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    Delivering Value for Your Dues Dollar – Part I

    Alliance members will get a full report on the organization’s overall financial condition, including results for the 2011 fiscal year and for the first six months of 2012, at the Annual Meeting next week in New Orleans.  The bottom line is that the Alliance is heading into what could be a tumultuous 2013 – both in terms of political challenges to the fraternal system and operational challenges to the life insurance industry – in excellent financial shape.  We have the fiscal resources to effectively address the issues most important to you: preservation of the federal fraternal tax exemption, ensuring that fraternals compete on a level state regulatory playing field, and enhancing member societies’ ability to control expenses and attract new member customers through innovative value-added programs.

    These results are in large part due to the outstanding working relationship between the Board, the Finance Committee, and the staff.  The Board provides the vision for organization; the Finance Committee provides the oversight of its fiscal resources; and the staff manages those limited resources as if each dollar was their own.  It’s an incredibly effective model that is paying dividends to members by controlling dues costs, while delivering more and better benefits, including one-of-a-kind consumer research, expanded regulatory compliance services, and affordable access to information through Webinars and other online educational offerings.

    Here is a quick look at some financial statistics:

    Expenses

    Staff and Consultants – The Alliance’s largest expense – as is the case with virtually every trade group (and more than likely with every Alliance member society) – is the cost of staff and consultants. In 2011, the Alliance spent $140,000 less on these expenses than it did in 2008. This is largely due to staff reductions that eliminated duplication of duties.

    Office Expenses – Office overhead expenses have increased only $22,000 (about five percent) over the past five years. This is primarily due to renegotiating the lease for the Alliance headquarters at very favorable rates.

    Program Expenses – The Alliance has utilized savings in other areas to invest more heavily in programs for members. This includes world-class speakers for meetings and conferences, a broader number of educational programs such as Webinars and Board Institutes, the consumer research project and our new Online Learning Center that will bring educational programs to your desktop when you cannot attend.

    Revenues

    Member Dues – In 2011, the Alliance collected almost $200,000 less in member dues than it did in 2007. This is a result of the full impact of the Aid Association for Lutherans and Lutheran Brotherhood merger taking effect in 2008. Despite the significant loss of dues revenue, the Alliance has not increased its $1,350,000 budget for dues revenue in five years and many societies have not seen any increases in their individual dues.

    Associate Member Dues – This new category of membership was created in 2009 and the Alliance now has more than 50 Associate Members – primarily firms that want exposure to fraternals and access to the information provided by the organization on its website and various publications.

    Non-Dues Revenue – The Alliance’s primary sources of non-dues revenue are meeting registration fees (for the Annual Meeting and Section Meetings), sponsorships, royalties on endorsed programs, and revenues from educational programs like Webinars and Board Institutes. Non-dues revenue is critically important to trade associations because it helps keep dues costs down. While the amount of non-dues revenue has increased significantly since 2008, the Alliance still generates a disproportionately large share of its total revenue from membership dues compared to other similar trade groups (more on this in Thursday’s post).

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