Yesterday someone asked me about this situation:
A service organization has a large amount of money in the bank. People have donated that money and club members have worked hard to raise it. Now the club is split about what to do with it. But here’s the strange part. The split is not about who to give the money to. Or where it will make the most difference. The split is about whether to give it away or keep it. (They do give some, but keep most.)
A past president quit over the issue. Current members are incensed, asking, “Why are we filling our coffers? There are so many worthwhile causes where the money can make a difference.”
What should they do?
This is what I think: Don’t quit. Try not to become incensed. Don’t make it an US and THEM issue. I truly believe that people are by nature innately good. In time, they will do the right thing. In the meantime, it’s only by the small means of friendly persuasion that you can exert an influence.
What do you suggest? Send me an email at Shar@JoyofLeadership.com or comment here. I’d appreciate it. Thanks, Shar McBee
Hello Shar,
Thank you for giving your readers/leaders the opportunity to contribute toward a solution.
My recommendation is for the organization to consult its charter, bylaws, and financial obligations. It is very reasonable to keep a portion of the money in a reserve for times when the financial income may not be so plentiful. This would help the organization be prepared to continue its mission during these harder times.
At the same time, I am assuming that the organization exists for some real purpose and the groups/individuals who provided financing expected their investment to serve that same purpose, potentially the mission of the organization. So, my overall recommendation is for the organizational members to review both their purpose and fiscal status to determine their best way forward.
There’s an opportunity here for the organization step back and revisit or refine their strategies for community support. Taking time in a facilitated retreat setting would help get to the core beliefs of all board members.
— What difference do they want to make in the community?
–What causes do they want to focus on?
They may find that they want to make a shift in areas of focus or even a brand new strategy for supporting local charities. When they take time to find out why some members want to build a reserve they may find it to be advantageous for reasons they have not yet considered. For example, a reserve could be used for unforeseen disasters or for a long-term solution to a specific community challenge.
My vote is for the organization to step back and take this opportunity for some in-depth strategic planning.
Basically, dues are supposed to cover administrative expenses. When a non-profit service organization raises funds for charitable causes, they are proscribed, by law, to give it to those causes or return it to the donors. It is that simple.
Anne sent me this email privately but I think everyone should hear her thoughts:
This issue is near to my heart – and as I was reading it gave me the anxiety from my experience. I was elected treasurer of our PTA three years ago and found that we had a bank balance of over $30,000 – after listening to the previous 2 treasurers say we had no money and could not do enrichment programs or much of anything for the kids. Luckily, the woman who was elected president with me was focused on doubling if not tripling our programs for students but the resistance was HUGE! More than 75% of our membership was STRESSED about spending because they had been so brainwashed by the previous board about making sure we had enough money. But if we were not spending it, what would we need the money for? I made 6 presentations to the membership to outline what we needed for a carryover fund and what could be spent. It took those 6 presentations plus LOTS of positive speeches from our President to convince the Membership that the money was doing nothing for the students just sitting in a bank – and if we had all that money, why were we continually fundraising. It was beyond frustrating and luckily, quitting was not an option – all though we lost a few members who quit because of our “reckless spending.” I think in the end, the loss of those members made our organization better!
Thanks for your emails – they always seem to hit just the right note.
Another comment sent to me by a man:
As the post depression era mentality slipped away to the ‘spend ‘ mentality, no one saved and now we have nothing for a rainy day ( or 2010’s).
If they are smart enough to save, they better be darn
careful where they store it
A woman sent this and asked to remain anonymous:
Hi Shar!
I had a similar situation about the money in an organization when I was president. A couple of thoughts come to mind.
A president preceded me who had some rogue board members who wanted to give away all the funds. She managed to gain enough board support to lock up the money in an endowment. When my year came along I too had rogue members who attempted to dismantle the endowment. I had to bring in respected community leaders as well as legal counsel to point out sense and sensibility.
What I came to realize is that some people with the title of board member become what I call “drunk with power,”. In other words, they want the power to “spend” the organizations monies all under the guise of helping the community and without any consideration for the future of the organization. They are creating their own exit clause if left untamed.
Additionally, it turns out that if an organization has a financial cushion via something like an endowment fundraising actually becomes easier because more generous donors are attracted to organizations demonstrating fiscal responsibility meaning they will not fold in the near future.
Just my opinion.
This message came to me by email:
If they are a service organization they have to give most of it away. Legally they can only keep enough to cover overhead. Why are they split on this issue. This is a no brainer. Argue over the issues you can win and move on over the issues you can’t control. Life is too short to fight a losing battle.