Tue Mar 1, 2011

The American Sociological Association has Interest Rate Swap Obligations?

Update (March 2nd): The ASA has just posted their audit statements for the past two years. Looks like someone from HQ was reading Prof. Disgruntled.

My pet Theory of Professional Academic Associations is that the discipline’s organizational life inverts its core intellectual commitments. Thus, Political Science is the discipline of government and especially of democracy. Yet, the last time I checked, all of the high-level positions in APSA are decided by committee deals rather than free and fair elections by the membership. Or, Economics is the discipline of decentralized coordination through the efficient operation of the market. Yet its job “market” is in fact an administered queue, with departments explicitly ranking their candidates, departments effectively ranking themselves, and a direct matching process operating between the two as top-ranking candidates slot into open positions in top-ranked schools. (This mechanism also includes an effective method of rent-extraction from Deans in the form of a salary ratchet.) And, to get to the present case, Sociology is the discipline that analyzes the many forms of collective social action, on the one hand, and is the social science most oriented towards the exposure of the workings of power, on the other. So naturally it follows that the ASA is not very good at organizing anything, and that its financial arrangements are as secretive as legally possible.

So, via Brayden King at OrgTheory come the efforts of The Disgruntled Sociologist to ferret out some of these details by way of the ASA’s tax statements and discusses them in a series of detailed posts. Some of the more striking findings include the following:

  • The ASA spent $10M on a “condo.” (Its office building, a couple of blocks from the White House.)
  • From 2003 to 2008, total revenue has been flat, but revenue from dues has increased substantially — almost 17%.
  • The staff of the ASA grew 26% in five years. Wages and salary increased roughly the same amount.
  • Total expenses for the the ASA ($7.6M) are greater than any of their peer organizations: American Political Science Association ($6.2M), American Economic Association ($7.1M), American Anthropological Association ($4.7M), and American Historical Association ($3.5M).
  • Total compensation of headquarters staff for the ASA is substantially higher than for the other organizations (with the exception of the AEA, which lists more than twice the number of employees).
  • The ASA has substantially higher interest expenses than the other organizations.
  • In 2008 the ASA spent its cash reserves of $1.8M – “from approximately $3M at the beginning of the year to $1.2M at the end,” presumably to make up for that year’s 28% loss in investments.
  • The ASA has $8M in bond liabilities (mostly stemming from the purchase of the DC offices).
  • The big change in liabilities comes in the ominous category, “Other liabilities.” This increases twentyfold, from $101,000 to $2,000,000. The ASA describes these liabilities on the tax form as an “interest rate swap obligation.”

An interest rate swap obligation? As in, a derivative? Looks like investment advice gone badly wrong to me. [Update: It turns out the swap obligation is a hedge against the cost of servicing the debt on the Condo, rather than a separate investment.] Now, perhaps there is a perfectly reasonable explanation for all of this, and there is nothing odd about these points at all. (I note in passing from the comparative data that the ASA reported 100 unpaid volunteers the last year it filed. Meanwhile, the AEA reports zero volunteers.) The thing is, though, that this is the first that members have heard of any of this. The most recent audited financial statement available is for 2007, and as far has I can tell you cannot actually navigate to it from anywhere on the website. Instead you have to search for it directly. Meanwhile the official organs of communication to members (newsletters and so on) have been completely silent about these financial downturns. The level of transparency is astonishingly low in comparison to its peer associations.