AmateurRadio.com

Corporate annual reports can be real snoozers to read. Unless you have a specific interest in the contents. A high school teacher once used a similar analogy as I tried to stay awake in her class which was just before basketball practice. History is boring. Unless it touches your life! If you’re a licensed ham operator, this story possibly does touch your life. For non-profits, annual reports, if issued, are most often a fiduciary document, not just something dashed out for informal consumption. In short, you should be able to trust what financial information is reported.

That’s actually a legal aspect of being a non-profit, especially if it receives tax relief on income and donations under the IRS Code 501(c)(3). (Not all non-profits have status under this part of the tax code.) This commitment to trust is part of the determination that the IRS makes when it issues a Ruling on a non-profit corporation petition for federal tax relief. Seriously. That ruling for the ARRL came back in 1931.

The formal non-profit requirements are not as clear when it comes to non-financial statements such as factual claims made in an annual report. But the IRS makes it clear that non-profits receiving tax relief under the tax code should be publicly transparent: “By making full and accurate information about its mission, activities, finance, and governance publicly available, a charity encourages transparency and accountability to its constituents.” I was President of a small non-profit for several years, fortunate enough to have a fellow ham attorney who handled these matters weekly as my Secretary-Treasurer. We recently closed the corporation since it had fulfilled its stated mission. We never issued an annual report. Thus, I have personally been through the process. Non-profits are not required to do so but they must file Form 990 with the IRS annually, in a timely matter. For the ARRL, many such filings are available here via a name search. The ARRL Foundation’s Form 990 filings can be found there, too.

Best practices in the non-profit world, however, do suggest the following if a non-profit issues an annual report document, transparency is vital. This complements the IRS quotation on best practices in the previous paragraph:

Transparency is important for a nonprofit. People want to know how trustworthy a nonprofit organization is and see the impact of the work they’re doing. A nonprofit annual report can highlight the good you’ve done, your profits, your losses, and your expenses. This can keep volunteers and investors satisfied with what they’ve helped to create. (Mosey, a compliance assistance company for non-profits).

Especially for a non-profit like the ARRL, which is a corporation with a separate Foundation that allows donors to receive some tax benefits through those solicitations, the transparency criterion is very important.

The trust that what is said in an annual report is akin to key non-required acts that the reader experiences every day. I come from three generations of bankers (my brother was the banker, I became a news journalist then college professor). There is no requirement for a bank teller to count back cash in front of the customer. None. Their bank rating by Sheshunoff & Company will not change one whit. Why do they do it, each and every time? To certify the trust that the transaction is accurate and complete. There are many other examples available but the reader gets the point: trust and veracity are paramount for a membership-based non-profit corporation that solicits donations.

This preface is useful for what I’m about to show. When I read the 2023 Annual Report, I was looking for membership numbers. But when I read the President’s Foreword, a paragraph jumped out at me.

Wow! Let’s ponder this number. Some 75 percent of Technicians just do not participate in amateur radio as soon as one year after receiving their FCC license. Before the reader fires up a spreadsheet to copy and past the simple license numbers from the ARRL FCC Licenses page, consider what this data means. Rick K5UR was referring to 75 percent of NEW licenses, not of ALL licenses. The full Technician license count is comprised of multiple elements: Total = (Existing Licenses + New Licenses) – Expired Licenses. There is no public data readily available that will identify this equation (i.e., give unique estimates consistent with the known total).*

*Moreover, the FCC mainframe ULS database is not efficiently updated to remove expired licenses when the expiration dates pass. It's an erratic thing based upon IT workload so on any given day, the ULS database for amateur radio licenses will undoubtedly contain what "should" be expired licenses but they just haven't been purged. Joe Speroni AH0A and I have downloaded the "end of year" full set of ARS licenses on or about January 1st each year to capture the EOY dataset. Joe used to maintain a snazzy website with a database backend allowing the user to generate custom tables and graphics with filters. He sunsetted that a few years ago but I got 2000-2012 from him before that occurred. I've continued to download the data each January 1st so I have a continuing series from 2000-present. They represent a consistent dataset for EOY numbers. 

But a thought experiment might be, say, 30,000 NEW Tech licenses per year. This would suggest that 22,500 would get licensed but become wholly “inactive” not later than 12 months afterwards. Imagine an active local club who works hard to get 50 new Techs into the hobby through their training and VE Testing Program in a year’s time. This would mean that only 12-13 would still be participating in the hobby a year later. Demoralizing, no?

This is a truly significant finding reported in the 2023 ARRL Annual Report so surely it was something carefully determined by people skilled in data analysis, right?. That’s what I would have assumed. It is critical to better understand this study so I needed to read it for the details.

Just knowing how being “active” in the hobby was defined and measured would be illuminating. We don’t have anything like a consensus on what this means, yet it’s used in any discussion of the state of the hobby. What were the source(s) of the data used? How large were they and how was the sample drawn? Did ARRL conduct a large random sample survey that has not been released to the public? (This is kind of a joke since they hardly ever release survey data to the membership, unlike RAC.) Will the sample generalize to some large population versus just being, say, hams in the Newington, CT area or something? So many questions that are important on this surprising result.

Yet, as the reader will see, CEO David Minster says there was not a study per se!

I sent Rick K5UR an email requesting a copy of the study cited here. So there’s no misunderstanding, I’ve reproduced the email chain below for reference. No he-said, she-said here.

Let’s see if I can summarize. The ARRL President needed some data on the state of amateur radio to frame the theme of the upcoming Annual Report which was on volunteers. The President was told something, either in person or in a presentation (he says he honestly does not recall), by the CEO David Minster concerning a surprising statistic from the Strategic Working Committee about Technician License retention. Rick K5UR publishes his Foreward in the Report as a clarion call for greater volunteerism toward new Technician licensees. Routine. Next on the to-do list, right?

A volunteer for the League (me) asks for a copy of the study since it’s really important for understanding recruitment and retention of new ham operators. And the IRS says this tax-exempt non-profit corporation should be publicly transparent in its activities as well as it being “best practices” to do so. President Roderick refers it to the CEO, who runs the show in Newington. Mr. Minster then corrects the language in the official 2023 Annual Report that there really is no study per se, only a bunch of data amassed to reach some conclusions. But, on the other hand, yes, they did put the results in many tables. OK? But the CEO doesn’t have the “non-study” set of tables or is unwilling to release them. He didn’t say. Mr. Minster points to the recently unelected Division Director Fred Kemmerer AB1OC to fork over answers to my basic questions noted in the email chain. (I get that Fred might not be in the mood for this.) As the source of this “massive set of data put into tables,” Fred AB1OC finally replies that he has nothing to add to what CEO Minster already sent me: which was nothing! So ARRL executives have acknowledged that there is not a study in any real sense but they also refuse to disclose whatever they did to reach this surprising conclusion about Technician loss to inactivity.

The result that I illustrated above should make rational donors question why they would willingly support an education or training project just to have three-fourths of the Technicians being produced take a hike from the hobby inside of a year. Put another way, how would the reader feel if their bank just said, we don’t have to count out your cash withdrawal to you…and we don’t have to explain why.

Is the reader shocked? I'm reminded of the George Bundy character in the old television show, Married With Children, who would say in this situation: Ah geez!

Many questions of suspicion come to the surface here. Did Mr. Kemmerer lose the materials? Did he or his group just not know how to conduct a quality analysis of “a bunch of data” so they’re afraid of releasing it for critique by those who have professional credentials? (Among professional researchers, this is called peer-review and is expected for every study of any significance.) Is it being angry over not being re-elected? Is it a belief that the public simply has no right to know anything cited in an Annual Report? I honestly do not know but one is forced to guess to fill in the blanks since he refused to communicate as CEO Minster told him to do.

I get that Rick K5UR got caught short with this, trusting his CEO to get him key data for the Foreward of the Annual Report which focuses on volunteers in the hobby. I’ve put together many technical documents like this and you have to rely on others for accurate information. The CEO is compensated $303,246 plus another $45,475 in additional monies (or $348,721) according to the latest IRS Filing. This should be the kind of thing that he does for the President in preparation for a fiduciary Annual Report just like getting an official auditor to verify the financial books. But you must get these things right in such a public document, according to those who proffer best-practices for non-profit filings of annual reports. Rick knows this better than I as he is a practicing labor attorney. You must present accurate statements to the court and must face questions by the judge or opposing counsel. This time, it’s the court of public opinion. Since the CEO pushed it off on a former Division Director, it’s confusing. Or perhaps not. The reader can make their own determination here.

The CEO is compensated $303,246 plus another $45,475 in additional monies (or $348,721) according to the latest IRS Filing. This should be the kind of thing that he does for the President in preparation for a fiduciary Annual Report just like getting an official auditor to verify the financial books. 

I’ve been involved with some key issues like this myself. My university research center years ago worked with the Congressional Management Foundation (CMF) on the alternative year survey of the U.S. Senate and the House staff. When the Blue Book report, as it was called, was released, it was said that everything on the Hill ceased for 15 minutes. Why? Congressional staffers wanted to see where they ranked in compensation among their peers. When Time Magazine was doing an investigative piece on the glass ceiling in Congressional staffing compensation for women, the CEO of CMF was on one telephone line with the Time reporter and me on another. When Time would ask thus and so, CMF would tell me the question and I’d quickly run the survey data on my Sun workstation, verbally giving the CMF CEO the results for his response to the reporter on the other line. The CMF CEO was speaking to the public, in the form of Time Magazine’s readership. He had to get what he said right so he called on a scientist involved with the data collection and analysis of congressional staff salary data. That’s a fairly pressured environment to get it as accurate as possible but that’s the deal, no? And, while Time is a for-profit magazine, the principle is the same for the ARRL especially since they solicit contributions from donors.

With the CEO washing his hands of it and the expert on the ARRL Strategic Working Committee just clamming up totally, we are left to conclude precisely what the CEO’s response to me said. There was no study per se. For whatever reason, when they publish something that is unfounded, trust tends to go out the window.

Now, should the reader trust the ARRL when they publish a statement about amateur radio in the U.S.? Should donors question the veracity of what good their money does for the hobby, especially if the solicitation is based on a publicly undocumented study? (Especially since IRS guidance suggests they must be transparent on their activities.) What other statements have not actually had studies behind them even though presented as such? I don’t know. If the ARRL does not have anyone who can conduct a formal study on a topic so it produces a self-standing document, then stop saying they’ve done one. But the transparency issue is still the underlying problem. It precedes the current CEO’s tenure in Newington.

Some years ago, I requested the survey data the ARRL pays for by Readex Research to better understand publication subscribers and readership. CEO Howard Michel denied that request (even though I am technically a volunteer staff “flunky” who is a professional survey researcher) stating that the “League would lose its competitive advantage.” Who is the ARRL competing with such that they desire an advantage?

General Manager at the time Harold Kramer told me that the Readex survey was “proprietary” to Readex. That’s contrary to my experience as a survey researcher who both had clients as well as hired large survey research companies like Gallup to collect data for my research program. I called Editor Rich Moseson at CQ Magazine, whose company also purchased a survey of their readers from Readex to see if the latter’s work for them was indeed the proprietary property of Readex Research. He told me no, it was not. I then called Readex as a prospective customer and asked them the same question. Their response was the survey data was the property of the client. So the League could have easily sent the data to me, as RAC recently did for a survey they collected, so I could provide expert additional analysis to assist “my” national organization.

But why tell a volunteer who is offering to donate about $10,000 of consulting time to help the League meet its mission statement of “to promote and protect the art, science, and enjoyment of amateur radio, and to develop the next generation of radio amateurs” something that is demonstrably untrue? The five pillars are Public Service, Advocacy, Education, Technology, and Membership. Clearly, such results from a national survey would significantly contribute to education, technology, and advocacy, if not the other two. It is the League’s mission. Is it to have complete control over any and all research findings? This way, the League can make whatever claims they wish without independent challenge.

The League’s record on corporate transparency is lacking in my mind from these events. It falls far short of the “best practices” for non-profit corporations as noted above: Transparency is important for a nonprofit. People want to know how trustworthy a nonprofit organization is and see the impact of the work they’re doing. It appears to be at variance with the IRS guidelines for transparency, too. The reader will have to evaluate accordingly. A statement that is often used in data science is: In God we trust. All others bring data.

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