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Subj: Alumni Association Leadership Update; August 2004 Refer to: Central Region Letter 11-04; August 12, 2004 **** George Watt ’73, President of the Alumni Association, just issued his August 2004 Leadership Update. I am transmitting it to you verbatim in its entirety.
“August 2004
The twelve-month operating year ending 30 June 2004 marked still another consecutive fiscal year of overall financial success; membership growth; surpassing interim campaign fundraising objectives; increased private support to USNA; and significant growth in consolidated net assets. Progress was made in all of our long-term objectives, and all but one of our stated annual objectives was met (that being in absolute membership). In addition, FY 04 was a second consecutive year involving USNA leadership transition, with the AA-NAF and USNA partnership once again strong and vibrant. Milestones reached during the past twelve months include completion of Phase II of the Navy-Marine Corps Memorial Stadium (including dedication of Jack Stephens Field) and significant progress toward completion of Phase III. In FY 04, ground was broken on the Uriah P. Levy Center & Jewish Chapel, a cooperative initiative of the Naval Academy Foundation and Friends of the Jewish Chapel. New international squash courts were officially opened and entirely funded through the Foundation and Friends of Navy Squash. The Robert Crown Center was completed and rededicated. Through the efforts of the Alumni Association, and in partnership with four graduated classes, Memorial Hall was dramatically enhanced with the addition of a unique exhibit of operational loss panels (Valor & Sacrifice). Among many other accomplishments, perhaps the most public was exceeding the previous campaign goal of $175 million in December 2003. When measured against three previous good years for the Association and Foundation, FY 04 should be considered a great year.
With that, I bring you the summer edition of Leadership Update. In this report, we will focus on the details of fiscal year financial performance, campaign results to date and where we are (and where we’re going) regarding membership.
Financial Performance
Although the treasury staff continues to do their usual group of year-end entries to officially close the books and prepare for the auditors, we have recently presented unaudited results to the Joint Finance-Audit Committee. The numbers presented herein are better than directionally correct and are excellent indicators of recent financial success.
Fiscal Year 04 highlights include:
· Membership Growth: Alumni Association membership now stands at an all-time high – more than 50,000 dues paying members. Since the amalgamation, we have added approximately 12,000 net new members.
· Contribution Growth: Total contributions in FY 04 exceeded $39 million, compared to $29.8 million in the previous fiscal year. Unrestricted gifts exceeded $7 million against a budgeted goal of $6.8 million.
· Increased support to USNA: In total, more than $29 million was provided for a host of restricted projects, initiatives and programs that add to the margins of excellence in every facet of Academy life. This compares to $21 million in FY 03. Milestones in support included the completion of Phase II of the stadium renovation and more than $14 million in support for Phase III. In addition, we provided $4.3 million in support for the Uriah P. Levy Center and Jewish Chapel (a cooperative initiative with the Friends of the Jewish Chapel). New international squash courts were officially opened and entirely funded through the Foundation and the Friends of Navy Squash. The renovation for the Robert Crown Center was completed and it was rededicated in April.
· Investment performance: Our investment portfolio has grown to $105 million and has benefited from the steady hands of the Joint Investment Committee. Total return for the year has been more than 12 percent, realized from a very sound, strategic investment policy that captured the upside of the improving financial markets, particularly during the first six months of the period. Improved yields on our investment help in our budget execution, as we rely on interest, gains and dividends to supplement our revenue. Investment income for FY 04 was more than $900,000.
· Budget Performance: The operating budget is the annual financial plan for the enterprise and is put together with the intent to balance unrestricted revenues with operational expenses (labor and programs) without drawing on reserves. In FY 04, we exceeded our revenue target by almost $1 million ($11.8 million vs. $10.8 million) and were slightly above the plan on expenses by $400,000 ($11.2 million vs. $10.8 million). We had an “operational” surplus of more than $600,000, as well. This is the third year we have shown a budget surplus, strengthening the overall financial health of the Alumni Association and Foundation.
· Increasing Net Assets: Our net asset position improved significantly with an addition of greater than $11 million for the period. Net assets are those assets left after removal of liabilities and are an indication of our “equity.” Net assets are classified as one of the following: unrestricted, temporarily restricted or permanently restricted. One measure of our financial health and prowess is the degree of sufficiency of our unrestricted net assets. Unrestricted net assets are those assets which do not have restrictions and the board/s can use the amounts as they choose to carry out the mission of the organization. After several lean years, our unrestricted net asset position on a consolidated basis improved in FY 04 by more than $4 million – $6 million as of 30 June 2004 vs. $2 million as of 30 June 2003. This improvement is spread over and shared by each of the divisions – Alumni Association, Foundation Development and Athletic and Scholarship Programs.
· Cost of Fundraising: Finally, a measure that we take very seriously is the “cost of fundraising.” How efficient are we in our fundraising efforts? The three-year average is currently 12.7 cents on the dollar, within our internal goal of 14-16 cents per dollar raised and also within the range of any measurable national best practice for non-profit organizations or higher education institutions.
A comprehensive review of audited financials and the auditor’s report will be given to the Joint Finance and Audit Committee and both boards later in the fall. That will be followed immediately by the FY 2004 Annual Management Report. A summary of our performance highlights (unaudited) for FY 04 is shown in the table below.
Campaign and Fundraising Update
I’m pleased to report that we continue to make significant progress toward our $225 million goal in the Leaders to Serve the Nation Campaign. As of 31 July 2004, documented commitments to the Campaign total $200.2 million. Of the $200.2 million, $142.1 million has been received, while $58.1 million is in outstanding pledges and bequests. The breakdown of campaign support by constituency is: Alumni, 67 percent; Friends, 11 percent; Corporations, 10 percent; Parents, 4 percent; Other Foundations, 2 percent; and “Organizations,” 6 percent. This includes gifts and commitments from the NAAA, NAF-Trustees and the Alumni Association. We are on track to meet or exceed our public goal of $225 million by 31 December 2005. However, we must continue our momentum as we have several areas requiring our focus, namely: to secure an additional $5 million in commitments for Navy-Marine Corps Memorial Stadium; to raise additional support for the Naval Academy’s leadership and character excellence initiatives (principally, funding for the Ethics Center); and finally, to sustain unrestricted support for operations and the annual discretionary gift to the USNA.
We also look forward to celebrating the 10th anniversary of President’s Circle, our premier donor recognition society, during the weekend of 22-23 October in Annapolis.
Alumni Association Operations
Membership We continue to make steady progress toward our membership objectives, and as of 1 July, we reached a remarkable milestone. For the first time, we have more than 50,000 members – 50,946 active members as of this writing – and anticipate we will soon surpass the 51,000 mark. This accomplishment can be credited not only to the hard-working Alumni Association membership staff, but also to you – our leadership. By working together, we have made it to where we are today, and, through our continued collaboration, we can achieve our future goals. Thank you!
Also, we have more than 541 sets of parents from the Class of 2008 who have joined the Alumni Association as Associate Members and signed up for a four-year plan. We know these parents will be engaged for the next four years – a model we will continue to use for future classes. We’ve also activated the Class of 2006, welcoming the midshipmen to the Association as Provisional Life Members. They will begin to receive Shipmate and are now eligible to take advantage of the value-added services we provide to our members.
The coming months will keep us busy, as we head into the football season, our reunion season and Homecoming. I encourage you to engage your classmates, shipmates and friends who are not currently members and explain to them the importance of joining the Alumni Association. We have more than 8,500 living graduates who have either not been afforded an opportunity to join, or have allowed their membership to lapse. Membership is our lifeblood and is critical if we are to remain relevant to our entire constituency. We must find a way to bring these folks back to the fold…and we need your help to do this.
The membership staff is now working on a three-year membership drive that will take the Association through June 2007. The goal is to accelerate membership growth and to eventually reach the 60,000 member milestone. We will use a Navy-Marine Corps Team concept and already have two volunteers on board who will help us promote this to our Alumni. They are RADM Rick Buchanan ’68 and LtGen Jack Klimp ’68. They are working closely with the Membership Committee of the Board of Trustees, chaired by Dan Lear ’68, and the membership staff at the Association to encourage our Alumni to join. Even with the concentrated effort of this team, we need the support and help of our class, chapter and club presidents. You have contact with our non-members through your classes, chapters and clubs, and we ask you to promote the importance of Alumni Association membership whenever you have the opportunity to speak to your peers.
Communications
Parents’ Web Site Since its launch at the beginning of May, the USNAAA parents’ web site, www.USNAParents.com, continues to gain in substance and popularity with parents. In June, the listserv moderators of another USNA parents’ web site, www.usna-parents.org, were invited to join the communications team of the Alumni Association and Foundation. We are now working to integrate this site into www.USNAParents.com and expect this process to be completed by 1 September.
Shipmate Redesign By now, I hope you’ve received the July-August issue of Shipmate and had a chance to see the magazine’s new look and format. We appreciate the many comments that we’ve received regarding changes to Shipmate and encourage you to continue to provide us with your feedback.
Unfortunately, there has been too much, and quite unnecessary, misinformation circulating through various email channels. Let me assure you, our Alumni leaders, that we remain committed to our mission to bind our Alumni together, and Shipmate is an important communication tool as we work hard to do just that.
I have no intention of rehashing the erroneous information that’s out there. To ensure you have the “good gouge,” we’ve posted information on our web site. Please visit www.usna.com, click on the “Shipmate” link and click on the “Shipmate Fact Sheet” link. Communications Committee Chairman Bernie Maguire ’64 is also available to assist you in understanding and communicating the facts.
Please remember that Shipmate’s redesign is a work-in-progress. We need the opportunity to execute and learn from the plan we have created based on the survey conducted last summer – a plan that was thoughtfully created in close coordination with Alumni volunteers and thoroughly vetted with Alumni leadership. I hope I can count on your patience and continued support. As we go through this process, I am at your service to take your feedback and to provide you whatever operational or financial information you require to act as a responsible and informed advocate. I hope you will continue to avail yourself of Bernie and me in this regard.
In Closing…Fire it up!!!
In a matter of a few weeks, the Brigade of Midshipmen will re-form to begin the Naval Academy’s 160th year of providing leaders for the nation. I look forward to seeing many of you this fall in and around Annapolis at one of our six home football games (at the newly renovated, expanded and transformed Navy-Marine Corps Memorial Stadium). Or perhaps you will join us for the 2004 Distinguished Graduate Award weekend (10-11 September). First Class Parents Weekend provides us an opportunity to host our parent club officers, giving them a chance to hear from the Superintendent and other USNA leaders. Homecoming 2004 will see six significant class reunions and thousands of Alumni returning to the alma mater in late October. We also have Notre Dame in the Meadowlands and Army in Philly, as well as many opportunities to “Fire it Up!”
A final reminder for you and your respective constituents: The parking scheme at the stadium has changed and we anticipate larger crowds at home games than in the recent past. If you need more information on the fall season, USNA events, changes to stadium parking, etc. please log on to either www.usna.com or to www.navysports.com. Let’s not have anyone saying they never got the word!
Thanks, as always, for your leadership and support. Our successes are joint and mutual. The Alumni Association and Foundation staff remains focused on the vision and the mission. Your moral and physical support is critical to our performance and to our achieving our goals. Go Navy!
George P. Watt, Jr. President and Chief Executive Officer USNA ’73”
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