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Association Bisnow
   
October 8, 2008
 
       
 

FORM 990 POACHING


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Putting aside the current unpleasantness, we continue our roundtable on "other" issues on the plates of association CEOs (besides delicious Smith & Wollensky crab cakes). Our all-star cast turns to Form 990 and leasing/ buying office space as hot topic issues that bring us to the final cup of coffee.

 

Guests of honor: Bill Millar, CEO, American Public Transportation Association; Walter McCormick, CEO, United States Telecom Association; Governor Bill Graves, CEO, American Trucking Association; Michael Katcher and Jim Dennin, Senior Directors, real estate giant Cushman & Wakefield; and Jerry Jacobs, head of the non-profit practice of national law firm Pillsbury.

Bisnow:

Since everyone's talking about it, what's the latest with Form 990?

   
Jacobs:

We represent about 200 national associations. Before the end of the year, your board is probably going to have to address policies, some of which you already have, some of which you don't have. The new Form 990 basically forces you to answer questions regarding governance the way Sarbanes asks publicly traded business corporations whether they have a governance code of ethics. For the first time, your compensation will be itemized in Schedule J showing base salary, bonus, retirement, non-tax benefits.

   
Graves: Trucking is made up, for the most part, of very, very small firms—everybody thinks of FedEx and UPS and Yellow Roadway.  But they are the exception. The concern I actually have is the average individual out there trying to make a living, meet a payroll, a bottom line in Columbus, Ohio. And when you look at compensation levels of what goes on in Washington D.C., it's very difficult to ever understand that.
   
McCormick:

I mean everybody is always curious about what other people make. I have some of the same challenges that Bill has in that a lot of our members are really, really small.  And they make what might be the median income in the United States.

 
   
Jacobs:

The itemization is a problem because, in many organizations, the department head's compensation will be itemized, not just that of the CEO. It's all going to be there now for your competitors to see.  So if you're lucky enough to have a great CIO whom you've been underpaying relative to the market, you could be at risk of poaching; conversely, you've got a great recruitment tool if you're looking for a CIO. You just look at other organizations' 990s, learn who's out there, and determine who, perhaps, is underpaid.

   
Graves:

If I had a concern, it would be that people will misinterpret or jump to conclusions about what those different numbers might mean when in fact they are pretty standard common rates of pay.

   
Bisnow: What happens if members get upset?  Do you have a plan?
   
Graves:

We have a very fine HR staff that stays very attuned to compensation surveys, analysis, knows what comparables are being paid for like positions within associations. We can defend or explain everything. My point is that I hope it doesn't come to needing to take the time to having to do that.

   
Millar: That will depend a lot about how the members are feeling about life in general. Be optimistic. If the bailout works and the economy starts to come back, there isn't huge unemployment, for my guys ridership continues to rise. That's a whole different environment than if this whole thing goes in the tank. Then we'll be describing what we spent on pencils last year.
 
   
Bisnow: Let me ask the Cushman guys.  What's the latest in association space planning?
   
Katcher: One of the big things that we're seeing now is looking at your peers. Benchmarking against your peers by either using rent-to-revenue ratios or square-foot/employee numbers in order to better gauge themselves against other non-profits.
   
Dennin: It's a tough situation—a lot of associations who would like to reduce expenses might be inclined to move outside the city with rents in D.C. so high. However in doing so they grapple with their employees' need for the Metro and their members' desire for a DC address. On the sale side, what I've been seeing the last 18 months is more associations considering ownership. As rents and operating expenses escalate, associations beginning to say, 'Let's get control of these costs and try to purchase our own building.' Then again, with the current credit crisis making it difficult to secure financing, despite the interest, fewer sales may come to fruition.
   
Bisnow:

Are you finding this issue is a big factor in retention, recruiting, and general morale?

   
Dennin: I think it's important for associations to provide office space that's attractive. Not elaborate like a bank or a law firm but nice enough that employees are proud of their space and a sense of stability is present.
 
 
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