The Dues Debate

November 14, 2017

Most of us would probably like to have dues remain where they are, but then again, most of us would probably prefer to not make a car payment or take a trip to the grocery store. Sadly, during the past decade cost increases have continued to add up while our membership has not. The result is growing expenses and shrinking revenues.

We have and continue to change programs, reduce staff, limit activities and have made hundreds of decisions to manage our expenses. At the same time, we have made investments in efforts to grow revenues. Training and support efforts focus on the skills and techniques to engage new members and donors in Sertoma. CELEBRATE SOUND Don’t Walk in Silence® events have been an effective way to raise new money from new audiences. We have expanded our efforts to grow, and to create new relationships so that we can allow more people and organizations to engage in our mission.

The results, though good, have not been enough to address the growing shortfall in revenue. Until we can build the participation of Sertoma members and engage new people and communities in these activities, we need to build a bridge to the future. That bridge is the proposed dues increase. It will not solve our problem or give us a surplus at any level. It will simply allow us to continue to support and strengthen our members and clubs. It will allow us to continue to work with new people and new communities to build support for Sertoma.

The Board knows it is not enough to just ask the members, the board as individuals and leaders must do their part. So while they are asking you each for an additional $5 a quarter, they have committed to raising $60K in new revenues each a year. That averages out to about $4,000 for each Board member to develop through new people and communities. So the real question in this debate is – do we stop here, separated from our future by a gap in our revenues, or do we build a bridge to our future and assure a second century of Sertoma service?

Club Dues – How to Manage with Other People’s Money

Since the announcement of the proposed dues increase, the biggest concern is the $175 annual increase for clubs. Clearly as a flat rate for clubs of all sizes, this is a concern for clubs with smaller revenues or fewer members. Unlike individual dues, which are the responsibility of the members, club dues should not come from the member’s dues. Club dues should come from the other revenues that the club generates through fundraising or other activities. In effect, you want to pay your club dues with other people’s money – not the members’. Much like costs for insurance, club dues are an expense required to operate. As a public charity, the club can and should raise those funds as a portion of their activities. Make this an opportunity to leverage your fundraising efforts to greater success.  Not only will it cover your club dues, but it will let you give back to your community even more!


29 Comments

  • Ruth Anne Hickerson says:

    Is the flat fee the clubs pay increasing $175 (doubling) in addition to the $5/qtr/member increase? I’m sorry if this was announced earlier, I missed it.

    • Steve Murphy says:

      Yes, that is correct. Part of that decision rest on the fact that a club can pay dues from the funds it raises, as the maintaining the Charter is an essential and required cost to operate as a Sertoma club. This way the increase was not only the responsibility of the individual members directly.

  • Stan Schulz says:

    Does the dues increase have any impact on Life Memberships?

    • Steve Murphy says:

      No, life members are not impacted by the dues increase.

  • Rick Griminger says:

    The question is what do you spend the money on. Can’t you seek grants from Major corporation sponsors?

    • Steve Murphy says:

      The dues paid by the members goes toward the support of our members and operating our charitable programs. This includes everything: all communication efforts, printed and digital (Sertoman, Digest, websites, and email news services), training at the Club Development Workshops, conventions, and all on-line resources, support of the Governors, Board of Directors, FDRs and certified trainers. All the scholarship and granting programs, which include the Affiliates, all the hearing health programs, as well as our fundraising efforts.

      As to corporate support, we do get some. But corporations do not as a practice support operations and/or indirect expenses of charities. They like to support direct costs for programs, such as money for scholarships, or as sponsors for fundraising events.

      A short answer to a question that requires a longer answer, but feel free to contact headquarters for more details on the use of funds.

      Steven Murphy
      Executive Director

  • Patrick Wainscott says:

    I have been a Sertoma member since 1984, and a member of other professional organizations. I understand the cost of doing business has increased, and Sertoma National may need additional money to continue their worthwhile programs; however, I’ve also found that just adding money to an existing problem is not the solution. The problem is and will always be recruiting new members and retaining existing members. The obvious is that more members mean more money. Money allows programs and all the other things that a National organization can provide. My question is: So that we don’t have a similar proposal next year or 2 years, what plans are being discussed regarding recruitment and retention? Do you plan to contact the successful clubs and see what they are doing right, which allows them to grow and prosper? Maybe that information could better be shared among the Sertoma clubs, with the help of National. Maybe some of the money collected could be used for shared advertising costs with the clubs, to help them showcase their sponsorships and promotions in their communities.
    And, maybe the grant money for clubs for Speech & Hearing projects could be reinstated. I’m not against the small increase but I would like it to be used to help Sertoma return to what it was.

    • Steve Murphy says:

      Excellent points. First, there is a targeted program provided through the Club Development Workshops that has an entire focus on how to be more effective in recruiting and retaining members in this century. The techniques and information in that whole day workshop align exactly with those being used not only by growing Sertoma clubs, but all types of organizations. Included in that workshop is how to effectively get out the club’s message. Though advertising is an option, it is not a very effective option. Sertoma and its clubs will never every have the dollars to compete with the amount and level of commercial marketing. The focus of that and other work with the clubs is to help them focus on their own growth. In addition, the Board has taken on the challenge to directly grow Sertoma in new communities through new relationships, so the growth effort is not all focused on the current clubs and members.
      WE still have the grants program for speech and hearing projects. Though no longer a matching grant, they are still only given to organizations recognized as a Sertoma Affiliate. Every club can as in the past identify a community partner and support them as an Affiliate, and access the grant program to support the needs of the Affiliate.

      Steven Murphy
      Executive Director

  • Terry Cuthbertson says:

    For how long have we been in the red?
    When was the board informed about the short fall?
    We were at the last National meeting and nothing was said at that time about any short fall.

    • Steve Murphy says:

      As you may recall, when we have done previous dues increases, we set aside money from each year to help deal with increasing costs (inflation) and the trend in membership loss. So the Board has been well aware that we were rapidly working down that reserve money and when gone we would have a deficit budget. This is the year that we reached that point in our balance of our current and set aside dues from previous years. We had planned to avoid this by growing the use of CELEBRATE SOUND as a means to generate revenues from philanthropy rather than a dues increase. Even the small amount of operating support that comes from that event could have prevented, or greatly reduced the amount of this increase. Sadly, for whatever reasons, the members did not adopt the event, and while similar events have proven to be the largest growth in individual giving in the US during the past 8 years, we missed that opportunity.
      So in hope that we might be able to grow the event, the Board did delay this increase by two years, which pushed us to a much tighter position, than if we had addressed the increase on the five year schedule. The good news is Sertoma has a very strong balance sheet, and if the members pass this increase, it gives us another opportunity to grow the and diversify our revenues to assure another century of Sertoma service.

      Steven Murphy
      Executive Director

  • Jim Weiss says:

    A dues increase is like a tax increase. It costs member more to be a Sertoman. I am not sure the dues increase is justified, but I am willing to be informed. Educate me as to the amount of money currently spent. Show me your past years’ financial statement as well as your budget for the next several years. This will help me to determine if you should increase revenue, or cut costs.

    Perhaps you should evaluate the benefit of all the services you provide. Maybe some services are not needed by local clubs. Other services provided are a continuation of business as usual. Frankly, when I look at what we get from Sertoma Headquarters in terms of what we pay, I am hard pressed to justify the expense. Do you use “zero based budgeting” each year, or do you increase or decrease each budget category based on projected new costs?

    Don’t misunderstand. I like being a member of a national organization with the associated prestige. Which brings me to another continuous agitation – being asked what is Sertoma? I have been a member of Tampa East Sertoma for more than 30 years. Considering the number of clubs in this area, I am amazed at the lack of public recognition of the impact we have on our communities around the nation. I think the number one priority for Headquarters is to build the Sertoma brand. Hire a professional who can help with branding. Make Sertoma a well-recognized national brand. This will not be done overnight, but the long-term benefit is worth the effort to survive. When asked, “What is Sertoma?”, I am embarrassed to answer, “We are a civic club like Rotary, or Kiwanis, or Lions.”

    So, show me your financial reports and budgets, and I will look for cost savings by cutting services which are not necessary, too costly or unaffordable for a smaller organization. As club membership declines, so too should the cost of overhead needed to support members. Increasing dues is like raising taxes during an economic recession – exactly the wrong thing to do.

    Finally, I want to thank you for asking my opinion. I will now wait to see if it really matters to anyone in Kansas City.

    • Steve Murphy says:

      I will see that we send you financial information to review. During the past 15 years as membership declined, we have made continuous cuts to the operation, and made changes to program and service offerings consistent with the needs of the organization. The only programs we have tried not to touch are our scholarships and grants, which are our primary philanthropy as a national charity.
      We have and continue to work on brand awareness, but there are challenges. Unlike the organizations you mention, Sertoma members have always had more autonomy in how or if they present the organization. Clubs, districts, and the regions created logos, marketing phrases and other materials none of it coordinated or consistent with successful strategies to build a national brand. That is not a privilege that was or is allowed with other service clubs. IN addition, even at our height of members, Sertoma was about the size of a district for most of the larger organizations. By shear size alone, those groups are always the known service clubs. We do have professionals working on brand identify, that effort is limited by our size and budget, and focuses on our mission of hearing health.
      I, along our board members, will be happy to discuss these issues at anytime.

      Steve Murphy
      Executive Director

  • John Lambert says:

    Please clarify your apparent suggestion that dues paid by clubs can be funded from exempt-purpose revenues. Our club pays all dues only from our non-exempt purpose operating fund (e.g. from member dues).

    • Steve Murphy says:

      First I need to clarify, that a Sertoma club has no “non-exempt” purpose. As a 501(c)c(3) charity, your funds are all considered exempt, unless you happen to have some unrelated business income expenses, which means you are paying tax on those revenues. All sources of revenues and expenses of a club, be they for management/operations, fundraising or programs are exempt. The issue is from which revenues can a club pay its dues, which are separate from the individual member dues.
      Individual member dues paid to Sertoma are not paid by the club, those are paid by the individual member. The club is collecting and passing those payments on to Sertoma on behalf of the members. Those cannot be paid for by the club. That would be a violation of the use of exempt funds as it would be providing an individual a personal benefit. However, the club can and should pay for its dues from revenues it generates beyond individual member dues, from fundraising or other revenue generation efforts.

      Steven Murphy
      Executive Director

  • mike marshall says:

    the $175 increase should not be levied to SERTEEN clubs or clubs of less than 20 members.

    • Steve Murphy says:

      The Board is very aware that the club dues increase is a larger percentage of budget on smaller clubs. But Sertoma has no way to create a tiered club dues based on club size. That would require the members approving a new membership definition or structure. But the feeling is that passing the cost along to the individual members in the form of a larger individual dues increase was not the best solution. Better to allow the members to generate the funds from other fundraising or other activities. It would seem that even for a small club, most would not see another $175 dollars in fundraising much of a cost for the value a club brings to the community. To note: the dues increase has no impact on a Serteen club.

      Steven Murphy
      Executive Director

  • Mark Crofoot says:

    All the money we raise goes to charity, as it should be.

    • Steve Murphy says:

      There are very few charities that have the ability to cover all management and fundraising costs from revenues other than what they raise. Even many organizations with dues revenue can make that happen. It is expected by the IRS and watchdog groups that money from fundraising does provide support for the underlying costs associated with fundraising and program operation. Which would include volunteer development and recognition. If the members feel they would rather pay the $175 from their funds, that is a choice, but in the end those are also funds the club has raised.

      Steven Murphy
      Executive Director

  • Don Smith says:

    You will be loosing membership my raising the dues. You have to cut back expenses. Let us see your expense sheet and we will help you.

    • Steve Murphy says:

      That is something your Board looks at every year, where and how to balance the expenses and revenues of the organization. That is done in the context of the strategic plan which the Board also develops and approves. During the past 15 years, expenses have been adjusted down to match revenue and membership trends. I am sure any Board member, and clearly the officers would be happy to discuss, as any expense reduction impacts not just how much is spent, but what programs or services are impacted. And some of our increasing costs are not optional, such as the increasing costs for current technology, or the costs for fundraising registering in each state that impact our audit and legal expenses. Expense management was the first stop, not the last before the Board decided to propose a dues increase.

      Steven Murphy
      Executive Director

  • R. F. Luebben says:

    1) Reduce the Board size by eliminating the 3 Director-at-Large positions at the end of their current terms, since the Board has remained at a constant number while the membership has fallen by over 1/3 since 2004;
    2) Request an annual voluntary donation from Life Members “in lieu of dues” in increments of $25 for operational expenses.

    • Steve Murphy says:

      The size of the Board is an issue, but a simple reduction of the 3 at-large members will not address the revenue issue. The Governing documents defines a Region should be at lest 3,000 members, and that means one board position. Based on that we should have three regions, which would mean 3 directors plus the 3 at-large. So, yes we probably have a board that is too large for the size of the organization. But it is a more complex discussion than just drop the 3 at-large. And we have already begun to reduce the amount of revenues members have to provide for the board .
      A committee is looking at if and how we could approach the life members for additional support. That is something I can share more about as that committee reports on its work to the Board.

      Steven Murphy
      Executive Director

  • lowell scott says:

    when I was international director we had thirty two thousand members in Sertoma How many do we have now?

    • Steve Murphy says:

      We are just over 9,000. Sadly a lot has happened in the 35 years since we had 30K members. Beginning with somewhere around 1984 was the last year Sertoma had an net increase in membership. Sadly we are not alone, as all the US based service clubs have struggled since the early 1990’s with declining domestic membership.

      Steven Murphy
      Executive Director

  • lowell says:

    what are we paying the Executive Director??

    • Steve Murphy says:

      That information is available in the Sertoma 990 filing, which can be accessed through the Guidestar website

  • Debra Shelton says:

    Club dues have always been considered an operating expense, which comes from member dues. Yes it CAN be taken from fundraising, but that comes out of the donations available to our charities.
    It is apples and oranges, but our fundraising events that include alcohol sales are no longer covered by the Sertoma insurance. Locally over $20,000 has been diverted away from our charitable giving in additional expense. I do understand better than most why. However, when I was Governor, I was asked “why are we part of Sertoma” My answer was 501C3 status and insurance. Now, it is 501C3 – which is not that hard to get. Our largest two clubs give $10,000 per year in member dues now. Dues increase will not be popular at this time. I also heard that there has been expenditures approved that created deficit spending, which is very troubling.

    • Steve Murphy says:

      This highlights a couple of important issues. First, since club dues were first implemented it has been shared that those funds are a valid expense for a club, and could come from any revenue source including fundraising. At the end of the year, the IRS and watchdog groups look at all revenue and expenses in total and the relationships between management, fundraising and programs. Programs include funds given away by the club, but would also include costs for service projects, and even member training and recognition. It is not apples and oranges, it is how the world evaluates public charities. The concept of an operating fund and a sponsorship fund are holdovers from when club operations and fundraising were conducted under different tax exemptions.
      As to the value or benefits of membership as related to the insurance issues. One of the values of membership is a shared risk pool, and for the majority of clubs a great value on insurance. Yes we have a handful of clubs who have developed wonderful events and activities that have expanded beyond the coverage available. But the coverage is designed to meet the needs of the majority, and it does. You cannot expect the members to support a far more expensive policy with limits only utilized by a few clubs. If you are one of the few clubs that has events that generate 10’s if not 100’s of thousands of dollars, like any business you should expect your costs will be greater as is your return. But even those club have for years benefited from the shared risk before coverage recently changed, and even today it provides coverage for all but one or two specific events.
      Yes there are some benefits to being a member, like not having to apply for tax status, shared insurance; and if you participate and take advantage of training and shared mission activities. But in the end, we belong because we believe in what we share and value, in the difference being part of the whole can make. As we each consider the impact of this increase on the charities we support, a question to ask is where does Sertoma rank as the national charity I belong too?

  • Bob Brockmann says:

    Our club can afford the $5 per member per quarter dues increase and the club dues to $175. I built in a small increase in dues a few years ago in anticipation of this requirement.
    Treasurers forever can do that.

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