IBMA President and Chairman of the Board Stan Zdonik says improving IBMA’s financial health “will be the driving criterion” behind all decisions by the group’s board of directors “until we are again running in the black.”
Zdonik’s comments came in a lengthy statement in response to Bluegrass Today’s examination of IBMA’s finances. That account, based on a detailed review of IBMA’s non-profit filings with the IRS, showed that the association finished in the red each year from 2006 to 2010, and that its reserve fund had fallen by more than 50% in the time.
Zdonik said IBMA doesn’t face “any immediate peril.” But, he noted, “It is true that changes need to be made as IBMA cannot continue to live off its reserves indefinitely, but must use those reserves prudently while IBMA makes necessary changes to balance the budget on an ongoing basis. The IBMA board and staff are fully aware of this situation and are 100% committed to making the necessary changes.”
In fact, as part of one of the most forthright statements ever issued about IBMA’s finances, Zdonik said:
“IBMA’s board is committed to improving IBMA’s ongoing finances as a priority in the hiring of a new executive director and in making a decision on a site for World of Bluegrass post-2012, just as it will be the driving criterion in all of IBMA’s decision-making until we are again running in the black.”
Zdonik tied the group’s financial condition to the recession, declining attendance at the annual World of Bluegrass conference and stagnant membership.
“No one likes an economic downturn like the one IBMA is experiencing, but in some ways the downturn may be just the wake-up call that the organization needs to really focus and prepare for a long-term sustainable future by making careful and well thought-out changes.”
He also thanked Bluegrass Today for its reporting on the group’s finances and cited “a new spirit of transparency and openness at the leadership level” of IBMA.
Zdonik did amplify one correction that he previously noted in comments responding to the original article. We reported that since 2008, IBMA kept 50% of Fan Fest proceeds and donated the other half to the IBMA Trust Fund for musicians in need, and that prior to that all of the proceeds went to the trust fund.
He said the 50-50 split has always been in place, and that the only thing that changed in 2008 was how IBMA’s accountants treated the money. Before 2008, he said, the amount earmarked for the trust fund was treated as an expense so it was excluded from the bottom line of Fan Fest. Starting in 2008, the amount was included in the Fan Fest “profit” and listed separately as a grant to the fund.
“IBMA has not changed this program since its inception and continues to stand 100% behind it.”
Following is the complete response from Stan Zdonik:
IBMA Addresses Its Finances And Clarifies That Net Fanfest Proceeds Have Always Been Shared 50-50 With The Bluegrass Trust Fund
Recently, an article appeared in Bluegrass Today by David Morris addressing IBMA’s Financial circumstances (“IBMA at the Crossroads” February 13, 2012). IBMA appreciates the interest shown by Bluegrass Today and by Mr. Morris and welcomes further dialogue on this important topic. In follow-up to Mr. Morris’s article IBMA would like to offer the following additional information, and in one important respect, a clarifying correction.
IBMA has a history of conservative financial management that has allowed it to accumulate substantial reserves over the course of its history, with reserves in 2006 of more than $500,000. This put IBMA in the enviable position of having reserves of approximately 50% of its annual budget, where reserves of 10% are typically considered quite good.
Many things have happened since 2006 to cause a reduction in these reserves. As of 2010 the reserves were approximately $300,000. Key factors causing IBMA to spend reserves to balance its budget included the dramatic economic downturn in 2008, declining attendance at World of Bluegrass, an up and down trend in membership (revenue from membership dues was $170, 461 in 2006 and $171,409 in 2010), and other factors. IBMA still has reserves in excess of $250,000, or more than 25%, of the approximately $900,000 budget for 2010 such that IBMA is not in any immediate peril. However, it is true that changes need to be made as IBMA cannot continue to live off its reserves indefinitely, but must use those reserves prudently while IBMA makes necessary changes to balance the budget on an ongoing basis. The IBMA Board and staff are fully aware of this situation and are 100% committed to making the necessary changes. Progress in that regard is being made.
Some important changes have already been made, and further changes are either under study or underway.
- Significant cost cuttings have been carefully put in place over the past few years without impairing the delivery of core services and programs. Since 2006 total expenses have been cut from $928,876 in 2006 to $880,040 in 2010, a cut of $48,836. Preliminary figures show a further reduction of expenses for 2011 to approximately $789,000, a further cut of a little more than $90,000, reflecting a total reduction in expenses since 2006 of more than $139,000 or about 15%.
- Surveys of the membership and of attendees at World of Bluegrass were undertaken and with this feedback in hand changes were made to World of Bluegrass 2011, and more changes are expected for 2012, all with an eye towards improving the event and its bottom line.
- A program of revenue generating webinars has recently been established.
- IBMA has transitioned from a paper to an electronic newsletter with substantial cost savings.
- An aggressive lifetime membership campaign along with other discount membership programs has been pursued to bolster membership.
- Staff expenses have been cut back.
- IBMA renegotiated its contract with the Renaissance Hotel and the Convention Center to reduce food and beverage expenses from $131,000 to $53,000 for a savings of $78,000.
- IBMA has embarked on a first-ever full independent audit of IBMA’s finances and of those of the Trust Fund, along with an audit of the financial relations between IBMA and the Foundation for Bluegrass Music.
These are some examples of changes already made, with even bigger changes in the works.
IBMA is about to launch a beta version of its Bluegrass Nation online project. Bluegrass Nation will help position IBMA as a major on-line presence in the modern cyber world, will serve as a location for all things bluegrass, and is expected to increase IBMA membership and revenues even though tier one participation in Bluegrass Nation will be free.
IBMA is also in the process of selecting a new Executive Director. While IBMA will miss its longtime Executive Director, Dan Hays, who contributed much to IBMA during his 21 years at the helm, Dan’s departure is also an opportunity to bring in new leadership that can help guide IBMA into the future. Likewise, 2012 is the last year of IBMA’s contractual commitment to keeping World of Bluegrass in Nashville. A very talented site selection committee is hard at work evaluating proposals both to stay in Nashville and also to move to other suitable locations if it is determined that a move out of Nashville would be better for IBMA, for the membership, and for IBMA’s bottom line. The input of the membership has been actively sought through surveys and other strategies and input from the membership remains key.
IBMA members and non-members interested in IBMA’s future can take heart that IBMA’s Board is committed to improving IBMA’s ongoing finances as a priority in the hiring of a new executive director and in making the decision on a site for World of Bluegrass post 2012, just as it will be the driving criterion in all of IBMA’s decision-making until we are again running in the black. IBMA and its board and staff are grateful to the many talented members and non-members who have contributed their time and talent to IBMA by serving on committees and in a myriad of other ways. IBMA recognizes that its members and supporters are its greatest asset. It is hoped that others will agree there is a new spirit of transparency and openness at the leadership level of IBMA.