Sunday, August 02, 2009

Transparent Financial Management is Critical

Financial transparency is critical in every student organization

from our Friends at The Apathy Myth: a Blog for America's College Student Leaders

Embezzling from a student organization is remarkably easy. It's a shame, too, because when a dishonest officer steals from his/her organization – or uses funds in an inappropriate way – it takes away from the mission of the group and violates a very special trust.

When I traveled for my fraternity many years ago, I found stolen or misused funds in almost 20-percent of the chapters I visited. Sometimes, it was something as simple as a treasurer giving himself an unapproved loan or buying himself a new printer for his computer. In any case, the members of the chapter had no idea. If I hadn't come through and demanded a look at the books, the members would have been no wiser.

The best answer to this potential threat is transparency. Your members need to see the group's financial account, even if they don't care and aren't asking for it. At least once a month, the treasurer of your organization should give your members a printout of all financial activity for the month: what checks were written, how many people paid their dues, what money was raised or spent from that last event, etc. Most of all, your members should see the balance in their account. It's their money, right?

Ideally, your executive committee will review the statement for errors before it is presented to the members. This is also a great way to make sure your treasurer is doing his or her job properly. When more eyes are examining the books, mistakes are avoided, and the possibility of misappropriation goes down.

When you make financial stewardship everyone's business, your organization grows stronger, people pay their dues on time, and better choices are made about the use of your group's resources.

Here's my challenge... Can your members guess your group's checking account balance within $500? If not, you have a problem. Make them pay attention. Even if they roll their eyes and feign sleep when you talk about numbers, it's an important lesson to learn now when the stakes are lower. Someday when they catch an employee stealing, or prevent embezzlement from their homeowners association, they'll thank you.