1. Presentation to AFA Convention Delegates Larry Spencer, President
17 September, 2016

2. AFA is promoting a “dominate Air Force”
What have I learned?
AFA is a great organization
Greatest strength is our people
Great field volunteers, staff, members
Lots of positive movement
AFA has a long term financial problem
We can and must turn this around but it requires our immediate attention
We are in a tough non-profit environment
AFA has some tough decisions to make that will require courage and conviction
AFA is promoting a “dominate Air Force”

3. Thank You
But we must ensure we can keep doing amazing things in the future
“The Field is the Heart, Soul and Conscience of this Association.” ~Jimmy Doolittle

4. Thank You
But we must ensure we can keep doing amazing things in the future

5. AFA is promoting a “dominant Air Force”
Lots of Positives
Great field volunteers—Great staff!
Individual memberships up
Direct mail revenue exceeds prior year
AW symposium revenues above budget
AS&C Conference revenues above budget
Mitchell, CyberPatriot, StellarXplorers thriving
AF Magazine still a favorite among members
Daily Report very popular; particularly with younger members
WAP provided $300K in wounded airmen spt
AFA is promoting a “dominant Air Force”

6. Lots of Positives con’t
AFM draws supporters/visitors young & old
Record number of Op Eds published
20 AFA Air Force breakfasts/APA calls
Great relationship/support with the Hill
Great support from AF leadership
Operational expenses are down
AFM 10th Anniversary in full swing
$10K Rolls Royce sponsor teacher of the year
Now compliant to receive federal funds/grants
Clean audit opinion
AFA is promoting a “dominant Air Force”

7. A Call for Action
As of July
AFA has operated in deficit spending for 8/9 past years —CP $1M; AFM $500K

8. We have to change this policy. The question is when and how?
How did we pay the bills?
Investors instructed to liquidate securities using the following priority:
Profit earned during the year
Convert unrealized gains to realized
Liquidate a portion of the portfolio (Life membership funds)
Exempt accounts:
AFM, endowments, scholarships
We have to change this policy. The question is when and how?

9. AFA Net Assets & Liquid Reserves as of December 31
Liquid Reserves inadequate to pay for current obligations & future capital needs

10. Advertising sales are down across-the-board.

11. AFA revenues are increasing, but now targeted at restricted AFA programs.

12. Good news—memberships are growing. Bad news—we’re giving them away.
Corporate
Individual
Budget
Members (Jul)
Revenue (Jul)
2015
$363K
115
$211,000
2016
$405K
121
$233,000
Budget
Members (Jun)
Revenue (Jun)
2015
$2,184M
94,243
$1,075M
2016
$2,445M
95,742
$916K
Good news—memberships are growing. Bad news—we’re giving them away.

13. Investments
AFA policy: Include projected realized gains in the operating budget
Current practice is to use
unrealized gains as
needed
Note: Staff has no role in the investment portfolio.
Responsibility for investments rests with the
Treasurer/Investment Committee to the Finance
Committee.
2015
$1.7M (Actual)
$1,163M (Jul)
2016
$1.5M (Budget)
$511K (Jul)
Investment projection is significantly behind—may have to convert unrealized gains

14. Fund Raising Includes: Direct Mail CFC Planned giving, WAP
Scholarships
2015
$1.9M (Actual)
$831K (Jul)
2016
$2.9M (Budget)
$1,154M (Jul)
Good news—better than last year. Bad news—not as good as projected. Risk rated HIGH!

15. Prudent actions were necessary to improve financial position
Summary For 2016
Several revenue trends (adv, etc) are down
Other non-profits having similar difficulties
Recent reductions designed to keep us close
Lots of moving parts between now and Dec
Fund raising events, corporate memberships, Air, Space & Cyber, stock market, etc.
Tougher in 2017—Everything AFA does is good—tough decisions must be made
AFA is an $18M company spending $20M—we must close the gap
Prudent actions were necessary to improve financial position

16. AFA must change course to assure a vibrant future
Issues we must address
Cannot continue deficit spending
Need to adjust for defined benefit increase
Need to generate more unrestricted donations
Must adjust to new demographic trends
Should we hire a membership recruiter?
Should we hire an expert fund raiser?
Should we add a third major conference?
Should we add several smaller conferences?
What’s the future of our print copy magazine?
AFA must change course to assure a vibrant future