Marshall L. Henley, SLRCFA Vice President
I have my own business as a management consultant. I used to work exclusively with small to medium sized businesses (SMBs) and not-for-profits. The biggest single problem I run into with these folks is that they don’t have a realistic plan that gets to the end of the year with some money in the bank.
Not for profits need to make some money
Not-for-profits are usually very good at watching costs. Many, including SLRCFA, don’t assume the need to create net asset increases, which would be called profit in the for-profit world. A generally accepted range for a not-for-profit would be to put away (increase net assets) by 10%-20% of expected expenses each and every year, by plan. This means that their annual budget plans to take in 11-12 cents for every dime they spend. So, yes, not-for-profits need to make “profit” – they just don’t give it to equity holders.
And, without increasing net assets by design, when something like our flood happens, or when you need to take steps to maintain growth, the money’s not going to be there.
Not keeping up with inflation
SLRCFA held full dues at $150 since the year 2000 for many year. If you use the CPI Inflation Calculator with the US Bureau of Labor Statistics, the equivalent dues using the same cost structure in 2016 would be $210. Two years ago we started increasing dues, but too slowly ($10 a year), so that full dues were $170 by 2016.
What’s the problem?
So if this is a problem, why haven’t we talked about it earlier? Well, it’s been masked a bit by the following:
- · We dipped into our savings account on occasion
- · We have used our net earnings from events and shows, about $2,000 a year, to fund our operating income.
Figure 1 - 2012 Estimated Gross Income from Dues, below, shows that we basically would have lost money each year without income from our events ($2,000 a year, which is low, is assumed because we do not have records of actual event income by year):
Figure 1 - 2012 Estimated Gross Income from Dues
First of all, notice in Figure 1 that we had net losses for the four years ending in 2015. We made money in 2012, but we spent it in 2013. We made money in 2014, but we more-than-spent it in 2015.
Second, notice that if we reduce our income by $2,000 a year, the highlighted columns yield numbers generally less than $15,000 (with the exception of 2015). Our expenses were never lower than $12,917 (in 2014), but were generally much, much higher.
What matters is OUR inflation
Of course, it doesn’t really matter if inflation is at 4% if your family is spending 20% more this year. The breadwinners will have to bring home more than a cost-of-living increase in earnings or they’ll be short, significantly, by the end of the year.
In 2016 our share of the property taxes went up to $3,745. Our lease is $2,000. Mowing is generally between $6,000 and $8,000 a year (and that’s at a great price to get the field mowed, $200). We cut the budget to the bone in order to keep costs down, but that’s not smart in the long term.
The board desires to make sure SLRCFA is on a solid footing moving forward. To that end, we’ve put the following principles and practices in place:
- · We have a written Mission & Values: as part of that, we want to continue to be the best club and field available in St. Louis. You can break down our resulting Vision statement into the following three categories:
- o FUN – we want to continue developing a reputation as the friendliest, most fun club in St. Louis for folks who are serious RCers (3D, jets, electrics, warbirds, giant scale)
- o FIELD – we want to maintain and improve our status as the “country club” of RC flying fields in the Midwest
- o FUTURE FIELD – we want to put away money to purchase either our current field in the future, purchase another field in the future, or improve our current field in the future.
- · As part of our Mission & Values, we do not want you, our members, worrying about mowing our grass, with some rare exceptions. Furthermore, our mowers are used for late-season and event clean-up mowing.
- · Because events are not a reliable source of income, we do not want to budget annual operating income based upon anything other than our dues structure. Event income can help build our FUTURE FIELD savings.
- · As good stewards, we want to put away 10% - 20% of expected dues income each year. Our dues structure should allow us to fund our budget and save 10%-20% of budgeted expenses (without using event income).
Having said that, Figure 2 - 2017 Budget Ranges, below, shows the basic math of our situation. On January 1, 2017, we’ll need a dues structure that provides over $16k as a bare minimum to operate the field. A healthier, more realistic budget that matches our Mission & Values is close to $21k. Adding to that either 20% for the “Slashed” budget range or 10% for the “Recommended” budget range gives us a total between $19.5k and $23k.
Figure 2 - 2017 Budget Ranges
2016, for example
A basic analysis shows that our dues structure has been too low to generate enough operating income to run the club without using event income, and certainly too low to put money into the bank each year for a rainy day. Figure 3 - 2016 Actual Dues, below, shows that it’s impossible to generate enough income to even meet our SLASHED budget for 2017, not to mention putting money in the bank.
One part of the problem is that while our full members pay $170, many pay far less with equal access to the field, and equal impact on field upkeep costs.
Figure 3 - 2016 Actual Dues
So what do we do with dues?
After a year of discussion by the board, it was clear we need to…
- 1. This year, opt for a middle-tier increase to $195 (instead of $210) for full members, trying to properly fund the “Slashed” budget but saving 20%, or about $3,300. This should replace the money spent on the flood repairs in 2016, and put us on a good footing for the following years.
- 2. Eliminate the many tiers of memberships, with the exception of youth at $25, and the associate membership for folks over 75 miles away.
- 3. Stimulate early membership payment and renewal: therefore we’re limiting full memberships to 100 at this time (we had full, senior, family and dual memberships this year.
Moreover, we are working diligently to provide value to you as an SLRCFA member. We’re trying to create more low-cost, FUN events and activities for you. We are planning for folks who sign up and pay their dues electronically by January 1st to get free event landing fees AND free event pilot raffle tickets. We are still working on building successful events, but trying to get more out-of-towners so we’re not dependent upon the same St. Louis guys. We want to show off the field.
Sometimes, change is good
We ask you to consider the following statements…
- · Other fields in the Midwest with our field quality are charging around $300 a year, often with 150 members or more.
- · Having right-sized dues isn’t something new the club is creating; it’s an overdue requirement of our budget to enjoy the field we already operate.
- · For most of us, a servo or two costs as much as $195. Frankly, most of us feel like $195 is a bargain for the quality of field we operate.
- · Most of us will spend far more on an oil change or two than we will on the 2017 increase.
- · We can all work together to make sure you get the most value out of your membership. Why not hit the field on a Thursday night with the crew? What about hitting breakfast with us Saturday mornings before you fly? How about starting your own affinity group within SLRCFA (like the CombatONE guys or the 3D guys) and getting out more often?
The board remains committed to understanding your needs while making the necessary changes to keep the club active and healthy. Feel free to contact any board member!