President’s Message: The Fiduciary Responsibility of STC Houston

By Rick V. SanchezSTC-Houston_Logo2_2009
President, STC Houston

STC Houston pledged to send $28,000 to our parent STC organization to help deliver STC from its current financial circumstances. That pledge is vital to the survival of our parent organization and will be used to resolve STC’s deficit problem announced earlier this year.

In May 2009, during leadership day of the annual STC conference, the directors of our parent organization described a financially disturbing situation. They predicted a possible shortfall of $1.3 million, which would potentially bankrupt the organization if corrective actions were not taken. At that time, approximately $1.2 million were stored in the collective coffers of all STC chapters.

The STC directors explained that the projected shortfall was based, in part, on the STC economic model. STC spends approximately $250 per member but, on average, receives under $200 in dues per individual member. Thus, according to our parent organization, STC was spending more per member than it received from membership dues. The dues shortfall and the bad economy were cited as reasons for the financial distress of the parent organization. To cope with this situation, STC has cut back on office costs, employees, and other expenditures. To raise additional funds, STC has contracted with professionals that will help identify new revenue streams. In addition, STC has acquired a line of credit that has reduced the originally projected $1.3 million shortfall. All of these steps lessened but did not eliminate the shortfall. While the amount of the adjusted shortfall is uncertain, it is clear that STC needs the help of each local chapter in order to stay solvent.

Without the support of each chapter, the parent organization would not be able to meet its financial obligations—in which case, both the parent organization and the local chapters would eventually, perhaps after costly litigation, cease to exist. Therefore, the parent STC organization asked each chapter to produce an 18-month budget that identified what it would cost for each chapter to maintain the level of service it has offered in years past. In essence, no new initiatives would be allowed unless those initiatives could be proven profitable. Moreover, any initiative that caused a negative cash flow must be thoroughly reviewed and justified.

Houston completed its budget well within the proposed deadline, thanks to the many hours that our local directors and committee managers dedicated to the effort. However, because a portion of Houston’s revenue comes from member dues, and because the parent STC organization will be keeping those dues entirely, STC Houston is in search of replacement funds.

In past years, the Houston chapter functioned under a $2,000 per year deficit without harm because of generous donations and the hard work of its dedicated members. This year, the loss of membership dues has exacerbated our small annual deficit. But due to our chapter’s resourcefulness, STC Houston is in a position to help our parent organization regain its financial footing. We have the capacity to assist because of a financial cushion that we accumulated by hosting a Houston-based STC conference, which produced a surplus.

The efforts of those who labored to raise those funds from the Houston-based STC conference have not gone unnoticed; in fact, some of the current STC Houston administrative council resisted sending funds to the parent organization because those funds were gained solely through the wit and hard work of the STC Houston chapter volunteers. In the end, however, council members realized that STC Houston, like other chapters, would literally have to close its doors unless it helps sustain the parent organization, through which all chapters are incorporated. Due to the incorporation, all funds held by an STC chapter are, by law, owned by the parent organization. Thus, any chapter not contributing requested funds would not be following corporation guidelines. On the contrary, STC Houston is a supportive chapter with a proven track record of generosity, prudence, courage, and perseverance; therefore, in keeping with that spirit, we have pledged to be magnanimous and fulfill our mission.

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