The American College of Healthcare Executives closed 2006 with a loss from operations, despite membership gains, after the Chicago-based professional group overhauled its dues structure.
Revenue from the colleges dues fell slightly from 2005, by 2%, but those funds account for a large chunkmore than 80%of its operating revenue, according to the organizations Internal Revenue Service Form 990.
Last years decline, to $6.6 million, stemmed from revamped dues for members in their first five years, said Thomas Dolan, the colleges president and chief executive officer. The overhaul, which reduced dues by roughly 12% to 30% depending on a members tenure, is one of a few recent strategic changes to the colleges organization and operations. Dues revenue is expected to take another hit going forward as the association bolsters its local chapters with dues rebates, he said.
But the dip in dues revenue last year did not land the college in the red. Investment returns buoyed its bottom line to give the not-for-profit a healthy 14% profit margin on revenue of $9.2 million. The ACHEs investment revenue grew 13% compared with 2005 to $1.3 million. That contributed to net revenue, after operating losses of $1.25 million for 2006. Operating gains and losses do not include nonoperating revenue, such as investments.
Expenses rose slightly faster in 2006 than the prior year, climbing 5% to $8 million. In 2005, expenses rose 2% to $7.6 million.
And the Foundation of the American College of Healthcare Executiveswhich shares the ACHEs CEO and governing boardreported a 60% spike in net income to
$3.9 million from $2.4 million a year earlier on fast-growing revenue.
The foundation, which operates the colleges educational services, saw revenue rise 17% to $15.1 million for 2006. Soaring investment returns and healthy operations fueled the strong performance. The foundations investment revenue skyrocketed 57% to $1.9 million. Its revenue off operations climbed 14% to $7.2 million, while its expenses grew 7% to $11.2 million. Combined, the college and foundation reported a profit of $5.2 million on revenue of $24.3 million.
Dolan said the organizations combined strength allowed the college to reduce dues for early career professionals. We wanted to make it more attractive, he said. But the organization also ended its policy of waiving dues for new graduates in their first year as working professionals, which contributed to sluggish membership growth in 2006, Dolan said.
Membership grew roughly 1% in 2006 compared with an average of 5% in recent years, he said. We know thats the reason, he said. Controversial changes to the colleges credentials, instituted Jan. 1, did not affect 2006 dues revenue, he said.
The college eliminated one of two credentials in January in a bid to end confusion created by a two-tiered certification and set a single standard for executives professional acumen (Aug. 20, p. 6). Eligibility for the remaining certification, a college fellow, changed under the new strategy, a move that critics said watered down its prestige. Under the new policy, the colleges 2007 class of newly appointed fellows mushroomed.
Dolan said an additional change will further depress dues revenue. By 2009, the college is expected to require dual membership in national and local chapters, a shift that will redistribute national dues revenue to local chapters, he said. Launched in 2004, the ACHE now has 83 local chapters and of those, 68, have signed on to the dual-membership strategy, Dolan said.
Dolans cash compensation fell by 0.5% to $596,475, which he attributed to changing incentive payouts. Dolans total compensation, which includes benefits, climbed 11% to $710,097. The tax form reported no expense account or other allowance payments for Dolan.