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Recently our Executive Committee asked that we draft pro forma budgets not only for 2010 but also 2011 (our fiscal year is the calendar year). They requested that we devise two different scenarios for the two-year time period: one being an optimistic case where we envisioned membership would recover almost to where we were in 2008 by 2011 (our membership took over a 15% hit this year) and meeting attendance would climb back to near “normal” levels by then; and the second being a pessimistic scenario in which membership and meeting attendance remains rather dismal.

(Note: Our association has returned positive returns for each of the past 7 years with a forecasted loss for 2009 forecasted to be at about 5% of operating budget.)

This exercise forced us to think through the ramifications across all our programs and services and showed us what the net impact to Cash Flow and subsequent Reserve Balances would be under the two scenarios (not surprisingly, under the Pessimistic Scenario we projected operating losses for both years, whereas under the Optimistic Scenario a nominal loss next year and then a profit in 2011).

While it is very challenging to project membership and meeting attendance particularly in “unusual” times such as these, the exercise was beneficial in several ways:

a. It gets the news out in front of the board well in advance and gets them thinking about the “what if” scenarios and plausible implications to our budget

b. It forces them think through what level of operating losses they can live with and whether additional cuts might be warranted (we provided additional cuts which might be considered, some of which would affect some of our programs & services)

c. It also opens up dialogue with the board to think strategically about which legacy programs can in fact be disbanded, and offers an opportunity to engage in a frank discussion about new sources of non-dues revenue as well as ways to re-invigorate membership recruitment.

Has anyone been through similar exercises with their boards?