Annual Report 2015: Sustainability

YOU SPOKE. WE LISTENED: SUSTAINABILITY Sustaining the AAO-HNS/F, its brand, and its relevance to Members and the public is a strategic goal that is vital to all. It requires short-term flexibility and long-term stewardship. It inspires and enables philanthropy and support. This past year the following actions have delivered on providing quality leadership and adaptability to Member needs: COMMUNICATIONS Increased Visits: Website: Unique visitors: 5.66 million (91 percent increase since August 2014); Sessions (total visits): 6.7 million (76 percent increase since August 2014); Page views: 8.6 million (49 percent increase since August 2014). Logged in: ENTConnect: 4,203 Members (35 percent have logged in at least once since May 2014 launch); 54,857 sessions; 259,895 page views; 4.02 pages per session; Average session: three minutes, 26 seconds. Cultivated: Media staff responded to more than 65 interview requests this year, and successfully pitched coverage for two clinical practice guidelines in multiple media outlets. Submitted: The 2014 Impact Factor Citation Report rated Otolaryngology–Head and Neck Surgery at its highest ever, 2.020, a 17 percent increase from last year. The journal now ranks #11 among 43 otorhinolaryngology journals. Published: The first “Young Physicians” Otolaryngology–Head and Neck Surgery issue was published in October 2015. More than 200 submissions were received and 61 were accepted. Enhanced: Otolaryngology–Head and Neck Surgery “Special Focus Sections” began appearing in April 2015. Redesigned: The redesigned Bulletin launched in February 2015 with full color covers, more thematic content and integration with the website and ENTConnect. Initiated: Members now receive monthly Bulletin Table of Contents emails, making print articles more easily available online and offering online exclusives. DEVELOPMENT Exceeded: Annual Meeting grant, sponsorship, and marketing revenue exceeded $580,000. Participated: The Hands-on Training program on the OTO EXPO℠ floor had four participating companies hosting seven educational sessions with cadaveric specimens. Endowed: The Hal Foster, MD Endowment had assets totaling approximately $11M (combination of cash, bequests, and life insurance policies). Added: Two new Annual Funds were added to the fundraising program: Clinical Data Registry and Legends of Otolaryngology. CORPORATE RESOURCES Managed: The Fiscal Year 2015 financial results showed a positive contribution to reserves. Approved: The FY16 balanced budget and FY16 Strategic Plan has recently been approved by the Board. YOU SPOKE. WE LISTENED: DEVELOPMENT Development efforts continue to focus on increasing non-dues revenue for the Academy and Foundation in three main areas: individual gifts to the Annual Fund and Hal Foster, MD Endowment, Annual Meeting and other corporate sponsorship and the Academy Advantage affinity program. With continued success and growth in the corporate sponsorship area, the Development Committee has turned its attention to re-invigorating a culture of philanthropy. During the year ended, June 30, 2015, over $280,000 of Foundation programming was funded by gifts to the Annual Fund and endowment earnings. The Foundation depends upon philanthropic gifts and donations to carry out its mission and meet its strategic plan goals. Nikhil J. Bhatt, MD, completed his tenure as Coordinator for Development on September 30, 2015. We would like to thank Dr. Bhatt for his years of leadership, generosity, and hard work with staff and members. The accomplishments of Dr. Bhatt and the Development Committee are the building blocks of our future fundraising. Lee D. Eisenberg, MD, MPH, took over the position as Coordinator for Development on October 1, 2015 and we are looking forward to the years ahead. Dr. Eisenberg brings decades of philanthropic experience, new ideas and an incredible amount of energy to the Foundation. Under the leadership of Dr. Eisenberg, the Development Committee and staff will continue to think outside the box, listen to our Members and corporate colleagues, develop meaningful partnerships, and solicit grant funding for Foundation strategic initiatives. The fundraising of the Foundation relies on the active solicitation of the Academy membership and the companies serving the specialty. We would like to thank those individuals who supported the Foundation in 2015, particularly with gifs at the Millennium Society level and to the Hal Foster, MD Endowment. INDIVIDUAL GIFTS Emphasizing philanthropic giving on an annual basis is the directive of the Board of Directors and a goal of the FY16 Strategic Plan. The entry point for the Foundation’s individual giving program is its Annual Fund, within which a donor can designate an operational area of interest to direct their donation. Growing the number of individual donors and the dollar value of the Annual Fund is the focus of the Development Committee and Foundation staff. The Foundation launched a new initiative aimed to increase individual support for the coming years, The Legends of Otolaryngology campaign. This fundraising program will honor an otolaryngologist that has made significant contributions to the specialty, their colleagues, and improvements in patient care. We are excited to announce the first Legend, M. Eugene Tardy, Jr., MD. Dr. Tardy’s contributions to the specialty and facial plastics have proven to shape the practice of medicine, improve the education of young physicians, and create a path for the next generation to follow. HAL FOSTER, MD ENDOWMENT In October 2009, the Boards of Directors initiated the Hal Foster, MD Endowment Campaign with a goal of soliciting major gifts to provide an ongoing source of funding for the future of the specialty. The initial phase of the campaign was formally announced in 2010. To date, we have raised more than $11 million to ensure the strategic initiatives of the Foundation are continued in perpetuity. We are still actively pursuing Hal Foster, MD donations from donors who wish to leave a lasting mark on the future of their specialty. During the past year, we have recognized the following individuals as new Hal Foster, MD Endowment supporters who made major gifts to the Hal Foster, MD Endowment: Mona M. Abaza, MD Nikhil J. Bhatt, MD Roy R. Casiano, MD Nathan A. Deckard, MD Joseph Han, MD John H. Krouse, MD, PhD, MBA ANNUAL MEETING SPONSORSHIPS & CORPORATE SUPPORT AAO-HNSF continues to show an incredible commitment to corporate relations and an open dialogue with companies operating within the ENT space. The efforts of the Development Business Unit continue to produce tangible results, both financially and in relationship building. We have seen a remarkable increase in revenue from Annual Meeting sponsorships by leaders in the device and pharmaceutical industries. Total Annual Meeting sponsorship revenue has more than doubled since 2012. The 2015 Annual Meeting & OTO EXPO℠ produced $580,000 in non-dues revenue. In addition to the increased revenue, we have also worked internally to reduce expenses to ensure that dollars raised are going directly to support the mission of AAO-HNS/F. Significant enhancements for the 2015 Annual Meeting & OTO EXPO℠ include: Doubled the available opportunities for corporate sponsored hands-on training which resulted in more than 200 attendees receiving hands-on opportunities to utilize the newest technologies on the market. Increased the size and scope of marketing opportunities around the convention center and in the headquarters hotel to provide our corporate partners significant and professional chances to showcase their brand. Continued to provide our corporate partners with first-class Corporate Satellite Symposium opportunities to reach their target audience outside of traditional educational hours. Reinvigorated the Industry Round Table (IRT) Lunch which has proven to provide more fruitful conversations between Industry and AAO-HNS/F Leadership. Annual Meeting Corporate Marketing and Sponsorships Corporate Sponsored Education Initiatives Grants and Unrestricted Support $202,000 $356,000 $22,000 While we are certainly proud of how far we have come since 2012, there is still room for growth in the coming year. Over the fiscal year we will be redeveloping our IRT Program to encourage corporate support of Foundation philanthropic programs and services. We look forward to reporting continued growth for the years to come. AAO-HNS ACADEMY ADVANTAGE The Academy Advantage program continues to offer Academy Members select services and products at discounted rates as a benefit of membership. This affinity program includes partnerships with “non-endemic” companies – those that are not medical device or pharmaceutical companies. AAO-HNS is currently under contract with the following partners: The Doctors Company: Medical Liability Insurance Health eCareers: Online Career Board Officite: Website Design/Marketing AllMeds: Electronic Health Record (EHR) and Practice Management Solutions Services ENT-Cloud: EHR and Practice Management Eyemaginations: In-Office Patient Education Optum™: Coding Resources             FINANCIAL REPORT FISCAL YEAR 2015 (FY15) The fiscal management that leadership has been disciplined in maintaining has resulted in positive financial results in each of the last four years. The fiscal year July 1, 2014 through June 30, 2015 (FY15), closed with a positive (unaudited) $3.26M variance from the break-even budget. Overall, revenues were within three percent of budget and operating expenses were fourteen percent under budget. However, non-operating activity netted a loss for the year. Combining operating and non-operating activity, the combined (unaudited) contribution to reserves for FY15 was $2.7M. As of June 30, 2015, unrestricted reserves were $18.3M, of which approximately $4.9M was designated by the Boards of Directors to be used for specific purposes. The balance of managed investments at June 30, 2015, after subtracting the $6.9M earmarked for debt repayment on the headquarters building, was $13.6M, a decrease of approximately $540K, or 3.9%, from the end of FY14. The FISC closely monitors investment performance and is guided by the goals outlined in the Organization’s Investment Policy Statement (IPS). The FISC made the decision at their meeting in September 2015 to change investment advisors to LVW Advisors LLC, an Independent Registered Investment Advisor. The Hal Foster, MD Endowment has net assets, pledged, received , or to be received in the form of life insurance proceeds or bequests, of almost $11M as of June 30, 2015. For the year ended June 30, 2015, approximately $122k of AAO-HNS/F FY15 programing was funded by endowment earnings. In May 2015, the Boards of Directors approved a balanced fiscal year 2016 (FY16) budget with revenue and expenses both equal to $20.86M. The budget includes $2M for launch of the new Regent℠ clinical data registry. This expense is funded from Board Designated Net Asset reserves, included as part of the FY16 revenue budget. A balanced budget was able to be achieved for FY16, because of cost savings and efficiencies identified and continued from prior years. A balanced budget is required to comply with the debt covenants of the headquarters building financing. The budgeting process is integrated with the AAO-HNS/F strategic plan and involves the efforts of elected leadership, the Boards of Directors, Executive Committee, and the Finance and Investment Subcommittee. With year-over-year contributions to reserves, the AAO-HNS/F is building financial sustainability allowing it to make strategic decisions for long term impact. The Boards vote to fund the building of Regent℠ is but one example of this. Leadership and staff continue to be prudent stewards of the organizations’ financial resources as decisions and strategies for the organization are developed going forward.  UNAUDITED (ROUNDED) CONSOLIDATED STATEMENT OF REVENUE AND EXPENSES For the 12 Months Ended June 30, 2015 For a copy of the independent audit of AAO-HNS/F’s FY15 financial statements contact CHanlon@entnet.org. DESCRIPTIONS ACTUAL FY15 % BUDGET FY16 % REVENUE Membership Dues $            6,660,000 35% $            6,860,000 33% Meetings and Exhibits  6,940,000 36%  6,900,000 33% Product and Program Sales  1,630,000 8%  1,720,000 8% Publications  1,260,000 7%  1,250,000 6% Royalties  490,000 3%  370,000 2% Corporate and Individual Support  790,000 4%  710,000 3% Investment Income – Interest and Dividends  260,000 1%  310,000 1% Other Revenue  260,000 1%  140,000 1% Use of Donor Restricted Net Assets  410,000 2%  290,000 1% Use of Board Designated Net Assets  510,000 3%  2,310,000 12% Total Revenue $            19,210,000 100% $          20,860,000 100% EXPENSES Salaries and Benefits $             7,570,000 47% $            8,880,000 43% Occupancy  1,720,000 11%  1,670,000 8% Office Expenses  920,000 6%  790,000 4% Communications and Software  530,000 3%  610,000 3% Travel  450,000 3%  570,000 3% Meetings  1,120,000 7%  1,600,000 8% Printing and Production  600,000 4%  710,000 3% Consultants and Professional Fees  2,410,000 15%  5,370,000 25% Grants  630,000 4%  660,000 3% Total Expenses $           15,950,000 100%  $         20,860,000 100% Change in Unrestricted Net Assets from Operations $             3,260,000 NON-OPERATING ACTIVITIES Realized and Unrealized Net Loss on Investments $            (620,000) Unrealized Loss on Interest Rate Swap Agreement  (300,000) Non-operating Other Revenue  360,000 Change in Unrestricted Net Assets from Non-Operating Activities $             (560,000) Total Change in Unrestricted Net Assets $             2,700,000