financialresults
2011 was a very tur- bulent year financial- ly, both at home and abroad. In August, we felt the impact of the U.S. debt-ceiling crisis and the subsequent downgrade of the U.S. credit rating. In the fall, we saw concerns with Greece and the EU, as well as fears of a hard landing for the Chinese economy. De- spite the turmoil, U.S.
markets finished slightly positive for the year. MOAA’s investment portfolio didn’t fare as well
given our exposure to foreign markets and the his- torically low yields in the fixed-income arena. How- ever, our diversified investing philosophy has served us well over time, and we are committed to our asset allocation model. We remain investors rather than market timers and believe our 2011 losses are more a result of the market cycle than a reflection of the quality of our investments. We are cautiously optimistic, barring a major geopolitical event, that we will recover our investment losses in 2012. MOAA has four primary revenue sources: dues,
investment income, advertising income, and royal- ties from sponsored products and services. Our investment losses overshadowed the overall per- formance in 2011, but extensive efforts to maximize non-dues revenue sources helped cushion the blow. Additionally, we are pleased to report a growth in our paid membership over last year. On the expense side of the ledger, MOAA spent
$21 million on behalf of its members. Expenses can be categorized into four major areas: legisla- tive affairs (MOAA’s original purpose and still its primary mission) is 11 percent of the expense bud- get; informing members through Military Officer and MOAA’s Web Base accounts for 33 percent; supporting our councils and chapters is another 10 percent; and the balance helps our members by
providing essential benefits and information, as well as MOAA-sponsored products and services. In 2011, MOAA provided $9.4 million of financial
assistance in the form of interest-free loans and grants to 1,712 children from military families for undergrad- uate education. The MOAA Scholarship Fund’s board of directors approved awarding $9.4 million to more than 1,700 students from military families in 2012. Our Statement of Financial Position reflects that
MOAA’s assets are primarily investments and inter- est-free loans that have been provided to students from military families. Cash and investments account for more than $125 million. We had $42 million in outstanding loans to 4,275 students, as of Dec. 31, 2011. MOAA’s liabilities primarily are owed to MOAA members. MOAA has collected $57.2 million in both annual and life membership dues that will be used as earned over the next 60 years. The Widow’s Trust is a $2.8 million obligation to ensure beneficiaries of an expired MEDIPLUS® plan will receive the health care insurance they were promised. With net assets of $111.7 million as of Dec. 31,
2011, MOAA is financially sound to continue serv- ing America’s officers and their families. While we took a step back financially in 2011, I remain confi- dent that by keeping our eye on the ball by explor- ing opportunities for new revenue sources, closely monitoring expenses, and prudently balancing our risk with our investment-return goals, MOAA will maintain its strong financial position. Contact MOAA’s Member Service Center at
msc@moaa.org or (800) 234-MOAA (6622) to have a copy of MOAA’s audited financial statements for 2011 mailed to you.
— Col. James W. O’Brien, USAF-Ret. Chief Financial Officer
68 MILITARY OFFICER JUNE 2012
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