How Budgeting can Steer Your Ship in the Right Direction

Presented by:

Jane Muir                                                                          Andres N. Oliveros

What is the right direction?

• Doing good
• Making lawyers look good
• Stewardship
  • Continuing the existence of the Bar
  • Leaving it better off than before
• At a minimum, avoid squandering assets

What are the benefits of a budget?

• Plan to Earn more than you Spend
• Provides cover – say no and blame the budget
• Checks egos – coronation expenses must be within budget
• Prevents overly optimistic spending
• Prevents consequences of poor judgment
• Enable long term goals
  • Emergency planning (replacement/repair of equipment)
  • Hiring staff or consultants (e.g. bookkeeper, accountant, event planner)
  • Purchase of property
  • Creating a 501(c)3 foundation (Remember this one for later!)
    • For free legal aid to low income individuals
    • For scholarships
    • Other public benefits

What are important areas to have budgets?

• Operations
  • Total Membership dues should exceed cost of operations
  • At least earn more than you spend
• Events
  • Ticket price should cover costs of food and beverage, staff, and other needs
  • “Plus Plus” = tax and gratuity added to per plate price
  • Consider adding ⅓ to price to help plan per person cost
  • Avoid extra costs of decorations and entertainment as much as possible
  • “Incentivize” leadership to raise funds to get special extras
• Sponsorships of Other Organizations and Initiatives
  • Build an annual sponsorship package
    • Melissa Byers, St. Petersburg Bar Association Executive Director: “Sponsors are seeking business! Focus on what will bring business to your sponsors.”
  • Be careful with your funds, only sponsor most important activities
  • “Organizational Co-Sponsorship” option – no dollars
  • Pro Rata Profit Share Collaboration

Transparency and Accountability

• We owe our members proof of our worthiness to receive their investment of dues
  • Good work
  • Good membership benefits
  • Prudent expenditures of their money
• Florida Statute entitles members to certain information
  • Fla. Stat. 617
  • http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0600-0699/0617/0617.html
  • 3 years of tax filings
  • 3 years of financial reports (P&L, Balance Sheet)
  • Membership List
• Financial Controls
  • What enforces the budget?
    • Staff/ Outside Accountant
    • The “Bad Guy” – tough conversations for volunteers, but we are fiduciaries and so it is important to maintain boundaries
  • Handling de minimis costs
    • Consider a discretionary budget

• • • • Allows some flexibility to officers for spending on event tickets, supplies, conference attendance, e.g.
    • Reimbursement Procedure
      • Allow officers to seek reimbursement (submit receipt and explanation for cost)
  • Handling major costs
    • Dual Signatures
    • Distribute statements to all board members
    • Checks and Balances
      • Outside bookkeeper
      • Annual audit
      • Outside CFO

What is the difference between a 501(c)3 and a 501(c)6?

• References the Internal Revenue Code Section that governs the entity
• 501(c)3
  • Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.
• 501(c)6
  • Business leagues, chambers of commerce, real-estate boards, boards of trade, or professional football leagues (whether or not administering a pension fund for football players), not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.
• Benefits of 501(c)3
  • Can receive tax deductible gifts (write-off)
  • Maintains clarity of funds being allocated to charitable purpose
  • Examples of Organizations:
    • Cuban American Bar Foundation
    • Florida Bar Foundation
    • Broward County Bar
    • Hillsborough County
    • Highlands County
    • Tampa Hispanic Bar Foundation
• How to form a 501(c)3
  • Corporate Attorney or Accountant creates filing
  • How to maintain mission and collaboration?
    • Some crossover
    • Communication/ friendship
    • Bylaws

• • • • Require attendance by presidents/ reporting
      • Have to maintain diplomacy to avoid crossing purposes
    • Financing
      • Provided that the Bar Association is a primary funding source and source of help and support the foundation should be happy to maintain positive relationship
  • Board Composition
    • One board member must be former president?
    • One member must be a retired judge?
    • Cannot be the same board

Download this Outline Here

Some Additional Resources

Sample – Non-Staffed Bar Handbook

Sample – Event Budget

Sample – Financial Controls