Book1 – ARTICLE XIII – FINANCIAL ADMINISTRATION

3 Replies to “Book1 – ARTICLE XIII – FINANCIAL ADMINISTRATION”

1. What about chapters with large balances, should we require them to spend it?

   Reply

   1. I did some research and
      I would not require a chapter to spend money merely because its bank balance exceeds a fixed dollar amount. Chapters vary in membership, expenses, equipment, planned projects, and emergency needs. A uniform limit could encourage unnecessary year-end spending and penalize chapters saving for major trail work, corrals, equipment, or emergencies.

      A better approach would be a financial-reserve policy requiring each chapter to explain why it is holding substantial funds and how those funds will eventually support BCHI’s mission.

      I recommend placing this in Book 3—Policies and Procedures, rather than the bylaws. The bylaws could contain only a general requirement that chapter funds be used to advance BCHI’s purposes.

      A proposed policy could read:

      Chapter Financial Reserves and Use of Funds

      Each chapter shall maintain financial reserves appropriate to its normal operating expenses, foreseeable obligations, equipment needs, emergencies, and planned projects.

      As part of its annual budget process, each chapter shall review its unrestricted cash balance and identify:

      Funds needed for normal operations and emergencies;
      Funds committed or designated for specific projects, equipment, grants, or future obligations; and
      Unrestricted funds exceeding the chapter’s reasonably established reserve needs.

      When unrestricted funds exceed the chapter’s established reserve level, the chapter board shall develop a reasonable plan for using the excess funds to further the purposes of the chapter and BCHI. The plan may include trail projects, educational programs, land-manager partnerships, equipment purchases, member training, public access projects, or contributions to BCHI-approved projects.

      Restricted donations, grant funds, and money contractually committed to a particular purpose shall not be included when determining excess unrestricted funds.

      Each chapter shall report its year-end balance, designated reserves, and planned use of excess unrestricted funds to BCHI annually.

      Rather than setting a dollar amount, BCHI could use a formula such as:

      A chapter should normally retain up to two years of ordinary operating expenses, plus amounts designated for approved projects, equipment replacement, emergencies, and other documented future obligations.

      The word “normally” gives BCHI flexibility. If a chapter needs a larger reserve—for example, to replace expensive trail equipment or fund a major corral project—it can document that purpose.

      I would also avoid language allowing the state organization to automatically take a chapter’s excess money. Chapters may be separately incorporated or have legal control over their own accounts. Any transfer requirement should be reviewed against BCHI’s affiliation agreements, tax status, and chapter governing documents. Federal tax guidance focuses on using nonprofit assets for the organization’s exempt purposes and preventing private benefit; it does not establish a standard bank-balance ceiling for ordinary public charities. IRS Publication 557

      My recommendation is: require annual review, disclosure, and a mission-related spending plan—but not automatic spending or transfer based solely on a fixed bank balance.

      Reply

2. Fiscal Year Clarification Recommendation

   Policy 30 604 currently establishes the fiscal year as April–March. After further review, this may add unnecessary complexity at this stage of the rewrite.

   It is recommended that we simplify and strengthen the structure as follows:

   1. Move Fiscal Year to the Bylaws
   The Bylaws should define the fiscal year as:

   The fiscal year shall be January 1 through December 31.

   Placing this in the Bylaws provides stability and ensures the fiscal year cannot be easily changed by policy alone.

   2. Revise Policy 30 604
   Policy 30 604 should no longer define the fiscal year. Instead, it should address operational alignment:

   Budget cycle aligned with the Annual Convention
   Financial reporting structured around the Convention cycle

   3. Remove Conflicting References
   Remove any references to Policy 30 604 or fiscal year definitions from the Bylaws to avoid duplication or conflict.

   Result

   This approach:

   ✔ Simplifies the governance structure
   ✔ Avoids IRS complications
   ✔ Minimizes retraining and transition impacts
   ✔ Keeps the fiscal year stable while allowing operational flexibility through policy

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