Money in the Bank

New Orleans DSA’s Alli D. examines why building cash reserves and implementing democratic, member-led budgeting processes is a necessary task for DSA chapters across the country. Critically assessing how and when we spend dues money—through discussions on strategy, tactics, and resources—will help us wage successful campaigns and take on the capitalist class.

In September 2019, while the United Auto Workers were on strike, presidential candidate Pete Buttigieg briefly walked the picket line and halfheartedly asked the workers what resources they had and how long they thought their funds would last. The online reaction to this short video clip was swift: Scab! Stooge! McKinsey brain! Cringe! Many DSA members have never walked a picket line, but the power dynamic was so clear that even an inexperienced organizer could see the problem: you don’t ever tell the boss how much money you have in the bank.

The incident was a perfect demonstration of two things: one, that Pete had no idea how strikes work, but more importantly, that the financial reserves of the UAW were a source of their strength, leverage, and power. On the strike line, workers chant, “One day longer, one day stronger.” It was immediately obvious watching Pete ask about their reserves that this was a tactic to gain valuable information: how long the strikers could last, so that the bosses could wait them out. 

Unions know that financial reserves are powerful. DSA chapters should not hesitate to learn this lesson and apply it to our own operations. Until chapters are capable of democratically controlled financial operations, we will not be able to survive attacks from the capitalist class and wage successful campaigns at the scale we need to win and wield power.

Image by MDC DSA member Zoe P.

Why are cash reserves critically important for DSA chapters? First, stuff is more expensive than you think. Planning a direct action that might result in numerous arrests of your members? Bail and legal support fees can run through those funds quickly. Want to run an issue campaign and print literature and mailers (with a union bug, of course)? That can easily cost thousands. Need meeting space for a growing chapter? Thinking about buying property for a chapter hall? Even $10K or $20K in reserves won’t go far if you’re trying to rent in the long term or make a purchase on that scale. Someone sued your chapter and you need an attorney? Hope you have enough cash on hand to hire somebody.

Second, chapters need to prepare in advance so we can act with appropriate speed. We cannot predict the future, but we know that opportunities will arise where we need to act fast. While many chapters have successfully used crowdfunding for immediate needs, a sudden influx of cash is difficult to manage. Chapters with little experience managing, spending, and accounting for thousands of dollars need to build those systems before those funds are needed, not after. The heat of a campaign or crisis is not when you want to test new financial controls. Building a cash reserve over time is a great opportunity to build policies and procedures on which the entire chapter can rely. 

Third, paying for services is ok. As a chapter grows, it may need to work with a bookkeeper, an accountant, or an attorney to make sure its financial management practices and policies are both responsive to the membership and chapter needs and compliant with U.S. law for 501(c)(4) organizations. The threat of politically motivated audits is real, and chapters should prepare for them as if they could occur any time. Working with a professional to ensure good record-keeping, set up templates and accounts, prepare tax returns, or even answer questions about operations is a prudent use of chapter funds. As chapters grow, it may even be possible to procure these services collectively, through our national organization or a future regional organization. (We could even think about building a shared services and purchasing cooperative for DSA chapters!)

So how should DSA chapters begin this process of building cash reserves, and how should they decide to spend them? Simply, we build reserves through dues, and we spend our dues money by implementing democratic, member-led budgeting processes in our chapters. Dues are paid to our national organization, with a portion going back to chapters, and many chapters encourage members to give monthly to their chapter as well. 

In a membership organization like DSA, dues are how we fund our work and organization. Unlike nonprofit entities, which raise money through grants and thus are responsive to their funders and board, DSA raises money from our own members, who can then set their own priorities. If we make decisions democratically, including decisions about how we spend our money, then the members’ money is translated into the organization’s priorities. The tool that makes this translation possible is simple, common, and necessary for any democratic organization: a chapter budget.

A budget outlines the money we expect to bring in (revenue) and money we expect to spend (expenses) over a certain period of time. The process of building a budget with members can tell us a lot. It can show things like fixed expenses, or the money that will leave a chapter bank account every month no matter what: rent, web-hosting fees, a Zoom pro account, etc. The budget will also show us recurring revenue: the amount brought in by dues every month, quarter, or year. By looking at our funds this way, we also learn an important lesson: monthly dues are better for budgeting than annual dues, because it is easier to plan for expenses when your revenue comes in on the same schedule. Recurring revenue minus fixed expenses leaves free cash flow—and here is where the hard decisions come in. Once the bills are paid, what’s next? How much will chapter campaign activities cost? Is there enough free cash to cover it? If not, what else is needed to raise revenue?

If we make decisions democratically, including decisions about how we spend our money, then the members’ money is translated into the organization’s priorities. The tool that makes this translation possible is simple, common, and necessary for any democratic organization: a chapter budget.

Every DSA chapter should build a budget, because these questions have to be answered through political strategy. What will build power? How do we know if a campaign is worth the cost? A critical piece of assessing the strategic value of our actions is understanding our resources: not just our time and labor, but also our money in the bank. Does it give us any leverage in a fight? That depends on the fight. The process of building a budget with members gives DSA chapters a tool to have these critical discussions on strategy, tactics, and resources. 

In a time when many members’ own bank accounts are thin and the state has abandoned the working class, it is tempting to think of the growing balances many chapters are accumulating in their own bank accounts as something that should be redistributed. Instead, each chapter should take this opportunity to strengthen their financial management, to prepare for the fights ahead, and yes, to build their reserves through member dues. It is tough to look at a bank balance many times larger than our own and not feel like a business, a boss, or corrupted in some way. But those balances mean that our organizations have leverage for the fights ahead. We can’t be bought off. And if we get better at building and wielding our own money, then we won’t be afraid of growing into a bigger and more powerful organization.