Two sides of a story

A boost in membership dues could not prevent the American College of Healthcare Executives from posting a $1 million loss in 2008, but officials with the Chicago-based not-for-profit say the organization actually was profitable if their closely related foundation is included in the calculations.

Taken together, ACHE and its charitable foundation had a consolidated $1.6 million profit on $23.3 million in revenue, which would amount to a 7% profit margin, according to figures contained in the latest Internal Revenue Service Form 990s. While still running well in the black in 2008, ACHE’s overall profit margin was less than half what was posted in 2007.

Between the two organizations, which file separate Form 990s, total revenue declined by 9% while total expenses increased 2%. Chief Financial Officer Edmund Dietrich said the organizations collected $2.8 million less in realized investment income in 2008, a decline that essentially accounted for the entire drop in revenue in 2008.

Despite those results, ACHE President and CEO Thomas Dolan was upbeat about ACHE’s performance in 2008, and said the IRS forms did not appear to show a complete picture of the organization. Membership dues and seminar fees were both up in 2008, pushing operating revenue up by 9% even though investment losses pushed the ACHE and its foundation to a 9% drop in total revenue for the year.

“We did better in 2008 than we did in 2007,” Dolan said. Last year “was a good year, 2009 is not going to be as good.”

Membership dues bounced back in 2008 after a two-year slide that followed several changes to the membership and payment structure in 2006. Dues were up 8% in 2008, after losses of more than 2% each in 2007 and 2006. ACHE collected $6.9 million in dues in 2008—about 3% more than in 2005, before the changes took effect.

Dolan said the fluctuations in dues collections did not reflect the fact that membership has grown every year since the changes. In 2008, membership grew by nearly 6% and the ACHE ended the year with 37,514 members. Dues from members made up about 29% of the ACHE’s total revenue.

The ACHE and its foundation also took in far less in investment income in 2008. Dietrich said the organizations reported just $545,000 in realized investment income in 2008, an 83% drop from the $3.4 million the year prior.

In 2007, investments accounted for 78% of the year-end profits, while operating revenue accounted for just 22%. Last year, the weak investment returns accounted for only 35% of the total profit, while operating revenue made up the remaining 65%, according to figures from Dietrich, not the 990.

The ACHE’s total compensation spending rose 12%, to $9 million from $8 million. Dolan said payroll spending is unlikely to grow in 2009.

Dolan saw a 1% increase in his $822,236 total compensation in 2008. That figure includes $510,475 in base pay, $153,179 in deferred compensation, and $122,859 in bonuses and various other forms of compensation in 2008, compared with $557,444 in salary and $241,875 in deferred compensation and benefits in 2007.

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