February 28, 2011 § 5 Comments
In an earlier post, The Disgruntled Sociologist explored the changes in the ASA’s finances between 2003 and 2008. In this post, we consider the ASA as compared to other professional associations in the social sciences.
We compare the ASA (~14,000 members) to four other professional associations: the American Political Science Association (~15,000); the American Economic Association (~17,000); the American Anthropological Association (~10,000); and the American Historical Association (~15,000). The Disgruntled Sociologist wanted to include comparisons to the Academy of Management, but their tax returns lacked many of the details included below. Similarly, the American Psychological Association is a rather different organization, as a large share of its members are clinical psychologists.
The data are simple:
One caveat is in order when interpreting the AEA data: the AEA appears to include the editorial staff for its journals under the number of employees. The AEA also pays the editors of its journals, which accounts for some share of the compensation listed.
Total expenses for the organizations are ASA ($7.6M), APSA ($6.2M), AEA ($7.1M), AAA ($4.7M), and AHA ($3.5M).
Finally, as noted in an earlier post, it seems likely that the number of employees for the ASA should really be 29, which is the number of employees in 2007.
Several things strike The Disgruntled Sociologist as noteworthy:
- Total compensation of headquarters staff for the ASA is substantially higher than for the other organizations (with the exception of the AEA, which lists more than twice the number of employees). Including salaries, taxes, and benefits, the ASA spent close to $3M on its headquarters staff. The APSA spent close to $2.5M, the AAA $2M, and the AHA $1.5M. Yet the ASA is the second-smallest of the associations in membership.
- The ASA stands out in the category “Office expenses,” spending close to $1.2M. That is $500,000 more than any of the other organizations.
- The ASA also stands out in the category “Occupancy,” here again outstripping its nearest competitor by half a million dollars.
- Finally, the ASA has substantially higher interest expenses than the other organizations. This is presumably due to the bonds issued for the purchase of the ASA’s swanky “headquarters condominium.”
Higher costs would be fine if they were associated with greater benefits for ASA members. But it is hard for The Disgruntled Sociologist to believe that the ASA’s members are so much better off than the members of the other professional associations. In fact, in terms of tangible benefits, it appears that the other associations are more attractive. For example, membership in all of the other associations includes access or subscriptions to the association journals. To name two examples, for the APSA, that’s 3 journals, and for the AEA, 6 journals. ASA members must subscribe to journals separately.
Perhaps, then, it is the intangible benefits of ASA membership that make it all worthwhile? Color The Disgruntled Sociologist skeptical.
Which, of course, highlights the fundamental question: How does the ASA membership feel about this? Do they even know? If they knew, would they approve?
Or is this the Iron Law of Oligarchy in action?
[All Form 990s are available here.]
February 28, 2011 § 7 Comments
Does the ASA spend your money wisely?
It’s of course hard to tell. We don’t know what a world without the ASA would look like. And we may disagree about what the ASA’s priorities should be.
But while we might not agree exactly about what things should look like, we might agree about things that seem out of whack.
Let’s go to the numbers.
What we’re going to do here is use data from the ASA tax returns, since these provide a breakdown of revenues and expenditures in different categories. Mostly, we will compare 2003 to 2008, although since 2008 may have been a somewhat unusual year due to the financial crisis, some comparisons will be to 2007.
We will start with the ASA’s revenue and costs over the period, in constant dollars.
This picture seems rather unremarkable. Both revenues and costs are more or less flat in real terms through 2006. In 2007, revenues jump appreciably, only to fall even more in 2008. Costs increase substantially between 2007 and 2008.
It is very hard for The Disgruntled Sociologist to tell from the tax returns exactly what happened. But it is clear that the ASA went from reporting a modest operating surplus from 2003-2005 (on average about $200,000 a year in 2003 dollars), to a substantially larger surplus in 2006 ($475,233 in 2003 dollars) and an even larger surplus in 2007 ($825,897). But 2008 was a bad year; costs exceeded revenue by over $700,000 (in 2003 dollars).
Things look worse in terms of the ASA’s net assets. As discussed in an earlier post, 2008 was a very bad year for the ASA.
As noted in the other post, the drop in net assets between 2007 and 2008 appears to be due in part to a drop in the value of the ASA’s investments in securities, and in part due to unanticipated costs in the financing of the purchase of the new ASA headquarters.
What about the headquarters property, or, as it is described in the tax returns, the “headquarters condominium”? This appears to be the biggest financial event in the ASA’s recent history. According to the 2008 Form 990, the costs basis for “Buildings” owned by the ASA was $9,947,205.
Yes, that’s right: The ASA spent $10M on a “condo.”
Granted, the location is swell. Two blocks from the White House! On K Street, with all the other lobbyists! In a “12-story building with a glass facade“! The impact of these amenities has surely already been felt in the pages of ASR, not to mention the halls of Congress. Or not.
Turning now to other changes over the period (all dollars are constant 2003 dollars):
- Over this period, while total revenue has been flat, revenue from dues has increased substantially — almost 17%. In part this is because membership has increased by almost 8%. But it is also because members are paying more: dues paid per member has increased almost 9%.
- Remember, these calculations are in constant dollars. It may of course be, since ASA dues levels depend on income, that the increase from an average of $86 to $93 is because sociologists have gotten richer. But the ASA’s own data suggest that that is not the case.
- As noted above, revenues in 2008 were rather flat, while they were quite high in 2007. If we average those years, the increase in revenue relative to 2003 was 6.8%.
- The ASA spends a lot more money on salaries and wages in 2008 compared to 2003: the headquarters has gotten bigger.
- The Disgruntled Sociologist was particularly surprised by the growth in the number of employees, but now suspects that this is an error on the Form 990. The 2007 Form 990 lists 29 employees, and approximately the same spending on salaries and wages. That is still a 26% increase in the staff of the ASA – in five years.
The Disgruntled Sociologist is a puzzled sociologist. What, oh what, could the ASA have started doing in the years between 2003 and 2008 that would justify such an increase in staff and expenses? Are the additional 1,000 members really, really high maintenance?
It certainly does not seem to us that the ASA is a phenomenally better organization than it was in 2003. More importantly, it does not seem that sociological research has gotten better or had more of an impact.
[Most data are from the ASA’s Form 990 for the relevant years, available here. Data on membership are approximate but have been confirmed as appropriate by a kindly person who has served on the ASA Council.]
February 28, 2011 § 8 Comments
The Disgruntled Sociologist has been examining the finances of the American Sociological Association. As a result, The Disgruntled Sociologist is not only disgruntled, but also deeply disturbed. So, fair warning, this is a long post.
Let’s start with a mystery, from the ASA’s 2008 tax return (Form 990). (You can get your own copy here.)
2008 was a bad year. Total assets dropped by almost three million dollars. At the same time, total liabilities increased by almost two million dollars. By the end of the year, the ASA’s net worth had been cut in half. Gulp.
(Oh, and: Who knew? We do not remember reading about this in Footnotes.)
How did this happen? To be fair, 2008 was a bad year all around: epic collapse in financial markets, etc. The ASA was apparently not shorting the sub-prime mortgage market, and so took a big hit like everyone else.
Still, closer inspection suggests some strange things.
- The ASA took a bath in the markets. The value of investments in publicly traded securities – stocks, bonds, mutual funds – fell from $7.1M to $5.1M. That is a loss of 28%. That actually compares somewhat favorably with the drop in the stock market; the S&P500 dropped approximately 33%. (Thanks, W!) But such a large drop suggests that the ASA was heavily invested in the stock market, and paid the price.
- The ASA spent down its cash reserves to the tune of $1.8M – from approximately $3M at the beginning of the year to $1.2M at the end. It is unclear from the tax return where this money went.
- The only substantial increase in assets comes in the form of accumulated depreciation.
Now consider the increase in liabilities. This is if anything more disturbing.
Two things are of note here:
- The ASA has $8M in bond liabilities. Who knew? Closer inspection of the tax returns indicate that these bonds were issued on Nov. 28, 2007, for the purchase of the ASA’s “headquarters condominium.” Them must be some pretty sweet digs.
- The big change in liabilities comes in the ominous category, “Other liabilities.” This increases twentyfold, from $101,000 to $2,000,000. Twentyfold! What, oh what, can these “other liabilities” be? Dig a little deeper into Part X of Schedule D, and you find:
“Interest rate swap obligation”? What does that mean? Dig a little further:
That isn’t much of an explanation. As a working hypothesis, The Disgruntled Sociologist thinks the ASA got caught in the same way Harvard’s endowment got caught: in Harvard’s case, Larry Summers made a bet that interest rates would rise (interest rates were historically low in 2007, everyone thought they would go up); in the crisis they fell dramatically. Similarly, we think the ASA made a bet that interest rates would rise, and got burned. Why make that bet? Presumably because they had issued a bunch of bonds to buy their HQ space, and were worried that the interest payments on those bonds would go up.
This could be the wrong interpretation. But it is hard to tell, because the ASA has not, as far as we know, described — let alone explained — these events. In this context it is very disturbing that the ASA releases very little financial information to its members, and does not communicate regularly about the state of the association. Audited financial statements are available on the ASA website, but they are a) hard to find (you have to search, you cannot find them by browsing) and b) the most recent audited statement is from … 2007! Coincidence?
(By contrast, look at the data rich reports from the Executive Director of the APSA; or the audited financial statements that are published in the American Economic Review each June and easily available on the AEA website.)
Nonetheless, a $2M change in the value of interest rate swap obligations suggests an organization engaged in relatively sophisticated hedging strategies. And more importantly, an organization that is out its depth. Perhaps the swaps were dictated by the bond issuance, which was dictated by the purchase of the “headquarters condominium.” But if a $2M loss on interest rate swaps was the cost of purchasing a “headquarters condominium,” perhaps it was not such a good idea?
The real scandal is the fact that nobody knows. Go to the ASA website and search for “interest rate swap” or “bond issuance.” Nada. Search in the full-text index for Footnotes. Nothing.
Think about this the next time you pay your dues.