The American Sociological Association has Interest Rate Swap Obligations?

by Kieran Healy on March 2, 2011

Update (March 2nd): The ASA has just posted their audit statements for the past two years. Looks like someone from HQ was reading Prof. Disgruntled.

My pet Theory of Professional Academic Associations is that the discipline’s organizational life inverts its core intellectual commitments. Thus, Political Science is the discipline of government and especially of democracy. Yet, the last time I checked, all of the high-level positions in APSA are decided by committee deals rather than free and fair elections by the membership. Or, Economics is the discipline of decentralized coordination through the efficient operation of the market. Yet its job “market” is in fact an administered queue, with departments explicitly ranking their candidates, departments effectively ranking themselves, and a direct matching process operating between the two as top-ranking candidates slot into open positions in top-ranked schools. (This mechanism also includes an effective method of rent-extraction from Deans in the form of a salary ratchet.) And, to get to the present case, Sociology is the discipline that analyzes the many forms of collective social action, on the one hand, and is the social science most oriented towards the exposure of the workings of power, on the other. So naturally it follows that the ASA is not very good at organizing anything, and that its financial arrangements are as secretive as legally possible.

So, via Brayden King at OrgTheory come the efforts of The Disgruntled Sociologist to ferret out some of these details by way of the ASA’s tax statements and discusses them in a series of detailed posts. Some of the more striking findings include the following:

  • The ASA spent $10M on a “condo.” (Its office building, a couple of blocks from the White House.)

  • From 2003 to 2008, total revenue has been flat, but revenue from dues has increased substantially — almost 17%.

  • The staff of the ASA grew 26% in five years. Wages and salary increased roughly the same amount.

  • Total expenses for the the ASA ($7.6M) are greater than any of their peer organizations: American Political Science Association ($6.2M), American Economic Association ($7.1M), American Anthropological Association ($4.7M), and American Historical Association ($3.5M).

  • Total compensation of headquarters staff for the ASA is substantially higher than for the other organizations (with the exception of the AEA, which lists more than twice the number of employees).

  • The ASA has substantially higher interest expenses than the other organizations.

  • In 2008 the ASA spent its cash reserves of $1.8M – “from approximately $3M at the beginning of the year to $1.2M at the end,” presumably to make up for that year’s 28% loss in investments.

  • The ASA has $8M in bond liabilities (mostly stemming from the purchase of the DC offices).

  • The big change in liabilities comes in the ominous category, “Other liabilities.” This increases twentyfold, from $101,000 to $2,000,000. The ASA describes these liabilities on the tax form as an “interest rate swap obligation.”

An interest rate swap obligation? As in, a derivative? Looks like investment advice gone badly wrong to me. [Update: It turns out the swap obligation is a hedge against the cost of servicing the debt on the Condo, rather than a separate investment.] Now, perhaps there is a perfectly reasonable explanation for all of this, and there is nothing odd about these points at all. (I note in passing from the comparative data that the ASA reported 100 unpaid volunteers the last year it filed. Meanwhile, the AEA reports zero volunteers.) The thing is, though, that this is the first that members have heard of any of this. The most recent audited financial statement available is for 2007, and as far has I can tell you cannot actually navigate to it from anywhere on the website. Instead you have to search for it directly. Meanwhile the official organs of communication to members (newsletters and so on) have been completely silent about these financial downturns. The level of transparency is astonishingly low in comparison to its peer associations.

{ 21 comments }

1

John Quiggin 03.02.11 at 1:31 am

Economists follow the standard army wisdom on volunteering.

2

Russell Arben Fox 03.02.11 at 1:53 am

Thus, Political Science is the discipline of government and especially of democracy.

There are many theorists–particularly, though not entirely, those of a conservative/traditionalist bent–that would strongly contest this description, especially its last part.

Yet, the last time I checked, all of the high-level positions in APSA are decided by committee deals rather than free and fair elections by the membership.

Hmm…I think there might be some argument about this. But overall, yeah, the “Perestroika” movement in the 90s really didn’t change that much.

3

ben 03.02.11 at 2:17 am

There are many theorists—particularly, though not entirely, those of a conservative/traditionalist bent—that would strongly contest this description, especially its last part.

Yes, and presumably some economists would dispute the justice of Kieran’s characterization of their discipline. Nevertheless, the introduction as it stands is clever and amusing, which it might well not be if it were more stringently accurate.

4

Lurker Grad Student 03.02.11 at 3:39 am

By comparison, the American Anthropological Association has all of there tax returns up to 2009 one link away from their front page (under annual reports in the About AAA tab).
http://aaanet.org/about/Annual_Reports/index.cfm

5

bm 03.02.11 at 3:39 am

Mmm – they may have stolen and squandered the lot, but least they vote Democratic 100% – rock solid!

6

Myles 03.02.11 at 4:01 am

Nevertheless, the introduction as it stands is clever and amusing, which it might well not be if it were more stringently accurate.

I think Prof. Fox might be allergic to humour, and in thrall to literal-mindedness. Spring allergies?

7

shale 03.02.11 at 5:14 am

Hmmm. What must the AAA be bad at, or the AStatisticalA, or APA? PAA?

In defense of the ASA running a much more costly show than some of the other organizations, as a grad student I pay comparatively little for my membership and conference costs. At least compared to AAA and, I think, APSA.

8

ben w 03.02.11 at 6:39 am

APA

The American Philological Association is devoted to the classics, but they conduct their business in English!

9

Kenny Easwaran 03.02.11 at 8:30 am

The other APA (philosophical) has many ethicists and yet they schedule the meeting that determines the future career prospects of PhD candidates in Boston during a blizzard!

10

Russell Arben Fox 03.02.11 at 12:07 pm

I think Prof. Fox might be allergic to humour, and in thrall to literal-mindedness.

I repent of my stick-in-the-mudness. Bad day yesterday, perhaps.

11

Walt 03.02.11 at 12:50 pm

It’s too late, Russell. You’ve ruined everything.

12

y81 03.02.11 at 3:30 pm

The organization probably took out a floating rate loan to buy the headquarters, and bought an interest rate swap so that they pay fixed, rather than floating. Since floating rates (e.g., LIBOR, SIFMA) are now very low, the swap would have a high termination payment, which they are showing as a liability. But this liability is really just an accounting entry: the organization’s actual liability is simply to pay fixed rates over the term of the loan, just the same as if they had taken out a fixed rate loan rather than buying the two items separately. So this “derivative” is probably a hedge, not a speculation, in which case it’s a little alarmist to make a big thing of it.

I’m all in favor of transparency, but I would be surprised if more than one in a thousand members had the faintest interest in the organization’s financing methods. I belong to various professional and social organizations (e.g., Yale Club, Society for the Scientific Study of Religion, New York Historical Society, Commercial Real Estate Finance Committee), and I never pay the faintest attention to that stuff. I just pay my dues.

13

praisegod barebones 03.02.11 at 3:54 pm

I assume that there’s some academic association for promoting the study of finance whose membership includes of a load of bankers, but I’ll leave it to D Squared to tell us whether this constitutes a counterexample to Healey’s Law.

14

SamChevre 03.02.11 at 4:08 pm

My guess is actually “perfectly reasonable explanation”–my guess is that the interest rate swap is part of the bond deal. One of the problems with derivatives accounting is that gains and losses flow through to income, even when they are a real hedge. (My guess would be that the swap is a floating-to-fixed swap, so the bonds are issued as floating rate but the bond-swap combo functions as fixed rate. Given the very low rates of the past few years, such a swap would have a significant negative value, but would be a very reasonable business decision in many cases.)

15

CDNSessional 03.02.11 at 5:43 pm

I’ll see Kieran Healy’s pet theory and raise him one. Exposing class-based inequality is at the heart (or at least one of its chambers) of the discipline of sociology. Well, okay, so that’s the fantasy I cling to. Anyway, following KH’s theory I would add that sociologists tend to be… how do I say this cleverly?…. Snobs and elitists. At one large CDN university where I worked, the chair once commented to me privately that he thought a job candidate reminded him “more of my mechanic” (referring to the candidate’s clothes/looks; the candidate wore a jacket, shirt and tie and dress pants, but apparently not the Right ones). Others (the ones who actually like the term “foodies” and apply it shamelessly to themselves), debate which expensive restaurant they will take an out of town guest to. And my favourite example of my own pet theory, is the sociology department who did not want their graduate students to run a food-and-$$ campaign in the month of December. Seems they did not want to see cardboard boxes full of cheerios and canned food spilling over onto their newly carpeted floors. It follows that I also think that psychologists are screwed up, theologians are hinky and …. well, you get the idea. Accordingly, as a devoted-yet-disgruntled sessional, I consider myself a tarragon of virtue.

16

Don't Quote Me on That 03.02.11 at 6:07 pm

Disgruntled Sociologist examined ASA’s 2008 form 990 tax return. For anyone interested, ASA’s 2009 return is available via Guidestar.org:

http://www.guidestar.org/FinDocuments//2009/135/626/2009-135626343-06a9635b-9.pdf

17

ChrisB 03.02.11 at 10:24 pm

It’s also an example of the long-observed rules about university faculties: in any given university the Business School is losing money on the canteen, the front is falling off the architecture building, and there are no bandaids in the first aid cupboard in the medical school.

18

John-Paul Ferguson 03.03.11 at 7:26 pm

I’m all in favor of transparency, but I would be surprised if more than one in a thousand members had the faintest interest in the organization’s financing methods.

The ASA has between 12 and 15,000 members. I’ve personally spoken to more than two dozen sociologists who are interested/annoyed/outraged at our recent dues hikes and who would like to know what the hell all the money is going to. So, while I acknowledge your hyperbolic intent, I also submit that you should feel surprised.

19

James Haughton 03.04.11 at 1:17 am

I know a lot of anti-social anthropologists, but I’m not sure whether this carries through to the organisation of the AAA.

20

Zebbidie 03.04.11 at 9:58 pm

…a tarragon of virtue.

Thyme will reveal how sage you really are.

21

James Hanley 03.05.11 at 1:45 am

Harold Lasswell described politics as “who gets what, when, and how.” If that’s actually the subject of political science, then the behavior of the APSA is actually perfectly in line with the discipline’s academic conceptions.

Comments on this entry are closed.