Tips on Financial Transparency in Associations—Members Deserve Transparency and Engagement in Financial Planning Processes

Oscar Wilde once said, “When I was young, I thought that money was the most important thing in life; now that I am old, I know that it is.” Although I personally do not agree with this sentiment in regards to all aspects of life, I do think it can be applied to associations. Associations depend on their members to grow and thrive, and they would not be sustainable without their financial support. In that regard, it is crucial for an association to be as transparent about its spending, both the good and the bad, to show their membership they are making the right financial commitments or learning from the mistakes of the past. Below are four key tips on how associations can be financially transparent with their membership:

  • Plan for surprises: Most Americans would agree this winter has been one for the record books, and associations are feeling the financial burden of severe weather conditions. The Chicago Tribune recently published a piece on how unprecedented snow levels have left many associations unprepared for the costs associated with storm preparation.  The article quotes Michael Rutkowski, President of First Community Management in Chicago, saying, “It’s not uncommon for our associations to be as much as 300 percent over their snow removal budgets.” When associations are planning their budget for the upcoming fiscal year, they should always consider an emergency climate line item allowing for these types of expenses.
  • Raise awareness as a problem arises and what is being done about it: Money can be an issue in organizations, especially since cash flow has so many moving parts. The Oxford Times recently reported that Edward McKenzie-Green, a former OXFAM employee, admitted to swindling £64,000 from the charity. OXFAM, an organization, which is known for its success in combating poverty around the globe, has taken a firm stance on how upset they are by what Mr. McKenzie-Green has done. Oliver May, head of counter fraud at OXFAM, made the following statement: “The actions of Edward McKenzie-Green were brought to light by OXFAM’s own robust counter-fraud measures and we work tirelessly to ensure that money donated to OXFAM is not lost through the actions of rogue employees like McKenzie-Green. We will now work to try and recover the money taken.”

OXFAM could not have handled this better; they cited their efforts already in place to combat employee swindling such as their counter-fraud department and made a commitment to their members to recover the money that was lost. In making this pledge, it is reassuring members that this is not something it takes lightly, and it is something it will resolve.

  • Conduct Regular Surveys Directly Addressing Member Finances:Communication is a two-way street, and it is always important to show membership encouraging feedback about every aspect of an organization, including finances. Surveying members on an annual basis to see where what programs they would like to see more or less money go towards is a great way to make members feel included in the financial decisions. It also may make members aware of initiatives they did not even know existed that could benefit the organization as whole.
  • Have a controlled budget that is shared with members: At the end of every fiscal year, its important for associations to conduct an internal audit of spending that can be shared with members at an annual conference or meeting. In this audit, organizations must look at positive spending results but also make recommendations for improvement in the future. Members will appreciate the consideration and involvement in this process; after all, it is their money being spent.

Our experience helping associations of all sizes shows that disgruntled members always seize on a lack of financial and research transparency as excuses to criticize or even remove boards and staff. So next time an association hosts a planning meeting, it should keep Oscar Wilde’s words in mind: “Money is the most important thing.” Associations must be transparent with members, plan for surprises, and keep them up-to-date and involved in the decisions as to where the money is going.

Published on: http://www.bulldogreporter.com/dailydog/article/on-deadline/tips-on-financial-transparency-in-associations-members-deserve-transpar