Financial Analysis of the 2021 Convention
Financial Analysis of the 2021 Convention
As the dust of the National Convention settles, we wanted to take a look at the financial status of DSA National as it stands, and what we can expect in the next two years. We utilized several publicly-available reports provided by the Treasurer and Budget & Finance Committee including:
2018 National Financial Report
2019 Annual Report to Members
2021 Convention Memo of Cost on Proposals
2021 Financial Report & Attachments
Our goal was to apply basic accounting analysis solely rooted in verifiable projections. We do not apply any value to the below, it is not our place to say what should or should not be funded. Our analysis below provides a cold-read of the financial limitations that DSA currently faces and how that will affect the priorities approved by the Convention.
In performing a basic budgetary analysis of the funding committed by the 2021 convention, we estimate that we vastly overcommitted based on an overview of likely budget projections. We don't mean to sound an immediate alarm—the estimated cost of resolutions are variable and open to interpretation—but this likely means that many of the resolutions and plans decided at the convention are unlikely to come to fruition barring some stark change in DSA's fundraising or expenses.
Ultimately, the task of solving our fiscal hole will fall to DSA's national leadership. But rank-and-file members should understand the basics of DSA's financial situation so that we can interact with national DSA activities appropriately and plan for the future accordingly.
Financial Situation Pre-Convention
To begin our analysis, we need to look at our income. We were able to find most information regarding income from 2017, and some before then. Two caveats—we were only able to find data for the first half of 2018, and the 2021 report provided the actuals for the first half of the year, and projected EOY numbers. For the purposes of this analysis, we doubled the first half of 2018’s numbers in order to get a rough estimate of income, and the projected totals for 2021.
https://public.flourish.studio/visualisation/7333246/
Here, a couple of things pop out immediately. Our income has grown almost in lock step with our membership growth. This is because our sources of revenue are largely derived from member dues. Dues made up 92% of National’s income in the first half of 2020, up from 76% in 2019.
Our per-member dues average has increased with this growth. On average, each member provided on average $34 in dues annually in 2017. In 2021, it was $63. This is before the dues share is sent to the chapters, which is a standard 15%. Our chapters received on average $9.45 per member annually.
As DSA grew in membership over the last few years, the percentage share of yearly revenue made up by dues also increased:
https://public.flourish.studio/visualisation/7220477/
As you can see here, the donations (in yellow) have remained stagnant, and the percentage of our income derived via fundraising has actually decreased. As we will discuss later, this presents our organization with a couple of problems. But, we need to understand our expenses to tackle that topic.
National DSA has not surpassed $500,000 in annual fundraising since 2017, (and donation revenue decreased in 2020 and the first half of 2021 relative to 2019). We are aware that a new Development Director was hired to focus on fundraising recently. But, the Treasurer’s estimate of fundraising $467,219 in the second half of 2021 is unlikely based on historical trends unless there is an intentional focus at the national level on major fundraising efforts. Without that dedicated fundraising in the latter half of 2021, such as the telethon hosted prior to convention, DSA national is likely to end this year in an overall annual deficit, as we will be spending more than we bring in, in 2021.
Expenditures are pretty straightforward. DSA national expenditures are reported in the Treasurer’s Report. We used the same assumptions for 2018 and 2021 as for income analysis.
https://public.flourish.studio/visualisation/7220686/
DSA’s staff and consultant costs make up a full 50% of the current 2021 budget (staff 42%; consultants 8% of our 2021 budget). Beyond the dues share (15%), we also spend a substantial amount on supplies and organization/educational materials.
When we put together our income vs our expenses, with our Net Assets (cash on hand) we start to see a potential issue:
https://public.flourish.studio/visualisation/7220793/
We grew 74% in membership between 2019 and 2021, but our cash reserves are projected to only grow by 15%.
We are expected to have $2.4 million in Net cash at the end of 2021. As much as we would want to call it a “surplus” and start spending it down, it is much more complicated than that. Large scale organizations need to keep cash on hand to pay for expenses. The standard for non-profit organizations is three to six months of operating expenses, depending on the risk profile of the organization. Any organization needs to be prepared in the event of an unseen circumstance or emergency where cash stops coming in for a period of time, or substantially decreases—they need to maintain a cushion so that they can keep working.
The NPC unanimously passed the following Reserves Policy in 2019:
Based on the above and data from financial reports, DSA National must have at the very least $2.6 million in cash reserves at the end of 2021, in anticipation of the expenses for the first half of 2022. The second half of 2022 reflects the staff’s CBA contract salary step up, which means that the first half of 2022 will probably be closer to $3.9 million than $2.6 million. But, we will stick to the calculated average of the last four quarters for our analysis.
2020 (first half) - $2,065,555
2020 (second half) - $2,065,555
2021 (first half) - $2,416,087
2021 (second half projected) - $3,904,20
To circle back, we are expecting a surplus of $2,435,340 at the end of this year under the current budget and projected income for the rest of this year. Under the current Treasurer’s budget, and not accounting for the new expenses approved at Convention, we actually are in a $175,000 cash deficit, at minimum.
This means that National DSA cannot spend any more money than is in the current budget for the second half of 2021 and will likely have to make some cuts for 2022.
2021 Convention Approved Expenditures
Now we come to the National Convention. During the 2021 National Convention, the convention body approved expenditures of $3,245,405 annually with a total of $1,393,067 in annual costs referred to the NPC, according to the Cost Out documentation provided by the Finance Committee. Some of the costs approved at the 2021 National Convention are already included in the 2021 budget (some tech, six field organizers and support staff, etc.) but the majority of expenses would be new spends.
In terms of the passed resolutions, I calculate annual costs as:
$619,266 in direct costs
$2,626,139 in staff costs
We do not currently have the financial capacity to fund any of these expenses above what is currently in the 2021 budget without violating our own Cash Reserves policy, and putting the organization at substantial financial risk. But, we will look at the expenses with a bit of detail to see where we are.
Crunching Numbers: Staff
National DSA currently employs 32 full-time employees in total, six of which are Field Organizers, with one of which assigned to (part time): Growth & Development, the DSLC, the NEC, the Green New Deal, Medicare For All.
The resolutions passed would require a total of 17 Field Organizers, an addition of 11. The below resolutions approved one full-time staff member or more:
Res No 12 - 2021 Ecosocialist Green New Deal Priority
Res No 27 - Beyond 100K: Building a Mass Socialist Organization
Res No 5 - Building Worker Power to Win Democratic Socialism: A Labor Strategy for DSA in 2021-2023
Res No 21 - Prioritizing Tenant Organizing — Resolution by the Housing Justice Commission
Res No 1 - Resolution on the Defense of Immigrants and Refugees
Res No 8 - Toward a Mass Party in the United States (Electoral Priority)
This does not include other resolutions that request 3.5 hours per week on staff support, and hundreds of necessary operational, supervisory and administrative staff support hours.
It is very unlikely that National can bring on even one more field organizer before the end of 2022. It is our understanding that the Budget and Finance committee already has (or is working on) a staffing plan through 2022, and it does not include additional field organizers. Unfortunately, our current staff will likely continue to be stretched thin to support the work they already have and the new priorities passed. Six field organizers will work a combined 12,468 hours (and not all of that will go to campaign work). The Convention body approved over 30,000 hours of Field Organizer time.
Crunching Numbers: Direct Costs
The direct costs associated with the convention will also require some tough decisions. I’ve summarized the largest direct costs:
Res No 29 - Stipends for NPC Steering Committee Members - $144,416
Res No 12 - 2021 Ecosocialist Green New Deal Priority - $75,000
Amend 10 - Childcare for All - $75,000
Res No 14 - Committing to International Socialist Solidarity - $72,000
Res No 31 - Making DSA a Multiracial and Anti-Racist Organization - $66,000
Res No 8 - Toward a Mass Party in the United States (Electoral Priority) - $50,000
Res No 2, Res No 4, Res No 5, Res No 21, Res No 27 - Multiple - $23,000 each
These are all new costs not anticipated in the current 2021 budget. Under good financial practices, they cannot currently be funded by the General Fund without additional fundraising, unless cuts are made elsewhere in the budget.
Why This Is An Issue
One might ask at this point why all of this fun with numbers matters. After all, DSA’s National Convention happens every two years and everyone seems to accept that much more will be passed than can actually be funded. There are four reasons why this is a critical issue for DSA as an organization, and one that the new NPC must address as quickly as possible.
It could put our National Organization at Financial Risk
To put it bluntly, the NPC has a mandate to spend more money than we have. If they do approve expenditures well above our current 2021 budget, it could put the National Organization at great financial risk. We must maintain our bumper of six months of operating expenses or we put ourselves in a precarious situation.
It could undermines our democracy
Every two years, DSA comes together to set our priorities and overall strategies as a national body during national Conventions. The NPC, though elected, is meant to be the collective leadership of the organization between meetings of the convention (see Art. X) and their main job is to execute the priorities decided on at convention.
A major part of the convention is deciding how the members’ chapter dues and donations will be spent over the next two years via our priorities and other resolutions. The NPC is meant to execute these resolutions by apportioning the money voted on to the appropriate committees and campaigns.
However, lack of funding will mean that much of what was decided at the 2021 convention may not actually happen. Because we do not have the money to fund what we agreed upon, the NPC lacks a clear mandate on where to actually direct the organization’s scarce resources. Over-approval of funding has given the NPC a huge amount of discretion on how to actually spend our money, and make tough decisions for 2022, which will in turn decide what the organizations’ actual priorities are and what will be priorities in name only.
It could undermine good will with the national organization
We fear that many DSA members are going to be disappointed over the next two years. Organizers who had big wins via resolutions are going to wait for money and support that may never arrive. Most organizers are not deeply versed in the financial realities of national DSA, and almost no one else has performed this kind of financial analysis of the organization’s resources. Many will only see that they are not getting the resources or staff attention that was decided on at the National Convention. Staff will be further pulled into different directions, supporting more priorities than their hours can support, leaving all of our priorities with short shrift. This might direct (unwarranted) blame or ill-will towards the NPC and national staff. Frustrations and recriminations will ferment.
It could lead to “wasted” work
We spent multiple days during the convention discussing, debating and working through these resolutions. We came to an impressive amount of consensus regarding our path forward as an organization. But, the majority of what we passed, at least in terms of estimated costs, might never come to be. If we were to refocus our debates on our material financial realities, we would be able to debate more efficiently and not promise ourselves way more than our reach can grasp.
And, the “wasted” work continues now. While the costs are estimated, and some will actually cost more or less as outlined in the Cost Outs, it is clear that we have fewer resources than needed to do the work we want to do as a national organization. Hundreds of organizers around the country are now planning campaigns/proposals/plans around funding and support that will never come. Documents, meetings and plans of work will be based on false premises — that they will actually get the resources due to them as voted on by the National Convention body.
What Can We Do About It
While this post paints a certain overall picture of the results of the National Convention from a financial perspective, we have some firm recommendations on how we can move forward and also prevent this issue from occurring in the future.
NPC intervention
The new NPC’s first order of business should be to assess what will and won’t be funded from the National Convention, so that organizers are not waiting around for resources that may never come and can plan accordingly and avoid the “pocket veto” approach of NPCs past. It will, in the short term, upset a lot of people, but in the long term will be healthier for the organization. Particularly, the NPC needs to make and publicize decisions quickly on the twelve resolutions and one constitutional amendment referred to them, which total $1.3 million in annual costs.
The NPC should also consider creating a broader consultative body that can amend and give their ascent to whatever draft budget the NPC develops before they finalize and implement it. For example Article 9 of the DSA Constitution allows for the formation of a National Advisory Council, with membership elected by the NPC. Such a body could allow for a wider range of voices and greater buy-in on the political priorities set out in our national budget than the eighteen members of the NPC may allow for.
Realignment of discussions at the 2023 National Convention
The Treasurer should provide a supplementary/draft report 90 days prior to the 2023 National Convention. This will allow the kind of analysis we have done here to take place prior to the Convention, not after it. The NPC should then make a concerted effort to center discussions of spending during the 2023 Convention around what we can materially actually accomplish, and speak to the limitations that making decisions create (e.g., we can only have so many priorities that receive money).
There are other tweaks that can be made. For example, the 2021 Convention Memo on Costs of Proposals lists out staffing requirements and costs. It recommends that 4.3 staffers are requested for “Top National Priorities.” However, in our research, we could not find one committee or campaign that had more than two dedicated staffers assigned to them for longer than a brief period of time. This needs to be re-assessed for the 2023 Convention to reflect a recommendation that can more reasonably be expected to be met, including no full-time staffers for the majority of campaigns.
Another suggestion would be to put in a rule where only a set amount of funds can be approved in resolutions under the Consent Agenda. This would prevent the current situation from occurring, where 30% ($1 million in annual spending) of approved spending was passed with consent during the 2021 Convention.
Educating our members
Many socialists hate dealing with money. But, we cannot organize effectively without a consistent understanding of what resources are available and how large organizations like DSA work financially. Members (and especially national convention delegates) need to become familiar with navigating the complex financial realities that DSA—a dues-driven, democratically run membership organization—faces.
The National Growth & Development Committee should work with the Finance Committee on an educational program to (1) help chapter and campaign leaders understand the financial realities we operate under; and (2) help chapters make the hard decisions that they face themselves around how to spend their own money. The latter will help solve a competing conundrum DSA is facing as a body—chapters are much more likely to build up spending reserves than National because they are not accustomed to using money in their organizing. The NPC and Finance Committee can help chapters understand the risks and possibilities with their own spending as well as the national financial picture.
Raise funds
Finally, we should consider that the simplest way to bridge a funding gap is aggressive targeted fundraising. In recent years fundraising has usually only taken place when a specific campaign or committee takes it up to fund their own area of work, and as a result tends to bypass the general fund for DSA’s costs. National recently brought on a new Development Director to focus on fundraising, which will be helpful in meeting the already ambitious fundraising projection for 2021, $467,219. A single staffer will likely not be able to raise funds to support the Resolutions passed during convention.
If we want to be serious about expanding the scale of activities DSA wants to embark on, we need to consider whether it’s time to bring in dedicated fundraisers. Under our current model, we will always be limited in how much we can raise. Our pool of donors is small—we cannot sustain multiple national issue-based fundraisers, as well as general National DSA fundraising at the same time without it leading to (literal) financial competition between the different committees and working groups within our organization. Additionally, we need to urgently look at our technology to make it as easy as possible for our members to increase or decrease their dues as needed, and to set up recurring donations. Currently, a member cannot change their dues amount under our current system. They must email a staffer, ask to cancel their dues, confirm their dues are cancelled, and then rejoin under the new amount. This applies if they are trying to go from yearly to monthly dues or simply trying to change their monthly amount.
There are other options we could consider to bolster these efforts. The Dues Drive approved in Resolution 27 (“Beyond 100K”) is a positive step towards more proactive fundraising. Additionally, we could always consider raising dues, paired with a strong and transparent waiver process.
The financial priorities passed at the 2021 convention demonstrate that our membership have ambitious political goals for the socialist movement in the United States. The way forward will not be to demand less from our membership, but to instead demand a National which can capitalize on those ambitions. Like it or not, finances will be crucial to the success or failure of those ambitions. A close and sober look at our financial prospects, as well as a serious and critical thinking about how we raise that ceiling, will be vital to the future of that work.
We encourage people to reach out if they have topics they want us to cover. We require primary sources and documentation in order to write on a topic. You can reach us through our contact form or email us at contact@new-majority.org. Suggestions and ideas for how the organization should operate should be directed towards the National Political Committee at npc@dsausa.org.
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