A Look at USPA Finances
by USPA Executive Director Ed Scott
The annual audit of USPA for 2016, which Rogers & Co. of Vienna, Virginia, completed in August 2017, reported sound fiscal management and accountability measures. In 2016, revenues of $3,486,623 exceeded expenses of $3,467,585, leaving USPA with an operational excess (not including investments) of $19,038. USPA had a total excess of $218,957 after including investment gains, interest and dividends.
As for revenues, member dues comprised 63 percent of total revenues, with individual member dues making up 95.2 percent and Group Member dues comprising 4.8 percent of the dues category. Fees, derived from both license and rating applications, made up 17.2 percent of revenues. Advertising revenues (primarily from ads in Parachutist magazine) are the bulk of Sales of Services revenues and contributed 12.6 percent to overall revenues. USPA Store items are the majority of Sales of Products revenues, which are 4.1 percent of all revenues.
USPA creates its budgets by department, but expenses here are broken out by area of expenditure. Staff compensation (including pay and benefits) was 40 percent of expenses. Parachutist expenses (editorial and photo payments to contributors, printing and postage) were 19 percent. Overhead expenses (supplies, communications, bank charges, insurance, equipment purchase/lease, etc.) made up 14 percent. Outside services (legal, accounting and audit fees) comprised 11 percent. Premiums for third-party insurance (a member benefit) were six percent. Together, staff and board travel expenses (mainly for two board of directors meetings per year) were three percent of expenses. The remaining six percent fell into four miscellaneous categories.
The audit breaks out expenses by the seven USPA departments and an amalgamated Support Services category. Membership Services is a six-person department, with most of its expenses (after compensation) related to printing and mailing membership cards and renewal notices. Communications is a department of four, and its highest expense is related to printing and mailing Parachutist magazine, followed by compensation expense. A sole director staffs each of the other departments. Under the Support Services category, the General Operations and Information Technology line items account for office overhead, computers and software, and the Headquarters Management line item contains the expenses of the office of the executive director and the director of accounting and human resources. The Board of Director expenses relate primarily to travel to two annual meetings.
USPA’s balance sheet reveals that its net worth climbed from $3.07 million to $3.29 million over the course of 2016.
USPA Finances Over Time
Like most associations, USPA has seen its share of financial ups and downs. The climbs and dips are influenced by scores of factors, some of which the organization can control or at least moderate but many of which it cannot. Most of USPA’s revenues derive from members who join, renew and earn licenses and ratings, referred to as “membership activity.” To a large extent, the volume of membership activity is dictated by the state of the economy, which is a major factor in determining whether someone makes that first jump, which is our source of new members. The economy also dictates how active experienced skydivers are and whether they pursue new licenses or ratings.
The state of the economy, rate of inflation, consumer price index and even consumer confidence—along with many other factors—influence how people use their discretionary income and therefore the decision as to whether they make their first skydives. The same factors influence skydivers and help determine how many jumps they make in a year or even whether they quit for a while to take care of more important matters in life.
In a good year, nearly 8,000 new members join USPA, while between 80 and 90 percent of current members renew. Of course, many of those skydivers—whether new or renewing—also obtain new skydiving licenses and instructional ratings. Obviously, when any economic uncertainty creeps up, skydiving activity—both new and experienced skydivers—ratchets down, as do USPA’s revenues.
The graph below shows the confluence of USPA’s finances with staffing levels and dues rates from 1995 to the present. Through the mid- to late-1990s, USPA membership was on a steady increase, as was the association’s finances and staffing level. That all changed in 2001 with the attacks of 9/11. Membership then stood at 34,583 but declined over the next five years to 30,488 before beginning to recover. USPA’s financial position fell, too, despite a dues increase in 2003. Like most associations did until the recession of 2008, USPA counted its investment gains and revenues as operational revenue. Beginning in 2009, USPA separated its investment gains and losses from operational revenues and endeavored to operate under a balanced budget sustained only by operational revenue. That approach, plus an increase in dues and fees, provided an operational excess in 2009, the first one since 2002. And we’ve had annual operational excesses ever since with the exception of 2015. However, 2016’s operational excess was only enabled by a generous $70,000 bequest to USPA. Without the bequest, USPA would have followed 2015’s deficit with a greater deficit in 2016.
Looking at these facts, the reason for the board’s recent approval of the dues and fees increases (to start January 1, 2018) becomes apparent. After more than eight years since the last dues and fees increases, costs have begun to outpace revenues. The increases should allow USPA to continue its member services for some years to come.
Ed Scott | D-13532
USPA Executive Director