To the Members of the New England Bicycle Racing Association: Friday, February 18, 2005
I want to make you aware of events surrounding the planning of the NEBRA Awards Banquet and Dinner Dance, held on Saturday, February 5th, 2005. On March 31, 2004, the Board entered into a contract with the Best Western Royal Plaza Hotel in Fitchburg. This reserved a hall for the Awards Banquet and a separate room for the annual USAC Official’s meeting (the two are separate functions, but both sponsored by NEBRA).
During the remainder of 2004, two letters were sent to every licensed rider in New England that announced the Banquet. One of these was the NEBRA annual meeting announcement.
At the December 18, 2004 annual NEBRA meeting, the members voiced general support for a Banquet and the Board continued discussions to further the planning. However, it wasn’t until the January 2, 2005 Board meeting that the actual amount of the Banquet was known to be approximately $8,500. During the discussion, the Board expected to lose some money on the Banquet, but realized that ticket sales would help offset any loss. The Board set the ticket price ($20) at a point that would be attractive to the New England cycling community.
The only history the Board had to go on was the Sons of Italy Banquet, last held many years ago. That banquet typically had well over 200 people attending. It was not unreasonable to think the NEBRA Banquet would get a similar turnout. The Board felt that the Banquet honoring those who raced well last year, and as a social gathering, was a worthwhile service to the NEBRA membership.
In January, every promoter and club received multiple emails inviting everyone to come. All the award recipients were similarly emailed. The Banquet was announced on the NEBRA website and on Bikereg.com. An announcement was also broadcast via the NEBC listserve.
It wasn’t until January 31, 2005, when Bill Black (NEBRA Treasurer) was asked to send a bank check to the hotel that the cost of the Banquet became known to him. Nowhere in any of the Board’s previous meeting minutes was the cost of the Banquet recorded. It was at this point that Bill immediately voiced his strong objections. His point was that spending that much money (nearly 50% of NEBRA’s revenue) on entertainment was not consistent with and limited to the purposes for which NEBRA was established, and far exceeded the "necessary and reasonable" standard set forth by the IRS for business expenses. Bill then gave his resignation, noting that as a lawyer, he was obligated to do so as he was now in conflict in advising NEBRA.
The Board felt it had two options: renegotiate the cost to a more reasonable level, or cancel the event altogether and pay a cancellation penalty. The Board did not feel that not sending the check (as Bill had advised) was an option; a contract had been signed by the (previous) Board and included a severe cancellation penalty. The Board noted Bill’s many and strong objections, but felt it had little choice.
The hotel was contacted and explained that the Banquet could not be cancelled at such a late date; to do so would have resulted in a penalty equal to the expected cost of the Banquet, $10,000. The contract was re-negotiated to $7,000.
With an expected income from banquet ticket sales of $2,800, the initial net cost to NEBRA of the Banquet was projected to be approximately $4,200. Additional efforts were made to reduce the overall net cost of the event. The sale of raffle tickets would help offset the cost. Also, fund raising efforts by the Board members raised $2,440 to further reduce the final cost of the Banquet.
Awards Banquet Cost
Below are the Banquet’s projected and actual costs.
Banquet cost: $ 7,009.03*
plus DJ: 200.00
plus Awards: 600.00
less Ticket sales: 2,840.00
Projected Net Cost: $ 4,969.03
(*Note: Originally $10,045.93)
Banquet cost: $ 7,009.03
plus DJ: 200.00
plus Awards: 539.00
less Ticket sales: 2,560.00
less Raffle sales: 415.00
less Fund Raising: 2,440.00
Actual Net Cost: $ 2,333.03
This situation arose because the Board (past and present) did not do its job of keeping all Board members and officers (in this case, Bill Black, especially) informed of contractual arrangements before they were made. Because of that, Bill, as NEBRA’s legal counsel was not able to render an opinion on the matter that would have prevented the contract from ever being signed in the first place or at least without further discussion and reduction of the cost.
Further, the Board was operating under the premise that the final net cost was the important figure to consider, and not the initial outlay of $7,000, as Bill subsequently clarified. (See item #1, below.)
To avoid this type of situation from recurring, the Board will take (has taken) the following corrective actions:
1) Have Bill (or other counsel) present to the Board an overview of corporate law/governance and being a §501(c)(3) (tax exempt) corporation. (This was done at the 2/12/05 Board meeting.)
2) Ensure that all Board and corporate Officers are completely and fully aware of all Board discussions, actions, and activities, through minutes, email, and phone conversation. The Board’s minutes will be carefully reviewed for any omissions or factual errors, and if found, will be corrected and circulated to the Board. (This is an on-going action item.)
3) Require that no contract or other legal obligations be entered into by any NEBRA board member or officer without prior review and approval from counsel, legal and accounting. (This was clearly reviewed at the 2/12/05 Board meeting and will be a continuing action item.)
4) Establish limits on the amount of money to be used for all events or activities. (This is being accomplished through the budgeting process. See below.)
5) Establish a NEBRA budget and process so it’s financial position can be reviewed at any point in time. (This is in-progress as of the 2/12/05 Board meeting.)
6) Any other corrective measures deemed necessary by appropriate expert opinion.
Prior to these events, Bill had notified the Board of his intention to resign his positions in order to focus on his various business activities. Norm Collard has been appointed as Treasurer (action taken at 2/12/05 Board meeting). Norm has served as NEBRA’s accountant and is well qualified to serve in that capacity. The Board is also in the process of relocating the corporation to MA, while preserving the §501(c)(3) tax exempt status of NEBRA.
The Board regrets any negative impact that this situation may bring to the Association, its members, or others.
Questions or concerns that anyone may have regarding this situation can be directed to any of the NEBRA Board members.