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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 boards don't have a minutes problem until they need them. Then they find twelve pages of who said what, or three lines that record nothing at all.
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Risk management is one of those areas that every association and not-for-profit Board knows is important - but it can sometimes become
little more than a risk register reviewed once or twice a year.
Insurance can be treated in much the same way.
The organisation receives its annual insurance renewal, the premium is approved, the policy is renewed and everyone assumes the organisation
is covered.
How we help membership based, not-for-profit associations now and into the future.
