ITE will direct deposit dues to the U.S. based Districts and Sections three times per year:
Dues collected for ITE Canada and it's Sections will be sent directly to ITE Canada for distribution, on the same schedule listed above.
Each District and Section should maintain their own bank account. Banks will typically require an Employer Identification Number/Tax ID provided by the IRS, state incorporation documents, and other specific information to both open and maintain an account. ITE HQ staff can assist Sections with some of the set-up requirements.
Not-for-profit organizations must have a written, mandatory document retention and periodic destruction policy. Policies such as this will eliminate accidental or innocent destruction. In addition, it is important to know the length of time records should be retained to be in compliance. This policy provides information on both the how long to maintain records and when to delete them: Document Retention Policy
It is understood that Districts and Sections will have at least a Checking and in some cases both a Checking and Savings account. There should two people from the District or Section who has access to these accounts. Typically this is the Treasurer and either another elected leader or an administrator. Two people should always have access to the accounts and should work together to make sure the account is in good standing and free of fraudulent charges.
While at least two people should have access to the account(s), it is also important to not have too many people with access to the accounts. The District or Section should rotate people on a regular basis, especially as they roll off the Board. Making changes on who has access to accounts, through the bank can be difficult, and with a yearly change in leaders, can be a pain point, but fiscal responsiblity lies with the Board.
Expenses should be approved by two people. Typically one can approve a payment and the second can execute the payment in the banking system. All accounts should be reconciled on a monthly basis and updates related to accounts and budgets should be provided to the Board regularly.
Many ITE Sections and Districts utilize Quicken for check book accounting and financial record keeping. Given the low flow of checks and deposits, this level of financial record keeping is in line with annual IRS reporting needs.
Each Section is expected to establish an annual budget for its annual revenues. Establishing a “reserves” budget target should be assessed. For many Sections this is a savings account balance or net checking account balance above annual inflows and outflows. A common guide for groups such as ITE is to have reserves between 50 and 150% of annual operating costs (75% is typical).
Reserves address issues of fluctuations in revenue that may occur with economic conditions or unusual events/needs. While reserves are good financial practice, large reserves are not. To the IRS they indicate sidelined capital not being applied to the benefit of the organization and can become taxable.
Best practice for Districts and Sections is to have two people review expenses associated with the entity.This can be elected leaders of the Section or an elected leader and a Section administrator/treasurer. Controls should be in place for major expenditures that include checks and balances prior to incurring an expense (such as Board approval) and include a second pair of eyes on the financial record (which may include presentation to the Board at routine meetings). Since much of a Section’s expenses are in/out lunchtime or meeting event activity, such oversight is at the point of event. However, when non-routine requests arise (an email from a Board member for an expenditure), these should be personally verified prior to expenditure to avoid fraudulent phishing scams.
Verify all invoices and avoid paying based on emails alone. We’ve had multiple instances where leaders have paid an invoice or made a purchase based on an email that looked like it came from an officer. Later, after it was paid, we found out it was a phishing scam. Don’t fall prey to scams. They are getting more sophisticated. Make sure every payment out has a verified invoice affiliated with it and you use two people to verify expenses.
In addition to dues, Sections should explore additional revenue opportunites: sponsorship, advertising, fund raising (e.g. golf tournaments), and job notice revenues. For some Sections, these additional revenues exceed dues income. Nearly all Sections have in/out-revenue/expenses associated with meeting events (e.g. restaurants, hotels).
Many Sections have developed online presences for this revenue stream to minimize handling of cash and checks. During the pandemic some Sections have generated revenue through virtual meetings which have very limited expense. ITE asks all Sections to price their events for ITE members lower than for non-members, with non-member prices 50-100% higher than member prices. It is also requested that all ITE members, even from outside the Section, be provided the member “discount.” We are ONE ITE!
ITE headquarters maintains a relationship with an investment company for its reserve funds and scholarships. Districts and Sections may participate in the investment portfolio. While the investment analysts generally maintain a conservative posture, funds are invested in the stock market which does see unrealized gains and losses over time. Because the funds are aggregated across ITE, Districts, and Sections, the fees are very low, a much better rate than you would typically experience if you were to invest on your own.
Districts and Sections can participate in a reserves investment account and/or the scholarship investment account. You should not need frequent access to these funds; rather, access should be limited and ITE needs 2 weeks to fulfill any requests for distribution. Distributions will be sent by direct deposit.
ITE sends out quarterly reports to provide Districts and Sections updates on their accounts.
ITE headquarters has worked with Ames & Gough to develop a coordinated program to provide ITE Districts, Sections and Chapters with cost-effective Directors & Officers, Employment Practices and Fiduciary Liability (often referred to as “Management Liability Insurance”). Contact ITE Staff for more information on the coverages and how they relate to Sections. For Sections to be a part of this coverage requires them to complete the Coverage Election Form along with an application (for new risks) and provide confirmation of compliance with the Program Qualification requirements and return it to Ames & Gough for processing.
The Directors & Officers (D&O) coverage focuses on wrongful decisions of directors and officers, employment practices and fiduciary liability (roughly $900 to $1300 per year for a Section for $1M coverage). The General Liability coverage focuses on coverage for office premises and events held by Insured at any and all locations/venues, and host liquor liability coverage for meetings (roughly $500 per year for a Section for $1M coverage).
Districts, Sections, and Chapters are encouraged to develop a budget each year. The needs of the budget will vary greatly on the size and activity of the District or Section. As you go about planning, a sample of District budgeting elements, membership and committee structures can be found here. As you can see some elements are more universal than others and not all are applicable to every District or Section, but you can use this as a guide when you go about planning.