FROM THE CEO
APA’s strong financial footing
BY DR. NORMAN B. ANDERSON • APA CHIEF EXECUTIVE OFFICER
As a 501c3 nonprofit organization, APA focuses on activities that support and
advance psychology. Our collective goal is to enable the discipline to continue
to apply its science in ways that advance human welfare. We know that
supporting APA’s mission to apply psychology for the public good is, in part,
why you belong to the association. Don’t assume, however, that our
charitable and educational mission means that APA’s financial
strength is a secondary concern. Simply put, because financial
strength leads to mission strength, we take very seriously our
responsibility to spend wisely, balance our budget and protect
APA’s overall financial health.
APA’s financial management team — the Finance
Committee, the APA treasurer, the Board of Directors and
our Finance Office staff — oversees the association’s $126
million annual budget. The income side of the budget
consists of operating revenue, grants and contracts revenue
and income from the two office buildings owned by the
association. The sale and licensing of APA publications and
databases is by far the largest source of revenue, generating
nearly $86 million annually. Your dues payments are the
second largest source of revenue, about $10 million annually.
Part of the association’s financial strength is that we are not
largely dependent on dues income. During the last five years,
APA has decreased member dues and continues to offer
students and early career psychologists special rates to make
membership more affordable.
As for expenses, staff salaries and benefits are APA’s largest
expense. We employ over 600 people in functions ranging from
editing APA journals, to supporting psychology’s interests in
Washington, to staffing governance groups. A second major
expense is producing APA’s print and electronic publications.
These expenses pay for themselves in returned revenue and
in the many ways they allow APA to meet member needs,
disseminate psychological scholarship and affect public policy.
APA’s annual operating budget is managed to ensure that, on
a three-year rolling average basis, revenue exceeds spending —
in other words, we must have a positive operating margin across
any three-year period.
To ensure APA has money for unplanned but critical
projects, APA uses “designations.” For example, in 2012, the
Council of Representatives established a special $3 million,
three-year designation to help create more APA-accredited
internship positions. Special designations totaling $6.2 million
were created in 2012 to support projects aligned with APA’s
Strategic Plan, including the new Psychology: Science in Action
public education campaign, the Good Governance Project and a
process by which APA will create clinical practice guidelines.
The final components of the association’s overall
financial picture are its real estate and investment portfolio.
As mentioned earlier, APA owns two office buildings in
Washington, D.C. One serves as APA headquarters, with about
40 percent of the overall space leased to tenants. Our second
building, one block away, is entirely leased to tenants. We also
use the headquarters buildings to host many APA governance
meetings to save the expense of holding them elsewhere. In
addition, APA just completed a state-of-the-art conference
center on the roof of the headquarters building. The conference
center, with an outstanding view of the U.S. Capitol, is a new
source of income when rented out for events and conferences.
APA’s investments are a well-diversified mix of large-,
mid- and small-cap equity funds that include domestic and
international companies. APA also invests in bond funds. Like
that of all investors, APA’s portfolio is subject to the market’s
ups and downs but is structured to preserve capital and enjoy
long-term growth. Last year’s strong stock market helped
increase the association’s net assets to $67 million. In addition
to the investment portfolio, APA has considerable equity in
its two office buildings that is not included in the $67 million
of net assets.
Viewed together, the solid budget and investment strategy
will ensure APA’s long-term stability and help us continue
our mission to advance the creation, communication and
application of psychological knowledge to benefit society and
improve people’s lives. n