Acronym

I'm sure everyone is breathlessly awaiting tomorrow's Chicago vs. DC quiz, (well everyone in the two largest association hubs in the U.S.) in this series of posts from ASAE's 990 Key Ratios database. Today, there's not particular theme, just me playing around in the tool and finding some things I thought were interesting. Good luck on the quiz--I'll post answers tomorrow morning. If people take some guesses in the comments, I'll come up with a fantabulous prize to the person who does the best or is most entertaining.

1. When ranked by per capita income, Connecticut is the richest state; Mississippi is the poorest. Looking at all data we have for each state from the 2009 tax years (217 for CT, 106 for MS), the associations in Connecticut are on balance larger, averaging 27 employees and just over $2 million in revenue, compared to 28 employees and $1.9 million for Mississippi. So which state averages higher compensation costs per employee?

ANSWER: The obvious answer would be Connecticut, so of course the answer is Mississippi.

In the next four questions, choose either c(3) or c(6) as in the tax status of the association. Quick reference tip, most charities are c(3), but in the association world many of the education-based and scientific-based organizations also receive that designation. Most other professional societies and just about all trade associations are c(6). To control for size, I limited my search to $1 to $5 million.

2. Which group is more profitable?

ANSWER: The infamous tie, but I'd give it to you if you said c(3). Here's how the numbers break down, with profitability being revenue divided by expenses (I'm giving median and average respectively): c(3)s - 1.3 and 1.7; c(6)s 1.2 and 0.8. It's a little surprising to me, because most people in the association world assume trade associations are more profitable than professional societies--though remember plenty of professional societies are in the c(6) category. It's hard to ascribe a lot of meaning to this number by itself. It could mean that professional societies in the c(3) category are more profitable than those in the c(6) category, or that the other main element in the c(3) category, charities (remember only ones which collect membership dues would be included in this research) are more profitable--but I admit it's hard to know why that would be the case. My guess would be that trades are hit harder than individual membership organizations (IMOs) by economic downturns, and this number reflects that. It will take a couple more years worth of data to test that theory.

3. Which group has a higher current ratio? (What's a current ratio? See Question 4 from yesterday.)

ANSWER: If you knew the answer to question 2, you could probably answer this one, too (if you knew what the hell a current ratio was); it's c(3)--5.5 compared to 3.0. Both are healthy numbers.

4. An easy one: Which group depends more on dues?

ANSWER: Of course it's the trades in the c(6) category that are the difference maker. When comparing trades and individual membership organizations, trades generally place more emphasis on advocacy and public awareness--things that take the collective dues assessment to pay for. The IMOs place relatively more emphasis on knowledge attainment and sharing, which often have fees in addition to dues associated with them. So it's an obvious answer, but I never would have guessed how big the difference is. For c(6) associations, 46 percent of revenue is from dues; for their c(3) counterparts it's only 7.9 percent.

5. Which group has more revenue per employee?

ANSWER: Interestingly, even though c(3)s are more profitable (at least in the 2009 tax year) and have a better current ratio, it's the c(6)s that are more efficient with their staffing--strikingly so. The c(6) category gets $172,000 per employee while the c(3) category earns just $74,000 per employee.

And today's last question for all you HR people:

6. In looking at all data from the 2009 tax year--all sizes, all types of associations--what percent of total compensation costs are paid as benefits (at least as reported on the Form 990)?

A. 7.5%
B. 16.4%
C. 21.0%

ANSWER: It's A - 7.5 percent. Yeah, that sounds low to me, too. Could be how stuff is being reported on the 990, or perhaps it's a fairly accurate figure. It would take digging into some individual 990s compared to an association's actual financials to tell for sure.