As readers may know, in June I succeeded in efforts to be elected treasurer of the IPA. As I could not carry two such demanding positions simultaneously, I have resigned as treasurer of The American, effective as of August 7.
In the five-plus years of my work for The American, I have learned lots about lots, and wish to share some of my observations about our association and its future, about how we determine the allocation of our funds, and about the meaning of the term “budget.”
We are a not-for-profit corporation. This mean that we are specifically organized to conduct educational, scientific, and other charitable enterprises, and nothing else. We are not expected to show a year-end surplus, although we may.
Not-for-profit organizations such as ours are tax-exempt. Not-for-profits are organized for growth rather than for profit, and growth requires many activities that cost money.
Our income is drawn primarily from dues revenue, to which is added some income from the sales of publications and mailing lists, and from investments of a relatively conservative variety. Our expenditures are for everything imaginable, and we write checks that average eighty to ninety thousand dollars monthly.
When we finish the year in the black, that balance of uncommitted funds is regarded not as profit available for distribution to stockholders, but rather as surplus to be retained within the association for its various purposes. Following our dues increase in January 1990, we had by design a surplus for each of the next four years through 1993. That surplus was sequestered in a special Capital Fund Account, a deliberately ambiguous label, though we were for a while considering a move to larger quarters. At present that account totals more than half a million dollars, a seemingly large amount, though prudence urges that it become at least twice its current size.
My comments concerning growth were not simply by way of prefatory flourish: our largest source of income, as I noted, is dues revenue. Without such revenue we can do very little, and for a number of years we have steadily been losing members. For example, last December our total membership stood at 3,095, of whom 651 were life members, having by statute no further dues obligation. (Nonetheless, life members have voluntarily contributed various sums, for the group an annual total of some twelve thousand dollars.) On August 28 our membership numbered 3,033, a loss of 62.
But that diminution in total membership does not tell the entire story. The 651 life members of last December have now become 707, which means a loss of 56 from the category of dues-paying active members. According to our membership database, next January we will be shifting into the new senior member status an additional 49 active members, bringing the total of life and senior members to 756.
Readers may recall that because of this loss of active members to the life member category, we reluctantly passed a bylaws amendment that in January will substitute the senior member category for that of life member. Senior members will have a stepped-down phase-out of dues over a six-year period. We cannot at this time know the fiscal effects of this change; it should result in some increase of dues revenue, but we will learn only next year, when we send our senior members their 1996 dues invoices, of many hardship situations which otherwise would have remained entirely private.
More to the point, we must have new members or “die.” Indeed, if our total membership were to remain absolutely static, with no further attrition, we would still die, because within the total there is an inexorable shift from the active member category of full-rate payers into the senior member category, with its diminished dues.
Inasmuch as psychoanalytic practice pays all of everyone's bills and provides most of the revenue for our association, top priority must be accorded to outreach for practice enhancement and recruitment of new candidates. These twin objectives strongly influence each other. They are not, of course, our only objectives, as we have important investments in educational, scholarly, and scientific pursuits. I speak now only of priorities.
What, then, has this to do with the process, currently under way, of preparing our 1996 budget?
A budget is a quite complex document, summarizing numerous cash flows. Some are current cash flows, such as our usual operating expenses. Some are cash flows of the past, such as our budgetary entries for “depreciation”: we have already spent money to purchase equipment, for example, and we allocate a related sum—a “non-cash expense”—in our budget in order to accumulate the money needed in future for the replacement of equipment that is gradually wearing out. Some are cash flows in the future, such as our allocation for the retirement fund: money that must be set aside in a special fund, to grow with investment and be available in sufficient amount when retirement benefits must at some future time be paid out.
It is the total of all these inputs and outputs that tells us if the budget is balanced, in the black (surplus for saving or investment), or in the red (deficit, allocations in excess of revenues). The fact that our budgetary document reads deficit does not mean that we cannot pay our bills and are going bankrupt. Our budget deficit is not the same as the debit balance in one's credit card account, where “deficit” means specifically money that must be paid out now.
The question then arises as to whether we will decide that our budget must be a “zero-deficit” budget, with or without an included allocation for money to be set aside as a planned surplus—a so-called balanced budget—or will decide that we can live with some deficit provided we can pay our bills in a timely way without drawing on our Capital Fund Account. Unlike the government, we are unable to borrow from banks, except for something like a mortgage on a headquarters building, and therefore need not worry about debt service exhausting our finances. We did, by the way, retire the mortgage on the Central Office in mid-1994.
Clearly, I do not agree with those who consider zero-deficit budgeting the only true path. Like the budget document itself, I regard zero-deficit as simply a worthy aim. In the present season of our association's life, however, I consider it an absolute priority that we redirect our membership census onto a positive, upwardly tilted slope. Without this, we eventually will vanish from the picture altogether—which could occur even with a budget in perfect balance.
This means we must put added muscle into our outreach to psychiatric residents, clinical psychologists, clinical social workers, medical students, and university undergraduates. We
must also monitor legislative moves that would worsen our practice opportunities. If the career of psychoanalytic practitioner is not economically viable, who will commit the time, energy, and money required by the training, no matter how refined our standards?
The Budget and Finance Committee met in October to discuss and revise the budget proposed for 1996. That tentative proposal was significantly out of balance. Then the trimming began. It was only then that we could project concretely the spread of our expenditures. Such a process tells us better than anything what activities we may include as we trim in the direction of—or all the way to—a zero-deficit budget. This will permit us to arrive at a compromise budget allowing the attainment of as many prioritized objectives as possible. Never before in our history have we been able to pursue such a budgetary process. That in itself has a certain inherent excitement, and we are certainly living at an exciting (read “nerve-racking”) time for psychoanalysis.
My best wishes to all. As this parting message may attest, my having shifted my position to the IPA has not altered my interest in the welfare and development of psychoanalysis or in The American's role in that enterprise.