March 9, 2022

How is the IES Faring Amidst Revenue Decline?

2022 03 ies revenue decline.jpg

The quick answer is okay – thanks, in part, to $20M in pre-COVID assets

It’s likely that most members of the Illuminating Engineering Society pay attention to the organization mainly for the lighting-related reasons that they joined. The organization provides members with access to lighting education opportunities, standards, local Section events, trade shows and conferences – and many other benefits.

During recent pandemic times, we’ve heard some lighting people speculate that the absence of event revenue from three big IES moneymakers – LightFair, the IES Annual Conference and the Street & Area Light Conference – might be putting the organization into a financial bind.

While it’s true that pre-pandemic LightFair revenues of $3M+ are not expected to return soon, the IES has seemingly done a respectable job keeping the gears turning with forward progress despite having the uncertainty of a pandemic layered on top of an Executive Director leadership change. After Tim Licitra departed in Spring 2021, the organization tapped Dan Salinas as interim Executive Director. Recently-appointed Executive Director, Colleen Harper, takes over next week.

Fiscal year-end data cited above. Each fiscal year ends June 30.

MEMBERSHIP TRENDS

The two largest categories of individual members, associate and member, have hovered around the 5,000-person total over the last three years. But total membership dues have declined nearly $400,000 from 2019 to 2021 mainly due to a decline in sustaining membership.

The sustaining members are mostly for-profit lighting companies that invest in one of five tiers of membership. The middle tier price tag is $7,000 and the highest tier investment is $25,000.

As many companies adjusted their marketing budgets amidst COVID uncertainty, it is possible that the decline is a temporary dip during volatile times and not a long-term downward trend. In either case, we imagine that bringing sustaining members back into the fold is a priority for the IES.

FINANCES

LightFair expenses and revenues are divided equally among the three event owners – the IES, the International Association of Lighting Designers (IALD) and International Market Centers (IMC). In the recent past the IES share of revenues was over $3 million. For fiscal year ended June 2021, that number was $0.

With the expense of over 20 employees, a NY City headquarters office and the monthly printing/mailing of LD+A magazine, how is the organization faring financially amidst the lack of event revenue? The short answer is okay thanks, in part, to $20M of pre-COVID assets.

Here are some of the financial impacts of the last two years:

Coffers of cash
The IES had $20 million in assets in June 2019. As of June 2021, those assets were $15.2 million.

An IES spokesperson explained that even though having those assets allowed for a place to draw from during the crisis, it also means that the IES will have to find a way to rebuild those depleted coffers going forward, which takes time. With no LightFair income and cancellation of in-person events the last two years, the IES will be rebuilding those funds for some time going forward.

Government help
The organization received $833,000 in Paycheck Protection Program funds in Fiscal year 2020-21.

Unexpected losses
There were LightFair and other conference expenses incurred two years ago that were losses. But, some of those 2019 expenses will be utilized for the upcoming Annual Conference in New Orleans – which should help the 2022 bottom line for that event.

Good investments
The IES also realized approximately $1.2 million in investment returns in fiscal year 2020-21. The organization has multiple investments that are purposely diversified to make sure the organization has a good income stream and the organization told us that they have very been successful over the last few years in those investments.

Moving forward
Colleen Harper takes over as the new Executive Director next week. With her arrival coinciding with the apparent steady return of live events, there is great opportunity to put the IES back on more stable financial footing and consistently positive financial performance in the years ahead.