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Association vs. foundation--disagreements aren't uncommon.

Early in the movie version of "Beckett," Peter O'Toole, as Henry II, lectures a group of his nobles on what taxes are to be collected. Finally, one ventures, "This was never an issue in your grandfather's time," and Henry thunders, "MY GRANDFATHER WAS NEVER THIS POOR."

This may be the background of the current squabble between the Newsletter & Electronic Publishers Association and the Foundation boards of directors over whether the association should charge the foundation an administrative fee for the various staff services it has always provided gratis (NL/NL 6/16/04).

The NL/NL article reports that some NEPA board members "expressed dissatisfaction with the activities of the foundation."

It's easy to see both sides. The foundation board believes its programs "strengthen and complement the role of NEPA," and the NEPA board thinks "times have been tough the past several years, we've had to tighten our belts and make cutbacks, but they're sitting on a pile of money."

Fact of association life: Boards change. The 2004 NEPA board of directors is not bound by decisions may years ago by previous boards.

In the beginning ...

I was at the association when the foundation was established some 20+ years ago. It's common for trade associations to have a related foundation.

The foundation:

* Can tap the members, especially the larger ones, for funds beyond dues and conference fees

* Do things some of the association membership might not feel is an appropriate use of the dues dollars (i.e., give scholarships to college students)

* Can help underwrite the administrative costs of the association by paying a management fee from its funds to defray the cost of operating foundation programs.

From the beginning, the newsletter association board decided to pass on #3 (despite my perhaps cynical comment that it was a main reason many associations have a foundation). In early days the foundation had little money and the association even paid for the printing and postage for foundation fundraising efforts.

Anyway, over the years the newsletter foundation has steadily expanded its activities. It took over the annual journalism awards program some years back (which had been a minor profit center for the association). So it must take an increasing amount of NEPA staff time for its administration.

I don't have the financial statements in front of me, but the $28,000 fee quoted in these pages is considerably less than 10 percent of NEPA staff budget and probably is still an underestimate of the "true costs" of running the foundation.

I don't know how this will wind up. Since it is what I wanted to begin doing nearly 20 years, I'd have to say the administrative fee seems equitable.

Another example

Along the way, I was also a volunteer for the United States Figure Skating Association, doing fundraising for its foundation. Like NEPA, the USFSA foundation had a separate (if sometimes overlapping) board of directors. Under the longtime leadership of a wealthy retired Rochester businessman, who didn't dip into capital, the foundation came to have several million dollars in the bank.

There were sometimes unpleasant squabbles over who controlled those funds and for what purposes they could be used. But the foundation did pay all the direct costs of its fundraising activities and the costs of a staff member at headquarters who did its administrative work.

Later, when that position wasn't filled, the foundation paid an annual administrative fee to the association for its staff services--similar to what is now being proposed in the newsletter industry.

That fee was dropped a few years ago, but it should be noted that USFSA was then several years into a long-term $100 million contract with ABC for TV rights. The board probably figured it could be generous enough to stop niggling the foundation for "fees."

But, who knows? TV ratings are down for skating. The next TV contract may well be much less remunerative and the USFSA could, once again, think about charging the foundation for the services it provides to it.
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Author:Goss, Fred
Publication:The Newsletter on Newsletters
Date:Jul 22, 2004
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