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First-Rate Financials
Fiscal Resolutions for Your Chamber
Key Takeaways:
Put policies (and your budget) on paper.
Audits are more than a financial review.
Get everyone involved in the budget process.
A few years ago, the Chamber of Business & Industry of Centre County’s board of directors approved a straightforward investment policy. The chamber placed some cash reserves in a long-term investment pool. But with the market volatility, it was time to revisit what was on paper. “It’s easy when the market is going up. You just let it ride,” said Greg Scott, president & CEO. “But when the market’s going down and you have an investment committee with differing opinions and differing thoughts, it gets a little more difficult.”
Chambers cover a vast spectrum in terms of budget size and financial resources. But because chambers are funded in various ways from different sources, it’s essential to be good stewards of the dollars coming through the door. Here are a few financial best practices to consider no matter where you are in the fiscal year.
Put policies (and your budget) on paper.
As Scott led the creation of a new investment policy, the chamber looked at other non-profits outside the industry with endowments or long-term investment pools to see how those were managed. The chamber’s new policy provided additional parameters and governance around the funds, responsibilities and how future decisions would be made. “We tried to get a little clearer but without being super restrictive or prescriptive to our investment manager,” Scott said.
Even if your chamber isn’t ready to invest reserve cash, other standard policies like spending approvals and disbursement policies can provide internal control. Linda Ashworth, Dayton Area Chamber of Commerce’s chief operating officer, said getting your budget on paper, no matter the size, is vital. One policy in Dayton states that any budget fluctuation over 10% or $10,000 merits an explanation. “You can’t hide anything, especially because we run on such tight margins,” she said. “Not only are you using a budget to help you make future decisions, you’re also providing that trust level to your members and to your volunteer leadership that everything is running as they expect.”
Audits are more than a financial review.
Katie Richardson knows audits. She joined the staff of Greater Spokane Inc. with nearly a decade of public accounting experience. And while it’s not exactly cheap, she said audits are much more than just a financial inspection. “They’re not just there to tick boxes,” she said. “Can they be a trusted advisor in other ways?” Auditors can share guidance or recommendations based on their work with other organizations. “It can provide a level of outside experience,” Richardson said. “The smallest entities always have the most complexities.”
There are a few things chambers can consider that might lower the cost. For example, look at who is compiling the chamber’s form 990. Because a lot of the information is the same, there might be some synergy there. “Off-season is always good,” said Ashworth. “Look to your regional or local firms but do some due diligence to see who else does not-for-profits, and if you can, who does associations. Then you don’t have to teach them the business and it’s much more efficient.” Ashworth also recommends sharing an RFP with members and interviewing those who respond. For interviews, she says asking about their familiarity with the chamber and how it operates can make a huge difference.
An audit might be required if your chamber or foundation is looking to start applying for grants. And if you’re planning on going after U.S. Chamber accreditation or your Certified Chamber Executive designation, it might be time to get an audit on the books.
Get everyone involved in the budget process.
Not every chamber employee will be a financial expert, and that’s okay. Ongoing education from those who are, coupled with getting staff involved in the budgeting process, can create a basic level of understanding across the organization. In Dayton, program managers build their own budgets. Ashworth consolidates those submissions, adjusts as needed and creates the organizational budget. The budget is built on a zero-based policy, starting from scratch each time. “By engaging people who are actually executing those activities in the budgeting process, they stick to their expense budget,” Ashworth said. “They can use it as a management tool. By helping write it instead of just being given it, they have a level of understanding. And that’s part of the control process.”
Richardson implements ongoing financial education throughout the year. There are regular reviews of the budget vs. actual spending and discussions are part of team leader meetings. “It’s easier to teach them to fish than to give them the fish,” Richardson said.
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