Chapter Leader Training Week Finance Track Facilitated by Stuart Taylor and MaryAnne Bobrow, CAE,...

Chapter Leader Training WeekFinance Track

Facilitated by Stuart Taylor and MaryAnne Bobrow,

CAE, CMP, CMMApril 28, 2009

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Speakers:

Stuart Taylor – MPI Chapter Business Manager

MaryAnne Bobrow – Bobrow & AssociatesMember, MPI ICLC

Elaine Altman – Controller, MPI

Webinar Objectives

• Review MPI’s Vision and Mission• Minimum Standards• Review Chapter Metric – Chapter Financial

Management• Review the resources available

MPI Vision

Build a rich global meeting industry community

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MPI Mission

Make our members successful by building human connections to:

• Knowledge/Ideas• Relationships• Marketplaces

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EVOLVE to a global community

RE-IMAGINE our business relationship with chapters

ELEVATE the member conversation and experience

BUILD a great organization

Strategic Imperatives

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• It will make our members, you and our chapters more successful

• You will become advocates of our Vision/Mission

• This, in turn, will increase member involvement in MPI

Why is this important to know?

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2009-2010

Chapter Metrics

Chapter Metrics Dashboard

1. Engagement/Participationa) Gauges member participation and involvement in chapter activities

b) Allows for chapters to track event/volunteer success

2. Chapter Membership Satisfactiona) Assessment of overall member satisfaction with chapter

b) Allows for chapters to gauge member satisfaction in 3 areas; Network, Education and Marketplace

3. Net Member Growtha) Measures chapter member growth and rebates

b) Allows for chapters to track their member growth patterns

4. Chapter Financial Managementa) Calculates financial management not budgeting skills

b) Allows for chapter the freedom to manage finances and track educational expenses

Chapter Financial Management

• Gross Margin– Total Revenue less Total Expenses divided by Total

Revenue– Allows for financial management liberty

Note:– Needs to note if in-kind contributions are included– Should Exclude Investment activities from calculations– Transfers into reserves, if any, need to be noted

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Chapter Financial Management (Example)

Revenue

Educational $ 7,624

Fundraiser $ 3,710

Membership Dues $ 5,379

Total $ 16,713

Expenses

Board Retreat $ 4,948

Community Outreach $ 1,030

Donations $ 1,120

Educational $ 8,091

Total $ 15,189

• Gross Margin*

(16,713 – 15,189) =1,524

1,524 / 16,713 = 9.11%

• Educational Investment Ratio

8,091/16,713 = 48.41%

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*Gross MarginTotal Revenue less Total Expenses divided by Total Revenue

Membership Rebate Practice

• Membership Rebates* – 11.4% (Clubs)– 18.0% (US & Canada) – 23.0% (EU)

• Yearly Full Member Rate = $325 USD– Chapter Rebate = $58.50 USD

• Increase in installment plans this year– Quarterly = 4 x $81.25 = 4 x $14.63– Monthly = 12 x $27.08 = 12 x $ 4.86

*exceptions exist.

What We Need From You

There are several things we need from each chapter.

• Active Participation• Fiscal Responsibility/Oversight• Making the Chapters more Successful

CBM as your Partner

• CBM’s are your partners to assist to make your chapter successful.

• We need on a monthly basis:– Chapter financial statement

• Revenue, Expense, Educational Investment

• Identifying investments and reserves if included in Revenues

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Role of Finance

• Chapter Success

• Review– Accounting & Banking Procedures– Financial Reporting– Budgeting– Tax Issues– Fiduciary Responsibilities – Insurance Issues– Reserves & Investments

Financial Review

Roles & Responsibilities

• Accounting & Banking Procedures• Financial Reporting• Budgeting• Tax Issues• Fiduciary Responsibilities • Insurance Issues• Reserves & Investments

What Are Association Reserves?

• Defined:– Money held back for future use or specific

purpose– Net assets minus net liabilities– This is a surplus or rainy day fund for the

association– Reserves are usually protected by the board– Should be equivalent to one year’s worth of

operating cash.

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Control Guidelines

What You Need To Know

• Control: (U.S. & Canada)– Requirements

• 2 Signatures on All Checks or Wires• Bank Reconciliations Performed by

Other Than Cash Handler(s)• Annual Financial Reports Reviewed

by “Disinterested Party”

Accounting Practice: Segregation of Duties

There are 4 aspects involved in any financial transaction

1. Check request

2. Authorization

3. Custody of checkbook

4. Recording the transaction

No one person should control all 4 aspects.

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What You Need To Know

Insurance –

Coverage and Costs

Company: Sleeper Sewell

Contact: Julia Ladiner

(P) 972-419-7539

(F) 972-419-7555

Email: julia.ladnier@sleepersewell.com

Domestic Insurance Covers:• Directors & Officers Liability (D&O)

– $3 Million Aggregate Max.• Employment Practices Liability

– $3 Million Aggregate Max.• Kidnap and Ransom

– $1 Million Aggregate Max.• Domestic Package

– General Liability ($1 Million each Occurrence)•  Umbrella

– $10 Million max. above and beyond General and Commercial Automobile, Employer’s Liability, Employees Benefits Liability, Foreign Package General Liability and Commercial Liability coverage’s.

Foreign Insurance Covers:

• Directors & Officers Liability (D&O)– $3 Million Aggregate Max.

• Employment Practices Liability – $3 Million Aggregate Max.

• Kidnap and Ransom– $1 Million Aggregate Max.

• Foreign Package – General Liability ($1 Million each

Occurrence)

What You Need To Know

Accounting & Banking Procedures

What You Need To Know

• Accounting & Banking– Cash Receipts & Disbursements

• Invoices• Check Requests with Signatures• Account Codes• Authorization / Purchase Orders

– Bank Reconciliation• Timeliness• Highlight Discrepancies IMMEDIATELY!

– Checks & Balances• Dual signatures on checks

What You Need To Know

Financial Reporting

Timelines

– Lack of Timely Financials Creates Risk– Require Financials within 10 days after

month end(send courtesy copy to CBM at the same time)

– Forecasting

What You Need To Know• Reporting

– Statement of Financial Position (Balance Sheet)

– Statement of Activity (Income Statement, P&L)• Variance (Actual vs. Budget)

– Audit Statement– Frequency (Monthly, Annually)

• Board Meetings (incl. bank reconciliation)

Statement Review

Key Terms and Concepts

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Financial Statements-Corporate

• Balance Sheet

• Income Statement (or Profit and Loss Statement)

Financial Statements-Associations

• Statement of Financial Position

• Statement of Activities

Key Terms and Concepts

• Balance Sheet or Statement of Financial Position

– A picture of the organization at a given point in time. It reflects the assets owned, liabilities owed, and residual net assets.

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Key Terms and Concepts

• Profit/Loss Statement or Statement of Activities

– Shows financial activity, reporting revenue generated, expenses incurred, and results in net profit/loss

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Key Terms and Concepts

• Accrual versus Cash Accounting– Accrual-basis accounting recognizes

revenue when earned and expenses when incurred.

– Cash-basis accounting recognizes revenue when payment is received and expenses when cash is expended.

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What You Need To Know

Budgeting

How does Finance make the Chapter more Successful?

Chapter Strategic Plan

• Begins with Board Retreat • Developing Key Measures of Success• Since the financial statements give “pictures”

of the chapter’s financial health, the Finance Chair is the eyes and ears of the Chapter

Budget Process

• Budget falls out from monetizing success measures.

• Internal Goals can be different then Budget Goals

What You Need To Know

• Budgeting– Integrated with the Business Plan– Start w/Zero, Not Prior Year– Eliminate/retire outdated activities– Understand Cash Flow Impact of

Budget– Recognize Cash Sponsorship as

Revenue– Understand the impact of In-Kind

Revenue Generation

• Non-Dues Revenue– Advertising– Educational/Networking Programs– Trade Shows– Auctions, Raffles

• Sponsorships/Partnerships• Fundraising & Special Events

What You Need To Know

Tax Issues

What You Need To Know• Taxes

– Forms (U.S. only)• 990-N(Revenue <= $25K)• 990-EZ(Revenue >$25K and < $100K)• 990(Revenue >= $100K)• 990-T(UBIT > $1,000)• Schedule A

– Forms (Outside USA)• Differs from country to country

Minimum Standards

• October 1st – Year End Financial Statements due to Chapter Business Managers.

• A copy of Tax Returns for US chapters only submit to your Chapter Business Manager by October 1st.

What You Need To Know

Investments

What You Need To Know

• Investments– Level of Desired Risk (Asset Allocation)– Policy (Board-Approved)– Professional Management

Tools & Resources• MPI Resources

– Chief Financial Officer – Greg Lohrentz• glohrentz@mpiweb.org

– Controller – Elaine Altman• ealtman@mpiweb.org

– Insurance – http://www.sleepersewell.com

– Toolkits: http://www.mpiweb.org/CMS/mpiweb/mpicontent.aspx?id=8235

• Finance Section

Tools & Resources • Your CBM

Use them – they are here to help you.

• Group Space

• MPI Foundation – http://www.mpifoundation.org

• The Chapter Toolkits on the WebCheck here first – don’t reinvent the wheel.

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Questions & Answers

Thank you for your time!