Monday, April 10, 2006

DUES: Geoff Neale's comments to the LPTX

These comments are from Geoff Neale to the LPTX Executive Committee and should not be construed to imply support or opposition to Wes Benedict's campaign for a position on the LNC.

From: Geoff Neale
To: LPTX Executive Committee
Date: 4/9/06

I humbly disagree with one insinuation - that dues don't work.

The LNC set the dues level at $25 in about 1989.

In 1998, the LNC created UMP. At that time, most states had dues, and National had dues. The idea that each state and National were duplicating renewal efforts was behind the impetus to offer economy of scale improvements. By having National do the renewals for both, and then forwarding a portion of dues to the states, the renewals would be done professionally, and both state and National would benefit.

Prior to UMP, every California member paid $20 for California membership, and $25 for National membership. California received $20, but paid their own renewal expenses. National received $25, but paid their own renewal expenses.

Then UMP was codified, but the LNC screwed up big time. Rather than saying "Let's make this attractive enough by coming up with a new dues number that is somewhere between the old and the new", they didn't change National dues. Dues remained at $25 - but now it was for BOTH National and State.

Prior to this, we were making huge outreach mailings under a project called Archimedes. Some have argued whether or not this was worthwhile monetarily, but our dues paying membership rose rapidly up to about 32,000.

After UMP, for some strange reason, funds started drying up. Membership flattened, and peaked at about 33,000. National could no longer afford much in the way of outreach mailings. Starting in 2000, membership began falling. National tried one more Archimedes mailing, but it dropped a few days after 9/11 - it cost over $75,000 and garnered a few hundred responses. Since then we've been basically broke, and we've not done any significant outreach.

These economic problems started when UMP was created. Why?

Prior to UMP, National retained $25 of every $25 membership. Afterwards, with UMP I, it retained on average $10 per member. With UMP II (Son of UMP), it retained only $7 per member.

Because the LNC made a fiscally stupid decision, primarily because Steve Dasbach told them that the increased numbers of members other-than-renewal donations would offset the losses (which they never did), the LNC fell into an ongoing deficit situation.

So now, in order to correct the mistakes that were made, we've eliminated dues altogether, and our revenues are plummeting. National is now telling groups like the state chairs that their fundraising is more effective, because they HAVE REDUCED THE PEOPLE THEY ARE FUNDRAISING FROM TO PROVEN DONORS. In other words, no new donors, because we
don't ask for money from people who haven't given before.

What mistakes did National make?

1). Dues should have been a reflection of the costs of providing the direct and indirect services, and should have been adjusted over time to reflect the realities of inflating expenses. If we'd followed inflation, the $25 1989 dues would today be in excess of $40.

2). When UMP was created, a new dues level of approx: $40 per member should have been set, and the members should have been educated as to why $40 is better than $25 (National) plus $20 (State). Instead we reduced revenues drastically while increasing the costs of services.

If these two mistakes had not been made, then dues would have gradually risen to about $50 by the time of UMP.

Assuming a small drop-off in membership ($50 is not that much), we would have quite easily have continued our outreach efforts, because a significant amount of money would have been available to do that. The actual costs for National would have been somewhere around $30 ($18 for UMP and $12 for servicing, LP News, etc), leaving $20 for outreach. That means that every
year, every member would have given enough in surplus dues to reach approximately 40 people. Given that we achieve a new member rate of approx 1 in 60, and also experienced a very normal dropout rate of 30% of first year members, we'd have achieved and maintain continuing growth of membership. Also, delivering growth significantly increased renewals and non-renewal donations, both of which have floundered.

I've estimated conservatively that our membership could be in excess of 50,000 today if these two mistakes had not been made.

So, you see, Einstein is correct, but the Irish saying goes "If it isn't broken, don't fix it." The LNC fixed what wasn't broken.

Now, to compound things, they've decided that the thing that wasn't broken, that they broke, can't be fixed at all, because it's beyond repair. God forbid they'd say "We screwed up - many times - and should now go back where things were working." No - instead, we fumble forwards into unproven territory.