Rotary bets on zero-based budgeting

Presenting Rotary’s five-year financial forecast at the Kochi Institute, RI treasurer and director Rhonda Beth Stubbs informs that revenues are higher than expenses until fiscal 2026 (2025–26), and from fiscal 2027 “our expenses will become higher than our revenues” starting with a $4 million deficit budget. “We are projecting a balanced budget in fiscals 2025, ’26, and deficits from FY 2027 through fiscal 2029.”

The decision to increase membership dues ($78.5 per Rotarian) from FY ’27 will be determined by the Council on Legislation 2025. “RI’s bylaws require a balanced budget each year and our Finance Committee staff prepare a zero-based budget that aligns with our strategic initiatives and wherein the expenses must equal our ­revenues,” says Rhonda. The RI Board evaluates the budget against Rotary’s overall goals taking into consideration the strategic investments and financial performance.

Out of the projected revenue of $135 million in FY ’25, membership dues contribute $92 million (68 per cent), services and others, that include related expenses for holding RI convention and COL for example, bring in $39 million (29 per cent), and investment earnings chip in with $4 million (3 per cent). “RI leaders and staff look for opportunities to increase revenue, reduce expenses, and find ways to invest in our members,” says Julie Burke, RI’s CFO, during a video presentation with Rhonda. Almost 60 per cent of RI dues are invested in membership support initiatives and programmes, followed by administration cost and compliance obligations (22 per cent) such as expenses for tech platforms, accounting and legal support, and finally, 19 per cent of dues are spent in enhancing public image like revamping the Brand Center which offers resources for Rotarians to increase awareness about Rotary in their communities.

Forecast

While the trend indicates fewer members joining Rotary over the next five years “we are focused on growing membership — both new members and retaining the existing members,” says Rhonda. “In a typical year, we welcome around 150,000 new members in our clubs, while we also lose a similar number each year.” With increased numbers, RI will be better equipped to address the needs of communities, and “also enriching the lives of our valued members.”

Though inflation rates have gone down recently, the higher inflation over the past several years led to increased expenses. “This resulted in some tough decisions to reduce costs and develop a balanced budget,” says Julie. Now the challenge is to balance the budgets for fiscal 2027 through the next two years (till FY ’29). The forecasted reserves are above the RI board’s target in FY ’24 through FY ’28, and then projected to be below the reserves target in FY ’29. Rotary’s financial health is strong and good stewardship is ensured on finances which enables RI to support members with resources, tools to serve clubs and communities, Rhonda adds.

More institute coverage in next issue.