"For the past 7 years the corporation has watched as its expenses increased and its revenues declined. The BoD polled the membership and asked for advice and opinions, which were received. Based on those and our own analysis, we made some changes.
Despite constantly rising costs, for the past 7 years the corporation has had the same cost for membership. This has only been achieved by continually tightening down on our operating costs and reducing some services. As the Board of Directors and Society officers are all volunteers, they have absorbed many operating costs during this time. In the second half of 2002, the Board of Directors took several actions to improve finances, including removing the Tournaments Illuminated subscription as part of the membership, increasing the subscription fees for additional publications, and creating the non-member surcharge (NMS).
The NMS was enacted as part of a large financial change for the corporation. It was never intended as a standalone solution, but as a part of a larger answer.
The primary changes were to membership. TI was unbundled, effectively increasing the cost of membership. We are also adjusting subscription and postage rates to meet our current expenses. We believe these changes will put the corporation back on a sound financial footing. In addition, the Board increased by over 20% the amount of money being sent to the kingdoms for publishing their newsletters. We felt this was necessary as many kingdoms were being forced to subsidize the newsletter in order to maintain their quality of publication.
However, these changes are to subscription based entities. Thus, the revenue increases the corporation will receive will be delayed until those subscriptions/memberships renew. Indeed, for those who have purchased long term memberships/subscriptions, the corporation will not receive any increase for several years. Yet, our expenses increase immediately as the increased stipend takes effect long before we receive the increased subscription amounts.
This creates a major expense bubble, where expenses jump and revenue goes up much more slowly. In the long term, we will be back on a financially sound footing. But while the bubble exists, the corporation will lose money at an increased rate.
The NMS was enacted to cover this period until membership / subscriptions are renewed and the corporation starts receiving the revenue increase we need. Unfortunately, we don't have any reliable numbers on how many non-members actually attend events, other than for large wars. For example, Pennsic 31 had over 5,000 non members in attendance. We know the bubble will be more than $30,000 (15,000 subscriptions x $2 stipend increase). Based on our budget estimates, we anticipate our loss to be an additional $50,000 for 2003. Additionally, due to the litigious times in which we live, our legal support has recommended we gather funds for legal defense over and above our insurance. Insurance costs have gone up over 15% in 2003 due to post 0/11 terrorist act. Underwriters are also changing the way liability insurance is priced.
We will have to carefully monitor the NMS fees as they are collected to determine if the amount is larger or smaller than anticipated and make corrective action as needed. This could be as soon as mid-2003 if sufficient information is available to show what our financial status is.
I realize that there are other means of raising the necessary funds. The BoD selected these are the ones they felt were best suited for the current financial environment as well as for the Society.
Reprinted with permission