New Toastmasters members do not understand where most of their dues go and why their club is often short on cash.
About 70% to 80% of a Toastmaster's dues goes to the International HQ, not the local club. $90 of a toastmaster's annual dues goes to "HQ" in California.
Toastmasters HQ is not forthcoming about how HQ spends dues. Toastmasters told me they "do not engage in questions on speculation or financial analysis." They only provide the Board of Director's and 990 N forms which are listed below.
( All 501(c) 3 non-profits are exempt from paying income tax. They are required to file what is known as a form 990N. It is due on the fifteen day of the fifth month following the end of the tax year. It is open to public inspection. )
Click on these links for the forms:
Total revenue is fairly constant at roughly $ 34,000,000 annually comprised of:
member dues $ 28,000,000
district conferences 4,600,000 *
annual convention 1,300,000
investment income 631,000
charter fees 209,000 **
grants and contributions 42,000 ( average )
* gross revenue only; P & L for the event is unavailable. The convention contractor alone cost $ 634,000. This does not include the other costs such as convention rental fees, etc.
** new clubs must pay a registration fee
Total employee compensation is trending up from a low of $ 10,100,000 in 2014 to $12,939,000 in 2016. Officers and directors compensation total is flat year-on-year at $ 1,500,000 with a salary range of $ 151,000 ( marketing communications director ) to $ 479,000 for the CEO. Average hours worked is 40. There are numerous other volunteers who do not take out a salary.
Travel expenses average $2,000,000. Toastmasters declined comment on what percentage, if any, is first class or charter.
Cash, savings and money market is trending down from $ 18,256,486 at the end of 2014 to $13,640,731 at the end of 2016. In the board of directors meetings, it is affirmed that all district funds are property of Toastmasters International. It is not clear to me whether district funds are included in these totals.
As with any business, it is prudent to have a rainy day fund. In the Toastmasters board of directors meeting calls it "disaster recovery." While a disaster scenario is difficult to imagine ( even with the HQ in California ) it is prudent to be prepared for an unlikely revenue interruption scenario. It's cliche but true in business - " you don't go broke with cash." Toastmasters has a staff of I T professionals who likely have redundant systems.
With the exception of an investment loss of $ 667,000 in 2016, investment income is fairly steady at $ 2,000,000. The value of investments at the end of 2014 was
$ 50,784,000. At the end of 2016 it was $48,437,000. Investments are managed by professionals at Morgan Stanley. Figures for 2017 will no doubt be encouraging. The figures will be available when the next 990N is filed. Toastmasters usually takes the full two allowable extensions to file.
According to the minutes of the 2017 Board of Director's meeting the goal of the investment portfolio is: "The total return on equity investments is expected to exceed the composite performance of the securities markets by at least 100 basis points, net of investment management fees, over a rolling three- to five year period."
The first ratio any bank looks at for viability is the current, or "acid" ratio defined as current assets to current liabilities. Anything over 2:1 is good. While it is difficult to apply ratio analysis and other conventional metrics such as ROI, ROCE, inventory turns, Z score, etc. to Toastmasters, it is obvious that Toastmasters will survive an unlikely downturn. It is assuring to note that as a 501(c)3 corporation, Toastmasters is not subject to additional tax under IRS section 531. Section 531 applies to C corporations which have accumulations of cash in excess of reasonable needs.
501(c) 3 organizations are also required to have a board of directors meeting like any other business. Here are the minutes of the last two year's meetings:
Finnancial matters are discussed in the BOD meetings. In each meeting, the CEO's were recognized for their excellence and contribution.
Toastmasters members can rest assured their dues are being put to good use and managed prudently. Toastmasters will survive and prosper.