|Glenn P. Gravlee, MD
Planning our Financial Future
Your Society has enjoyed excellent financial success in the past year, with total assets growing from $2.5 million to just over $4 million, an all-time high. Most of that growth reflects bull market portfolio growth, but note that this figure precedes the bottom-line impact of an anticipated six-figure financial loss on the recent Annual Meeting in Honolulu. It was a great meeting in an outstanding location, but too few of you elected to join us there. Lesson learned: We'll stick to the continental United States and major Canadian cities at least for the near future.
SCA decided approximately five years ago to place a relative emphasis on stock market investments in order to maximize long-term growth, so your Board of Directors recognizes that a bear market could emerge from hibernation at any moment. Therefore, the $4 million figure may be evanescent, as most of us can confirm having watched helplessly as our personal retirement accounts shrank during the recent extended bear market.
How much money does SCA need? Most financial advisors suggest keeping sufficient reserves to cover two years of operating expenses. Our annual operating costs are approximately $2.5 million, so we are still short of that benchmark, but I'm not complaining. To sustain research and educational grants independent of revenues from annual dues and from educational meeting registration fees will require more than that. In order to pursue this latter goal, the SCA Board of Directors recently created a Research and Education Fund. Its long-range goal is to provide a source of revenue designated specifically for scientific research and for educational activities that do not sustain themselves financially. The current value of this fund is approximately $600,000.
The most obvious SCA mission is education, and I hope that you share my pride in our educational accomplishments. Most of our educational meetings either break even or generate a small profit. Research is also a very important component of our mission. Awarding grants for promising investigators constitutes an important part of this research mission, and SCA spends approximately $175,000 each year funding research grants. A variety of other research or educational activities, e.g., our annual monograph, run the SCA annual research and education budget up to approximately $250,000. To independently sustain a $250,000 research and education budget would require approximately a $5 million fund, assuming that 5% of these funds could be spent each year without eroding its principal. Ideally this amount would exist over and above the operating revenue reserves, so one could argue that SCA needs as much as $9-10 million in reserves in order to be fiscally prudent. For comparison, the Society of Thoracic Surgeons and the Oral and Maxillofacial Surgery Foundation each have over $6 million in reserves. If we could bring SCA's total assets into the $6-7 million range over the next five years while dividing these assets into restricted and an unrestricted use categories, this would do much to secure our role among our subspecialty organizational peers as a healthy major organization with a well-rounded agenda of activities.
Because it has become so difficult for young academic cardiovascular anesthesiologists to obtain peer-reviewed grant support, SCA hopes to increase its support for research in the future. It is often difficult for practitioners to see a benefit in supporting such research, but I hope that each of us can appreciate that research sustains and enhances our daily clinical activities. It is important to understand that SCA would also use enhanced reserves to support educational activities.
To determine the feasibility of moving toward these loftier financial levels through philanthropy, SCA has retained the services of Campbell & Co., which is currently conducting a survey for us. Nancy Nussmeier has done an excellent job of leading a task force on fund-raising for SCA, and she is largely overseeing the Campbell & Co. survey. I hope that this survey points us in the direction of successful philanthropic fund-raising through a variety of mechanisms (yes, including contributions from members, but I hope much more than that). The maximum cost of this survey will be $35,000-40,000, and we expect it to be completed later this year. When we get the results, we will share the highlights with our membership. I hope that this survey will mark the beginning of a successful fundraising campaign that will enhance our subspecialty. Stay tuned.
Glenn P. Gravlee, MD