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62

MARCH 2017

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THE FOREIGN SERVICE JOURNAL

AFSA NEWS

AFSATreasurer’s 2016 Report:

Poised to Take Advantage of New Opportunities

I am pleased to report that the American Foreign Service Asso-

ciation is in excellent financial health. As we advance our work

in 2017, our strong financial position allows us to take advan-

tage of new opportunities while also responding to serious chal-

lenges to our core mission as the “Voice of the Foreign Service.”

This report provides a financial overview and describes

innovative initiatives included in the 2017 budget process

to enhance our fundraising, communication and outreach

programs to garner greater public awareness and support

for the Foreign Service.

Over the course of 2016 we expanded our very strong

membership base while initiating a process to strategically

realign resources to advance the overarching strategic vision

established by our president, Ambassador Barbara Stephen-

son, and the Governing Board.

We ended 2016 with 16,571 members, up from 16,446 in

2015. This represents 78 percent of our potential member-

ship in terms of eligible members of the Foreign Service from

the various foreign affairs agencies. As a result of our strong

membership base, we are able to sustain a staff of 32 profes-

sionals supported by an operating budget of $4.5 million.

Flexibility and Heightened Security

To protect our organization from unforeseen risks, we

maintain a reserve fund of $2.9 million that is dedicated to

the protection of obligations assumed in our operating bud-

get together with unanticipated capital maintenance expen-

ditures. Industry best practice for a union or professional

association like AFSA is to maintain an amount roughly equal

to six months of operating expenses in reserve. In our case,

we allocate a slightly higher amount because we also seek to

shelter our investments from market turbulence.

Our Scholarship Fund, a 501(c)(3) entity, currently totals $8

million. Funds are restricted and can only be used for scholar-

ships, with a certain percentage of gains withdrawn each year

to fund our Scholarship program. Last year AFSA disbursed

$253,500 in 156 scholarships awarded to 89 students.

Finally, in terms of our balance sheet, we own our head-

quarters building at 21st and E Street debt-free.

Combined, this level of reserves and real estate ownership

provide AFSA with a substantial benefit. For example, when

AFSA renovated its headquarters a decade ago, it was able

to reduce costs by utilizing funds from the operating reserve

and also by taking out a loan from the Scholarship Fund.

Late last year we were able to pay off this loan.

By paying off this below-market loan two years early, we

carved out important new room for priority activities in our

operating budget over the last quarter of 2016 that can con-

tinue to be funded on an annual basis starting in 2017.

These achievements are important in that they allow us to

dedicate more money to priority activities while minimizing

costs to our membership; dues were not increased in 2016

and were only increased by 1.5 percent in 2017.

The diversity and depth of our assets provide AFSA with

enormous flexibility and heightened security in these uncer-

tain financial and political times.

A Significant Decision for Future Growth

The most significant decision with regard to finances

taken for 2017, however, was the creation for the first time of

separate operating budgets for our two 501(3)(c) entities; the

aforementioned Scholarship Fund and the Fund for American

Diplomacy.

No additional resources were allocated for the Scholarship

Fund, but the Governing Board established an independent

budget for the program for the first time. The fund now has

important new transparency as to income and expenses, as

well as insight into the management of the various scholar-

ships granted annually. This year, with the help of outside

experts, AFSA will be identifying and implementing estab-

lished best practices for scholarship funds like ours. The aim

is to enhance the efficiency and quality of how we run this

program, which is greatly valued by our members.

The Fund for American Diplomacy (known as the FAD)

was established on Oct. 22, 1954, as an arm of AFSA to

educate the public on the role of American diplomacy and

engage in consistent and wide-ranging public outreach to

further that goal. Despite its creation more than 60 years

ago, the FAD had never been given a budget and distinct

management structure. Addressing those deficiencies has

now made the FAD an ideal vehicle to enhance our revenue

through development efforts both short- and long-term. It

also provides the structure to form strategic partnerships

to advance the cause of heightened public awareness of the

importance of diplomacy, development and the U.S. Foreign

Service. As a result, member dues can be directed mainly to

core activities such as labor-management and services for

members.