Every year, thousands of non-profit organizations lose money thru disorganized finances, borrowing by volunteers and/or just simple embezzlement and theft. Watch the newspapers for a few months. You will start seeing the incidents. Protect your organization by adopting some of the below suggestions. Why does this happen? Volunteers are focused on fulfilling a need and not on basic business infrastructure. A natural result is that caution is lowered allowing problems and incidents to occur.
Key Ideas and Goals
- Separate the Responsibilities of the Committee Member responsible for writing check and the Committee Member who reviews the monthly statements
- Plan for your year through Budgeting
- Make it easy to trace the money spent and the money received.
- Don’t burn your volunteers – If they incur a “reasonable” expense, get them reimbursed in a timely way. If it’s not reasonable, you have a different issue
- Be transparent with your finances and regularly update the accounts
Why Issues can arise
Many volunteers will not see the importance of financial discipline because it’s just a Scout group. It’s not obvious to most volunteers that every year a 40 person Cub Scout pack can easily have $20,000 “passing thru” their checking account between dues, fundraisers, camp fees and such. Larger units can easily have $50,000 or more going thru their checking account. Groups with high adventures, monthly camping and summer camps can have even more passing thru checking.
- Consider a 40 Cub Scout pack with $50 annual dues. Selling both popcorn and wreath fundraisers (averaging $300 per scout … some higher … some lower). 50% signing up for one winter event at $30 per person (scout and parent). 50% camping each summer at resident camps ($100 per person). That’s $2000 in dues. $12,000 gross in fundraising. $1200 in winter event fees. $4000 in summer camp fees. Or a total of $19,200.
- Consider common scouting expenditures. Philmont trip for ten scouts and leaders – $7,000 to $12,000 dollars. Week long summer camp for forty scouts – $8,000 to $10,000. Pack summer camp for 20 cubs and 20 parents – $4,000. Weekend camping for 20 scouts – $300 to $600 dollars. Pinewood derby – $200 to $600. Blue and Gold Banquet – $200 to $1,500. Monthly pack meeting program segments – $50 to $350
Separation of Responsibilities
Even if the family has the best of reputations and single-handedly started the scout group, split the responsibilities with multiple families. It’s to protect both the interests of the unit and the reputation of the family. Someone (committee chair or other) who does not have signing authority on the account, should review the financial statement every month
- Some organizations split the treasurer role into two positions: Treasurer and Financial Secretary.
- The Treasurer is transaction oriented. Collects money. Makes deposits. Receives expense reports. Pays bills. Writes checks.
- The Financial Secretary is planning and reporting oriented. Creates and manages the budget. Updates and publishes scout account records. Reviews bank statements. Balances the books. Creates event profit / loss event summaries.
- The treasurer should never sign checks payable to anyone in their own family. Have another authorized, non-family member sign the check.
- BSA recommends two signatures on every check. Though a very good recommendation, many units don’t do this as it can slow reimbursements and make the treasurer’s job harder.
- If your unit doesn’t do this, make sure your unit has good financial “transparency” (i.e. multiple people see the bank statements and other documents) and “traceability” (i.e. is there evidence on why money was spent and where incoming money went)
Financial Decisions and Transparency
One of the ways to avoid issues, include overspending on a project/event or lack of funds, is continuous transparency of the Unit financials. Not that you need to send out the detailed record each month, but that the financials are available to anyone who asks.
- Document standing decisions Put them in the unit handbook, bylaws, family guide or unit web site
- Share financial summaries with the committee.
- Bring print-outs of balance statements and profit-loss statements to the committee meetings
- Walk the committee thru the financial statements … line by line.
- Share a summary of the budget at the end of the year (look back) and for the coming year (look forward)
- Keep it simple. Don’t require large corporation policies and procedures. We’re all volunteers with very full lives.
- Divide and conquer the accounting so that each step is a smaller easier process.
- Make it easy to re-create financial records when things get messed up.
- Watch the rumors – Misunderstandings easily occur over money, hurt reputations and drive away volunteers