Saturday, August 27, 2005

LNC Meeting Report: Finances and how we get them

Nelson reported that our finances are considerably improved since Seehusen took office two years ago. He questioned the approach of chasing membership and then pounding them with direct mail once we have them in the door. He proposed that instead we put more emphasis on generating income from monthly pledges.

Pledge revenue per member is down from about $1.50 to $1.00. Direct mail revenue per member is also trending downward, and membership is down slightly in the last month. Nelson suggested that too many fundraising letters may be driving down the donation per member numbers and may be causing donor fatigue.

Nelson said we should look for a better rate of return instead of simply chasing gross profit. He followed that our database is underused and that one of its best features is its ability to target and focus fundraising. For example, it allows us to better target our letters only to those with a history of donations in response to direct mail and new people, while omitting mailings to our members who don’t respond to fundraising letters. We also need to take care to not alienate our core membership while broadening our donor base.

Cory cited the industry standard for direct mail as 13-17 pieces a year, or one every 3-4 weeks. Dixon reported that there was little response from members to recent mailings calling for groundswell actions such as petitions to various government figures, such as the death tax initiative. Lark emphasized the need for member feedback to select and drive such issues. Dixon said that recent innovations on the website gives us far more direct feedback from the membership than direct mail. Colley suggested that we value the high level networking practiced by Seehusen over lobbying. New is continuing our program to have a presence at meetings and conferences of fellow traveler organizations. Cory added later that we can keep the high level donors to our lobbying and public policy campaigns if they see results from their donations.

On Sunday, Moulton presented a motion to limit the direct mail coming from national and requested a roll call vote. After some discussion which mostly expressed concern about the proposal, the motion failed 2-12-1, as follows:

YES on limiting direct mail: Hagan, Moulton.

NO: Breudigam, Carling, Colley, Hoch, McGinnis, Nelson, Redpath, B Ryan, T Ryan, Southerland, Starr, and Sullentrup.

Abstaining: Wrights. Not Voting: Dixon.

Nelson speculated that one bad letter or another minor catastrophe might be enough to push us over the edge into more dire financial circumstances. We need to increase our cash on hand to be greater than our accounts payable. As of July 31st our accounts payable stood at $125,695. While this is $10,000 more than the figure at the end of June, Nelson noted that this still represents an improvement as the percentage of accounts payable past 30 days due had decreased from 60% to 43%. He warned that the 2006 convention is a potential financial land mine, saying we have not yet even completely recovered from the effects of the losses on the 2002 convention. Keeping convention costs under control and its funds strictly segregated are essential to its success.

Colley asked about cancelled pledges and how to turn that around. He asked Cory if there were plans to follow up regarding recently cancelled or uncharged pledges. Cory responded that there was no current plan to do so but that it could be done. In reply to a question from McGinnis, he did say that follow up thank you calls were being made to new pledgers.

After the vote to abolish membership dues, the LNC scheduled 20 minutes on Sunday to discuss new revenue streams to replace this dues money. This turned out to be a distracted and frustrating enterprise with few bright spots. This twice resulted in a successful motion to extend the discussion for another 20 minutes until something could actually be accomplished.

Starr began the discussion with a motion calling for the immediate cessation of any solicitations for new or renewed memberships. He said it would be wrong of us to continue soliciting annual memberships when dues paying memberships will only be available for another four months. It was pointed out that a contribution of $25 or more would still result in an annual subscription to LP News and other benefits currently received by dues paying members.

The discussion sadly devolved into the worst parody of bureaucracy with suggestions of how to compose and print a letter, using money and staff time they do not have, explaining everything to the last detail in place of the usual membership letters. The only issue they failed to debate was what color paper these letters should be printed upon.

Rutherford expressed his frustration by pointing out the purpose of this session was to focus on the big issue of generating revenue. Starr became more impassioned as he made his case, clearly portraying this as a moral issue, to the point where he earned a rebuke from Dixon. Frankly, while Starr did go a little over the top, he was absolutely right in my view – in this context, it is simply immoral to continue to sell a product that you know you are discontinuing.

Starr’s motion failed 5-11. A roll call was requested, which went as follows:

YES on ceasing membership solicitations: Carling, McGinnis, Redpath, Southerland and Starr.

NO: Breudigam, Colley, Hoch, Lark, Nelson, Rutherford, B Ryan, T Ryan, Squyres, Sullentrup and Wrights.

Tony Ryan moved that the Chair include a cover letter with membership renewal solicitations explaining the benefits of renewing, including LP News and increased delegate allocation for one’s state party at the national convention, and that a similar explanation be published via LP News and the State Chairs’ email list. This passed 10-5 on a show of hands.

Lark suggested we return to the status quo of $25 dues and allow the convention make any changes. He predicted that the LNC may have cause to reconsider their decision to abolish dues.

Rutherford suggested the LNC become more of a fundraising board, and also to establish a Finance Committee. The idea that LNC members become active in fundraising had also been advanced by Starr earlier in the meeting. Starr moved to create a Finance Committee with Rutherford as Chair.

Dixon spoke during the debate of the LNC’s transition over the years from a strong staff with a weak board to the opposite, a process which brings with it greater responsibilities to each board member.

The motion passed 11-5 on a roll call vote:

YES on Finance Committee: Breudigam, Hoch, Lark, McGinnis, Redpath, Rutherford, Southerland, Squyres, Starr, Sullentrup and Wrights.

NO: Carling, Colley, Nelson, B Ryan and T Ryan.

Nelson reported that the abolition of dues would be by itself a net financial gain for the LNC. The lost revenue from memberships would be more than offset by the end of UMP payments to the states and membership solicitations and renewals.

A conference call for the State Chairs was scheduled to explain the changes, which has since occurred. About 8-12 people participated in the call, including myself. My notes on that call can be found on my blog, The NC Way.

One critical bit of information raised by George Phillies that was barely discussed during the burying of his Ballot Access audit commissioned by Dixon is the discovery that there is no paper trail recording each transaction. This is how is was possible for many checks to be written for ballot access expenses which cannot now be documented. Phillies suggested in his report that there should be a file for each and every transaction, even if it is simply a handwritten receipt noting the check number and purpose. Our current method leaves the states responsible for generating this documentation, which is a haphazard process when done at all.

6 Comments:

Anonymous phillies said...

" As of July 31st our accounts payable stood at $125,695. "

And the cash on hand was a very small fraction of this.

Also, see the financial report: Income is running $110,000 a month. Outgo is substantially above this. We are in very serious financial straits, and there does not appear to be a response. Is there a plan to cut expenses short term to $100,000 a month? Or to increase income?

I confess that my response to the recent fundraising letters is I see little explanation as to how the money on the last project was spent, and suspect that it was spent not on the project at hand.

7:54 AM  
Anonymous phillies said...

I see that once again Mr. Gilson de Lemos is not present as a representative.

4:18 PM  
Anonymous GregD said...

Once again, both staff and LNC seem to be under the mistaken impression that there is no relationship between the decline in donations and members' perception of the donor worthiness of the organization.

Perhaps donations and pledges decline because after one year, the staff still can't get the database fixed. Perhaps there is a relationship between the staff advocating an Iraq Exit Strategy that calls for foreign aid (a violation of the platform) and declining donations.

Both LNC and staff have made a lot of mistakes and they continue to try and cover them up -- even after it is obvious to the membership.

6:33 PM  
Anonymous phillies said...

I understand what Greg Dirasian is saying.

How many people know about the database issues?

How many people ever saw the IES?

I think the answer is 'lots'. However, there are a bunch of other issues, like
Secret Ballot on Raising Dues to $50.
Lowering Dues to $0 a few months later.
What was done with the money we raised?
Surplus of right libertarian fundraising letters.

I beleive there were a lot of issues not the least of which is an inactive board that is not doing politics itself.

10:51 PM  
Anonymous GregD said...

The most active 10% of the party are on email lists. They are also donors. They know about all the problems.

Direct-mail fundraising letters need to give news report how the last batch of money was spent, and even identify success or failure. Propose a plan for raising more money, and then go from there. If the staff keeps sending out the same bright yellow letter saying "give us money or we are closing the doors" people are going to get tired of it.

To raise money via direct-mail, you must prove that you are donor-worthy.

7:09 AM  
Anonymous phillies said...

With respect to burying my audit, I don't think you need to worry about that.

George

2:46 PM  

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