Executive Director View from HQ
"An ounce of prevention is worth a pound of cure."
Protecting the Assets of AMA Chartered Clubs and Special Interest Groups
One of the advantages afforded a club or chapter associated with the Academy of Model Aeronautics is the insurance protection. The major portion of this protection is directed toward liability concerns primarily arising from incidents associated with flying activities.
There are, however, other areas of concern that each of these groups, along with Special Interest Groups (SIGs), should address, whether they are incorporated, have officers, or written bylaws.
While some clubs, chapters, or Special Interest Groups do not maintain large balances in their treasuries, others do. This may be the result of flying site development, acquisition funds, or monies which are to be dispersed later for community projects or major events. The protection of those funds is very important! The group should consider the following operational and insurance protection procedures:
- That the checking and/or savings accounts be established in the name of the group.
- That more than one officer's or director's name be on the account and/or more than one signature be required on checks written, especially those exceeding a specific dollar amount.
- That the treasurer be required to provide regular financial reports, at least quarterly.
- That the group maintain an accurate, up-to-date inventory of assets, including equipment.
- That the individual or individuals responsible for the financial assets be covered by insurance, referred to as Fidelity Bonding.
- That the bank account must be reconciled by someone who does not have check-signing authority.
Items one and two may prove difficult to achieve with some financial institutions. The institution may require that the group apply for a tax identification number from the Internal Revenue Service (an Employer Identification Number, or EIN). This will result in the need to file a yearly federal return.
In most cases, the group's account can be established using one of the officer's Social Security numbers; that individual becomes the party responsible for the account.
Item five can be accomplished through a special type of insurance called Fidelity Bonding. By contacting a local insurance agent, you can obtain the rates and conditions applicable in your area.
In general, bonding one or more individuals provides protection in the event an officer misappropriates funds by repaying the funds in part or in full, according to the terms of the agreement. At the present time, fidelity bond rates are fairly reasonable. For instance, $25,000 of protection can be obtained for $100–$200 a year.
An additional item a group may wish to consider is referred to as "Directors & Officers (D&O)" insurance. This is specifically designed to protect the directors and officers of the group against claims or suits resulting from officers' decisions regarding club policy, discrimination, site use, and environmental issues.
These kinds of claims or suits are not covered by the AMA member/club liability policy that covers bodily injury or property damage.
Smaller groups with limited financial assets may consider these points unimportant or unnecessary; however, it should be noted that even a small amount of missing funds might create a significant hardship for the group.
Additionally, it may be thought that people with authority who engage in fraudulent or dishonest acts, or who misuse or abscond with the funds of an organization, are rare occurrences. Unfortunately, such is not the case in today's world.
Each club, chapter, and Special Interest Group is encouraged to carefully study its needs and operational procedures in these areas. The old adage, "An ounce of prevention is worth a pound of cure," is most appropriate in these matters!
Happy flying,
Joyce Hager Executive Director jhager@modelaircraft.org
Transcribed from original scans by AI. Minor OCR errors may remain.
