Dear Members- I am frequently asked a version of the following question and thought that it may be useful to members that I answer it for everyone:

“Since we have a sizable endowment from the Mellon bequest, why can’t we reduce or eliminate dues and tuition?”

It is certainly a legitimate question, and the short answer is that there are very tight restrictions on the amount of distribution allowed from this gift. However, I feel that the members are entitled to a more complete explanation.

The bequeathal states, explicitly, that in any given year the distribution from the account can be no greater than 5%. This language is commonly used in bequests of this kind. The dividends and interest that our account produces amount to approximately 3% of the account value. That 3% number is what we budget for distribution; it is clearly not a part of the principal of the account. I use “principal” and total account value synonymously. The distribution is used with other revenue sources to fund our excellent programs, important scholarships, and to provide payroll for our extraordinary staff. While we could, in theory, distribute that other 2%, using those funds would necessitate going into the principal of the account. Therefore, I view the 2% cushion as an emergency fund that is available if needed, but it is not a resource that is automatically distributed.  One does not want to diminish the principal of an investment account, unless absolutely necessary. 

I am acutely aware of the numerous competing interests associated with the budgeting process. One of our goals is to keep the dues and tuition as low as possible, while continuing to fully fund current operations. At the same time we want to fully fund current operations, we do not want to do so by taking principal away from the future (the investment account) to pay for the present. Attempting to achieve the proper proportionality among these goals is a delicate balancing act which the finance committee, and the board, are constantly fine-tuning. I am quite sure we are not perfect. 

In summary, I want to reassure the members that:

We should be pleased about the success of our investment in that it safeguards our future, but not complacent as we realize the restrictions on its accessibility. I hope this helps the members understand better our financial structure and goals. If you have questions, please feel free to call me, at your convenience, at 703–850-4077. I would be more than happy to discuss any of these financial issues with you. 

Thank you, 

Cary Gold, Treasurer

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