Financial Guidelines for Local Sections

To: SAE Section Chairs & Treasurers

Subject: financial guidelines for local sections

The Sections Board has put forth the attached guideline to reflect an objective of SAE that ensures that member dues reimbursements as well as reserves reflect an efficient use and are spent for the benefit of the membership. The Sections Board has concerns with the apparent trend of increasing section financial reserves. The following information is intended to provide sections with necessary information to understand the issue, and to provide a guideline for "adequate" financial reserves which do not risk the solvency of sections or SAE, nor risk SAE's not-for-profit status. A list of recommended actions are included to help sections respond to the trend of increasing financial reserves. Appendix A is also included as background information for the purpose of providing the section with information relative to who is making this guideline recommendation.

Rationale for Section Reserves Guideline

  • The guideline serves as a reminder to each section to remain aware of their financial reserves. As a not-for-profit organization, it is important to remember that SAE's sections can not have a profit motive.
  • The guideline provides some suggestions for maintaining adequate reserves so as to protect both local and international fiscal solvency, yet being sure that the maximum amount of benefit is being provided to our membership. As a member organization, it is SAE's and each section's duty to be sure that we serve our members needs in the best ways possible.
  • This guideline is intended to encourage good fiscal responsibility and long term planning.

Requested Actions

  • Review the Guideline as soon as possible.
  • Review your section's current financial reserves, and your financial plans.
  • Take action at your next Governing Board meeting to assure that reserves meet the guidelines and recommendations.
  • Establish a plan to meet guideline reserves.
  • Continue to monitor and enforce section reserve guidelines.
  • Provide the Sections Board your comments (good or bad) and/or problems you visualize that would be specific to your section's ability to adhere to the guideline recommendations - it is recognized that there are special needs and circumstances.
  • Provide the Sections Board any other suggestions that you feel would be helpful to meet our members needs, and financial reserve guidelines.

Guideline for Section Reserves
The following information is being provided as a guideline for sections on financial reserves. Included are recommendations / suggestions on where the excess reserves could be used to the benefit of a higher number of your members. Each section's governing board will have to decide which suggestions would be most beneficial to their membership and how proactive they can be, based on the exact reserves that are on hand versus the guideline targets.

  • Unrestricted Financial Reserves should be maintained between 30 - 60% of their one-year operating expenses for the section. Operating expenses are defined as that amount listed on line 45 in your Financial Report.
  • Unrestricted Financial Reserves are defined by the Sections Board as: liquid assets, excluding capital assets, which are available for general expenditures. The Sections Board defines liquid assets as checking, savings, money market accounts, investments, stocks, certificate of deposits, etc. There will be exemptions / exceptions for some specific section needs. These exemptions / exceptions must be noted in the section's Financial Report. Examples of Restricted Financial Reserves are: scholarships, student education, and development funds. Financial reserves should be maintained to the same guideline that SAE International must observe as a not-for-profit organization.
  • In general, financial reserves should be kept to an "adequate" minimum to assure that financial reserves do not continue to increase beyond their one-year reserve, and to assure that SAE resources are being used for the member's benefit.

Recommendations / Suggestions for Maintaining Financial Reserves
The following is a list of recommendations and suggestions. The items are intended to be "food for thought" to give each Section a set of ideas for how to handle their particular circumstances.

  • Increase funding of student programs
  • Purchase Capital Equipment (A/V)
  • Hire a nationally known speaker
  • Student member attend activities free
  • Hold regional activities
  • Increase spending on: student activities; professional development activities; and continuing education activities
  • Scholarships for college
  • Fund outsourcing of staff duties
  • Global Sections Partnership Program
  • Support math & science education through the SAE Foundation, or utilize the SAE Foundation to develop a math & science fund for your individual section.

Appendix A

SAE International Organizational Background
The following information is being provided to help sections better understand the SAE organization and how the Sections Board and sections fit in to the operation of SAE International.

SAE International is a not-for-profit organization operated under the authority of its Board of Directors. The President of SAE chairs the Board of Directors during its meetings.

The President obtains concurrence for the major thrusts for the year in which he or she presides. In the year prior, the President-elect both assists the President and prepares for their presiding year. The past President also assists the president but concentrates more on a personal initiative started as President.

The Executive Vice President sits on the Board of Directors and is responsible for the approximately 400 hundred professional staff members and facilities at Warrendale, PA, Troy, MI and Washington, DC.

Reporting to the Board of Directors are seven operating boards and committees who are empowered to completely administrate their given functions. They, of course, must act within the charter, the Governance Manual of the Board of Directors, the given Guidelines Manual and the Strategic Plan, which is a composite of all the plans, developed by these various organizations.

Sections Board Organization
The Sections Board is comprised of sixteen (16) members. Members may be self-nominated or are nominated by their local sections, and selected by the Sections Board Nominating Committee and confirmed by the Sections Board. Section Board members are typically past chairs of their section. This is to assure they have the understanding of issues at the local level and that their actions as a part of the Sections Board have local support.

There is often short term, ad-hoc committee assignments to address specific issues. Some in place lately are; "Addressing Member Needs", "Section Structure", "Information to Knowledge" and "Sections Board Structure".

The Sections Board is the oversight committee for the sections of SAE. It has the responsibility of monitoring the health of all sections, both administratively and financially. It is authorized to create sections and approve of divisions. The Sections Board has a responsibility to make sure no section suffers or closes due to financial issues. The Sections Board has means of helping any section in a financial emergency.