Preamble

In recent years AALL has managed its resources prudently, controlled expenses, and generated moderate additional revenues. AALL has also benefited from a robust national economy and equities market that has boosted earnings from investment funds that have been used to support new projects. Investment earnings - withdrawn to support special projects - have ranged from 5.8% of operating expenses in 1996 to 9.6% in 1999. This has enabled AALL to support an unprecedented level of new initiatives during those years. Realistically this level of investment earnings cannot be assumed in future years.

AALL has been able to support its core programs and member services from annual operating revenues. Annual Meeting net revenues contribute significantly to this success. Yet, in adopting a new and ambitious Strategic Plan 2000 - 2005, AALL must seek additional revenues and other resources to implement this new plan that contains many non-revenue generating activities. Such activities will require financial support from dues, grants or contributions.

Consultant Dean West advised the Finance & Budget Committee that the AALL Executive Board has done its job - it has created a bold, ambitious and new strategic plan. Now the Board must present the plan with its associated costs to the membership. Members can choose to support the plan - and invest in their own future - with their dues or not. The new plan itself provides the basis and rationale for a discussion of dues levels and what members are willing to support.

As a result of the West study, the Finance & Budget Committee now recognizes that AALL provides programs and services that address the different interests and needs of law libraries as corporate entities and law librarians as individual professionals. For example, strategic directions #3 & 4 in the new plan address primarily the needs of institutional members - legislative advocacy and publisher relations - whereas strategic directions #1 & 2 address individual professional needs - professional development and image. These two distinct groups have unique needs that are always competing with each other for scarce resources. Currently the operating budget is built on an assumption that modest individual dues - based on the relatively low salaries paid to law librarians - must support all Association activities. These realities suggest the need to rethink how the AALL is financed in the future.

Long-term financial health is crucial. The Finance & Budget Committees defines financial health as meeting the following criteria:

• Income sources from dues, registration fees, advertising and other sources are stable, predictable and reliable.
  
  

• Association revenues are adequate to support core programs.
  
  

• Discretionary funds from investments and contributions are available to support innovation and new programs and services.
  
  

• There is minimal or no reliance on "soft-money" that is unpredictable and might be encumbered by restrictions controlled by donors.
  

The current investment policy, the long-term objectives and target for the investment fund need to be reviewed, clarified and more precisely defined during this planning cycle. The Finance & Budget Committee raised several questions that need to be addressed. Is the performance of AALL's investment manager competitive with that of other managers? Does AALL's policy allow for growth through greater risk of a portion of the investment fund? Will the investment fund earnings be expected to grow to a size that is adequate to subsidize existing core programs at some time in the future, or will it be used - as it does now - only to support new initiatives? What is the appropriate target for the long-term investment fund?

Raising funds from the corporate sector has always been important to AALL and the Association has been moderately successful. During this planning cycle staff and Finance & Budget must review current practices and plan for an expanded and increasingly effective fundraising effort in the future. With the assistance of outside expertise, AALL must seek to increase support from foundations - an untapped source at the present time - individual members and legal publishers. The experiences of other similar associations might provide guidance for AALL. The Finance & Budget will explore these questions in the fundraising study that must be completed by February 2001:

• What are the fundraising practices and experiences of other associations? What are the sizes and objectives or purposes of their endowments?
  
  

• In order to be successful, what should AALL invest in fundraising - staff, financial resources, and public relations? Will some of the raised funds be used for administrative overhead expenses?
  
  

• What is the potential for individual member contributions through annual and planned giving opportunities? What do individual members customarily support? What is the most effective method to reach individuals?
  
  

• What are reasonable fundraising targets for AALL in the future? Are some programs and services more attractive to donors?
  
  

• What policies are needed to strike the right balance between programs supported through dues and other operating revenues, and those supported by outside funding?
  
  

• What are AALL fundraising priorities? Will certain programs or services be primary targets for outside support? If so, which ones?
  

Outcome 1: AALL maintains financial health and independence.

Outcome 2: Resources support the implementation of the Strategic Plan.