Money Matters
By Marc Guerra, AMA Chief Financial Officer | amacfo@modelaircraft.org
This month, I will cover some important financial controls and oversights that your club officers should consider.
Hopefully your club has a checking and savings account established at a local bank. A trusted custodian, such as a club treasurer or other senior club officer, should be associated with any bank account. The account most likely will include blank check stock and credit cards, and bank account services will provide monthly statements for all transaction types for checking, credit cards, and savings.
Senior club officers should always be aware of where the club’s banking is conducted, which individuals have signature authority, and the location of all financial records and instruments (e.g., checks, credit cards, statements, etc.). A contingency plan should also be in place in case your club’s banking custodian suddenly leaves. I have seen clubs scramble to pay bills and conduct other business when their treasurer suddenly leaves or abandons their responsibility. In general, it is always a good idea to have a business continuity plan in place. It can be put into practice during the new club officer hand-overs that occur periodically.
Other recommendations for ongoing financial controls and oversight include:
- Sharing and reviewing the monthly bank statements during club meetings. Leave the statement(s) out and available for review during the meetings.
- Sharing and reviewing canceled checks and credit card statements.
- Clearly documenting in the board meeting minutes that new bank account custodians have been voted in or are continuing to serve through the next election cycle.
Other financial controls sometimes require awareness and observations. Vigilance because of fraud has unfortunately required more effort in recent times. Often, a “trusted” individual who is associated with the club might use social engineering to gain popularity and access to the club’s financial resources. A “trusted” individual’s unsolicited financial advice also always comes with a price. My suggestion is that if you receive unsolicited financial advice, walk away. Pressure to hear a presentation or to go down a certain path should be regarded with sceptic disinterest.
Some clubs have the good fortune of a large reserve fund, which is serious money and should be treated as such. Use a fiduciary financial advisor who manages a well-balanced portfolio. Your local bank might also offer reserve balance investment services. Storm clouds are always looming, and a well-balanced portfolio can achieve good results over time. It is a shame when serious funds do not work to provide growth equity and income to cover capital improvements and/or to augment operating costs.
Your club might also have the good opportunity of receiving an inheritance or gift from an estate. These inherited gifts are often targets of other club members who feel entitled. The reasons vary, but club officers can only manage to the extent of what is written in the estate or gift documents. The club might be legally bound to spend the gift payout exactly as the donor specifies in any written agreement.
When a donor writes a check, the gift is almost always made to the club itself rather than to a specific club member or subgroup. The hard work and efforts of prior club officers and members have placed the club in a viable position to receive donor gifts. Do not let an individual in the club or a subgroup take advantage of the club’s hardearned good name and goodwill. Protecting its reputation is essential. When individuals or subgroups act in ways that are self-serving, it can quickly erode the hard work and reputation that your organization has built throughout the years.
I apologize if my article sounds negative; however, an organization that I am associated with seems to be experiencing an increase in targeted fraud attempts from within and outside of it. I have also noticed frequent warnings from financial institutions, businesses, and government agencies regarding fraud scams that use many methods and sources.
Being aware and recognizing old and new red-flag types is now becoming a habit layered in any financial management function.