First Steps to Fixing the 2024 Budget Crisis

First Steps to Fixing the 2024 Budget Crisis
credit: @jewsandroses via

Tomorrow, DSA’s National Political Committee will meet to determine many remaining items of our budget for 2024. The stakes of this meeting are high: with declining member revenue and increasing costs from staff and organizing expenses over the past few years, DSA now needs to take the potential for a major financial crisis seriously. We must develop a coherent plan for how to move forward that preserves the organization’s political priorities, increases member control, and keeps DSA operating. 

Several caucuses have written about their proposals and plans, including the Socialist Majority Caucus, Marxist Unity Group, the Libertarian Socialist Caucus, and Bread and Roses, who have also put forward a proposal to call for immediate voluntary staff layoffs.

In summary: with cuts we are supporting, including an expansion of DSA’s hiring freeze, we believe the organization is in a position where staff layoffs and/or cuts to dues shares to local chapters are very possible, but not guaranteed. DSA has the opportunity to land in a stronger financial position with a massive round of grassroots fundraising that requires the whole membership to get onboard, and we should seize that opportunity. 

If layoffs are necessary, they need to happen with diligent work from the NPC and the Personnel Committee to understand the structure of the organization and outline criteria for cuts that engage with our staff union in good faith. When a decision is made, it needs to be executed quickly, avoiding a scramble that would cause chaos across the organization. And though we advocate a “no” vote on Bread and Roses’ proposal to perform layoffs at this January meeting, we appreciate their putting staffing costs on the table. We think it’s important not to endlessly defer the staff costs question just by calling attention to these concerns. We do not want a situation where all political programming is ceded to the imperative to fund DSA’s staff.

That’s why we are putting forward a resolution to establish a hiring freeze which could fill some positions like Finance Director through internal promotion and seek no further backfill, which will save an estimated $580,000. We are also in support of an upcoming resolution by Marxist Unity Group to establish an audit of staff structure that can empower us with more information to make future decisions. 

This and other cuts we’re supporting would bring DSA’s 2024 projected deficit to around $500,000, allowing us to organize DSA for a major fundraising push. Following tomorrow’s meeting, we must evaluate our staff structures and figure out ways to better allocate responsibility in a transparent way to membership. We must also commit to growing member participation in national work via the Growth and Development Committee, the Comms Committee, the National Tech Committee, and other national organizing bodies, as well as using our paid national co-chair roles to exercise more direct political oversight to the work of staff.

And we want to be clear: in an emergency budget proposal where dues share cuts and layoffs are on the table, the NPC must prioritize keeping dues shares as a vital tie between locals and the national organization, and be ready to make difficult choices about our organization’s staffing structures.

This will guide our approach for the NPC meeting tomorrow. While we recognize that it could be seen as kicking the can down the road on some difficult political decisions, we think it’s a well-reasoned approach that enables the NPC to make difficult decisions with more information and preparation, while organizing DSA to remain a powerful, member-funded organization right now.

Why are we here?

The finances of the national organization are complex and constantly evolving. In brief, over the course of the past eight or so years, DSA has grown tremendously as a force on the left in American politics. As the organization has grown, it has increased spending in preparation for more growth. Starting in 2021, expansion of membership slowed and halted, but the organization continued spending money with growth in mind. DSA’s stockpile of cash was spent down entirely over the past two years. The organization has been working hard to stop our downward membership trend, but a shift back to growth has only begun very recently, and we are bearing the cost of staff expansion, a continued NHGO contract, and an in-person convention - one of our greatest single item expenses - with no no cash surplus. This means we must cut expenses and increase recurring income through member dues and donations.

While the EOY actual expenses haven’t been provided to the Treasurer or the NPC yet, we were projected in mid-November to end 2023 with little to no dollars above reserves, around $2.4 million. The calculated reserves we are required to have (six months operating cost) will be determined by the budget passed, but it is estimated to be around $2.2 million. 

If we were to pass everything approved during convention, keep administrative support for all functions, and continue at our current level of staffing, the organization would spend $7,092,518 in 2024, which would drop us past our reserves rapidly and would bankrupt the organization by early 2025, if not sooner. This National Political Committee (NPC) has a very tough course to chart: they must balance reducing the budget while ensuring continued operations of the organization and executing the will of the 2023 National Convention. 

At the NPC meeting on January 14, the NPC passed a very preliminary draft budget comprising the core costs that DSA requires in order to remain operational. At that same meeting, the NPC decided to vote on a variety of changes individually during a special meeting tomorrow, Sunday January 21.

The total of this draft budget passed on January 11 is as follows:

  • Estimated Income: $5,056,390
    • $4,421,365 is expected dues amount 
    • Unlikely to change until we start getting actuals from 2024 fundraising
  • Costs Approved: $6,525,689
  • 2024 Projected Deficit without Amendments: $1,469,299

This approved $1.5 million deficit must be cut down, or it could bankrupt the organization by the end of the year. It will be the task of the NPC to do this on the January 21 meeting through the budget amendment process.

How is Red Star thinking about this problem?

Our position is that the NPC should target a $500,000 deficit through reducing some organizing costs and engaging in a partial hiring freeze, which gives us some level of breathing room to engage in an all-out fundraising campaign over the next few months. We believe that in these conditions, further reducing staff costs or dues shares may eventually be necessary, though this is not guaranteed. As mentioned above, our priority in that case would be to preserve chapter dues shares, so as to prioritize the work of our chapters and maintain a stronger connection between chapters and the national organization.

Bread and Roses has put forward a resolution to reduce staff costs by $500,000 by calling for voluntary resignations followed by initiating a formal layoff according to the DSA union’s contract if not enough volunteers step forward. We appreciate that B&R has brought the question of staffing costs to the table. This conversation should not be off-limits for DSA’s political leadership, and we appreciate their point that DSA’s staffing grew based on expectations that haven’t become reality.

That said, we believe that the passage of the resolution as written would create undue chaos for DSA’s labor relations and leave the personnel committee without enough information or time to make a strong decision on such an important matter. If the thresholds are met by volunteer resignations, then critical positions might end up vacated and we would need to begin a rehiring process, negating any savings. 

We agree that staff costs may need to be reduced, but also acknowledge that after investigation we may find that even deeper cuts than those proposed by B&R need to be made. If layoffs are necessary, they must be well-planned and performed with clarity and respect for DSA’s affected staff. 

With this in mind, we have submitted a resolution to freeze external hiring and complete critical internal promotions, which we think is a better approach to immediately reduce staffing costs by an estimated $580,000.

DSA has had several staff leave in the past months, and applications to replace them are now open (and accounted for in our current budgeting). Our resolution would fill some director and manager positions via internal promotion, halt the hiring process for some remaining roles, and call for personnel and the National Director to evaluate shifting some role responsibilities to other staff.

This arrangement will need to be evaluated for longer-term viability and will still cause pain as we make necessary adjustments, but we believe it is preferable to across-the-board cuts — both because it avoids the need to directly lay off staff, and because the impact is predictable and specific. 

Regardless of what spending cuts get passed, this will be a living budget, subject to continuous democratic oversight. Once passed, the Budget & Finance Committee will be meeting regularly to assess and make recommendations for adjustments to the budget. DSA Co-chairs Ashik and Megan, along with the rest of the NPC, will focus heavily on the Solidarity Dues Drive and fundraising. This will be a 3 month sprint to test DSA’s fundraising capacity, an initiative we’ve never taken on before. The NPC will discuss the results of the fundraising on an ongoing basis and resolutions can be brought to further reduce the budget or, if the picture improves, add things to it.

Marxist Unity Group has put together a resolution for an audit of staff functions that we understand will be brought for NPC consideration soon, which we support. The process of budget deliberation has revealed a lot of differing perspectives and levels of information about DSA’s staff structure and function, and we think a deeper understanding of our staffing work will go a long way towards equipping us with the ability to make a good decision if the emergency budgeting proposal kicks in.

We also think there are opportunities to reduce the number of director-level staff DSA hires. Maria Svart’s departure, which has created two interim positions for National Director and Operations Director, gives us an opportunity to evaluate these and other director-level roles.

We also understand that comrades from Groundwork may be bringing a resolution to prioritize fundraising and we are excited to review that resolution and provide feedback.  

We recognize that further cuts will need to be made to reach Red Star’s target deficit of $500,000. We support some further reductions, proposed by members of the NPC. Amendments to existing proposals may change our positions, and we’re happy to consider these amendments as they are made in the meeting.

NPC travel freeze (~$64,000 in savings)

Quarterly in-person meetings are an important way to relieve political tension among NPC’s elected leadership, but we also recognize that this is an extraordinary moment for DSA. We believe it is a reasonable approach for now to initiate a travel freeze for NPC meetings after our February in-person meeting and re-evaluate after one or two remote quarterly meetings.

NPC steering committee stipends - Amend to keep only stipends for Treasurer and Secretary (~$70,000 in savings)

Steering committee stipends can serve a valuable purpose, facilitating political leadership’s capacity to do their work. However, as the NPC is currently organized, we think the value is much greater for member leaders in particular officer positions, whether or not they’re on the steering committee. Secretary and Treasurer have outsized responsibilities performing crucial functions that would otherwise need to be filled by administrative or finance staff, and prioritizing them as a means to save on specific staff costs is a clear need. The Steering Committee should establish strong oversight to the members filling these roles (currently John L for treasurer and Cara T for secretary) to ensure they are meeting expectations and providing expected deliverables.

YDSA - Reduce to one annual in-person convention and reduce YDSA stipends ($150,000 in savings)

This is the most difficult political cut that the NPC will consider, and though we’ve landed in favor of it, we recognize that it puts YDSA in a difficult position. YDSA is a valuable part of our organizing strategy, but we don’t believe that it is the most crucial strategic force for DSA, as some may argue. Therefore we believe that changes we’re making for the NPC and for other national bodies should be applied to YDSA as well. Keeping YDSA to one in-person and one online conference is a difficult shift, but one we believe to be necessary while the org re-evaluates its finances in the coming months. Regarding the question of YDSA Stipends, the impacts of these cuts would only apply starting in July of this year, and we think that keeping parity with what’s provided to leaders of other national bodies is the right approach.

Tech audit (~$50,000-150,000 in savings)

DSA spends a large amount of money on tech resources; this is understandable, since technology tools are vital resources to enable effective organizing. However, we believe based on conversations with staff and member leaders of the National Tech Committee that there are significant opportunities for savings. A resolution would call on the NTC and staff to perform an audit of potential savings; we support this resolution, though we recognize that the exact amount saved will vary on the results of the audit.

We support proposed changes that will provide small but important sources of funds to YDSA, national committees, and working groups because we see the budget impact as minor and this is a good opportunity to make an outsized organizing impact.

Every dollar of DSA spending represents an organizer’s personal priorities for DSA, and that a good argument can be made against every cut that may occur. We ask for DSA members to take this weekend as a call to come together and commit to building a member-driven org that can avoid the worst outcomes of this budget crisis and increase our unity in building a fighting DSA.

What can I do to help? 

Help out with the Solidarity Dues Drive. If you can, switch to income-based solidarity dues today! Changing members over to monthly and income based dues should be done at every General Body meeting from DSA Chapters, in concert with the ongoing GDC Drive. Chapter leaders receive information about who in their chapter is paying solidarity dues, as well as hot lists of members who expressed interest in switching to solidarity dues during a phone bank but did not immediately commit. Chapter leaders should take ownership of this initiative and actively engage in switching their members to Solidarity Dues. Solidarity Income Based Dues Drive Chapter Resources are available here. (Members can sign for a Solidarity Dues Phonebank here.)

Organize members to help support national. If your chapter is in strong financial condition and can direct member contributions to the national organization, we welcome chapters’ contributions to getting us through this next, most difficult period of the budget crisis until DSA is no longer attempting to resolve a deficit. 

If you can’t afford financial contributions, reach out to your staff field organizer to offer labor or just to let the National organization know what you’re doing. We need stronger ties between chapters and national to concretely bring the two sides of our organization together. 

Recruit new members today. We are committed to making sure that DSA never ends up in this kind of situation again. We are extraordinarily optimistic about the member run organization on the other side of this crisis and want to deliver on our pledge of good governance. We hope, through our work on the GDC, to advance our work in retaining and developing members to new heights. But we also need new dues paying members to join us in the struggle against capitalism. 

Get involved with a working committee. Members are already involved with helping increase DSA’s capacity.  The DSA National Tech Committee (NTC) is a collection of volunteer tech workers or enthusiasts from across the country who create and implement tech solutions for the national organization and its chapters. They dedicated know-how and labor both before and during the 2023 National Convention, working with operational and tech staff to make the Convention a success. They have a few active projects including helping chapters create websites, an initiative to provide the OpenSlides voting tool across chapters and the organization, and have recently done a massive update to the National Forums. Apply to the NTC here

The National Growth and Development Committee is the primary internal organizing committee for DSA. It is a collection of experienced DSA organizers doing work across the organization, including recruitment and retention drives, chapter surveys, mentorship, new member onboarding calls, and member to member training programs. Apply for the GDC here

Remember: we’re going to get through this together. The prospect of DSA being in financial danger is distressing to us all. But we can and will figure this out together. We want to navigate our way through this process in a way that builds unity, which means we must work together with comradely dedication to get through this situation.

Further Discussion

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