Proposal to Increase Membership Dues
Mike Fischetti
Executive Director
Sam Smith
Chief Financial Officer
November 17, 2013
Agenda
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Proposal
Current NCMA Financial Situation
Options Considered to Address Financial Situation
Third Party (MGI and ASAE) Dues Surveys
Membership Benefits
Dues Comparison
Proposed Increase and Financial Impact
Resolution Before the Board
2
This Proposal Will Recommend The
Following Actions:
• Raise the member dues as follows:
–
–
–
–
–
–
Individual
Group
New Professional
Retired
Student
Pro Vita/Lifetime
From
From
From
From
From
From
$125 to $150
$105 to $115 (Average Rates)
$75 to $85
$55 to $65
$25 to $35
$1,000 to $1,250
• Effective date of increase to be March 1, 2014
• The establishment of a communication and execution campaign
to explain the rationale to members
3
Current Financial Situation
• Projected Operating Loss for FY 14 likely to be at least $40K
• External budget environment unlikely to improve in FY 15
– Conference “scandal” fallout, reduced procurement budgets,
reduced contract staffing, reduced training funds
– No environmental changes foreseeable
• Meetings revenue stream (2nd largest for NCMA) consists of small
number of high dollar events – vulnerable to material loss
• Absent further reduction in costs or increase in revenues an operating
loss is very probable in FY 15
• Operating cash balance as of 11/13/13 - $1.6m
• Reserve balances as of 10/31/13 – Restricted $2.9m – Unrestricted
$208K
• Association reserves benchmark - 50% of Operating Expenses = $3m
• Line of Credit facility - $250K – not currently used
4
Current Financial Situation – Revenue Streams
• Membership – (33% of FY 13 Revenue) Flat
• Education – (13%) On-line learning revenues continue to grow
and are main focus; NES, Books – no material growth expected
• Advertising – (19%) Remains soft and unlikely to grow in the
short term – sensitive to economic environment
• Certification – (4%) Growing but least material of revenue
streams
• Meetings (31%) – Most affected by economic environment and
Government curtailment on travel – WC FY 14 attendance down
32% from FY 13. Meetings expected to be flat at best in FY 15 –
unless change in Government policy
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Options Considered
• 1: Draw Down on Reserves
- Reserves intended to be used when no other alternative available as in
FY 03 and FY 04 when Operating Cash was zero and there was no line
of credit. Drawdowns were FY 03 $425K, FY 04 $100K.
- In FY 08 financial crisis no draw down was made. Cash managed using
cost reduction and line of credit
- Unlikely that current economic environment will improve in the short
term.
- Probable that when improvement occurs business activity will not
return to pre downturn levels
- Thus absent any significant improvement in revenue further draw
downs would be necessary
- Current Operating Cash balance = $1.6 million, L of C $250K unused
Recommendation: Not recommended. Seek additional revenues .
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Options Considered
• 2: Fund projected operating losses in FY 14 and probably FY 15 out of
Operating Cash balances (Currently $1.6m) and Line of Credit ($250K)
- Short Term proposition only
- Risks:
- Bank will hesitate about renewing Line of Credit unless they see a
plan to return to an operating surplus
- Mortgage covenants may not be met
- Third parties (e.g. Marriott Hotels) may be less likely to extend 30
day net credit and demand substantial upfront payments for
conference costs
- May generate footnote comment in audited financials
Recommendation: Not recommended
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Options Considered
• 3: Staggered Approach – Small Dues Increases Every Year
-Unlikely to restore profitability in FY 14
-Annual increase may result in negative member feedback
-Increased administrative cost
Recommendation: Not recommended
• 4: Full Dues Increase, but Permit Member Payment by Installment
- Significantly increased administrative cost
- Additional burden on members – e.g. –four payments per year vs. one
Recommendation: Not recommended
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Options Considered
• 5: Install Automatic “Triggers” which would Generate a Dues Increase
- Could be based on inflation, time elapsed since last increase, industry
benchmarks.
- May or may not bear any relationship to NCMA’s actual business needs
- May appear arbitrary to members – for example if the trigger increases
dues every two years it may or may not be necessary from a business
perspective.
Recommendation: Not recommended
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Options Considered
• 6: Further Cost Cuts
- All costs have been reviewed over the past year and significant cuts
made (FY 14 EAC - Total Expenses down $560K from FY13 Actual)
- Four staff have been laid off in the last 14 months
- Further cuts risks visible reduction in services to members OR employee
benefits, risking employee morale and retention
For example – a major monthly cost ($22K) is the production and
distribution of the CM Magazine. The number of editions could be
reduced to nine per year. The downside is that all member
surveys indicate CM Magazine is seen as principal member benefit
Annual health care costs total approximately $225K. Will be
reviewed in March prior to anniversary date and when effect of
Affordable Care Act has become clearer
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Options Considered
6: Further Cost Cuts (cont.)
- Comparative ratios indicate NCMA costs already compare favorably
with other associations. NCMA ratios in the most recent EAC (September
2013) are set out below
- Salaries and Benefits as a Percentage of Revenues
NCMA 38.6 % - ASAE Average – 42.2%, Median 41.4%
- Number of Employees (FTE’s)
NCMA – 24.95 – ASAE Average - 37.0, Median – 36.0
- Revenue per Employee
NCMA - $239,014 – ASAE Average $229,975, Median $192,547
Recommendation: Not recommended. However the ED will
continue to develop business efficiencies
(Source: ASAE Operating Ratio Report 14th Edition – Based on 2011/2012 Data)
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Options Considered
7: Dues Increase
Recommended – see following slides
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Association Survey Results
• Source: 2013 Marketing General Inc. (MGI) Membership
Marketing Benchmarking Report
• Data based on 695 Association responses
• MGI is a consulting firm, founded 35 years ago, based in
Alexandria, VA and a market leader in advising associations on
membership strategy and growth
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How Often Does Your Association Raise
Membership Dues ?
As Needed
Annually
Every Other Year
Never
63%
22%
6%
9%
Source: MGI
14
When Was The Last Time Your
Association Raised Membership Dues ?
2013 (Raised or Planned)
2012
2011
2010
2009
2008
2007
Prior to 2007
24%
21%
11%
9%
8%
5%
3%
19%
56% of Associations have raised their dues since 2010 – the last
time NCMA dues were increased.
Source: MGI
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How Much Are Your Basic Membership
Dues ?
Under $50
$50 - $99
$100 - $149
$150 - $199
$200 - $299
$300 - $399
$400 - $499
Above $500
Varies By Group Size
7%
17%
10%
12%
13%
10%
3%
10%
18%
Over 66% of Associations in the survey had dues higher than NCMA
Source: MGI
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Dues Comparison with These Associations
– Project Management
Institute (PMI)
– Institute for Supply
Management (ISM)
– National Institute of
Governmental Purchasing
(NIGP)
– Society of Cost Estimating
and Analysis (SCEA)
– Association of Proposal
Management Professionals
(APMP)
– American Institute of CPAs
(AICPA)
– American Bar Association
(ABA)
– FL Association of Public
Procurement Officials
(FAPPO)
– National Procurement
Institute (NPI)
– Association for Operations
Management (APICS)
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Benefits Comparison
• The comparable associations share the following
benefits with NCMA
–
–
–
–
–
–
–
–
–
Magazine
Journal
Newsletters/Articles
Networking Opportunities
BOK
Certification
Conference/Training Events
e-Learning: webinars, e-courses
Volunteer/Leadership Opportunities
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Dues Comparison
Association
AICPA
ASAE
AMA
NPI
APICS
ISM
NIGP
PMI
NCMA
APMP
ABA
ICEAA
Regular
$505-$795
$295-$325
$250
$210
$205-$210
$190
$185
$149 - $179
$125
$100-$125
$60 –If US licensed
$55
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Proposed Increases In Dues Rates
Membership
Type
Current
Rate
Proposed
Rates
Increase $
Increase %
Regular
$125
$150
$25
20.0%
Group
$105
$115
$10
9.5%
$75
$85
$10
13.3%
$55
$65
$10
18.2%
$25
$35
$10
40.0%
$1,000
$1,250
$250
25.0%
New
Professional
Retired/62
plus
Student
ProVita/Lifetime
21
History
NCMA Rate Increase History
Effective Date
Annual Dues
Increase
3/1/14 – Proposed
$150
$25 – 20%
7/1/2010
$125
$15 -13.6%
7/1/2007
$110
$10 -10%
7/1/2002
$100
$15 -17.6%
4/1/2000
$85
$13 - 18.1%
1/1/1997
$72
$7 - 10.8%
1/1/1992
$65
$5 – 8.3%
7/1/1988
$60
$15 – 33.3%
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Annual Financial Impact of Proposed Increase
Membership Type
# of members
Current Rates
Proposed Rates
Regular
9,475
$1,184,375
$1,421,250
Group
7,167
$752,535
$824,205
New professional
1,367
$102,525
$116,195
Retired/62 plus
635
$34,925
$41,275
Student
302
$7,550
$10,570
Pro-Vita/Lifetime
149
Total Revenue:
One time Only
$2,081,910
Increased
Annual Revenue
One time only
$2,413,495
$331,585
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Proposed Timing of Dues Increase
• Effective Date – March 1, 2014
• Accelerated renewal program from January 1 to February 28, 2014
to allow members to renew at existing rates prior to March 1, 2014
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Current Value of Member Benefits
CM Magazine
Journal
Preferred Pricing
Conferences
Certification Applications
NES
Books
Virtual Conference
$158 Free to members
$ 15 Free to members
$100 per conference
$125-$150 per app
$50-$75 per NES
$10-$15 per book
$20 per VC
25
Member Value Enhancements
• 2 free professional development webinars (Value = 2 x
$189 = $378
• 1 Webinar on Demand – (Available only to members)
• Adding new “chat now” feature to auto connect members to
member services
• New member gift at 6 month anniversary
• Outreach to group memberships
– Gift for Point of Contact with reminder of renewal date
– NCMA leadership outreach
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Member Response to Dues Increase
• The past three increases in dues have resulted in no
discernible decrease in membership numbers.
• NCMA dues remain low in comparison to other
associations
• Business environment is not good – but more reason
to maintain connection with profession through
NCMA membership
• Conclusion - Reasonable basis to assume no
significant loss of members
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NCMA’s Mission & Values
• Excellence in everything we do, especially our
service to our members and CM community
• Continuing education and training
• Remaining the preeminent source of professional
development for contract professionals
• NCMA cannot continue to uphold these values
with additional cost cuts
• Source:
http://www.ncmahq.org/About/content.cfm?ItemNumber=9018&
navItemNumber=519
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Recommendation
• NCMA Board of Directors approve the following:
• Membership dues to increase as follows:
–
–
–
–
–
–
Individual
Group (Avg. Rate)
New Professional
Retired
Student
Lifetime
From
From
From
From
From
From
$125 to $150
$105 to $115
$75 to $85
$65 to $75
$25 to $35
$1,000 to $1,250
• Effective Date of Increase to be March 1. 2014
• A Communication and Execution Campaign to Explain the
Rationale to Members Beginning in December 2013
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