By Joseph W. Polli, Ph.D., FAAPS, President, and Mark J. Rose, Ph.D., Treasurer
“Nonprofit is a tax-status, not a business plan,” is something members of the AAPS Board of Directors remind themselves as part of the Duty of Care
1 responsibility of an association board. As a 501(c)(3) nonprofit organization, AAPS is exempt from federal income tax, but not from paying for staff and office space, PharmSci 360 venue and programs, or any number of business-related expenses. When the association makes a profit, it goes back into the organization, not to executives or shareholders as happens in for-profit corporations.
One of the Board’s year-over-year goals is for AAPS to continue to find ways to raise revenue. Mark and I hope to see the organization achieve a balanced budget in the next three years, but the organization is not there yet. In the short term, the Board continues to use AAPS’ reserves and investment income to cover the fiscal deficits that have occurred for the past six years. This is a temporary use of the reserve funds, and it gives the association stability while we continue to pursue our strategic plan and rebuild AAPS’ services and programs to serve today’s member.
AAPS’ Operating Budget—Where the Money Comes From and Where It Goes
AAPS is a meeting-driven organization. Nearly 70% of revenue in fiscal year 2019 (FY19) came from the 2018 AAPS PharmSci 360 and workshops. Attendance and exhibition at those events are key. Registration fees provided $3.3 million collectively from our various events, which is nearly matched by $3.2 million in exhibitor fees.
Rounding out our top sources of income in FY19 are publications, which includes our journals and AAPS Newsmagazine ($924,000), and membership dues ($922,000).
It sounds like a lot of money, until you consider the bills generated by running PharmSci 360, maintaining secure and internationally accessible registration and membership processes, publishing journals, employing staff and consultants, etc. Seventy-nine cents of every dollar spent in FY19 directly supported member products or services. The other 21 cents go to important aspects of running AAPS’ business, like computers, software, and office rental.
Figure 1 below provides a breakdown of our FY19 sources of revenue.
Figure 2 below provides a functional breakdown of our FY19 expenses—programs versus general and administrative expenses.
Thank you to the AAPS financial team, who continue to maintain high standards in reporting our financial standing and in maintaining a sound internal control environment. Based on this, our outside audit firm Tate & Tryon provided us with an unqualified audit opinion,2 which is the highest rating that can be achieved.
What Are We Doing to Reach Balance?
AAPS is changing to meet the needs of today’s members, who work in a very different world than the one that existed when we formed the association decades ago. Today, AAPS is facing:
- competition from for-profit meetings;
- declining returns from publishers, even as success metrics for each of our journals increase;
- exhibitors who have many more options for reaching their targets; and
- members who can stay abreast of the latest trends in research through other platforms, largely online.
The AAPS Board of Directors is thinking long-term with the launch of the next strategic planning process this year, while also driving immediate changes that can improve the value of programs and services for members.
Look for:
- a new membership package that allows companies to purchase and manage hundreds of memberships at a time;
- a new app that will put the AAPS Communities in your hand so that you can communicate with your fellow members more easily;
- a new PharmSci 360 track, Discovery and Basic Research, which expands the audience with more opportunities to present foundational science;
- new software that will initiate networking between members from all corners of AAPS; and
- continued improvement of the process to develop workshops, which has already led to better Net Promotor Scores and increases in attendance and revenue.
I hope you will get involved in our strategic planning process and help the AAPS Board of Directors fine-tune our existing programs and build new ones. AAPS doesn’t have shareholders; it has members! We use our profit to grow your career, enable you to share your science, and to expand your network. I think it’s worth every penny.
What do you think about our financial standing and the changes we are making? Always feel free to share your thoughts with the AAPS Board of Directors, or start a conversation on an AAPS Community!
References
- Tenenbaum JS. Legal Duties of Association Board Members. ASAE. Published Dec. 21, 2015. Accessed Feb. 26, 2020.
- What is an independent audit? National Council of Nonprofits. Accessed Feb. 26, 2020.