Editor’s Note: Journalist David Murray obtained the 2013 IABC Audit Report about a month ago—well ahead of next week's Annual General Meeting at the World Conference in Toronto, where the results of the report will be shared with members who choose to attend.
He forwarded the report to a couple of trusted sources familiar with IABC's finances. They pegged the numbers on a scale from "grim" to "shocking."
He asked one source—Julie Freeman—who took the association over in the immediate wake of its last financial crisis, in 2001 and ran it until her retirement in 2011—for her analysis. Here is her response:
When IABC members travel to the World Conference or open up the latest edition of Communication World, it is usually not because they are eager to review the annual audit report.
But even if members are not enthused about financial reports, they have found value in IABC’s conferences, content and community of friends and fellow professionals. Without a sound financial base, however, IABC cannot continue to provide its members with the resources they need to do their jobs and advance their careers.
I recently reviewed the 2013 Audit Report—formally titled The Consolidated Financial Statements and Independent Auditors Report for the Years Ending December 31, 2013 and 2012. I see some troubling trends that threaten our association. I know from experience working with past International Executive Boards (IEB) and staff that restoring an organization to financial health requires discipline, sound planning and sacrifice. And it is a multi-year process. I would hope that the association does not have to travel that path again.
I urge IABC members attending the AGM or reviewing the audit report to ask some hard questions and demand some clear, truthful answers from the IEB. Members have a right to know.
- IABC finished 2013 with a net loss of $529,073. This follows a net loss in 2012 of $122,168.
- 2013 revenue was $692,486 less than in 2012. Deferred revenue—funds collected in 2013 for future obligations--was $128,889 less than in 2012.
- Most significant is a decrease of $245,036 in dues cash intake, indicating a substantial loss of membership.
- IABC financed its expenditures by selling investments assets, using $100,000 of IABC’s Line of Credit and incurring a loan of $350,000 to fund a new website.
Questions that need to be asked:
1. Where did revenues fall short of budget and why?
2. What were IABC’s major expenditures in 2013? How did these expenses serve members?
3. General and administrative expenses increased 56 percent in 2013. What was the reason for this huge increase in expenses in this area?
4. Board expenses increased 25 percent. Faced with declining revenues, how can the Board justify this increase?
5. At the end of 2013, IABC’s cash and cash equivalents were $42,172, a decline of $495,117 from 2012. Does IABC have sufficient cash to make its debt payments and pay ordinary operating expenses in 2014? How will it do so?
6. The Consolidated Statements of Financial Position (the Balance Sheet) includes Intangible Assets of $552,067. What does that include? How was that determination made?
7. Several years ago the IEB approved establishment of an operating reserve and a special project reserve. How much should be in each of those funds? How much is currently there?
8. What is the contract dispute related to the website development? How can members be assured that new Web developer will not have the same issues? When can members expect a new website?
9. What impact will the association’s current financial position have on its ability to recruit a qualified Executive Director? What is the status of that search?
10. What is the current IABC membership? How does that compare to prior years?
11. What is IABC’s current financial situation? What is the IEB doing to ensure that IABC will finish 2014 with a positive net? And will it keep members updated about finances before June 2015?
Professional communicators know the value of transparent, candid communications and have for many years advocated that leaders in their organizations and in their clients’ organizations communicate frequently and openly to their stakeholders. IABC leaders should adopt the same practices in communicating with IABC members.
A version of this article first appeared on David Murray’s blog, Writing Boots. Julie Freeman, ABC, APR, served as IABC’s president from 2001-2011.