The HoD Leadership encourages you to be informed regarding the proposed changes to the Bylaws titled "Graduated Dues."
Letters from Delegates
Editor’s note: Steve Earle’s initial comments and Lee Billingsley’s reply may be viewed on the AAPG web site: http://bylaws.aapg.org/?p=3#comments
We are being asked to consider and approve a new dues structure for AAPG. Now I’m no financial wizard, just a hard-working explorationist who takes pride in his work. And right now I’m screening a deal called “graduated dues.”
With all respect to Mr. Billingsley, the percentage of total revenue represented by dues, a number that has been trotted out as justification of this new test, is statistically misleading. If dues were as insignificant as he seems to claim, then the dues increase would not be needed. This is not to argue against such an increase; we are not privileged to see that data. The point is that dues are a critical part of the income stream.
In order to properly understand what the financial impact on the society would be, we first have to separate fixed overhead from other costs. The income and expense statement for fiscal year 2005-’06, available online, shows total expenses of $13 million (MM$). Of this, I have broken out 7.3 MM$ as fixed overhead, slightly more than half the total. This includes essential costs to run AAPG such as salary and benefits, building and office expenses, fees for professional services, travel budgets and miscellaneous. How does our Society pay this? The largest contributor is profit on conferences and meetings. Last year this amounted to 1.1 MM$. Dues are the second largest source of funds bringing in 1.77 MM$. Based on this back-of-the-envelope calculation, I offer that dues represent 24% of the critical revenue stream.
Other interesting data that falls out of the financial statement is that the Bulletin and Explorer are currently paying for themselves; times are good and advertising revenues are up. Based on what data is currently available, it would seem that the financial benefit of adding one incremental new member at any level would be a plus. What is uncertain is this: How might expenses be impacted by the addition of 1000 new members paying reduced dues? What about 5000 new members? Any financial model worth the time and effort putting of it together should address these questions. Only then can we know how the new dues structure might impact the Society.
The long-term financial impact is more uncertain. As the demographics of our members change, as is inevitable considering our aging population of active members, the pressure to fund overhead costs will continue to increase. If graduated dues are approved, my wild guess is that in 10 years only 50% of the members will pay at Level 1 (the full dues paying level). I would welcome a more educated guess and some discussion about the facts that led to it. Anyone who thinks it’s 90% is being overly optimistic. Will this cover overhead? I don’t know the answer. I was hoping someone had worked out an answer based on good assumptions.
Proponents of graduated dues keep referencing the Society of Petroleum Engineers (SPE) model. Not being familiar with this organization, I did some research. Interestingly, their triggers for reduced dues are substantially lower than what is proposed for AAPG. An SPE member older than 30 earning more than $18,000 a year has to pay full dues. This raises the question of what the reasoning was for the income levels selected for AAPG membership since they are so different from that of the SPE.
Finally, in response to my question about the cost of regional offices, Mr. Billingsley states that the offices will pay for themselves. While I think this is a possible outcome, and one that could be enforced by a hard-headed board, it is not a certainty. Let’s be honest here, if AAPG has 3000 members in some part of the world that are only being paid $18,000 a year, there will be a lot of pressure to open an office, but they won’t be buying books or attending conventions in any far flung places, and any local conferences will likely not generate any revenue; in fact, they will probably request that AAPG subsidize their activities.
These are, I believe, legitimate questions that we should know the answers to before investing in the graduated dues deal.
Both Misters Earle and Billingsley would appreciate your additions to the forum.