The LNC's financial troubles continue. A new, prudent approach is needed. Only new leadership will bring that. by James Oaksun
(libertarian)
Saturday, January 23, 2010
"What is prudence in the conduct of every private family, can scarcely be a folly in that of a kingdom." (Adam Smith, The Wealth of Nations, 1776.)
Every financial adviser you can name, from Suze Orman to Dave Ramsey to ... well... James Oaksun, recommends to their clients that they build a prudent reserve fund, held in cash or equivalents, for a "rainy day." You never know when you'll have an unexpected expense, medical emergency, temporary job loss or cash flow crunch.
Most experts believe that three months of such a reserve is a bare minimum; six months is more comfortable.
Consider the situation of today's Libertarian Party, however.
At November 30, 2009, the cash balance was $49,000. That would be roughly two weeks' expenses, at the current run rate.
That's right. Two weeks.
But if you don't want to listen to Suze, or Dave ... or even James... consider the words of the Nonprofits Assistance Fund. This is a Minneapolis-based nonprofit whose mission is to build financially healthy nonprofits that foster community vitality. They discuss the need for an operating reserve and discuss the prudent level for that reserve:
An operating reserve is an unrestricted fund balance set aside to stabilize a nonprofit's finances by providing a "rainy day savings account" for unexpected cash flow shortages, expense or losses. These might be caused by delayed payments, unexpected building repairs, or economic conditions.
Reserves should not be used to make up for income shortfalls, unless the organization has a plan to replace the income or reduce expenses in the near-term future. In short, reserves should be used to solve timing problems, not deficit problems.
A commonly used reserve goal is 3-6 months' expenses. At the high end, reserves should not exceed the amount of two years' budget..... Each nonprofit should set its own reserve goal based on its cash flow and expenses. Organizations that have contracts or fees with regular and reliable payments don't need as much in cash reserves as organizations that rely on periodic grants, fundraising events or campaigns, or seasonal activities.
Yikes!
I understand another "urgent" fundraising appeal went out from the LNC leadership recently, suggesting the situation may well be worse as I write this. Further, a friend tells me that the current treasurer is advocating cold call direct mail -- mass mailing to people who are not Party members, and have never given to us before!
Desperation tactics.
In the age of the Internet, anybody who has a clear and attractive message, can raise all the funds they want. Ron Paul proved it. Barack Obama is in the White House because of it.
A strong and clear message, coupled with the donor's confidence that we will use their money wisely, that we are a strong custodian and operate with purpose, is the recipe for success.
How would you score the current leadership on this basis? Do you think their tickets should be punched for another two years? Or is it time for a different and fresh approach?
There needs to be a new treasurer, and new leadership, to put the LNC on sound financial footing. The party must build a prudent reserve first, of what we can, then more as time passes.
A new and revitalized LNC will manage the LNC finances as well as we would expect any family living in freedom to manage their finances. Our donors and partners deserve no less.
Mr. Oaksun is a candidate for LNC Treasurer.
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The views expressed
in this article are those of James Oaksun only and
do not represent the views of Nolan Chart, LLC or its affiliates.
James Oaksun is solely responsible for the contents
of this article and is not an employee or otherwise affiliated
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Good luck to you, James, but why ride a dead horse? Start a new party, go independent, or try something new. The LNC is moribund. I jumped ship long ago and I vote my conscience.
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