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The economic downturn and the difficult financial situation of many institutions of higher education have been a challenge for most individuals and organizations; but ASA has weathered the storm well through prudent management of the Association’s operating budget and investments.
While revenues in the last two years have dropped somewhat, significant reductions in ASA expenses, including a two-year salary freeze for staff, made up for that decline. (ASA staffing has remained stable at 27 to 30 FTEs since the mid-1990s.) The 2010 fiscal year ended with a small surplus, as did most years in this decade, and the 2011 budget again proposes a small surplus. The deficits in 2008 and 2009 were expected in 2007 as part of the Association’s plan to return to owning rather than renting ASA’s headquarters space.
ASA owned its headquarters from 1971 through the mid-1990s, until that particular space became no longer adequate for ASA’s operations. ASA sold it, initially sought new space to purchase, and then placed the sale proceeds in a restricted building fund when no suitable office location could be found. After renting for a decade, ASA identified 13,016 sq. ft. of new office space and purchased it using the building fund as a down payment. We secured low-interest, tax-free revenue bonds from the District of Columbia (in lieu of a classic, more expensive mortgage) to purchase the space, a portion of which is rented out and provides the ASA with income. ASA protected its low rate with an "interest-rate swap" that fixed the interest rate at 3.58 percent. ASA’s financing was runner-up for the DC metro area "Best Real Estate Deal of 2007" by the Washington Business Journal. Despite the national real estate "bubble bust," ASA’s space has appreciated in value. DC has one of the strongest commercial real estate markets in the country, and ASA’s decision to purchase in a desirable downtown location has protected the value of our asset.
In addition to the real estate we own, ASA also has about $6 million conservatively invested in a low-cost portfolio of bonds and equities that reflect the broad marketplace and are passively managed to limit risk. While the value of our investments declined during the financial meltdown, ASA’s portfolio losses have been fully regained and it is now modestly increasing in value.
About 35 percent of these invested funds were donated to the Association for specific purposes (e.g., the Arnold and Caroline Rose fund that supports the ASA Rose Book Series, and the Sydney S. Spivack Fund that supports applied sociology and public policy activities including the CARI small grant program.) The remaining 65 percent are "reserve funds" to protect the Association in case of major problems. EOB has determined that prudent fiscal accountability to our members under recognized not-for-profit organization standards requires ASA to have the equivalent of at least 50 to 70 percent of its annual budget in such a reserve; we are currently at 66 percent.
Over the next several issues of Footnotes, I will comment in greater depth about various aspects of ASA’s finances, including sources of revenue, various areas of expense, and some thoughts about how EOB and the Executive Office can provide members with greater financial transparency. For the moment, ASA’s audits and the minutes of Council that contain substantial financial information are found from the ASA Homepage (www.asanet.org ); click on "About ASA" and then "Governance."
If you have financial questions, send them to firstname.lastname@example.org with "Q&A Financials" in the subject line. Send any other types of questions to the Executive Officer at the same address with "Q&A" in the subject line. Thanks for your commitment to the Association.
Catherine White Berheide, Skidmore College ASA SecretaryBack to Top of Page