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By Nick Koerbin
What are the spending limits for an Association CEO?
I was visiting a newly appointed CEO of a well-known industry association, and we were discussing how much authority he had to spend on
operational items. I was surprised when he mentioned that his authority level was $300. Anything over that would have to go to the Board for
approval.
How much should an association or any organisation's CEO be allowed to spend?
Of course, it all depends on several factors, such as the size and financial health of the organisation. Having been a CEO of several
similar organisations, here are some suggested guidelines.
💡 Major spending decisions such as significant capital expenditure, acquisitions or investments must be given Board approval, as the Board
should have oversight and control of substantial financial decisions.
💡 Establish a risk assessment committee reporting to the Board to review the risk levels of entering any contract that may significantly
impact the association's financial performance.
💡 Ensure a budget includes the expenditure of planned operational activities, including hiring staff, professional development, membership
development and events.
💡 Have a defined policy regarding approval of expenses outside the budget.
💡 Ensure there is a delegation of authority for the CEO or senior manager regarding any limitations regarding their decision-making. This
authority should be reviewed annually, and details should be included in the Board meeting minutes.
💡 Ensure there is transparency in the financial reporting mechanisms to the Board. The CEO would be more productive by getting board
approval on budgeted spending than asking the Board for every decision.
The Association Board should provide all the resources and support to operational staff so they can get on with the job. However, ensure the
authority is documented in a board policy or organisation procedure and understood by all involved.
Most associations can provide a long list of membership benefits. They may include professional development, advocacy, networking, industry information, events, resources, accreditation, discounts and access to specialist advice. However, a list of benefits does not necessarily explain why someone makes the decision to join.
While every Board is different, the same governance issues appear time and again. One of the most common is allowing one person’s behaviour
to dominate the Board table.
Almost every Board has experienced it at some point. One director who seems to consume more time and energy than everyone else combined.
A renewal invoice is not a request for last year's money. It is a request to pay for next year's benefits. The moment a member — individual or corporate — opens that invoice, they make a decision: renew, or walk.
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