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In my third report as treasurer, the news is mixed—OAH had a difficult year financially, but there are some bright spots as well as problems. My report is drawn from the annual accountants’ report, which includes an audit, and from a less formal summary prepared by the OAH business manager. The accountants’ report is prepared by the CPA firm of BKD LLP.
Total Assets
The accountants’ report indicates total assets at the end of the 2004 fiscal year of $2,227,457, as compared to $2,826,210 the year before, a decline of just under $600,000. Of the current assets, the largest single category consists of investments, worth $1,759,604. The next largest categories are operating cash, $263,669; receivables, $132,089; and property and equipment, $35,216, net of depreciation and amortization.
Revenue
Total revenue was up from $2,782,468 to $2,818,037. Figure 1 indicates revenue by type. Our largest source of income continues to be dues, which totaled $978,690, a small decrease over 2004, although institutional dues were actually up for the first time in several years, reflecting efforts to bring back former institutional members and also a significant increase in individual members. Another significant increase in revenue came from development activities. Advertising revenues were up for the first time in several years. Nearly all other revenue categories showed small increases over last year except for investment income.
Expenditures
Total expenditures were up significantly, from $2,739,818 to $3,289,888. The major categories of expenditures are shown in figure 2.
We had a number of unanticipated expenses in 2005, including the continuing conversion to a new data-management system that began last year. The cost of the annual meeting, however, was the most significant departure from our planned budget, and was due to the decision to move the annual meeting from San Francisco to San José. Another significant increase in expenses was for the OAH Magazine of History, which increased the number of issues this past year and also staff expenses; this increased expense was anticipated and was partially offset by increased revenues.
The Bottom Line: Fiscal Year 2004-2005
The accountants’ reports show the following revenue and expenses for the past three fiscal years (table 1). Nearly three-quarters of this past year’s deficit is due to the increased cost of the annual meeting. The cost of meetings in 2004 was $317,924; in 2005, it was $634,002. This difference reflects some late bills for the 2004 OAH Southern Regional Meeting in Atlanta but is due largely to expenses associated with the change of location in the 2005 annual meeting. There were also other, less dramatic, unanticipated expenses, and some anticipated revenues that failed to materialize.
Endowment Fund and Investments
The accountants’ report shows the following net assets for our endowment fund, the Fund for American History, and the prize fund (table 2). The reduction in the Endowment Fund reflects a decision by the executive board to pay the annual deficit from that fund. However, the finance committee has also been disappointed in the performance of these funds over the past few years, and investigated other fund-management possibilities. In consequence, our investments have recently been transferred to the Indiana University Foundation, where we anticipate a better rate of return in the future.
Audit Recommendations
Previous accountants’ reports have recommended changes in procedures for bookkeeping and handling cash, all of which have been implemented. Of these, one of the most significant was to convert to the accrual method of accounting. This year’s report recommends that all budgeting now be converted to the accrual approach, that there be monthly reports to the Finance Committee and quarterly comparisons of budgeted expenditures and actual expenditures, with an explanation of variations. Some of these recommendations are already being implemented, and others are subject to further discussion among the executive director, the treasurer, the staff, and the budget-finance committee.
Outlook for Fiscal Year 2006
Despite the significant costs incurred by the organization as a consequence of moving the annual meeting on short notice and other unanticipated expenses, there is some reason for guarded optimism in the year ahead. Because we have recently moved our investments to IU Foundation, we now anticipate a somewhat better return. Advertising revenues are up somewhat. Membership is up and we now have more individual members than ever in the history of the organization. The development effort has been successful in increasing contributions. We anticipate no further unusual expenses on the order of those we experienced in 2005.
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