In yesterday’s post In A Quest For Context, NIGP and ISM Comparison Raise Very Interesting Questions, I expressed an interest in having a greater understanding of how the NIGP has been able to “buck the ISM money losing trend these past 3 years”?
I then indicated that it would also be interesting to see if ISM’s losses are an exception, or a reflection, of an emerging trend relating to the continuing viability of the association model in general.
Based on the above, I began the process of reviewing other nonprofit association financials such as CIPS.
“With the adoption of the FRS17 re accounting for pension costs the overall Institute’s reserves have become negative, this however will not prevent the Institute from being able to meet its financial obligations in the future. There is a plan implemented to redress the pension reserve shortfall over the next 10 years, the increased funding of which has been taken into account in all current financial projections and budgeted for accordingly. The above notwithstanding, reserves have fallen into deficit by 32K. However, creditors include deferred income of 5.5m, which would not become due for repayment but for the most extreme circumstances, and so would not impact on the group’s ability to meet its liabilities as they arise. – Page 21, Section (j) Going Concern, CIPS Annual Reports & Accounts 2013
As you will note from their financials CIPS, like ISM, has had a good deal of red ink over the past couple of years.
Right off the bat, you may be asking yourself, why is the above relevant? Why is the apparent growing wave of red ink that at least at this point in my research, seems to be sweeping across the procurement association world, important?
For the procurement professional (and profession), there are two answers.
To start, and from the standpoint of my investigation of the NIGP, it makes one wonder why this nonprofit organization has had three successive years of profitable operations while notable counterparts have clearly struggled financially? In this question may lie the answer to the entire #CodeGate controversy relative to the NIGP’s “dealings” with Periscope – as well as other private sector “partners”.
After all, the potential conflict of interest to which I referred in my December Up Periscope post, that ultimately manifested itself with the Missouri award protest, creates a vulnerability that if left unchecked and unchallenged could be disastrous for the public sector. Especially given the fact that 33 States and countless levels of governments i.e. municipalities, rely on the NIGP Code that is currently under the “stewardship” of Periscope.
As a side note, I would love to see all of the agreements relating to the NIGP’s dealing with Periscope for both the Code and the consulting arm. Based on the organization’s refusal to provide me with clarification regarding Chief Executive Rick Grimm’s expense account however, access to said information will not likely be forthcoming any time soon.
There is of course another element to this story that I had touched upon in a guest panel discussion featuring IACCM and the NLPA, in which the question Is The Traditional Association Model Dead? was discussed at length. The irony of course is that this segment aired back in 2009.
Why is this ironic?
Because back then, it was clear that what appears to be happening today with regards to associations losing money, is now becoming a reality. The consequences of which could have serious implications for association certification programs, including their ability to attract the up and coming generation of procurement professionals.
Perhaps NIGP Chief Executive Grimm realized this, and the measures he has taken to evolve the NIGP model might contradict the very principles upon which it had been established in the first place. The real question is at what cost has this profitable transformation taken place and, what are the long-term consequences?
This latter question even extends to include the everyday taxpayer, who ultimately bears the consequences – good or bad – of public sector procurement practice. Check out my post Why the everyday taxpaying citizen should care about the Missouri NIGP Code Bid Protest, to learn more.
Once again, and against this backdrop of controversy, the upcoming 990 Return for the NIGP will be very interesting.