Agenda

1. ASAE Foundation’s Association 990: A Powerful Tool for BenchmarkingJohn N. Dripps, CPANational Association of Secondary School PrincipalsNat Bartholomew, CPACliftonLarsonAllen LLP

2. Agenda • Define benchmarking and trend analyses • Why benchmark (quick summary) • What tools are available (benefits / limitations) • ASAE Foundation’s Association 990 • Identifying key metrics • Utilizing ratio analyses • Case study – NASSP

3. Benchmarking – Internal and External • Internal = Trend Analyses Utilizing historical financial and non-financila information from your organization to spot trends • External = Benchmarking Utilizing financial and non-financial information from peer organizations to evaluate performance, financial condition, etc.

4. Why Benchmark? • To compare like attributes or metrics from similar demographic data samples • To uncover business processes, practices, and strategies • To provide a baseline for performance improvement • To gain best practices • Measure by fact rather than intuition or opinion • Benchmark when you want to … • Make better-informed decisions • Answer the question “how do I compare?” • Take pulse of your financial health • Obtain a single version of the truth

5. Why Benchmark? As a way to share and collaborate, stimulate conversation and reflection, advocate for yourself, and takepulseof environmental trends.

6. What Tools Are Available – Benefits/Limitations • Similar organization Federal Form 990 (public document) • Annual reports or published financials • GuideStar – Lots of information stemming from filed Federal Form 990s • ASAE’s Operating Ratio Report (ORR) or Association 990 • NTEN – IT statistics • NCCS – Operating reserves

7. What is ASAE’s ORR • Compilation of financial data from participating associations • First published in 1953 • Collected via Federal Forms 990 and survey supplements • 660 valid surveys utilized in 13th Edition – 5% more than prior ORR – and 8¼% response rate • Compiled ’07 issued ’08 • Next edition due out 2012!

8. ORR – Respondent Profile • 67% were 501(c)(6) / 28% (c)(3) • 47% reported total gross revenue > $5M • Typical or median organization was $3.8M • Largest concentrations - DC 27% / Chicago 10% / NY 3%

9. Extracting Relevant Data ORR Cuts Data By Several Categories • Total Revenue (Six Tiers) • Membership Type – Trade vs. Professional • IRS Tax Status (c)(6) vs. (c)(3) • Geog. Scope (Int’l/Nat’l or Regional/State/Local) • Metropolitan Area (e.g., DC, NY, etc.) • Industry Sector/Interest Area (e.g., Bus/Industrial, Education, or Healthcare/Medical – Each Separated by Membership Type) ORR Interactive

10. Trend Analyses - Investment Composition(as a percentage of total assets)

11. Trend Analyses – Dues as a Percentage of Revenue (Dues Reliance)

12. ASAE Foundation’s “Association 990”

13. ASAE Foundation’s “Association 990” • Federal Form 990 – core form only • 18,952 ’08, 19,693 ‘09 and 23,339 ‘10 990s thus far • Functionality allows data sorts on the year and … • 501(c) class (9 choices) • Number of employees (6 tiers) • Total revenue (8 tiers) and total expense (8 tiers) • Membership revenue (8 tiers) • Investment asset balance (8 tiers) • Unrelated business income (7 tiers) • Accounting method (accrual, cash or other) • ASAE member (yes/no) • State (52, includes DC and PR) • Metropolitan area (36 different areas)

14. ASAE Foundation’s “Association 990”Suite of Tools • Association 990 - Key Ratios • Predefined reports – key ratios, revenue and expense detail, and balance sheet detail • Generated online • Sort functionality enumerated on the prior slide • Ability to export to Excel, Word or Adobe • Ability to print PDF copies of any Assn’s 990 • Association 990 - Agenda Items • Drawn from the aggregate data, these slides (PDF and PPT) provide comparative data on policy, procedure and certain organizational measures

15. Example Queries - Various

16. Example Queries – Number of Employees

17. Example Queries – Size (Revenue)

18. Best “Average” Measure Median – ½ respondents above; ½ below Mean – sum of all cases / total # of respondents Median is a better measure for average when the upper limit is theoretically infinite (e.g., number of members in reporting associations, annual budget for reporting associations), as the mean can be strongly affected by very high values. 2010 # Employees (Mean = 79.8 / Median = 9.0) 2010 Total Rev. (Mean = $3.5M / Median = $563K)

19. Compensation GeographicallyMedian / Mean (Total Revenue >/= $1M)

20. Dues / Total Revenue = Dues Reliance

21. 2010 Average Compensation Geographically

22. 2010 Average Benefits by Size(based upon total revenue)

23. 2010 Average Pension and Benefits by Size (based upon total revenue)

24. Median Number of FTEs (Full-Time Employees)

25. 2010 Revenue Growth(expressed as a percentage of revenue)

26. Unrelated Business Income – 2008/09/10

27. Unrelated Business Income – 2008/09/10

28. 2010 Investments as a % of Total Assets

29. After Login – 1St Page – Association 990

30. Building Your Report

31. Selecting One or More Categories

32. Generate the Report

33. Four Tabs

34. Tab 1 - Key Performance Ratios

35. Exporting to Excel

36. Tab 2 – Revenue and Expense

37. Tab 3 – Balance Sheet

38. Tab 4 – Ratio Definitions

39. Horizon Upgrades Contemplated • Access to filed Federal Forms 990, similar to GuideStar • Quartile results • Association segments by industry/interest area (e.g., business/industrial, education, healthcare/medical, etc.) • Ability to create comparison groups • Drill-down functionality • Slide generator • Trend analyses functionality when multiple years of data are available • Addition of Federal Form 990 Schedules to the database (e.g., Schedule J)

40. Identification of Critical Indicators(Key Metrics) • Financial Metrics • Non-Financial Metrics

41. What Are Your Key Financial Metrics Total Contributions / Total Unrestricted Contributions Investment Income Total Membership Dues / Non-Dues Revenue Unrelated Business Income Exposition $ Certification $ Publication $ For-Profit Subsidiary Dividends

42. What Are Your Key Non-Financial Metrics Number of Donors Number of Members Number of CE Hours Delivered Number of Attendees Number of Clients Served Number of Certificants

43. Basic Ratios • Current = Current Assets (CA) / Cur. Liabilities • Quick = CA Less Inventory / Current Liabilities • Leverage = Total Liabilities / Total Net Assets • Dues Reliance = Member Dues / Total Revenue • Inventory Turnover = Sales / Inventory • Avg. Collection Pd. = AR / Sales Per Day • ROI = Income / Avg. Investment Balance

44. The NASSP Story Using Financial Metrics - Information is Power

45. National Association of Secondary School Principals • 25,000 individual members • 97 staff (92 FTE) • $23M budget • 501(c)(3) • Student programs serve over 30,000 schools and more than 1 million students • Own HQ building w/35,000+ sq. ft. – Reston, VA

46. National Association of Secondary School PrincipalsMulti-Year Financial Ratio ComparisonJune 30, 2010 Ratio Dashboard

47. National AssociationofSecondary School Principals 2010

48. Statement of Financial PositionLiabilities and Net Assets Total Liabilities Total Net Assets

49. Current Ratio Total Liabilities -- $11,713,093 2.10 Total Net Assets – $5,582,436 Displays on the Dashboard

50. National Association of Secondary School PrincipalsMulti-Year Financial Ratio ComparisonJune 30, 2010 Debt to Equity