Published June 22, 2023
In August, delegates will meet in Chicago for the 2023 DSA Convention. As profiled before, this Convention will be the second in the post-Bernie reinvention of the DSA, where the organization will need to fly without the tailwinds of a larger national campaign to boost membership and socialist appeal. As such, the decisions made by the body will have a binding effect on the priorities and allocation of resources within the organization, and among all the decisions made at convention few are more important than those which impact the organization's financial resources.
After the 2021 Convention, Shane published an analysis of the spending decisions made by the convention and expressed concern that the convention had overcommitted. Our recent analysis in May 2023 confirmed that. This year, we are providing an analysis of DSA’s financial situation ahead of the Convention in hopes that the delegate body can go into the affair with a clearer view of what is really within our capacity.
We don't want to bury the lede — we are seriously concerned about the short-term financial health of our organization. We aren't in an emergency now, but under the current fiscal trajectory the DSA faces a very real — but still very avoidable — risk of insolvency within the next couple of years. The decisions made at the convention, and particularly the decisions made by elected national leaders in the organization, will be critical for pivoting off our path towards illiquidity or retrenchment.
Before getting into it – we want to acknowledge that budgets and numbers can be intimidating and exhausting, but it is incredibly important to understand the shared resources we have available to use. The collective management of financial and capital resources is textbook socialism, and it’s something delegates and lay-members alike should take seriously as we consider what is possible, or what can be done, by the organization we are all building and operating in pursuit of democratic socialism.
For delegates, we want to stress that while proposed resolutions will leave an impact or extend the organization’s financial commitments; the convention elected 16-person National Political Committee (NPC) will have the lion’s share of impact on the DSA’s budget. And so we urge delegates to use this analysis to not only assess the impact of resolutions, but also on who the delegation decides to assume the NPC for the 2023—2025 term at the convention. We will be posting a resolution-specific guide in the weeks to come, but we thought it was important to first foreground our current situation.
In 2022, the DSA brought in $5,345,779 in income, 14% less ($906,528) than expected. This corresponds to a decrease in approximately 10,000 members during that year.
The majority of DSA's income come through member dues. In April 2021, the DSA recorded 94,000 Members, approximately 78,000 of which were Members in Good Standing (MIGS), i.e. members who have paid dues within the last year. As of May 2023, the number of "constitutional" members was reduced to ~78,000 (as cited on the June B&F call), of which ~57,000 were recorded as MIGS. To emphasize, that's close to 25% of DSA's MIGS, a net average loss of over 1,000 MIGS per month. Our constitutional membership had decreased by 16,000 members, or about 17%.
Despite declines in membership, the DSA actually ended 2022 with a surplus because it recorded almost two million dollars less in actual expenses ($5,274,381) than expenses budgeted ($7,157,695). You can explore DSA's spending and income in the data visualization chart, prepared by E. Tov of Winston-Salem DSA, below:
In 2022, the largest areas of under-spending were:
You can explore the 2022 expenses on your own by using the data visualization we included above, but we want to relay a few direct line items for stipends, campaigns and committees below:
In the end, National DSA ended 2022 with $71,398 more than it started the year with. Excess income flows into the DSA's reserves — money that is held over for spending in future years.
A quick primer on reserves: The national organization is required at any time to hold six months of expenses in cash reserves, which was passed unanimously in 2019 by the NPC at the time. The difference between total reserves and required reserves is the available reserves. Available reserves can be spent without restriction, though bringing available reserves to zero means reducing the financial cushion available to the DSA in the future.
DSA's reserves have remained stable in the reports covering between June 2021 and December 2022:
At the end of 2022, this means that the organization had a $1.7 million buffer between the amount of cash it needed to have on hand and the amount it actually had on hand.
A 2023 budget was passed by the NPC on April 2, 2023. We want to disclose here that, while staff and the NPC have provided information on the organization's 2023 budget, a final budget has not been published, and it has been difficult to reconcile numbers between documents and it is unclear which are and are not up to date. In March 2023, the Secretary-Treasurer, a member of the NPC, shared the 2023 Budget on DSA’s Forums, which included the 2023 Budget, as recommended by the National Budget & Finance Committee (“B&F”). Additions and amendments were later made by the NPC during the NPC meeting on April 2, 2023 when the budget was approved, and Secretary-Treasurer Ashik S confirmed to us via email that tab 1, columns F-H reflect the additions by the NPC. In the spring of 2023, the NPC and staff hosted several calls on the budget and organization financial situation.
Outside of B&F calls and memos (which at their time of release were internal), the general membership did not receive a single budget update between the 2021 Convention and the April posting that we could find, a twenty month gap. We are doing our best here, but may update as information becomes less muddled. (We want to restate the recommendation we made in our previous entry to develop a reporting standard across the organization).
In March 2023, the Budget & Finance Committee proposed an original budget (see linked tab - DRAFT 2023 Basic Budget) with a worryingly large deficit of $1.5 million that would cut into most of our reserves over one year alone; but they also tried in earnest to cut costs and deny many expenditure requests from national committees. The B&F Committee went on to request the NPC authorize additional cuts ($400k-$750k) to aim for a target deficit under $1 million.
However, the budget that passed by the NPC on April 2 increased the proposed budget by $100,000, adding in several large spending commitments which totaled up to $365,000, including:
Under this new budget, spending was mostly offset by a hiring freeze of four positions in 2023 that account for up to $225,000. The revised budget also increased expected 2023 income by $700,000 from $5,170,539 to $5,817,054 by assuming an optimistic (but unlikely) dues revenue model developed by the B&F Committee (see Model B). The model assumes a 5% increase in average dues revenue per member by assuming a successful push towards income-based dues. It also reflects a higher registration fee for Convention, which is being paid directly by delegates and their chapters, which was approved as of March 21.
In total, the approved budget authorizes a net deficit in 2023 of $1,695,580.
Actual revenues and spending in 2023 could deviate substantially from the proposed budget, and the B&F Committee developed a few models — which went circulated in a memo published on February 7 — to demonstrate these different financial paths. The models create different income projections based on different scenarios: A-Realistic, B-Optimistic through dues increase and stable membership, C-Optimistic through stable dues rates but higher membership, D-Worst Case Scenario, E-Best Case Scenario through reduced collections. These models were created prior to the final budget being passed, so we cannot do more detailed analysis on them, but they are useful benchmarks for understanding DSA’s different paths to solvency (or crisis).
In the table below, we show Model A, based on actual trends and is considered the most realistic model, which assumes a decrease in dues revenue of 7% in 2023, 8% in 2024 and slightly lower expenses in 20244:
Income is the hardest variable to predict, and the models mostly differ in the way income is projected: Beyond membership numbers, changes in dues rates and changes in the collection method can lead to substantial changes in income. Currently, 29% of DSA members pay annual dues which amount to an average $48.38 annually. However, the average monthly dues payer (members who pay monthly rather than annually) end up paying $11.95/mo on average – or $143 per year. This is why DSA national and local treasurers have been pushing for members to pay monthly, rather than annually. An income-based dues calculation has been added to the join page, and the NPC and Growth & Development Steering Committees have started to plan a pivot to income-based dues. But most members are not currently aware that they can change their dues on the join page and no longer need to email staff. (DSA’s development director noted that new members are unlikely to pay income-based dues. This is an ask for renewing and more invested members.)
Model A assumes no additional spending including, we believe, filling those open staff positions. Still, we are not confident that the organization will be able to satisfy even this “realistic” assessment, as the DSA is already $174,661 under projected dues income for the first half of 2023. This is one reason why the B&F Committee has suggested options for additional cost savings which total up to $1,492,000. Some of these suggestions are controversial, but we want to list them here as they do identify substantial overhead cost savings:
Because dues shares are a significant budget item, we believe there needs to be a deeper discussion by the organization about these transfers, how they should be leveraged, and how much they should really be. Dues shares are not guaranteed in the DSA Constitution and can be amended by the NPC at any time. According to the February B&F presentation, the Dues Share calculations have recently been tweaked by staff to:
However, the delegation is unlikely to take on this discussion during the convention: Members of the Budget and Finance committee submitted a resolution for 2023 Convention, which failed to meet the signature threshold, that would have allowed National to withhold dues shares from chapters in budgetary crisis moments. But this is likely to be an issue taken up by the NPC during the next term.
Unless we can fundraise incredibly quickly and efficiently, the DSA will need to balance its budget completely for 2024. We are skeptical of the assumption that DSA will increase its income by 5% by the end of this year given current downward trends in expected income, though a concerted internal push for higher dues payments and direct donations could achieve this in 2024.
We are not going to blow these projections out of the water based on vibes and hopes: The DSA will not bring in a substantial amount more of cash in 2023 or 2024. Ending 2023 with a cushion under $100,000 risks digging the national organization into a hole that is potentially inescapable. And the projections above suggest that, barring discrete change in our organization’s operation, the DSA is on a path towards a liquidity crisis in 2024, when the national organization will be carrying well under six months of operating costs. Simply put, we are running out of money and this will impact what we can put forward post-convention.
There are a lot of “doomsday” scenarios that could happen if the organization has a true liquidity crisis, including layoffs and the cessation of the dues share, with bankruptcy and liquidation as the worst scenario. But, we do not think that these are likely outcomes. More likely will be that much of what was passed in this budget and at the upcoming convention simply will not happen, as occurred after the 2021 Convention, but without the same financial cushion inherited following the last convention. It is also likely that finances will dictate that the current open staff positions will remain unfilled for financial reasons, with no significant hires incoming for 2024.
We have a few immediate recommendations for the current and prospective NPC which we believe might help alleviate the DSA’s financial issues. But we also urge DSA delegates at the convention to ask candidates for the NPC how they will address these serious fiduciary gaps.
First, the DSA needs to focus on fundraising. With notable exceptions of the DSA 100K Drive and a renewal campaign at the national level, it’s been an area in which our organization has lacked dedicated focus. This includes increasing member retention and outreach, but also extraneous donations. In 2022, DSA fundraised under $230,000 combined, and in 2023 we are projected to bring in just $155,000. Campaigns and WG’s fundraising to support their work has been a mixed bag. When there have been fundraisers for IC trips after the fact, for example, National had to step in and pay the lion’s share of the expenses. In May, the NPC approved the Development Director’s proposal to explore a “major gifts” program to identify and contact potential larger donors, a step towards more intentional fundraising.
Second, we recommend the next NPC to revisit the budget and, in addition to considering the B&F recommendations cited above, also consider additional cuts:
It gives us no pleasure to recommend the above. But, our highest goal is to ensure that DSA as an entity can continue to exist, and the current budget introduces a very real risk of insolvency and will severely limit the ability of the next NPC at the DSA as a whole to act on the commitments decided on by delegates at the 2023 Convention.
We recommend these adjustments alongside the approved partial hiring freeze. This would save $224,500, which should be added to our reserves. While this is not sufficient, building on our buffer now will reduce the strains provoked by income droughts in 2023 and 2024. Our campaigns will also need, for this time period, to fundraise to offset national spending; we cannot provide external campaign funding at the expense of organizational solvency.
We also recommend that attention be provided to direct fundraising as well as boosting dues payments and membership renewals. The most optimistic projection for future income, Model B, assumed a future in which 40% of dues payers switch to income-based dues — an ambitious goal. In that projection, available 2024 reserves are projected to be only $351,504. This is better than current projections, but well under the $1 million recommended for the organization to have in excess reserves by the B&F Committee.
To be clear, one strategy alone will not get us there; we need a concerted effort by our national leaders and lead chapters to address this existential crisis.
We implied in our last piece the dire need to move away from staffing essential functions of the organization, instead focusing on management of functions and campaigns by working groups overseen by the NPC and supported/facilitated by staff. The fiscal analysis we provide above motivates our outlook on this – we see it not only as an extension of our ideological framework, but also as a necessity for both the short and long-term health of the organization.
The concept of moving organizational functions to an organized membership is not a foreign concept. In fact, Metro DC DSA is one of the banner chapters for developing member-led structures. Our model for the Administrative Committee has sustained a reliable and skilled team that has been replicated in multiple chapters across the country. Our publications team — which coordinates production of a weekly dispatch and maintenance of a living editorial archive — boasts a consistent readership that rivals organizations with paid communication staffers. Our political education team has organized a compelling arrangement of educational forums and tours that boast high virtual and digital attendance, providing an essential outreach channel for our working groups and allies. And our in-house design-team has built a network of artists capable of delivering propaganda on-demand that rivals output from paid production shops. Our chapter has demonstrated that member-led administration can be effective and scalable, and a boon to developing a strong internal culture.
The B&F committee envisions hiring all of the nine open staff positions in 2024, but we are skeptical that it will be possible given that it would impose a serious deficit onto the national organization. Additional hires, without major changes to the budget and intense increases in income, would lead to layoffs or drastic scaledowns of other national DSA funding priorities at the end of 2024 and 2025. Our ability to hire staff and provide resources to our external work are directly tied to, and limited by, our ability to raise revenue or reduce expenses.
The cost of staff is not just the salary of the staff itself, but also the cost of benefits. Based on the 2021 convention rules, the cost of a staffer plus overhead is calculated at $163,950 per year in total costs. This means that hiring five staffers would cost approximately $820,000. Ten would cost $1,640,000.
We want to recognize that some candidates for the NPC have made increasing staff an explicit part of their platform and vision for the DSA. There are also multiple resolutions to be considered by the convention that propose additional stipends and paid full time political leadership. Unless these initiatives are supported by a major fundraising endeavor, these plans are just not possible. If we review these plans optimistically, increasing staffing costs by leveraging a short-term deficit are defensible if they lead to large increases in membership. Consider that each staff hire assumed at $175,000 would be the equivalent of 583 members paying $300 in yearly dues (the objective average membership dues rate for 2023 and beyond). However, at the current average dues per member rate of $143/year, each staff hire is equivalent to yearly dues from 1,224 members.
On stipends - in most large organizations, if the board gets stipends it is expected they will fundraise to cover that stipend, and more. It is an unfortunate reality of operating as a registered nonprofit. It is encouraging to see the DSA NPC Leadership Pledge initiated by the Red Star NPC slate, which explicitly includes a commitment to spending a minimum of 2 hours per week on dedicated fundraising work.
Finally, we want to stress that our criticism of staffing proposals in no way denigrates the work done by current DSA staff. We want staff to grow with the organization, establish connections and tethers to the locals and members, and feel just as much a part of charting the direction of the DSA as our members. This is one of the reasons why we wince at plans that propose putting the burden of membership recruitment or campaign mobilization on the shoulders of staff – overcommitting risks provoking layoffs or staff burnout.
We realize our analysis here may be interpreted as doomsaying an austere future for the DSA as a national political organ. But we urge all readers to avoid letting this analysis diminish or deflate their campaign or political objectives in the DSA. On the contrary, we believe that charting our limits and vulnerabilities is empowering.
Understanding the material reality of our organization — the pool of capital we all share and are responsible for safeguarding — makes it easier to navigate the road to democratic socialism we're all marching on. It is critical that our membership understands what we have access to — and what we don't — so our campaigns and strategies can be developed in a way that is sustainable, realistic and generative.
To that point, we want to emphasize a few final points derived from our analysis:
Finally, we remind all members to remember that the DSA has no asset more valuable than its membership. Well placed pennies will augment or expand our political organization's range of motion, but the genesis of our political future lies within the networks of hope and trust that sew together the working-class and their communities. The goal of our organization is to grow these critical connections where they are absent and activate them for strategic action when they are charged. Safeguarding the long-potential for the DSA to carry-out this directive motivates our words of caution above.
In the next guide in this series, we will look at the 2023 Convention resolutions and what DSA can and can’t actually afford to approve financially and operationally.
1 At the beginning of the 2021-2023 term, the NPC approved the following national priorities: Labor, Green New Deal, Electoral, Multiracial Organizing Committee. These also received budget item funding for campaigns and grants.
2 Grants refer to financial assistance provided directly from DSA National to support campaigns, projects and initiatives throughout the organization. In this budget, various committees and programs are allocated specific amounts for grant distribution, including the National Electoral Committee, National Labor Commission, Green New Deal Chapter Grants, and Housing Justice Committee Chapter Grants.
3 DSA stipends refer to the monetary compensation provided to members of the Democratic Socialists of America (DSA) National Political Committee (NPC) Steering Committee for their work and time commitment. $2,000 per month for each of the five SC members was approved at the 2021 Convention.
4 Note- We have updated the numbers to reflect what is in the most current budget for 2022 and 2023. Our numbers come out differently than what was in the B&F presentation and memo, which predates the 2023 budget being finalized. We have attempted to reconcile and update the numbers based on the information presented here.
5 Dues shares are the percentage of monthly dues paid to the national organization that are distributed to each member’s chapter.