AASW announces a record profit: an analysis of the financial statement and some strategic implications

Record Profit

I took a look at the AASW financial statements for the past few years to bring you a summary of some of the salient features. (Note that references to a particular year mean financial year. For example 2016 refers to the 2015/16 financial year.)

This year the AASW has announced a record profit of $549, 868. This follows 3 previous year of substantial profit- the cumulative 4 year profit totalling over 1.5 million dollars.

The chief measure of company health is the ability to pay current debt without having to resort to outside financing. This is measured by describing the ratio of current assets to current liabilities (the current ratio). The AASW with current assets of $5.1 million, and liabilities of 3.3 million dollars has a healthy current ration of 1.54.

Excessive Reliance on Member Fees

The AASW does however have an excessive reliance on member fees as its main source of revenue. In 2011 membership fees comprised 67% of total AASW revenue. This year membership subscriptions represent 79% of total revenue. By comparison, the Australian Psychological Society (APS)  and Occupational Therapy Australia (OT Australia) are both far less reliant on member subscriptions. Compared to the AASW, OT Australia reports a modest 44.3%, and the APS stand at 48%.

Non member subscription revenue has flatlined, showing no growth in dollar terms, as well as a shrinking proportion of overall revenue. This is an issue that must be addressed.

Potential to Develop Other Income Streams

So how do professional associations generate revenue outside of membership subscriptions? Professional training and development, as well as some conference revenue account for a substantial chunk of revenue for OT Australia and the APS, as can be seen from the percentages in this table. The AASW managed to generate only 5.9% of its revenue from training and development, despite running a conference in the 2015/16 financial year. There are clearly significant opportunities for improvement in this area.

Increasing Student and New Graduate Membership

The AASW has experienced a pleasing, steady growth in membership. Describing the growth accurately is however not possible, as the AASW announces membership figures anytime between January and April. For example, our financial membership in August this year was 8,000, and will not climb back to full membership until the other 2,000 members have renewed sometime next year.

In the drive to reach 10,000 members by July 2016, 500 members were signed up in the last three months of the financial year. Many of those new members were students or new graduates taking advantage of the generous discounts on offer.

Revenue Implications of a Changing Member Mix

Whilst I strongly approve of this strategy, the effect on finance and resources must also be understood. Average revenue per member will naturally decline, particularly with our very low student and new graduate rates. The effect can be seen in this chart and will obviously accelerate in coming years.

All members naturally require support and services. And obviously the main resource in servicing the membership is the AASW staff. A rise in membership has implications for how thinly this resource is spread. Dividing the total wages, salaries and related costs per member is one way of appreciating these implications.

It is clear that the time is ripe to invest some of the AASW’s accumulated profits into retention of new members. If one considers for a moment the professional lifespan of  a social worker, her need for a full range of professional support is at its highest in the beginning years. Early investment in mentoring, CPD and quality supervision set good habits and strong foundations. AASW support of these investments in our student and new graduate members will build strong professional foundations and loyal lifelong membership.

The fee jump from new graduate membership to full fee membership is significant. Substantial membership retention will rely on the professional support offered before the fee increase kicks in.

Continuing Growth in University Social Work Enrolments

Whilst recruitment of student members has improved, it is by no means near its true potential. Next year there will be approximately 14,500 social work students in Australia. (10,000 BSW’s and 4,500 Masters qualifying). Around 3,000 of those students will graduate in 2017. (1,700 BSW’s, and 1,300 Masters qualifying). We can also expect further growth in coming years.

These numbers are staggering and point the way to our real growth potential. Scaling up our recruiting efforts to have a strong presence in all 26 universities is vital. we should be aiming to have at least 50% of all social work students in the country joining the AASW.

Investing our Profits in the Future of Social Work

And so how do we  invest our profits wisely to do this?

  1. We must make it easier for our members to talk directly to each other. Every member who wants it should have an app on their tablet or phone with a Linkedin/Facebook type function for AASW members only. This can used by members to set up their own groups, for example campus student clubs, private practitioners within a particular Primary Health Care Network, research interest groups, practice groups, etc.
  2. We should set up a mentoring program for new graduates above and beyond normal supervision arrangements. We have hundreds of wise and experienced members who, with the right training, would be happy to donate time towards career development, as well as ethical and professional guidance.
  3. We must build the quality and capacity of our field educators, so that every placement offered is outstanding.
  4. We must build the capacity of our members to offer quality CPD tailored to the learning needs of fellow members.
  5. We must professionalise and scale up our member recruiting (and our presence) in universities, not just to gain members, but also to help build a long term sense of professional identity and vocation.
  6. We must boost our research capacity.
  7. We must enhance the profile and reputation of our private practice cohort.

All these initiatives will come with a price tag, and we are fortunate to have the profit to invest in them. These investments will pay for themselves both in membership recruitment and retention, as well as building the strength of our profession.

 

 

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