AMA's 2019 Tax filing - the financial implosion continues
 

I was able to find the 2019 AMA IRS 990 filing, finally, on a public website (note 1). It's in xml format, so I had to do word searches to find the fields, but I was able to add the AMA's 2019 financial data to my ongoing study of their financial health ... based on their public IRS filings.

One thing that jumped out is that staff costs as a percent of revenue continues it's sharp rise. In 2019, 45% of every members' dues dollar went to pay one thing - staff in Muncie. Another eye opener is that the magazine continues to lose money, $783,000 in losses last year alone. This is not new. The magazines have lost money every year since 2003, and have lost a total of $32 million in members' money since then. What's maddening is to compare last years' magazine losses, $783,000, to grants to clubs and members, just $50,000. Where's the accountability for the magazine losses? Why are the staff still employed? Their "product" loses money year after year after year, and yet the EC is still paying them!

This is bad, but the 2019 990 showed something even more concerning. In the AMA's annual report, the AMA told all of us that they "... stabilized three to four years of membership losses ..." (note 2, page 2). Sounds good right? Not so fast. The same person that approved that language approved the IRS 990 filed for the same period. That tax filing showed they did not stabilize after three to four years of membership losses, it showed their membership revenue declined 16% in 2019 compared to 2018. Furthermore, it appears to be accelerating (see chart).

Key Performance Indicators (KPIs): Membership revenue down 16%. Club fees down 7%. Investment income down 22%. Total revenue down 13%. Magazine revenue down 12%. Lobbying expenditures down 27%. Grants down 33%. And yet we have EC members in this forum talking about number of mentions in the FAA RemoteID rule, or the ED bragging about how many emails sent. Meanwhile they're silent on the true KPIs above. Clearly some obfuscation happening, if not worse.

At what point should members start demanding change? The ED approves both the annual report an the IRS filings. He knew or should have known what he was saying in the report did not match the tax filing, yet he did it anyway. And where was the EC in all this? Silent. Why is the EC silent on the sharp downward trend in virtually every key performance indicator? Why is the EC not holding the ED accountable for misinformation? Either the EC is feckless, unwilling, or complicit. I don't care which, but pick one. It's our money. It's their job to ensure this stuff doesn't happen. Yet it continues, and they do nothing.

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Note 1: https://projects.propublica.org/nonp...ions/520799408
Note 2: (public site) https://amablog.modelaircraft.org/am...9annualreport/

Just wait...
They are working very hard.....
"We'll get those numbers in the black, even if we have to FORCE people to join."

LOL

Astro

Would be curious to know how staff has changed.

2001: 22% of $11M = 2.4M staff costs
2019: 45% of $6.5M = $2.9M staff costs

That means if they kept the staff the same over 18 years, everyone would have had just a tick more than a 1% annual raise. Not a big raise.

Also - would like to hear from the accountants in the room, "magazine losses"... how are these classified? Are there positive tax implications to having losses on the sale of magazines? If the magazine loses money but increases membership, is it a loss? (Analogous to subway systems - they all lose money, but imagine the US financial markets without the NYC subway.)

I am not an accountant, just a business owner.

Not trying to be a jerk, but, how about you buy something that costs 1000 dollars. You sell it for 500 dollars so you have a 500 dollar loss. Now try to spin that in to a plus!

It only "helps" if you're making enough money (profit) to take the loss against.

What Franklin is pointing out is that AMA, if it was a business, is a sinking ship. The AMA IS like a business. When the money runs out, it runs out. Doors closed.

Many, many business owners look at graphs and numbers, just like Franklin posts, either don't believe the numbers (which don't lie) and let the business run in to the ground, or, believe the numbers but don't have the fortitude (or the means) to grab the bull by the horns and make some tough decisions.

Popeye, really, you asked good questions though. What gets me is that sometimes people think that by losing money, somehow it makes money. Only a shady accountant can "cook the books" and make a loss (simple loss) turn in to a positive.

Thanks Jim. Great points!

I asked about the magazine loss, as AMA is more than a magazine store... to the point of "It only "helps" if you're making enough money (profit) to take the loss against.", are there other parts of the business that are profitable? (In my world, we deduct R&D expenses from the tax bills.)

I don't think AMA is profitable, but unfortunately the IRS 990 form is not a complete P&L. What is interesting, is the AMA 2019 membership report states that the "AMA successfully stopped a four-year decline in membership this year". Yet the graph above indicates a strong decline in membership revenue - or that membership costs decreased significantly. If one believes the annual report of membership totals of 170,000; and the membership revenue of 6.5M, the average annual dues are $38.

Would be great if the AMA disclosed their financial situation - if we need to hike membership rates to keep the group solvent, or reduce services, etc. (Assuming we support the need for a central organization - I do not intend to make this a debate on the need for AMA.)

For those interested: AMA annual statement is here: https ://www.modelaircraft.org/sites/default/files/documents/2019-REPORT.pdf. I could only find the 2018 990 form, here: http ://990.erieri.com/EINS/520799408/520799408_2018_%20.pdf

(Note, I do not have 10 posts, so I can't post URLs. I added a space after https; this space needs to be removed to follow the link.)

Reference some of the questions above with respect to membership number vs. revenue. Big picture, they're dying financially. Just look at the trends. In every area that matters, the trends are in the wrong direction. Yet you read the EC notes and it's barely discussed. And if it is, the solution is "more of the same and hope for a different result."

AMA often touts their members numbers. I submit what actually matters is membership revenue, since over 90% of AMA revenue comes from membership dues. Another reason why AMA does NOT discuss membership revenue is this. When they say "numbers" they can artificially inflate them. A few years ago they gave away "free" youth memberships. I mean why stop there? Take it to it's logical conclusion and give free memberships to every person inside the US borders. They could rightfully claim 328 million members, but the number is meaningless as to the health of the organization. It could also be full members converting to park flyer membership. But again, given drop in total membership revenue, that's hardly a good news story.

But touting membership "numbers" as indicator of health is similar to an EC member in these forums touting number of "mentions" in the FAA RemoteID final rule as some indicator of AMA strength. But dig deeper and even that's hardly a good new story. Many of those mentions were in discussions of ideas rejected by the FAA. Why do they do it? Who knows. But it shows the collective leadership is doing an awful job running the place.

As to the staff expense vs. membership revenue. Yep, The math allows modest raises that when combined with declining revenue makes the percentage go up. My point is that if membership revenue is declining, can they afford to keep the same number of staff? I say no. Yet they're hiring and, so far as I can tell, not letting anyone go. And why is the latter important? Because despite the magazine losing money year after year, they keep the same people in charge.

One last note. All of my data comes from public information, IRS 990s downloaded from various non-profit watchdog sites. There was one year I requested one directly from AMA. Interesting that true to form, despite being able to generate a PDF of their filing with just a few keystrokes, they initially wanted to charge me for it. Nothing like being transparent eh? The good news is that in the not too distant future, the IRS will make directly available these 990 filings. No more "mother may I?" from the AMA, and no more waiting until the watchdogs get access to the metadata for their sites.

FYI, I only have data going back to 1998. What we saw before the 2002 dues hike was that membership revenue appeared to be relatively flat over a few years. Then look at behavior after the raised dues in 2002. Within 4 years it declined to less than before the hike. I argue it's classic rational economic decision making, when the price of a product goes up, people buy less of it. Even more so when they don't get increased tangible value for their dollar. Same behavior repeated after the 2016 dues hike, except that time it only took half as long to decline below pre-hike levels. Remember above when I said "...more of the same and hope for a different result?" Well, there's a very useful example.

I believe this explains a lot of their actions that, in my opinion, are either direct or indirect attempts to use law and regulation to compel membership. Thankfully Congress got wise to it (49 CFR 44809 now says "or" in the "programming" sentence) . A low cost module and emerging CBO competitors (notably FiteTest) will cut into their market even more.

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LOL. reminds me of the old episode of Seinfeld where Kramer says, “Don’t worry about it, they just write it off!”

Astro

Thanks! What should we do? A letter writing campaign to the AMA? Is anyone from AMA on this site listening / seeing this?

You can. The AMA defenders on this and other sites say if you “Just talk nicely to them (EC),” then you’ll have all sorts of success. However facts don’t bear that out, as multiple individuals asking hard questions have asked for info, only to be denied.

BarracudaHockey in this forum is an EC member. All he says is contact your district rep. Which many have done only to be denied. That is when he’s not touting “mentions” as a Key Performance Indicator of strength.

I honestly think they’re blindly following Hanson & ED. Read the EC notes and you’ll see the EC doesn’t hold anyone accountable and rubber stamps whatever Hanson and ED want. They’re running the place into the ground and EC is unwilling or unable to stop it.

Consider this if you will. Except for the scale of it all, how different is the AMA from our own Federal Government?

Deficit spending, growing debt, pork barrel pet projects and the list goes on. And look at the individual citizen? Using credit cards to make credit card payments. Tax and debt relief help being offered on TV and other media. On line/smart phone help to improve credit ratings. No need to be responsible, Uncle Sam will simply print more money and call it a stimulus. And this has been going on now for generations as well as being taught in our schools. Bottom line is the public doesn't know any better with such education and examples leading the way. This is the new normal. Ecomonic ruin not only for the AMA, but the nation as a whole.

And when did this all start? When the treasury and Congress removed the gold backing from the US currency. While it was gold backed, the US dollar was one of the most stable on the planet. Now that it's not, the treasury can print(or not) as it deems appropriate rather than to replace existing worn out currency.
So, how does that relate to the AMA? If the AMA starts running short of cash reserves, it raises it's membership dues to get a quick influx of funds. Kind of like the treasury printing more money. When the AMA wants to fund a pet project, how do they get the capital to do so? They raise the membership dues. What should the AMA be doing instead? Very simple, cut costs by:

• laying off excess or low production staffers
• go to an E-zine rather than printing a "cash cow" magazine
• cut funding to programs that don't fit in with modern times and/or needs
• assign the staff members other tasks that others are now being paid to do that could be done in their spare time
• contract out the maintenance for the grounds and buildings rather than pay a full time staff

That would save hundreds of thousands of dollars each year. In the same way, the US government needs to:

• cut aid to many of the corrupt countries it subsidizes
• put an income cap on legislators
• set term limits for legislators in the same way the office of the President is limited to two terms
• force Congress to meet or stay below a budgetary cap and start reducing the national debt(something I doubt the Democrats would be willing to do)

Same thing for both organizations, limit spending and force the powers that be to make some hard choices that they don't want to make

;) The major difference is that the federal government has the power to continue "deficit spending" for as long as it so desires by kicking the financial can further and further down the road , whereas for the AMA it appears the time will soon come that the income isn't satisfying the financial obligations , with no apparent means of increasing that income . And since the AMA can't print money like the federal government can , it's either time for some major cost cutting or else it's future ain't looking all that rosy to me ......

Where is that damn like button?

Astro

Thanks for the detail.

US government policy is independent of AMA financial situation.

Speaking of deficit spending, the AMA spent more than their revenue in each of the past five years, averaging $700,000 per year. They've been selling investments to fund this, which means less revenue into the future.

And the EC permits it.

......AND begging for people to donate to the, "AMA foundation"....

I mean, who doesn't like free money, given by people that think it is being spent wisely......

Astro

ED and president love the foundation. Why? Someone gives $100 to the AMA proper, and to spend it the way they want requires majority vote of EC ... say ten or so members. While here to fore they've been a rubber stamp, it may not always be that way. Now, say that same $100 goes to the Foundation. Foundation gives money to AMA, but gets to direct AMA how to spend it. Now, instead of needing to convince say 6 or 7 EC members (majority), you only need to convince majority of Foundation board, which is much smaller. Add to that the foundation board is stacked with AMA true believers ... who will do whatever Hanson and ED ask them to do.

This is what happens when you get in bed with the government to try to pad your numbers, instead of differentiating toy drones and quadcopters from legacy RC, and end up getting bit by the government and people start leaving.

Actually paid memberships are on a slow but steady increase

Full-priced, paid memberships? for 2020 or 2021?
I guess we are supposed to trust your information? You post a lot of "facts" as an insider, but then cannot substantiate or talk any further about them, nor does it seem that available records can back them up either.

We all know that the AMA has a track record of statements that don't align with the real numbers once they have been distributed to the masses, so I am just wondering if this is more of the same, optimistic AMA kool-aid?

Astro

I have to agree with Astro on this one, Andy. The financials don't back your statement so, due tell, where did you read/hear that?

See the “spin?” Use of "memberships," but no indication of type, pay level. Meanwhile, the more fundamental question is why believe them at all.

Recall from my initial post is that in 2020 the ED (with EC's approval) published the 2019 Annual report. In that document, they AMA told all of us they'd stabilized the decline in membership. Yet at the entire time they're putting that in print and disseminating to members, they had in their possession the financials showing yet another year of sharp decline in membership revenue.

So I repeat. In the face of such obvious misleading information, why should we believe anything out of EC or Muncie?

All due respect but there are absolutely no supporting facts in your statement.
Meaning you expect us to take your word for it and quite frankly, your credibility when talking AMA is questionable at best.
You want to provide some supporting evidence and I for one will consider your statement. But without facts, your word simply doesn't cut it.

On page five of the 2019 Annual report (link in my first post), the AMA told it's members:
And they made that statement knowing full well the sharply declining membership revenue I showed in the attached chart.


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