ARPA (SA) Inc ARPA ACTIVE OVER 50s FINANCIAL FORUM: 14 MARCH 2019

Transcription

1 ARPA (SA) Inc ARPA ACTIVE OVER 50s For brevity, ARPA Active Over 50s is referred to throughout this document as ARPA. 1 Background This forum addresses the following motion passed at the 2018 Annual General Meeting in October 2018: ARPA Council will organise and publicise a Forum open to all ARPA groups The Forum will be held in the first 2 weeks of March The Forum will focus on the financial situation and viability of ARPA (SA) Inc. ARPA Council will bring and present to the Forum a written report detailing: progress on addressing and resolving the financial issues plans to bring the annual operating budget into surplus and ensure the financial viability of ARPA (SA) Inc. plans to manage the current investments so they provide the best return to ARPA (SA) Inc. 2 What is ARPA? ARPA is the parent body under which all ARPA Regional and Activity Groups operate. To join a Group an individual must be a member of ARPA; he/she is entitled to be a member of multiple groups. Table of the number of members and Groups during the last six years MEMBERS Regional Groups * Activity Groups * TOTAL GROUPS * *Not available. Total membership has gradually declined in recent years, partly because the number of Regional Groups has decreased by a third. New members tend to join Activity Groups. About 200 (8% of the total) are life members, most of whom joined in the 1990s, paying five times the annual fee at the time. Although they have paid no fees for over 20 years, many are active in Regional or Activity Groups, including some who are on committees. 3 Financial position Throughout most of its existence ARPA has operated at a loss.

2 Table of income, expenses and deficit for the last six financial years ($) YEAR TOTAL INCOME 92,734 93,494 99,129 96,553 92,680 89,574 TOTAL EXPENSES 116, , , , , ,202 DEFICIT 23,556 36,575 23,915 34,072 36,032 51,628 Table showing breakdown of income ($) YEAR Interest 12,440 15,595 14,063 13,944 12,705 7,854 Lottery 12,693 11,191 10,930 8,340 9,811 10,178 Membership 49,507 50,062 55,011 55,948 54,893 55,367 Miscellaneous* 18,094 16,646 19,125 18,321 15,271 16,175 TOTAL INCOME 92,734 93,494 99,129 96,553 92,680 89,574 *Miscellaneous income: donations, sponsorship, advertising, group office costs (e.g. rooms, photocopying). Interest income has almost halved since owing to low interest rates, but more importantly owing to the erosion of assets caused by annual deficits. Money was invested ten years ago according to advice at the time, but there was no annual review, resulting in overall weak performance. Table showing breakdown of principal expenditure items ($) YEAR Insurance 10,018 10,856 8,089 8,375 8,457 7,919 Newsletter production, postage 14,307 15,290 17,287 18,025 19,148 21,305 Other postage 3,255 2,785 3,729 5,424 2,755 2,953 Rent 23,162 23,621 23,621 23,621 25,286 37,076 Salary + on costs 35,008 35,633 37,002 37,018 37,700 36,710 Publicity/promotion 7,796 7,803 6,076 5,939 5,799 3,724 Miscellaneous* 22,743 34,081 27,240 32,224 29,567 34,392 TOTAL EXPENSES 116, , , , , ,202 *Miscellaneous expenses include electricity, telephone, bank charges, audit, lottery administration, name badges, stationery, photocopy rental and copies. Rent was static until the move to our new premises in 2017 resulted in a substantial increase, causing it to become the largest single expense in Newsletter costs have increased gradually owing to higher postage costs. Publicity and promotion have steadily declined, owing to changes in technology and a review of where the promotion $ is spent. The reduction in the cost of insurance is an important gain, courtesy of a good claims record and better marketing of the risk. This sequence of deficit budgets has resulted in a reduction in net assets between 2013 and 2018: 2

3 YEAR ASSETS less LIABILITIES ($) 344, , , , , ,529 The picture is clear. The current trend of increasing deficit budgets cannot continue. The projected deficit for is $42,700; at this level ARPA would be unviable in less than 3 years. 4 How is Council addressing this issue? Council has already implemented a number of changes that will reduce the projected deficit for the current financial year of Further changes could be made. Council would value members input into prioritising and implementing these. 4A Budgetary changes to date INCOME Membership fees There was a fee increase last September, but annual membership is still equivalent to less than $1 per week. The cost of 3-year membership was increased substantially to bring it back into equilibrium with annual membership fees. The impact on the budget will take time to become evident. At the end of February 2019 total membership income for the first 8 months of the financial year was $38,640, compared to $35,517 on 28 February The trend away from 3-year memberships means that an estimated of $7,500 can be removed from the liability of advance paid membership on the balance sheet. Investments Financial advice has recently been sought by approaching companies known to members of ARPA Council. EXPENDITURE Rent Last October Council negotiated a reduction of almost 33% in the rent ($1,387 per month), relating to the large meeting room. In the short term use of this room continues. In the longer term the reduced rent will continue, although the large room may no longer be available. The saving for the budget is $9,381, i.e. approximately $16,649 for a full year. Salary Accrued annual and long-service leave are a major liability; provision has always been made in the budget. To reduce this liability the Administrative Officer (AO) took additional leave last September and the office was closed for an extended period over Christmas and New Year. Additionally, the AO will take every Friday as leave throughout While this will have no impact on the AO s income, it reduces ARPA s liability for annual and long-service leave (about $4,500 to June 2019, $8,000 in a full year). Newsletter Last year an electronic version of the bi-monthly newsletter became available. This version became the default for all members who had provided an address (approximately 40% of members), 3

4 although they could opt to receive a hard copy at no cost to them. This change has resulted in about half the newsletters now being sent electronically. Whereas this has reduced the print run, the impact on the overall printing cost is limited, because the printer s major cost item is setting-up. However, savings are being made on postage costs, now $1 per copy. In September 2018 it was also agreed to reduce the number of issues from 6 to 5. The cost saving of this was factored into the budget at that time. Thus the predicted newsletter cost for is lower than that for , but there is a further saving against budget of approximately $1350, principally owing to reduced postage. Promotion This was reviewed in mid-late Multiple entries in Yellow Pages (electronic and hard-copy) were reduced, a paid advertisement in the Seniors Directory was cancelled (we also have a free entry), as was the promotion in AFL News. A trial of a targeted Facebook promotion was ceased in December. We retain the web page, Facebook and a paid advertisement in SA Senior every month. Opportunistic activities are utilised (e.g. the opening of the Bushwalking season, the Ageing and Lifestyle Expo at Wayville, Infin8Care fete at Christies Beach). Ron Capel was interviewed by David Bevan in the ABC Radio Adelaide program on 20 February for 5-10 minutes, leading to numerous telephone enquiries and the ARPA website being jammed on account of being visited by so many members of the public. The saving against budget from the Facebook trial is $525. The web and Facebook pages are now the principal interface with the general public. Based on changes made to date, the overall expected reduction in expenditure against budget is approximately $15,121, reducing the deficit to $22,507. This remains well below the target of a balanced budget and is unsustainable. What more can be done? 4B Intended and potential actions INCOME Membership It will take a few years for the full impact of the increased fees to become apparent. Meanwhile the actual number of members may decline in line with recent trends. Every year members are lost owing to changes in personal circumstances, loss of interest, ill health or death, and competing facilities (e.g. retirement villages). New members are continually joining. Increased membership will increase income, but how might this be done? Most new members hear of ARPA via word of mouth. Apart from this, what would you do? (1) A membership drive? (2) Paid advertising? (3) Increased membership benefits to make it more attractive? (4) Request life members to make a contribution, pay the annual membership fee or pay for receipt of the hard copy of the newsletter? Council intends to increase the membership fee annually by at least CPI. This measure will ensure that income keeps abreast of increasing costs. Room Hire Council wants to increase the usage of Leigh Street rooms by member groups and outside organisations. How might this be done? 4

5 The fee for use of our rooms will increase and be reviewed annually. Newsletter We should actively seek sponsors and businesses to advertise in the newsletter. Lottery Maximise sale of books provided (currently approximately 800 tickets are bought by ARPA). EXPENDITURE Life members Conduct an annual audit of life members to determine their continued participation. Newsletter Reduce the number of hard copies, to reduce printing costs (minimally) and postage, by: actively seeking s from those who have not provided their address (e.g. telephoning); 85% of new members have an . making the electronic version the default for all members unless otherwise advised, i.e. those receiving the hard copy at present will be advised that to continue receiving it they must notify the office of their wish to do so (this may eliminate those who do not read it). They may provide an for the electronic version. charging life members to receive a hard copy (30% receive it electronically). charging any member to receive a hard copy. Salary Continue reduction of leave liability throughout 2019 and into Additional 2 weeks mid-2019, plus extended closure December to January 2020 and one day per week as required through Review office workload and duties of paid and volunteer staff to determine required hours. Conduct a time and activity study. Miscellaneous Review office procedures to minimise waste (e.g. unnecessary printing, for renewals). Ensure cost recovery on all services provided to groups by ARPA office. Rent Find alternative premises at a lower rent. The implications of an office in a less convenient location would need to be considered carefully. 5

6 5 What can individual members do? Switch to the electronic newsletter Introduce new members Use on-line banking, direct deposit Make a donation Include in your will a bequest to ARPA Active Over 50s Join the SA Pensioners Funeral Fund Sell People s Choice lottery tickets Volunteer 6 What will Council continue to do Monitor changes in membership, income and expenditure Seek opportunities to promote ARPA Find ways to reduce costs and increase income 7 Modelling future years The following assumptions were made: 2000 paying members (which excludes Life Members), 64% single, 36% joint 60% pay an annual fee 40% a 3-year membership (Numbers per year increase as 3-year membership falls due) Membership fee does not change. This is for the purposes of modelling only. Costs increase 3% annually, small increase room rent Current changes remain (reduced rented space, AO leave) YEAR 2018/ / /21 MEMBER NUMBERS Singles 937 1,106 1,275 Joint Life TOTAL MEMBERSHIP FEES $ $ $ Single 1 yr Joint 1 yr

7 Budgeted Change from Budget Forward Estimate Forward Estimate YEAR 2018/ / / /21 INCOME $ $ $ $ Membership Fees 63,731 75,190 86,649 Interest 4,036 4,036 4,036 Donations Lottery Income 10,000 10,000 10,000 Room Hire 2,725 2,800 2,850 Sponsorships 2,000 2,000 2,000 Sundry Income 2,800 2,800 2,800 Total Income 86,942 98, ,985 Change from Budget EXPENDITURE $ $ $ $ Insurance 7,919 8,157 8,401 Newsletter Costs 13,660 (1,350) 11,410 11,410 Postage 3,260 3,260 3,260 Publicity & Promotion 2,042 2,042 2,042 Rent 37,904 (12,486) 25,797 26,571 Salary + on costs 41,722 (4,500) 37,222 39,472 Miscellaneous 18,066 18,608 19,166 Total Expenditure 124,570 (Budget) 109,449 (Actual) 106, ,322 DEFICIT 42,700 22,507 8, Reduction of advance fee liability 7,500 7,500 NET FINANCIAL ASSET BALANCE END OF YEAR 117,738 (Budget) 140,359 (Actual) 144, ,965 Further savings are possible through greater use of for newsletters and renewal, not sending repeated renewal reminders by post, removing those disinterested in the newsletter (an opt-in policy). Some costs will increase in the next 2 years but the membership fee can also be increased to account for that (based on CPI). 8 SA Pensioners Association Funeral Fund As part of the ARPA Council efforts to improve membership value we have negotiated with the SA Pensioners Association for ARPA members to join the Funeral Fund. This gives ARPA members the opportunity to purchase a Funeral Bond to go towards the costs of their funeral. 7

8 The bond is not an insurance policy nor linked to any prepaid funeral or particular Funeral Director. Money invested in the bond is not counted as assets by CentreLink (up to $12,500). In addition CentreLink do not consider the interest. In 2017/18 the fund earnt 4.84%. Money paid into bond can only be paid out upon the member s death. ARPA can only provide advice of a general nature and we urge members to obtain professional advice before investing. ARPA do get a commission on all monies invested in the fund (but not on earnings). A good way to help ARPA and yourself. More details from the ARPA Office. FinaceForumRev