How the DSA Deficit Happened—and How to Fix It
by THE SOCIALIST MAJORITY STEERING COMMITTEE
What’s Going On with DSA’s Budget
DSA is running a $1.7 million budget deficit while maintaining dangerously low financial reserves, and we need to make cuts. At the end of this past year, DSA’s revenue was approximately $700,000 less than in 2022. Combined with increasing spending, this significantly depleted DSA’s reserves, leaving less than $280,000 in cash above required as of November 2023.
The term “above required” means funds above a mandated amount that nonprofits keep on hand in case they need to liquidate and tie up their contracts and fulfill severance agreements. That money should never be touched, and when we get down to that amount in the bank, the money has run out—it’s the “zero” where an organization has to shut down. With a $1.7 million annual deficit and approximately $5 million in annual revenue, we will hit that threshold this summer if we don’t cut our 2024 budget.
The NPC must pass a 2024 budget, and their priority should be preserving as much of DSA’s organizational function as possible while ensuring it is financially stable. Unfortunately, much of the response to this budget crisis has mirrored the dynamic that led to the convention votes for expenditures far beyond our revenue: factional posturing about funding specific line items, instead of a sober, holistic analysis of the organization’s limited budget. No one has come close to a proposal to fully close DSA’s budget gap and avoid bankruptcy without sabotaging the organization. That’s the conversation we hope to start here.
How We Got Here
DSA’s membership, and by extension its revenue as a dues-funded organization, has declined about 30% in the past two years. While some have held this up as evidence that DSA lost its spark due to poor political leadership (headlined, of course, by each doomsayer’s pet disagreement with the organization), the reality is this trend has been reflected across the progressive political landscape in the United States.
Analysis of political donations to Democrats shows a 50% decline in small-dollar funding from 2021 to 2023, making it the lowest-funded year since 2019. Major progressive political institutions, from nonprofits like Sierra Club and Justice Democrats, to foundations like Open Society, to non-profit media outlets like Gothamist and The City, have seen massive budget shortfalls and layoffs in the past year. Individual donations to nonprofits across the spectrum have reached their lowest level in three decades.
While DSA has fared better on revenue losses than many political organizations reliant on the whims of wealthy foundations and big donors, we’ve still made many of the same spending mistakes. With Trump’s presidency, the Black Lives Matter movement, and the COVID-19 pandemic sparking a left-wing funding boom, many organizations committed to program spending that assumed the bump was permanent. It clearly was not—hence the shortfalls and layoffs throughout the sector.
There are also factors unique to DSA. As a socialist organization in the United States, we ingrain in ourselves an anti-cuts, abundance mindset, which we use to organize against right-wing austerity in government budgets. We’re right to do this—state austerity is a frame to justify taking resources from the poor and the public sector in order to support untaxed accumulation for corporations and the wealthy—but it’s not a mindset that maps well onto a political organization we fund with our own dues money. There are no corrupt billionaires siphoning our dues.
The design of DSA’s biennial convention exacerbates this problem—we have very little discussion of our budget, or how the proposals we vote on will affect it. When we project proposal details on the convention floor, there is no visual representation of the portion of our available budget they take up, and no accumulating total of how much spending we’re approving throughout the weekend. This makes it easy to frame votes as a test of how much delegates care about an issue, rather than as budget priorities all drawing from the same limited pool. That happened a lot in 2023, and as a result, the convention produced a materially impossible budget mandate.
Finally, there are cultural and organizing issues we must take responsibility for and work to change. We tend to weigh rhetoric over substance in our political decisions and leadership elections, optimizing for factional point-scoring instead of experience and effectiveness. We have little accountability or expectations for chapter recruitment and retention, leading to passive reliance on national political conditions instead of active organization-building. And we permit alarming amounts of bullying and disorganizing behavior under the guise of political disagreement, further damaging our ability to recruit and retain long-term organizers.
If we want to grow DSA into the mass socialist organization we know it can be, instead of shrinking into sectarian irrelevance like so many before us, we need to work continuously to fix these issues. They can’t be solved in one budget cycle, but our deficit can.
What to Keep and What to Cut
To maintain and build our organization, our budget needs to protect the core functions of DSA first. That means our administrative capacity, digital organizing tools, and staff. These organizational tools have allowed DSA to grow exponentially and recruit tens of thousands of new members over the last decade, while remaining legally compliant in our finances and governance—no small task for an organization this big.
DSA’s staff is made up of committed member organizers who work more and earn less than they would elsewhere, out of a commitment to democratic socialism. Even by the standards of the nonprofit organizing world, we still don’t pay well. Personnel is a large budget item in any organization, but Socialist Majority Caucus has been clear that we believe avoiding layoffs should be the highest priority in 2024 budgeting. As an organization with unionized staff that prides itself on labor solidarity, this is especially important for DSA.
If cutting any of DSA’s 34 full-time staff positions becomes unavoidable, the very first conversation should be with the staff union. Drastic, 15% across-the-board cuts like the ones being proposed by Bread & Roses—eliminating $500,000 of staffing—would be disorganizing and demoralizing for DSA’s remaining staff and members, and are certain to damage DSA’s core functions in unpredictable ways. The proposal is disconnected from any particular budgetary target or analysis of programmatic needs. We oppose it, and call on the NPC to vote it down.
At the same time, we know that DSA is already a bare-bones organization, so any substantial cuts will come from something important. Until the budget can be balanced, we encourage the NPC to work together to closely examine each of the other significant areas of spending to try to get to a balanced budget without layoffs. As we consider these hard choices, we must commit to major fundraising in ways that address the organizing gaps of prior dues drives, as SMC NPC member Colleen laid out in this critical assessment of the 2022 Recommitment Drive.
The NPC has a lot of work to do. Right now, the various proposals that make up the $750k in cuts being referred to the NPC by the Budget and Finance Committee contain a mix of expenses reflected and not reflected in the draft 2024 budget, without clear delineation of which are which. There are also still some outstanding questions, like the fiscal impact of a hiring freeze. We will need to get clarity on these questions as quickly as possible, and work together to identify savings in each area.
What we can do to start is identify the largest pots of money in the budget we can use to close the $1.7 million deficit before requiring layoffs. The total spending on each budget item is in parentheses—these aren’t projected savings, but instead how much we currently spend on it in the budget.
Immediately suspending all stipends to the NPC Steering Committee and YDSA leadership (current cost: $250k). In September, the NPC voted down a proposal to eliminate the stipends given to NPC SC members. At the time, SMC warned of the dangers that come with maintaining a $120,000-a-year expenditure. While we believe in the importance of full-time political leadership positions, stipends don’t allow NPC SC members to quit their jobs. The NPC should not lay off full-time staff while leaving stipends for themselves intact. A similar principle applies to YDSA leadership stipends.
Reduce national body budgets by cutting non-essential spending (current cost: $390k). The Budget and Finance Committee has recommended $70k of cuts to national body spending, primarily for travel. These should be approved, and national bodies should explore additional cuts in the interest of preserving our organization.
Moving forward with plans to end the NHGO contract in February (current cost: $360k). The search for an NHGO replacement, which had been delegated to members of the prior NPC last year, has been unfruitful for many months. At their January meeting, the NPC passed a resolution to get that process back on track and accelerate it. This could realistically save us about $90k this year.
Pursuing substantial reductions in major non-personnel spending items such as tech costs (current cost: $440k), printing (current cost: $100k), postage (current cost: $195k), and travel (current cost: $282k). These are important but expensive line items, each of which needs to be closely examined for possible savings. Aspects of each, like mailed fundraising asks, enable DSA to increase its revenue, which must be considered in deciding how to reduce them.
Closing the national office (current cost: $120K). The NPC has already approved pursuing an alternative to the current national office in order to save funds.
Reducing overall spending on recurring dues share with chapters (current cost: $720k). Chapter dues share represents the largest non-personnel budget line, and the NPC should consider what we can save by reducing the overall payments, adjusting the payment tiers, and/or suspending payments to chapters that have not met basic metrics, like producing an annual budget or regularly meeting with field organizers.
Moving many previously in-person events, including the YDSA convention, online (current cost: $100k+). In-person meetings are often preferable, but also expensive. DSA may need to hold far fewer in-person events until the situation improves.
Imposing a hiring freeze (current cost: TBD). DSA has several vacancies for unit (union) and non-unit positions. Freezing the hiring of non-essential positions is far less disruptive than layoffs.
No one wants to cut from any of these categories, none of them will be easy, and no faction of DSA is going to come out of this process protecting every one of their priorities. But a responsible NPC must consider how all of them taken together can contribute to putting us on a sustainable footing that will allow crucial, member-led organizing to be supported and expanded across the nation.