ABA Treasurer's Report -- Fiscal Year 2024
Each year, the treasurer provides a report on the association’s finances that is printed in the ABA Journal. In these reports, I seek to provide helpful information about the association’s financial health.
In this report, I cover the association’s fiscal year 2024 audited results; finances through the first seven months of fiscal year 2025 (unaudited); the results of a fiscal year 2025 dues rate increase; and a summary of the recently approved strategic plan for the association.
Fiscal year 2024 consolidated results
The fiscal year-end 2024 financial statement audit was successful. We received a clean (unqualified) opinion from our auditor, Grant Thornton. You can find the ABA financial statements and audit report at ABAJournal.com/FY2024. Below is a high-level summary of the association’s statement of activities.
Chart by Sara Wadford/ABA Journal
The association’s operating deficit of $13.7 million was roughly equal to budget and $3.5 million higher than prior year.
Consolidated operating revenue of $221.7 million was $7.2 million lower than budget, primarily due to lower grants revenue than budgeted and royalties shortfalls in the association’s ABA Advantage member benefits program. Operating revenue was $5.7 million lower than prior year, due to $9.7 million less grants revenue, but partially offset by higher meetings-related revenue. Consolidated revenue from nearly 170,000 dues-paying members totaled $42.7 million, roughly flat year over year.
Consolidated operating expense of $235.4 million was $6.8 million lower than budget: This is in part due to the lower grant activity, and in part due to conservative budgeting by sections, divisions and forums. Consolidated operating expense was $2.1 million lower than prior year, a 0.9% decrease.
Consolidated total change in net assets includes the operating deficit of $13.7 million, as well as nonoperating (“below the line”) results. Below the operating line, the association had $38.5 million of investment gains due to favorable financial markets, used $7.4 million of investments to support operations and had $5.9 million of nonoperating net expense. A $0.7 million year-end pension gain was recorded based on the determination of the association’s pension obligation by the association’s independent actuaries. As a result of the activity above, the association’s net assets increased by $12.1 million in fiscal year 2024.
Fiscal year 2025 through March 31
Through March of fiscal year 2025, the association’s net operating deficit of $3.4 million is $6.0 million lower than budgeted and $3.8 million lower than prior year, as seen below.
Chart by Sara Wadford/ABA Journal
Consolidated revenue of $128.7 million is $4.4 million lower than budget but $9.4 million higher than prior year. While grants segment revenue is $3.1 million lower than budget and $5.8 million higher than prior year to date, grants activity is expected to decrease moving forward. In spring 2025, the majority of the association’s grants with the federal government were terminated by the new U.S. presidential administration; as of this writing, litigation related to these terminations is ongoing. The association’s grants staff and member leaders will increase their reliance on alternative sources of funding to continue the important work they do to advance the rule of law and improve society.
Consolidated operating expense of $132.1 million is $10.3 million lower than budget and $5.5 million higher than prior year. Spending over the second half of the fiscal year will be lower because of the terminated grants.
Consolidated total change in net assets includes the operating deficit of $3.4 million, as well as nonoperating (“below the line”) results. Below the operating line, the association had $0.4 million of investment losses, used $4.0 million of investments to support operations, and had $2.5 million of nonoperating net expense, including pension and debt expense. As a result of the activity above, the association’s net assets decreased by $10.3 million in the first seven months of fiscal year 2025.
Fiscal year 2025 dues rate increase results
In my 2024 report in the ABA Journal (August-September 2024, page 60), I discussed a dues rate increase of $45 across most general dues categories that would be implemented in fiscal year 2025. This dues rate increase was necessary to ensure the long-term health of the association, allowing it to generate more revenue through operating activities to prevent or mitigate operating deficits, avoid depleting our investments, and most importantly, to continue investing in our membership product.
As a result of this general dues rate increase, I am pleased to report that the association is on track to earn over $2 million more dues revenue in fiscal year 2025 than fiscal year 2024, and an estimated $3 million more than it would have earned had there not been a dues rate increase in fiscal year 2025. Even with the meaningful increase in dues rates, membership loss to date has been minimal, as through March 2025, dues-paying members have declined by only 1% over the prior year.
In recent years, membership has been flat, yet general dues revenue has still been declining annually by $0.8-$0.9 million, as the association has been losing longer-tenured members paying higher dues rates and replacing them with younger members paying lower dues rates. One subtle benefit of the dues rate increases is that they also made the rates flatter across dues categories, a structure that was supported by benchmarking done against other professional associations and local bar associations. At the new dues rates, it now takes fewer members at the lower dues rates to replace the revenue lost from each member at the highest dues rate. As a result, if the trend continues of flat membership where the association is replacing long-tenured members with younger members paying lower dues rates, the associated revenue decline will be smaller than the $0.8-$0.9 million the association experienced under the old rates.
Staff and member leaders will continue to monitor these dues revenue and membership trends.
Financial position as of March 31
As of March 31, 2025, the association has total assets of $349.5 million and liabilities of $181.4 million, resulting in total net assets of $168.1 million. Of the $168.1 million of total net assets, $115.9 million are unrestricted sections, divisions and forums (S/D/F) net assets. The remaining $52.3 million are General Operations/Fund for Justice and Education (FJE) net assets (of which $18.5 million are restricted). Set forth below is our association’s balance sheet:
Chart by Sara Wadford/ABA Journal
American Bar Association strategic plan
In August 2024, after a yearlong process gathering input from key staff, member leaders and other stakeholders, the association’s Board of Governors approved a new strategic plan to help ensure the association’s success and ability to fulfill its mission. A full copy of the strategic plan is available at ABAJournal.com/strategic_plan.
The three strategic goals include:
Be the home for all lawyers and nurture thriving, inclusive member communities designed for equal opportunity, professional success and advancing justice.
Maintain and enhance the role of the ABA as the voice of the legal profession, the system of justice and the rule of law.
Maintain and grow a strong association.
There are several subgoals of the strategic plan on which I am currently collaborating with staff and member leaders. For example, through strategic plan goal 3.3, the association seeks to “establish more efficient governance policies, structures and practices to empower more efficient and effective decision-making and oversight.” One area for improvement is the current process by which the association approves revisions to dues rates and structures. We are currently contemplating ways to revise what is a very bureaucratic process so that the association can be more nimble in responding to membership and financial trends.
Another strategic plan subgoal is to “Transition to a financial governance model that strengthens the financial condition of the ABA and:
• Better allocates ABA resources for the benefit of the overall association.
• Reduces redundancy and improves efficiency across the association.
• Enhances stewardship of long-term investments by investing them using a uniform investment policy as opposed to multiple policies.”
We are currently making progress on this subgoal too, and I will have more to report in my report next year.
Thank you for the opportunity to serve as your treasurer.
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