Saturday, September 22, 2018
Home » Editorials » Know your budget

Know your budget

There was one major lesson I learned from a successful local businessman before he stepped down from the non-profit board on which we both serve: Know your budget.
This person understood that it’s easy for board members, particularly volunteers, to fall into the trap of approving budgets that they don’t fully understand. He realized that it’s painless to let the executive director or financial director present numbers and trust that those numbers are accurate.
In most cases, board members can get away with it because the numbers are good and things are kept running smoothly. But no one is perfect and mistakes can be made. Board members must be patient, smart, and willing to dig deeper into the balance sheet and ask the hard questions.
It’s incredibly important to do so because every organization’s mission relies on a strong financial footing. In fact, I’d argue that fiduciary responsibility is the most important duty of board members. And when an organization’s finances start to crumble, it’s the board members who are responsible.
This week, we learned that Mountain Express, which provides a free shuttle service between Crested Butte and Mt. Crested Butte and to various condominiums, is in financial trouble. While the organization’s budget will balance, it’s suffering from a severe cash flow problem after it used reserve funds to purchase a new bus barn.
What appears to have occurred is that neither the organization’s board nor its director fully understood what was happening with its budget until it was too late. With late payments pending from government sources, Mountain Express was forced to go to the town of Crested Butte to bail it out this winter in order to pay its bus drivers.
I don’t think any one person is at fault in this situation or that it was done maliciously. In fact, the board has several new members due to two recent Town Council elections in Crested Butte and Mt. Crested Butte. However, this doesn’t excuse fiscal haphazardness.
As everyone connected with Mountain Express already knows, this service is an integral part of Crested Butte’s tourism economy—it’s an amenity that both local residents and visitors have come to rely on. It’s alarming that local residents are the ones who may suffer if the organization is forced to cut back service or employee benefits.
Mountain Express has now appointed a board subcommittee to look at solutions to its financial issues. This needs to be done quickly, and if the subcommittee doesn’t have expertise to resolve the situation, a task force of local experts must be assembled.
If nothing else, this situation should serve as a wake-up call to all boards to understand their organization’s financial situation–particularly in more austere financial times. “Know your budget” has never felt more serious.
—Aleesha Towns

Check Also

Ahhhh … September

When we have asked the question, “What is your favorite month?” the two overwhelming favorites …