George Phillies: LNC Voted For Secret Ballot on Raising Dues

The following was posted on Dr. George Phillies’s blog, Gold USA Group, today:

Lest We Forget
Novel albeit legal uses of political funds are a long-standing political issue.  We repeat from the January 2005 issue of Let Freedom Ring!  Speaking of Massachusetts, they wrote:

“In 2003, the Committee for Small Government of Carla Howell and Michael Cloud raised $48,820.  During 2004 it raised $13,882.  (Source: http://www.mass.gov/ocpf/homep… data.htm and through dynamic links to the Committee for Small Government OCPF Filings.)  OCPF filings show that almost all that money went as consulting fees, to Howell and Cloud.

In 2003 the committee gave $17,950 to Cloud for consulting fees and $25,000 to Howell for consulting fees.  In 2004, the Committee gave $4000 to Howell for consulting, and $8500 to Cloud for consulting. That’s over $55,000 to the principals for consulting, out of less than $63,000 raised. In 2004, the Libertarian Party of Massachusetts has had major expenses.  It published its newsletter.  It ran its state convention.  And it gave the bulk of its Treasury, $4750, to the 2002 Senate Campaign, now long since ended, of Michael Cloud.

At the State Committee Meeting (most recent before January 2005), Michael Cloud was elected State Party Vice Chair.In Spring 2004 control of the LPMA State Committee ended in the hands of Howell, Cloud, and a slate of 13 State Committee members. Since then, the State Committee has been a model of inactivity.  State Committee support for our Presidential candidate was nonexistent.  When the Badnarik State Coordinator, Richard Watras, asked for contact information on Massachusetts Libertarians, he was eventually told that he could do a blind mailing through a bonded mailing house.  The State Chair refused to allow him to have actual names and addresses of members, so they could be phoned to see if they would like a lawn sign.  At this point, Watras submitted his final report.”

On a  slightly different topic, doing back some years the LNC raised dues to $50, and then lowered them again.  Here is coverage of that event, also from Let Freedom Ring! The LFR headline was “Dues Raised in Secret Ballot Vote; Money will Pay for New Washington, DC Office Location; Membership May Fall  ”

Meeting in Portland at the end of February (now some years ago), the Libertarian National Committee voted to raise LPUS dues to $50.  The vote was by secret ballot.  Libertarians around the country were swift to condemn the manner by which the vote was taken as contrary to our party’s principles.

And here are the people who voted to make the decision by secret ballot:
Dena Breudigam
M Carling
Michael Colley
Ed Hoch
Dan Karlan
Bill Redpath
BetteRose Ryan
George Squyres
Aaron Starr
Bob Sullentrup.

[Ed: Readers may wish to note that while many of these people are gone, a few of the people who voted to vote by secret ballot to raise dues either are still on the LNC, or are lurking on the fringes:]

In a widely-circulated letter, National Treasure Mark Nelson wrote:  “I voted no on both the dues increase and the UMP increase. My reasoning for my votes follows. As detailed below, without consideration for the political implications, increasing dues is a fiscally irresponsible decision. Increasing UMP payments would seriously compound this irresponsibility.

I encourage the other LNC members to publicly declare their votes and their reasons. Voting on an issue such as this in a secret ballot is deplorable behavior for a decision that directly affects our state parties.

It should be noted that the LNC ignored my repeated requests to direct staff to update the following data prior to making this decision, or to delay the decision until the data was updated. The National Chair has asked that I do so prior to the next meeting, which, unless directed otherwise by the LNC, I will make available on this list.

First, there is no structural need for a dues increase. As part of the 2005 Budget, the cost of members was estimated using the direct membership expenses (only UMP and renewal, the LP News breaks even) and a percentage of all common costs estimated based upon the percentage of dues relative to total revenue (32.26%). This formula estimated the “loss” on membership was $4.03/member, at the projected membership level of 24,000. It was noted that this “loss” disappears somewhere just over 30,000 members, when our common costs are spread over a larger membership base.

I believe this methodology overstates the common expenses of membership. There is no way our executive director, or most of our employees, spend 32% of their time on basis membership. Most of their time is focused on larger donors, fund raising or outreach. A membership operation could be run out of a basement in Boise, not a DC office. We are in DC for other non membership related reasons. A modest lowering of the common expense allocation to 20% of the common expenses would eliminate the net loss on membership.

The only argument with this analysis I heard was that prospecting or recruitment expenses are not included. This is unrealistic. No repeated use product or service includes the total expense of capturing a new customer in the first purchase. It is recaptured over the life of a customer, which in our case is over 7 years.

I believe it is a reasonable marketing strategy to have a modest loss leader as an inducement to “qualify” members for increased donations. That is how membership works in the LP’s model.

My final comment on whether the dues cover the associated expenses: The R’s and D’s National Committee both use a $25 or lower sustaining membership amount. It is compelling that they see $25 as the level needed to attract donors (while trying and bump them up) and retain member loyalty.

Beyond the lack of need for a dues increase, based on the best information available (a 2002 extract of donations showing how many members gave $25, $25 to $50, and over $50, and a survey of the $25 only members), increasing dues results in a net reduction in revenue. Based on the data, the loss was estimated at $14,130. Using the margin of error in the survey, the range of projections was +$28,440 increase in revenue, to a $56,700 revenue loss. Using the motions that were passed in Portland,  UMP payments would be reduced significantly. This would result in the LNC experiencing an $86,940 increase in net income (the range of projections is $56,502 to $117,377). This does not account for increased renewal costs, which would reduce the increase, quite possibly substantially. Still, it is notable that all of the increased income (revenue expenses) to national is at the expense of UMP states.

With Aaron’s proposed “fair” increase of UMP II payments to $30 per member, the LNC would experience a significant net loss, projected at $89,352 (the range of projected losses is  $72,324 to $106,308). I don’t see how taking $100,000 from National and simply transferring it to the states is “fair.”

The only arguments against the above analysis were against the survey methodology, stating that pricing survey’s result in biased answers. The survey firm (a highly qualified firm ran by a small l, that does work for the Heartland Institute), disputes there are any problems with the survey methodology. Instead, they state that the methodology was specifically designed to overcome any bias. To my knowledge, customer surveys are a routine part of pricing decisions. No one credibly provided information suggesting otherwise. For the modest cost associated with the survey (roughly $3,000), I believe it should be part of our decision process. If anyone wants them, I can provide the spreadsheets showing the above analysis.
Mark Nelson  LNC Treasurer

Kansas on Dues Increase: In a February 2005 letter to LP State Chairs, dated as word was just getting out about the event, the LP State Chair of Kansas is reported to have written:

Hello All,
I have seen a report on an LNC meeting purportedly held Monday evening, February 28, 2005. The report states that dues were increased on renewing members from $25.00 to a $50.00 minimum. It also states that the vote on this was made in secret.

Is this report substantially true?
If so this will have serious repercussions if not rescinded immediately.
My State, Kansas, will likely pull out of UMP altogether and handle our own membership and dues.
This subject was not mentioned at the recent LSLA Conference in St. Louis. It should have been as it has been discussed at past LSLA meetings.  Will someone please confirm and explain this action.
For Liberty,
Steven A. Rosile

The LNC then turned around and went to zero dues:

LNC Meeting  August 6-7, 2005, Kansas City MO
1) Zero Dues passes: BetteRose Ryan submitted a four-part proposal  establish the zero dues proposal of George Squyres.  Summary:
1) to set membership dues at zero effective 1/1/06;
2) to end the Unified Membership Program (UMP) effective 9/30/05 and offer UMP states a choice of either 6 months of full payments or 12 months decreasing by 1/12th each month beginning 10/1/05;
3) to develop programs and budget lines for training programs for state level activists, covering at minimum the following areas: ballot access, FEC compliance, fundraising, database usage, member recruitment, and candidate recruitment and training; and,
4) to develop a formal national-state affiliate agreement to be approved at the November meeting, which shall cover at least the following areas: ballot access, database sharing, LP News and material sales, an integrity clause, FEC compliance and adherence to common purpose.

Discussion: LP News would be sold by subscription; details  up to the LP News editor.  Jim Lark asked if everyone who signed the pledge would be considered a current member.  How do we count people with old contact information? There is no requirement to supply us with current contact information. Squyres stated this proposal is culturally far reaching in setting dues to  zero and completely changing the national-state party relationship.

Wrights said that zero is not an amount of dues which would be compliant with the Bylaws. Carling moved to postpone indefinitely with Wrights seconding. This failed on a voice vote.

Starr argued this was a motion to amend a previous action and thus required two-thirds approval. Dixon ruled against Starr.  Starr’s appeal to the body was defeated.

The division was divided in four parts.  The votes were:

Vote 1: eliminate UMP, passed 10-5
Yes: Nelson, Sullentrup, Colley, McGinnis, Rutherford, Ryan, Breudigam, Hoch, Ryan,  Squyres.       No: Wrights, Redpath, Lark, Southerland, Starr .     Not Voting: Dixon, Carling.      Not Present: Karlan, Gilson

Vote 2: zero dues, passed 8-7-1  Yes: Breudigam, Colley, Hoch, Nelson, B Ryan, T Ryan, Squyres and Sullentrup.  No: Carling, Lark, McGinnis, Redpath, Southerland, Starr and Wrights.       Abstaining: Rutherford. Not Voting: Dixon.  Not Present: Karlan, Gilson

Vote 3: training programs, passed 14-0-2  Yes: Breudigam, Colley, Hoch, Lark, McGinnis, Nelson, Redpath, Rutherford, B Ryan, T Ryan, Southerland, Squyres, Sullentrup and Wrights.      No: None.  Abstaining: Carling, Starr. Not Voting: Dixon.     Not Present: Karlan, Gilson

Vote 4: affiliate agreement, passes 11-4  Yes: Breudigam, Colley, Hoch, McGinnis, Nelson, Redpath, Rutherford, B Ryan, T Ryan, Squyres and Sullentrup.   No: Carling, Sutherland, Starr and Wrights.  Not Voting: Dixon. Not Present: Karlan, Gilson

And that’s how in 2005 we went from $25 a year to $50 a year to $0 a year.