PR Society of America's 2013 income was less than it was in 2006; member total is where it was in 2000; only $1,057 was spent on "ethics in 2013," and $423K CEO Bill Murray suddenly quit. But no one's interested in this story (except us).
The audit should be available to the press because no worthwhile coverage of the Society is possible without it. We have sent or offered to send it to media including PR News, PR Week/U.S., Bulldog Reporter, PR Newser, Ragan’s, and New York Times ad columnist Stuart Elliott.
So far there are no takers. We should not be the only medium covering news of the Society.
When Jill Abramson was bounced as executive editor of NYT last week, there was a hue and cry for an explanation. Yesterday Arthur Sulzberger Jr., after many urgings, put out a statement saying gender had nothing to do with it but rather “arbitrary decision-making, a failure to consult and bring colleagues with her, inadequate communication, and the public mistreatment of colleagues.”
But in the PR industry, Murray is allowed to walk out in the middle of a contract that paid him $423,000 in 2012 with one sentence: “After deep reflection, I’ve decided that the time has come for me to leave PRSA and pursue new opportunities and new challenges.”
Murray No Match for O’Dwyer Co.
We have the reason he left. He was no match for the O’Dwyer Co. His ceaseless campaign aimed at blocking coverage and discrediting the O’Dwyer Co. and this reporter was a colossal failure.
A typical example of the venom that spewed from him is a 1,089-word e-mail Oct. 7, 2012 to consumer advocate Christopher Elliott who asked why O’Dwyer reporters were being banned from the Society’s annual conferences.
It opened by saying we publish a “small newsletter and website related to the PR industry” and that the Society could “no longer tolerate” our “unprofessional and unethical conduct towards our volunteers, our leaders, and towards gathering ‘news’ and ‘reporting’ on our organization.”
Murray told Elliott that O’Dwyer staffers would be banned from everything at the 2012 conference in San Francisco including the Assembly.
It’s no wonder Murray did not want us reporting on that Assembly because senior members who were there described it as “the most utterly useless Assembly in the history of the Society.”
The morning was filled with speeches by leaders with no opportunity for delegate discussion. An “unconference” was scheduled for the afternoon at which anything was to be discussed. But the ground rules were quickly changed so that only ways to “grow the Society” were allowed. Senior members felt they were being treated like “newly-elected Brownie troop leaders.”
Commenting on the afternoon “buzz groups,” the seniors said, “The Society never uses any of the ideas of the delegates anyway.”
Murray and the board simply don’t want their abusive policies and practices being covered. Example is the 2009 Assembly that re-wrote the bylaws. Bedrock Robert’s Rules were disregarded including the ban against proxies and the need to present all articles for consideration and vote. Ten of the 11 bylaws committee members were APR when only two at most should have been. A committee member quit because no in-person meetings were set—only teleconferences and e-mails.
We have urged the Society not to repeat the mistake of hiring a non-PR career person as staff head.
McClennan Buffs up Audit
Treasurer Mark McClennan of MSLGroup/Publicis, in a posting on the Society website, tried to put a good face on the dismal 2013 financial report by saying the Society has attained its “financial goal” of increasing “net asset balance” by 1% of operating expenses.
That begs the question of how the Society figures its “net assets.” They include $5,180,386 in dues booked as cash instead of over the course of the dues year as demanded by section 958-605-25-1 of the Financial Accounting Standards Board. Deferred dues are a miniscule $307,305 which is earmarked for Tactics & Strategist.
There is a loophole, we admit. The Society’s auditor, not one of the “Big Four,” can book dues as cash if it claims that under no circumstances will the members get their money back. Other organizations, such as the AMA, ABA, AICPA and IABC, could make the same claim but they set aside about half of their dues as unearned and don’t claim it as part of their “net assets.”
The claimed “net assets” of $4,966,333 should be cut in half to about $2.5M. McClennan’s talk about the Society making progress towards its goal of having “net assets” of 50% of operating costs ($10.9M) means it needs to add at least $2.5M to profits to get there. The 2013 surplus was only $310K if an insurance payment and stock profits are excluded, he said.
Payroll Nearly $6M; 'Ethics' Almost Zero
Salaries & fringes of the 54 staffers totaled $5,534,037 in 2013. To this must be added $440,064 set aside for the 401(k) profit sharing plan for all employees. The Society contributes 3% “in addition to discretionary contribution.” It also makes matching contributions to those who give part of their pay to the plan. The total is $5,974,101 or 54% of Society costs.
It averages out to about $233,000 for the top six staffers (based on 2012 figures, the only one available until October of this year) and $82,000 for the other 50.
That’s quite high because associations of this size usually spend closer to 40% of revenues on staff pay/fringes.
Payroll/fringes were 31% of expenses in 1989. They were $1,407,093 on expenses of $4,534,990. They were 31.3% of expenses in 1990 when payroll was $1,612,540 and expenses were $5,154,899.
This climbed to 43% in 2003 ($3,905,950/$9,065,643), and topped more than 50% starting in 2009 when they were $5,368,206 on expenses of $10,442,670 (51.4%). They were 52.8% in 2010 ($5,529,059/$10,465,265); 51.3% in 2011 ($5,419,738/$10,563,130); 51.8% in 2012 ($5,539,059/10,688,215), and 50.6% in 2013 ($5,534,035/%10,936,203).
Costs Are High in New York (No Kidding!)
Costs of everything are high in New York and particularly full-time employees. That’s why the American Society of CPAs moved most of its offices to Durham, N.C., in 2005 where more than 500 staffers now work. It keeps satellite offices in New York at 1211 Ave. of the Americas as well as Washington, D.C., and Ewing, N.J.
Seven Society chapters, whose members must be rolling their eyeballs by now, urged the Society to shift most or all of its offices elsewhere in 1985. but these pleas were rejected in 1985. The lease at 845 Third ave. was up in April 1987 and the Assembly demanded to have a voice in where new offices would land. Leading the charge was the Houston chapter, ninth biggest with 450 members. It sent the national board a demand that any office move be made by the Assembly.
The national board strung the chapters along, obtaining full-scale pitches from Houston, Dallas, Denver, Chicago, Indianapolis, Memphis and Atlanta. A tipoff of what was going to happen was the fact that the Washington, D.C., chapter was not allowed to pitch.
National Capital president Paul Forbes said he was “amazed” at the shut-out since the D.C. area was the “only logical choice” for the office.
The 40-member staff threatened to quit en masse if any move was made out of New York. The national board capitulated. It gave out the weak excuse that $200K in recruiter costs would be needed to replace staff.
Dissidents said the board never estimated the cost savings in staff and rent by moving all or most of the operation to another city. Occupancy costs rose from $310,215 in 1989 to $780,544 in 2013. The 22,000 sq. ft. at 33 Maiden lane cost about $35 per sq. ft.
Twenty-seven years later, a ballpark figure of at least $50 million can be placed on lower payroll and office costs that would have been possible in most of the other cities that vied for h.q.
The board and staff, mindful of war that broke out over the office location in 1985, shocked the 2003 Assembly by telling it that a 13-year lease had been taken at 33 Maiden lane effective in 2004. Case closed.
'Ethics' Gets Pennies
The amount spent on “ethics” reached an all-time low of $1,057 in 2013. It was $5,290 in 2012; $1,406 in 2011; $2,649 in 2010 and $2,891 in 2009.
The Society, meanwhile, spent $582,608 on lawyers in the nine years ended Dec. 31, 2012. Legal expenses in 2013 won’t be revealed until October when IRS Form 990 is filed.
Travel, meals and hotels cost $434,970 in 2013 and $468,498 in 2012. The Society will not say how much of this is for staff meals and travel. Current policy eliminates New York as a site of the national conference resulting trips by staffers to spec out other cities. The previous two conferences in New York were in 2004 and 1992. The next four cities after the D.C. conference have been picked but the Society will not say what they are. New York chapter leaders said New York is not one of them.
Last year’s “surplus” was unusually high--$812,000. Factors, McClennan said, were “strict cost controls, increased used of technology, an insurance claim (from burst water pipe) and favorable returns on our investment portfolio.”
The booming stock market gave the Society $343,281 in profits. Investments include $1,764,576 in common stocks, up $374,852 from 2012’s value.
Net in 2012 was $629,105, including $233,897 from investments; $69,810 in 2011 including investment income of $11,330; $270,709 in 2010 including investment income of $222,599, and minus $149,753 in 2009 including investment income of $303,816.
'Leaker' Won’t Get A Hearing
Our lawyers say this is a ridiculous document and unenforceable in any court although Society staff can indeed cancel site access and the only recourse the member has is a lawsuit.
There is no "contract" because nothing was ever "negotiated" with the members. The "coercive," unilateral nature of these 13 pages of corporate terrorism is betrayed by the use of the phrase "at our sole discretion" five times.