The Elephant in the Room: Should Chemical Abstracts Service Become a For-Profit Company?

July 01, 2010

What role, if any, does a profit-making entity have in a non-profit organization? That's the question many have been asking for some time about Chemical Abstracts Service (CAS) and its relationship to the American Chemical Society (ACS).

Too Big to Be Non-Profit?

I was again reminded of this question after having finally been granted access to the ACS LinkedIn Group. In a recent thread discussing the the most recent (and possibly final) loss by the ACS in its protracted legal battle against LeadScope, one participant wrote:

I think the time has come--in fact, it came a while ago--to hive off CAS as a for-profit entity. I don't see any other way to justify ACS continuing as a non-profit.

What makes this comment remarkable is not so much the sentiment, which seems to be widely-held outside the ACS, but rather the professional background of the person who made it, Mary Thomson. According to her profile, Ms. Thomson served as Associate Editor of Chemical Abstracts Service from 1986 through 1992. She probably knows, better than most in this debate, what she's talking about.

By the Numbers

One question that should arise whenever this issue comes up is: how much money does the ACS actually make from CAS?

In past years, the ACS has pursued greater transparency in its operations, starting with easy public access to its financial statements. For example, you can view the ACS 2009 Audited Financial Statement here.

Unfortunately, revenues are not traceable back to CAS, as far as I can tell. The best we can do is look at all revenues deriving from "Electronic Services", which for 2009 totaled just under $376 Million, or 80% of ACS revenues. In contrast, "Dues" revenues totaled $12 Million and "Registration Fees and Booth Sales" (presumably from meetings) just under $10 Million.

Any way you slice it, "Electronic Services" generate serious money and no doubt contribute the lion's share to the ACS annual operating budget.

What portion of ACS' $376 Million in revenues from Electronic Services comes from CAS? That's tough to say. The report does have a separate category for "Printed Services", which totaled $24 Million in 2009. Whether these printed services include subscription fees to online journals is anybody's guess.

As reported by ACS, expenses related to "Information Services" totaled $350 Million in 2009. Again, it's not clear how much of this figure derives from CAS directly or even what this category entails.

Bottom Line

It's clear that electronic services generate nearly all of the money that ACS takes in every year, and that this is a sizable figure in absolute terms. To what extent should these revenue centers be allowed to continue operation within the protections afforded to a non-profit organization in the United States?

That's a question for all of us, as ACS members, to decide.