What are the spending limits for an Association CEO?

What are the spending limits for an Association CEO?

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.