STC’s volunteer leadership has been working to develop a recovery and regeneration plan for the Society. As we announced at the Summit in Atlanta in May, STC is experiencing an unprecedented challenge to its financial health in the form of a projected shortfall that could reach as high as $1.2 million. This will continue into 2010 unless we take decisive action right now. The regeneration plan, which will include many of the great ideas suggested by scores of chapter leaders and members through our various communication channels, will be announced as promised by the end of August.
As I have previously mentioned, the shortfall is primarily due to the negative impact the recession has had on our two main sources of revenue—membership dues and the annual conference. But going forward, we have to solve a problem bigger than the recession. For years STC has been adding and expanding services and activities to benefit members and the profession without taking a hard look at how to sustain those activities. And with only periodic, modest increases in fees, the costs to sustain those services and activities have outpaced our dues and total revenue such that the Society has actually been subsidizing these activities.
STC spends, on average, just under $250 USD to provide services to a member, yet dues rates are well below that amount. We have been relying on the revenue generated by the annual conference and our earnings from invested reserves to cover the difference. Obviously, this is not a good business model to follow and changes are needed.
A few weeks ago, I posted information on the website that fully describes the efforts taken by staff and leadership to cut hundreds of thousands of dollars in expenses during the last half of 2008 and throughout 2009. Almost $1 million in expenses have been cut since June 2008. That’s well beyond “trimming the fat”—those kinds of cuts go into the bone.
As part of our recovery plan, I have asked:
- The Board and staff to start from scratch to build a zero-based 2010 budget that is realistic, sustainable, and includes only those benefits and programs that we can afford during this economic downturn. That budget will include a dues increase.
- Chapters to develop a zero-based draft budget for 2010 by 17 August that assumes a 60 percent renewal rate and no funding from STC headquarters for one year. (The SIGs already use a zero-based budgeting method and will continue to do so.)
- Chapters to review what monies they have in their bank accounts, determine what funds are needed to conduct programs for the remainder of 2009 and 2010 activities, and return (reallocate) their surplus funds to the Society to help cover operating costs through the end of 2009. (Note, the reallocation of surplus funds to the Society is a one-time activity; this is not a new business practice. Zero-based budgeting for chapters, however, is a new business practice that will be sustained going forward.)
I realize these decisions will not be popular; nor will the reductions in programs or staff be. However, these actions are imperative to get through this difficult economic climate and to avoid bankruptcy, which is much closer than many of you may be thinking. It’s a difficult time for everyone and many of us feel our commitment to STC being tested by the challenges before us.
If we pull together and follow the plan, STC will emerge from this economic downturn a very different STC than that of the past; leaner by necessity, more efficiently organized, more focused on up-to-date service delivery, and ready to move into the future as a financially stable organization less prone to economic impact.
The Board and office staff have continued to look for cost-saving opportunities. Now it is essential that we turn our attention to increasing revenue. Dues and activity fees will increase to cover costs as part of a sustainable business model. Some of the membership benefits will take a different form, but the basic value that inspires people to join the Society will remain and grow as we recover, redefine, and regenerate.
Thank you for being part of this great organization during these turbulent times, and for your trust in and support of the leadership team as they work to ensure the future organization is viable, sustainable, and relevant.