Adapted from a story in the February 2014 issue of The Rotarian
How much does it cost to be a member of your club? You can probably answer that question. What do your membership dues cover? That may not be as clear.
Many Rotarians know that a portion of their dues funds club and district expenses, as well as Rotary International operations worldwide. Few know exactly how that all breaks down. Dues are extremely important, as they are the single biggest source of revenue providing the services you enjoy as a Rotarian.
As a companion to Rotary’s annual report , and on the heels of a $1 dues increase approved by the 2013 Council on Legislation, we answer some frequently asked questions about where your money goes.
HOW MUCH OF MY TOTAL MEMBERSHIP DUES GOES TO RI?
Right now, RI dues are $53. Depending on where you are in the world, that equates to about 4 to 14 percent of your total membership dues. The rest of your membership dues total primarily covers club and district expenses, meals, and a subscription to The Rotarian or your regional magazine.
WHY ARE RI DUES INCREASING?
The RI Board of Directors proposed the increase based on a five-year financial forecast projecting that Rotary’s spending would exceed its revenue by $9 million in 2018 if there were no increase. With the dues increase of $1 a year for three years, spending is still projected to exceed revenue, but by a smaller margin. The increase keeps the general surplus fund, which is Rotary International’s savings, above the mandated level but does not prevent cutbacks in service.
WHY INCREASE DUES? WHY NOT CUT SPENDING?
This issue is a hot topic not only for Rotary but for the larger philanthropic community. In fact, the three major U.S. charity-rating groups have publicly agreed that nonprofits should not be judged solely on frugality; impact is also a critical factor. Significant spending cuts will translate into diminished service for Rotarians, clubs, and districts, reducing our impact on the communities we serve. So, Rotary is committed to monitoring and controlling expenses closely, making prudent cuts, and investing where needed. For example, more meetings than ever take place virtually, and Rotary’s data center, software development, and some transaction processing services were moved to Pune, India, to lower costs. However, it is important that Rotary continue to invest in staff and technology to grow and improve the organization.
BESIDES DUES, WHAT OTHER SOURCES OF REVENUE DOES ROTARY HAVE?
Dues account for about 65 percent of Rotary’s revenue. The next largest source of income comes from return on investments. Rotary also earns money through publication sales, international convention registration revenues, royalties, license fee income, and rental income at the world headquarters building in the U.S.
IS ROTARY FINANCIALLY HEALTHY?
Yes. Rotary International’s general surplus fund exceeds the target established in the bylaws, and the budget is balanced. In 2011 and 2012, the RI Board of Directors designated $15 million of the general surplus fund to support strategic initiatives to grow the organization. It allocated $10 million to be spent over three years on additional public relations grants, a new communications plan, the creation of Rotary’s new visual identity, and the expansion of the organization’s social networking presence. The Board also approved $3 million to be spent on creating and implementing regional membership development plans, and $2 million for other initiatives. In 2013, the Board approved $2 million to be used for strategic and operational costs if needed. This strategic spending is important to promoting Rotary and helps support membership growth, which is critical to the future of the organization.
DOES RI EVER MAKE SPECIAL EFFORTS TO SUPPORT THE ROTARY FOUNDATION?
On occasion, the Board will take extraordinary measures to support the Foundation financially. For example, over the last two years, RI contributed $10 million from the general surplus fund to PolioPlus. As a result of that commitment, the Foundation received a $50 million grant from the Bill & Melinda Gates Foundation.
HOW DO OUR COSTS COMPARE TO THOSE OF OTHER SERVICE ORGANIZATIONS OF SIMILAR SIZE?
It’s difficult to compare Rotary to other international service organizations. However, The Rotary Foundation’s financial performance is included in assessments by various charity-rating agencies. For example, in the United States, the Foundation receives high marks from several ratings groups. Charity Navigator gives the Foundation four stars, its highest score. The Foundation meets the 20 standards for charity accountability set by the Better Business Bureau’s Wise Giving Alliance and is a silver-level GuideStar Exchange Participant, demonstrating its commitment to transparency. Rotary’s partnership with the Gates Foundation is another strong affirmation of our metrics and reputation.