Financial Planning Association National Capital Area Chapter Financial Philosophy

Introduction and Background

Since inception in 2000, the FPA NCA has experienced strong revenues and positive cash flows. Moreover, the Board of the FPA NCA determined that most programs should be planned to be cash flow neutral, except for speaker costs and administrative overhead costs. Additionally, during the last eight years, the FPA-NCA board has adopted many policies relating to financial matters.

This document is intended to serve as a guide for future boards of the FPA-NCA to understand the financial policies and procedures which have been adopted in the past. Moreover, this document will serve FPA NCA for generations to come and set the stage to resolve issues when facing competing uses of resources and on how to manage and oversee the fiscal affairs of the FPA-NCA.

Vision Statement

Financial resources and budgeting exist to further the vision of the FPA NCA and provide value to its members. They ensure the future viability of the FPA NCA and will enable it to remain relevant and viable. The Board of the FPA NCA will strive for financial strength and will not spend the last dollar of the FPA NCA. Financial strength will enable the FPA NCA to weather future financial storms while continuing to deliver member value.

Accounting Method

The presentation of the financial statements of the FPA-NCA shall be done on the accrual basis of accounting. This policy was adopted by the Board of the FPA-NCA on July 24, 2007.

Contributions, meeting fees, grants and sponsorship income are recorded as revenue in the fiscal year for which they are designated. When such income is received in a fiscal year other than the year in which it is intended to be applied, it will be held in a temporarily restricted account until the appropriate period is reached.

At times, during its fiscal year, the FPA-NCA maintains cash balances at financial institutions in excess of the Federal Deposit Insurance Corporation (FDIC) limits. The FPA-NCA considers all cash and other highly liquid investments with initial maturities of three months or less to be cash equivalents.

Investments are recorded at market value. Unrealized gains and losses are included in the Statement of Activities and Change in Net Assets which are part of its annual financial statements presented to the Board.

Financial statements are presented to the Board on a quarterly basis by the Treasurer.

FPA-NCA is exempt from federal income taxes under Section 501c (3) of the Internal Revenue Code. Accordingly no provision for income taxes in made in the financial statements. FPA-NCA is not a private foundation.

Transparency

The budget, net worth and Form 990 will be available for review by all members and may be placed on the FPA NCA website.

Yearly Budget

The Board of the FPA NCA should seek to adopt an annual budget that has a positive cash flow or is “neutral” (revenue is equal to expenses). In all budgets, revenue projections should be conservative, while expense projections should take into account all possible expenses. In years where expenses (for whatever reason) exceed revenues, the Board of the FPA NCA can pass a budget that is not cash flow positive with the understanding that the difference may be made up out of the chapter’s reserve funds. However, every attempt should be made to meet the majority of projected expenses, and the Board must be cautious in using reserve funds so as not to completely deplete the chapter’s emergency funds.

Excess Operating Funds and Use of Excess Funds

Excess Operating Funds are defined simply as non-dedicated cash reserves in excess of one-half (1/2) of the FPA-NCA’s operating budget for the current fiscal year. In other words, the FPA-NCA is committed to always having a reserve of at least one-half (1/2) of its yearly operating budget.

When the FPA-NCA has Excess Operating Funds, these Excess Operating Funds can be used to provide additional benefits to the members, such as, lower the member cost of a specific program, upgrade the computer or other equipment of the FPA-NCA, donate to charity or the Foundation for Financial Planning, hire speakers for programs, attempt a new program or have a program at a new venue, produce a membership directory or do anything else that will improve the member experience. Any expenditure of the Excess Operating Funds must be proposed on a regularly scheduled Board agenda and then approved by vote at a meeting of the Board of the FPA-NCA, with seventy-five percent (75%) of the Board members voting in favor of such expenditure.

Investment of Excess Operating Funds

The investment of the Excess Operating Funds should be in liquid, fixed income, investments. Limited risk should be taken. A certificate of deposit or other investment should not have a maturity in excess of one (1) year.

Conflict of Interest Policy

The directors, officers, committee chairs, and members of committees with board delegated powers of the FPA-NCA (“FPA-NCA Leaders”) must act at all times in the best interests of FPA-NCA and not for personal or third-party gain or financial enrichment. The Conflict of Interest Policy adopted by the Board (copy attached), which must be agreed to by all FPA-NCA Leaders, is intended to supplement but not replace any applicable state and federal laws governing conflicts of interest applicable to nonprofit organizations.

General Policy on Reimbursable Expenses

This policy was previously approved by the Board of the FPA-NCA. All Board and Committee Members are volunteers and should not bill the Chapter for their time or the time of any of their staff (if spent on FPA-NCA matters). Certain specific out-of-pocket expenses will be reimbursed, at cost (detailed below). Any exceptions to this policy must be approved in advance by the President and/or the Chairperson.

Reimbursements

There shall be no reimbursement for supplies or copies or other expenses, except in extraordinary situations when approved in advance by the President and/or Chairperson.

Postage and Overnight Mail

All reasonable postage and overnight mail expenses will be reimbursed.

Long Distance Telephone Charges

All directly related long distance telephone charges will be reimbursed. However, Board and Committee Members are urged to use cell phones to conduct FPA-NCA matters to eliminate long distance telephone charges. There will be no reimbursement for any cell phone related charges.

Automobile and Travel Expenses

Those Board members selected by the President or the Board to represent the Chapter at FPA leadership functions or Alliance Forum events will be reimbursed for their travel expenses, including airfare, airport parking charges, tolls, and transportation (taxicab and reasonable automobile rental), meals, food and hotel expenses, except that there shall be no reimbursement for personal automobile expenses for travel to an airport. All air travel will be coach class or similar fare classification. There will be no reimbursement for travel expenses to local FPA-NCA events, committee or Board meetings, the Retreat or the Symposium. The meals and food will be reimbursed on a per diem basis and shall not exceed the following amounts: (i) breakfast - $15, (ii) lunch - $20, and (iii) dinner - $50. Receipts must be provided for all reimbursable expenses, for all expenses over $25.

Other Meals and Food

Committees of the Board, including, but not limited to, the Symposiums, Golf, and Gala, all have separate budgets. All meal and food directly related for a Board or committee meeting to discuss/plan events and/or strategic efforts can be paid from the budget of the Committee (and/or the general budget, if a Board meeting), if such meal and food expense is reasonable and necessary to promote the business of the Committee.

Adopted by the FPA NCA Board on October 2, 2008. Revised and Approved by a Vote of the Board of Directors of the National Capital Area Chapter of Financial Planning Association on February 12, 2009.

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