The Foreign Service Journal, March 2017

62 MARCH 2017 | 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 Funds are restricted and can only be used for scholar- ships, with a certain percentage of gains withdrawn each year to fund our Scholarship program.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.