Cohousing-L Mailing List: Re: Operating Expenses, Who Does them and with what Controls?

[Sharon Villines (sharon]

On Oct 11, 2012, at 12:17 AM, Douglas G. Larson <ddhle [at] earthlink.net> 
wrote:

> 1) How does your community use credit cards and debit cards to pay for
> community expenses and what controls do you have in place for those
> expenditures?

We use a credit card but approving the policy was contentious because we have 
members who don't believe in using credit cards -- temptations of the devil. 
Others who believed they wouldn't be monitored well. Our policy is posted at: 

http://www.takomavillage.org/wordpress/documents/policies/credit-card/

The Admin team contained the two conservative, adamant members and the 
Facilities team had the more pragmantic members who were hurting from having to 
buy so much stuff and then wait weeks and weeks to get reimbursed. In the 
meantime the purchases were sitting on their own credit cards.

There were also disagreements with the treasurer who only wanted it used for 
small purchases that were easier to use the card for because then he wouldn't 
have to process several requests for reimbursement. Others who thought the best 
use was to put our recurring payments for cable TV and internet on the card 
because we had had trouble getting our management company to pay those on time. 
 For some reason he didn't believe that represented best practices, but our 
internet had gone down because these weren't paid for months. Our cable TV was 
still paid by one member on his own credit card and then he had to submit 
requests for reimbursement.

Admin also insisted that the person had to sign the policy. Since we have 
another form the cardholder signs that is very much like the one any card 
holder signs with a company, I felt this was overkill, set bad precedent, and 
was generally "stupid." We are all legally bound by all our policies whether we 
sign them or not. Why would this one be signed?

You can see how fearful some people were of a credit card. Our managemetn 
company had actually suggested we get a card. She said none of the condos she 
managed would have members spend their own money and get reimbursed. But, of 
course, cohousing is different.

There were two philosophies on getting it passed -- take the discussion to the 
membership to get the "right" policy and pass any policy and then do as we 
please. 

We passed the policy and haven't looked back. And we do what works. All the 
recurring payments except utilities now go on the card. It's great! As long as 
the credit card bill gets paid.

>    1a-  Who is authorized to use your community credit card or debit card?

We have one person who holds the card and is the only person authorized to even 
know the number. He has to make all purchases which means people sit with him 
at the computer and order stuff. 

He recently did notice some small unauthorized charges. He cancelled the card 
and had it reissued. I don't know the details. But what was a problem was that 
since his hame was on the card, he was the only one who could have cancelled 
it. The CC company wouldn't even talk to the treasurer. We now have two people 
and two cards (on one account).

A person's name has to go on the card and that person is liable for all 
expenditures if the association doesn't pay the bills. That is a stipulation of 
the CC company. 

>    1b-  What policies or authorization procedures are in place for use of
> these cards?

Expenditures on the card follow the same approval and reimbursement procedures 
as others. He still has to submit receipts and fill out forms. I personally 
think notes on the bill with receipts attached would be fine. The receipts are 
necesassary as proof of what the items purchased were.

>    1c-  Are your books audited and if so by whom and how frequently?

We have had annual audits because we had bad managment companies but now that 
we have a good one (knock on wood) we will go to every few years.

> 2) What budgeting controls do you have in place for operating expenditures?
> 
>    2a-  Is every operating expenditure checked to see that it is within
> budget? If so, who does that?

The treasuer and team budget people do this -- or are supposed to. The 
management company generates a monthly statement and it is distributed to 
everyone with the Board Minutes. We have had good treasures but now have a 
great one. He works for the foundation that is now publishing the analysis of 
Romney and Ryan's bizarre budget ideas.

He has also been very helpful in countering the more conservative ideas held by 
members with no knowledge of non-profit money handling or the appropriate 
checks and balances.

>    2b-  If a legitimate expenditure exceeds budget, what override or
> exception procedures are used?

We have a good policy on decison-making that covers expenditures and this has 
never happened except when approved. It was always related to facilities and 
unforeseable events.

http://www.takomavillage.org/wordpress/documents/policies/decision-making-2007/

>    2c-  If a requested expenditure would exceed budget but is not deemed
> essential, what denial or refusal procedure is used? Who issues the refusal?

See above. Ultimately the membership can refuse but this is really not a 
problem for us. If people want an item, we find the money for it. The issues 
arise when most people don't really want it. For example, we have one member 
who wants colorful flags to hang in the piazza like those in plazzas in Italian 
and Hispanic countries. He has wanted this since we moved in.

We may finally get it because he has convinced people they would be nice and 
has limited them to holidays. They still have to be designed and made but if we 
can get residents to sew them, the community would probably pay some of the 
expenses supplemented with donations, but he hasn't come forward with a 
specific proposal or costs.

Sharon
----
Sharon Villines
Takoma Village Cohousing, Washington DC
http://www.takomavillage.org