Öйú365betÖÐÎĹÙÍø

Committee Communication | Compensation | Invested Funds | Financial GuidelinesÌý

Committee Communication

1. Does the ACS Budget & Finance (B&F) website provide an opportunity for members to submit questions?

Yes. There is a feature on the B&F website that allows any user to provide feedback by email as well as ask questions of a financial nature. This link alerts ACS Finance staff that a question has been proposed and it is routed to the staff person best suited to provide a response. Please go to the B&F website and select “Feedbackâ€� to enter your question. Click here to access the B&F Committee website:ÌýBudget and Finance CommitteeÌýor you can e-mail your feedback and questions to:Ìýb_ffeedback@acs.org.

2. Are reports available on ACS financial matters at both Spring and Fall Meetings?

Yes, at each Spring and Fall Meeting members of the Öйú365betÖÐÎĹÙÍø Committee on Budget & Finance provide brief financial updates at the District Caucus sessions. The B&F Chair also provides an oral report at each Council meeting.ÌýIn addition to the information presented at the B&F Committee meetings, the Öйú365betÖÐÎĹÙÍø’s audited financial statements and several other financial documents (i.e., IRS Form 990’s) are available on the Öйú365betÖÐÎĹÙÍø’s public website. You can access this information from the B&F website by visiting theÌýBudget and Finance CommitteeÌýpage.ÌýThe financial updates presented at the District Caucus sessions can be found on the website under the section titled Budget & Finance Reports to Council at Spring and Fall Meetings.ÌýThis section contains financial reports for the past several years.ÌýThe Öйú365betÖÐÎĹÙÍø’s audited financial statements and other financial documents can be found under the section titled Resources by clicking on the line item called ACS FinancialÌýInformation.Ìý

Compensation

3. How are salaries of ACS executives set?

In order to determine competitive compensation for ACS executives, total compensation is compared to comparable positions in the marketplace. Total compensation includes base salaries, incentives/bonuses and the employer’s contributions to benefits packages.

The Board engages external consultants who compare ACS jobs to comparable positions outside the Öйú365betÖÐÎĹÙÍø to identify market value for the positions. The independent compensation consultants also inform the Board’s decision-making about pay policy and practice. This helps ensure that ACS remains competitive and can attract and retain key management talent. The consultantsâ€� data and recommendations are reviewed in depth by a Board-appointed Committee on Executive Compensation. This committee reports regularly to the ACS Board where final decisions are made. Consultants are changed periodically to ensure objectivity and diversity in the benchmarking process.

4. How are Executive Incentive Plans determined?

Incentives linked to performance are common in both the not-for-profit sector and for-profit sectors. They represent “at riskâ€� pay, meaning that they are only paid when targeted performance or pre-established objectives are achieved. Incentive opportunities drive performance on projects that are in addition to core job responsibilities. Incentives can drive innovation and that allows the ACS to expand its products and services to leverage the latest technology and achieve cost savings.ÌýThe Board-appointed Committee on Executive Compensation (referenced earlier) makes recommendations to the Board of Directors to approve incentive objectives and payouts for the top ACS executives.

5.ÌýIs ACS staff paid fair market salaries?

Similar to executive pay practices, the ACS periodically conducts staff-level salary benchmarking to ensure that the Öйú365betÖÐÎĹÙÍø remains able to compete for talent in the open marketplace and retain staff.

6.ÌýÌýWhat would happen if staff salaries were lower?

If ACS did not pay market competitive compensation, the Öйú365betÖÐÎĹÙÍø would be hampered in its ability to attract and retain highly qualified staff, managers, and executives. Competitive compensation is an investment in the organization’s human resources. The Öйú365betÖÐÎĹÙÍø competes with private sector employers and other not-for-profits for new employees as well as the retention of its current employees. Base salary is a significant factor within the competitive market. It has been the experience at the Öйú365betÖÐÎĹÙÍø, that lower-than-market salaries resulted in longer than expected candidate searches as ‘first choiceâ€� candidates typically choose higher salaried positions, all other factors being the same.Ìý This dynamic is also a factor in the retention of existing employees.

7.ÌýÌýWhat are the members of the Board and the Presidential Succession paid?

As members of ACS who are elected by the membership, the ACS Board and members of the Presidential Succession are volunteers and are not compensated for their service. Board members� travel and registration expenses are reimbursed when they are attending ACS-related meetings in their capacities as Board members.

8.ÌýÌýHow many ACS employees are there?

Effective December 31, 2023, ACS employed:

• 1,831 employees (505 are based in Washington, DC; 1,157 are based in Columbus, Ohio; and 169 are remotely based)

Invested Funds

9. How are the Öйú365betÖÐÎĹÙÍø’s funds invested?

The Öйú365betÖÐÎĹÙÍø invests in both short-term and long-term instruments. Funds needed to satisfy short-term, or normal operating obligations are invested in short-term instruments such as bank deposits, money market funds and commercial paper. Funds that are not required for short-term needs are invested in the ACS Investment Pool, which is a broadly diversified, long-term balanced investment portfolio.Ìý The primary objective of the ACS Investment Pool is to earn an annual real, or inflation-adjusted, total return that supports an annual spend of 4% of the average trailing three year market value and to provide sufficient growth in the Corpus to support the operations and growth of ACS and related programs. The investment portfolio has a normal allocation of 54.5% equities, 27.0% fixed income, 10.0% real estate, 6.0% hedge funds, private credit 2.0% and 0.5% cash equivalents.Ìý All investments are managed by external investment management firms selected and monitored by the Board Standing Committee on Pensions and Investments and internal investment management professionals. Performance of individual managers, as well as the overall Investment Pool, is measured on a quarterly basis by an independent consulting firm.Ìý At December 31, 2024, the ACS Investment Pool had total assets of $1.8 billion.

Financial Guidelines

10. How were the Öйú365betÖÐÎĹÙÍø’s financial guidelines chosen? What do they mean?

The Öйú365betÖÐÎĹÙÍø's financial guidelines were established during the 1970s and have continued to evolve. Every three to five years, members from the ACS Board of Directors and the Committee on Budget & Finance review the current financial guidelines and the Öйú365betÖÐÎĹÙÍø’s historical financial performance at a financial planning conference. Conference participants reaffirm or recommend revisions to the guidelines as conditions warrant. Final authority for establishing the Öйú365betÖÐÎĹÙÍø's financial guidelines rests with the ACS Board of Directors. The current guidelines are as follows:

A.ÌýDays Liquidity on HandÌýprovides an indication of whether the organization has sufficient liquid assets to meet its short-term obligations as they come due and is defined as the ratio of Cash + General fund investments liquid within 30 days or less divided by the Operating expense budget divided by 365 days. The Öйú365betÖÐÎĹÙÍø has a minimum target of 180 days liquidity on hand.Ìý

B.ÌýDebt ratioÌýis used to assess the organization’s level of, or dependency on, long-term borrowings. This ratio is useful in forecasting an organization’s long-term solvency. It indicates the relative contributions that creditors and owners have made to the financing of assets. It is defined as the ratio of total debt incurred by the Öйú365betÖÐÎĹÙÍø to the Öйú365betÖÐÎĹÙÍø’s unrestricted net assets. A maximum debt ratio of 50% has been established. This means that the total debt incurred by the Öйú365betÖÐÎĹÙÍø will not exceed an amount equal to 50% of the Öйú365betÖÐÎĹÙÍø’s unrestricted net assets.

C.ÌýFree cash flowÌýrepresents the cash that an organization generates, after capital investment, required to maintain or expand its asset base and to fund operations. The Öйú365betÖÐÎĹÙÍø established a guideline that free cash flow should be greater than zero over the most recent rolling four quarters.Ìý

D.ÌýFund balance ratioÌýis a rough indication of the adequacy of the Öйú365betÖÐÎĹÙÍø’s unrestricted net assets (or reserves). It is computed by comparing the current year’s unrestricted net assets to the following year’s budgeted operating expenses. The ratio is intended to measure whether the Öйú365betÖÐÎĹÙÍø has sufficient reserves to cover a catastrophic uninsured event, operating deficits, changes in accounting standards, and investment losses. This ratio reflects the percentage of next year’s operating expenses that could be paid if all of the Öйú365betÖÐÎĹÙÍø’s assets were converted to cash and all debt and obligations paid in full. The target for the Öйú365betÖÐÎĹÙÍø’s fund balance ratio has been established at a minimum of 75% of the next year’s projected operating expenses.

E.ÌýNet Contribution Ratio is a measure of the Öйú365betÖÐÎĹÙÍø’s operating performance and is calculated as net contribution from operations divided by gross operating revenue. The ACS Board of Directors has established a minimum threshold of 5.0%.ÌýÌý

11.ÌýÌý What does the term “restricted net assetsâ€� mean?

A.ÌýRestricted net assetsÌýrepresent endowments and contributions received from donors that are designated for specific programs (i.e., Project SEED, ACS Scholars Program, etc.). These funds are reserved for a specific purpose and cannot be used by the Öйú365betÖÐÎĹÙÍø for general operating expenses. Only the donor may restrict the use of these assets and this provision precludes the Öйú365betÖÐÎĹÙÍø from restricting its own funds. There are two classes of restricted net assets: permanently restricted net assets and temporarily restricted net assets.

B.ÌýPermanently restricted net assetsÌýare limited by the donor in perpetuity. The initial corpus of these funds may not be spent for any reason. They are to be invested and the investment income and any investment gains can be spent as governed by a charter, referred to as a “founding documentâ€�, that clearly states the purpose for which the funds are to be used. An example of a program with permanently restricted net assets is the ACS Petroleum Research Fund.

C.ÌýTemporarily restricted net assetsÌýrepresent contributions made to the Öйú365betÖÐÎĹÙÍø for a specific purpose, event, and/or time period. These contributions, not just the investment income and gains, can be used to support a particular program or fund a specific event. Donors can place constraints or conditions on their gifts to the Öйú365betÖÐÎĹÙÍø, which are clearly detailed in the related founding documents. Grants and Awards is an example of a program supported by temporarily restricted funds. All other financial activity of the Öйú365betÖÐÎĹÙÍø, such as revenue generated from membership dues or from the sale of publications, is considered unrestricted and is available to be used for general operating expenses.

Both permanently restricted net assets and temporarily restricted net assets are categorized on the Öйú365betÖÐÎĹÙÍø’s financial statements as “Net Assets with Donor Restrictionsâ€�.

12. Why does the ACS Petroleum Research Fund appear to have no impact on the financial performance of the Öйú365betÖÐÎĹÙÍø?

Investment income earned on theÌýACS Petroleum Research FundÌýendowment is temporarily restricted until used to support the activities of the Fund, including administrative costs. Temporarily restricted funds are released from restriction in an amount exactly equal to the grants awarded and administrative expenses incurred each year.Ìý Therefore, the net financial impact of the ACS Petroleum Research Fund Program on the unrestricted net assets of the Öйú365betÖÐÎĹÙÍø is zero.

13.ÌýAs a 501(c)(3) not for profit organization, why does the Öйú365betÖÐÎĹÙÍø generate sizable net contributions from operations?

To meet its mission, it is critical that the American Chemical Öйú365betÖÐÎĹÙÍø remain financially strong with adequate unrestricted net assets. Sufficient reserves are required to survive an uninsured catastrophic event, absorb operating deficits, cover investment losses, and finance a strategic acquisition (such as an acquisition to complement current ACS products or services or an acquisition to provide new products or services to ACS members and product users). By generating a positive net contribution from operations, the Öйú365betÖÐÎĹÙÍø can better ensure reserves will be maintained at a level sufficient to support its annual budget of more than $622 million.

To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must beÌýÌýandÌýÌýexclusively forÌýÌýset forth in section 501(c)(3) and none of its earnings mayÌýÌýto any private shareholder or individual. In addition, it may not be anÌýÌý(i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates). ACS meets these definitions.

14. What is ACS’s current financial condition?

The American Chemical Öйú365betÖÐÎĹÙÍø (ACS) ended 2024 with solid financial results. ACS generated a change in net assets without donor restrictions from operations of $61.8 million on revenues of $810.9 million and expenses of $749.1 million. This performance was achieved due to a continuation of growth within the information services divisions and persistent expense management across Öйú365betÖÐÎĹÙÍø programs and administration.Ìý The positive financial results allowed ACS to continue strategic investments in its mission driven activities and membership services.

ACS� overall financial position improved strongly, with net assets without donor restrictions increasing by $126.9 million from Dec. 31, 2023, to $901.9 million as of Dec. 31, 2024. The year-end balance includes the $61.8 million net from operations, along with an increase of $65.1 million from non-operating activities, primarily from net investment gains. ACS ended the year in compliance with all five Board-established financial guidelines.

15.ÌýÌýWhat is a Form 990? What is in it?

The IRS Form 990 is an annual information return (Return of Organization Exempt for the Income Tax) that federally tax-exempt organizations must file with the Internal Revenue Service. It provides information on the tax-exempt organization’s mission, programs, finances, governance and management policies, and disclosure practices (e.g., Non-profits are required to make certain tax documents available for public inspection. The three most recent information returns (Form 990 or 990-EZ) and its application for exempt status (Form 1023) must be made available for inspection upon request.) ACS posts its 990s on its public website and provides four yearsâ€� worth of filings. Copies of past filing can be found atÌýACS Financial Information.

16. What is a Form 990-T? What is in it?

ACS files an annual IRS Form 990-T.ÌýThis form is an income tax return (Exempt Organization Business Income Tax Return) that an exempt organization must file with the Internal Revenue Service if it has $1,000 or more of gross income from an unrelated trade or business. Even though an organization is recognized as tax exempt, it may be liable for tax on unrelated business income.ÌýThe Öйú365betÖÐÎĹÙÍø’s tax return, Form 990-T (Exempt Organization Business Income Tax Return), is made available upon request from the ACS Tax office atÌýtax@acs.org.

17. What is Unrelated Business Income Tax (UBIT)?

UBIT is an acronym for the phrase “Unrelated Business Income Tax�. For most organizations, an activity is an unrelated business (and subject to UBIT) if it meets three requirements:

1) It is a trade or business,
2) It is regularly carried on, and
3) It is not substantially related to furthering the exempt purpose of the organization.

18.ÌýIs there an IRS limitation on the amount of unrestricted net assets a 501(c)(3) can accumulate?

There are no IRS limitations on the amount of unrestricted net assets a 501(c)(3) can accumulate.

ACS Spring and Fall Meetings

19.ÌýHow are the ACS Spring and Fall Meeting registration fees determined?

Currently, the Spring and Fall Meeting Long Range Financial Plan was adopted in 1998 and reaffirmed by the ACS Board of Directors in December 2016. The Plan established a financial target for the Spring and Fall Meeting (technical meeting only) of a five-year rolling average of break-even (0% Return on Revenue) or better. To attain this target, the Plan calls for an adjustment of the Early Member Registration Rate for Spring and Fall Meetings utilizing the current registration rate and increasing by the change in the previous 2 years Consumer Price Index (CPI-W, Urban Wage Earners, Service Category), thus ensuring the registration rates increase with inflation. A second component of the calculation was also reaffirmed by the ACS Board in December 2016. This would be the inclusion of an incremental cost adjustment of up to $15.00 per year until the overall technical meeting attains and maintains a financial position of break-even or better.