Finance

Question: Our Club has started to develop a small surplus of funds and we are wondering about a couple of things. How much surplus are we allowed to accumulate? How do we use the funds if they are getting to be too high? Is it appropriate to invest our surplus funds?

Answer: Although Clubs such as ours are supposed to operate on a "break even" basis, it is acceptable to have a "small" surplus at the end of the fiscal year and the generally acceptable level of accumulated funds is one year's normal cost of operation. This is to protect you in the event that your revenue should suddenly cease and you have commitments to meet (i.e. hall rent, etc.) 

If you do find that your revenue is excessive each year, you probably should consider reducing your annual dues for a while and see if the picture improves. Another way is to use the funds to perhaps cover, or subsidize, the cost of a special event (Christmas Luncheon or Dinner) providing that all Members have the opportunity to participate in the event as technically all surplus funds belong to the Membership of the Club.

In regards to investing the surplus funds, the amount is generally not that high but there is nothing to prevent you from putting what you have into a "secure" investment, perhaps with your bank if it meets their criteria (minimum amount). You are not at liberty in put Club funds in an investment which involves risk.

Question: Can you give us some guidelines regarding how long we should keep our records?

Answer: You should keep records of your chartering, your Annual Meetings and Annual Financial Statements for a minimum of seven years (although these are generally kept in perpetuity). Notes on regular events, newsletters, etc. are generally kept for a year or two, unless you keep a historical record of the Clubs activities', in which case they would be part of the historical document...

Probus clubs in Canada are generally unincorporated organizations, except for a very small number that choose to register provincially as non-profit corporations.  

PROBUS Canada, by contrast, is a federally incorporated non-profit organization and has been assigned its own business or registration number.  

From time to time, individual Probus clubs are asked to provide a business number as proof of non-profit status, for example when applying for discounted hall rentals or software subscriptions. This naturally raises the question: can a local club use the PROBUS Canada business number for this purpose?  

The answer is no. Local clubs may not use the PROBUS Canada business number because they are separate entities with their own constitutions and bylaws.  

In practice, clubs can sometimes address this requirement by providing the Social Insurance Number of a designated club representative, often the Treasurer. As another option, a club may decide to undertake the more involved process of registering provincially as a non-profit organization.

The president of one of our clubs asked:

Our club received a Revenue Canada T5 form/document for interest earned on our deposit certificates. We have not previously received this, perhaps due to a smaller amount earned. Do we have instruction on “filing” a return, or how to handle?

Our Financial Manager, Doug Cucheron, answered:

A non profit organization (NPO) is exempt from tax on all or part of its taxable income if it is organized and operated solely for social welfare, civic improvement, pleasure or recreation, or any other purpose except for profit.  Also an NPO, does not have to file a T1044, Non-Profit Organization Information Return if it is a non profit organization as defined above, and if it received less than $10,000 in taxable dividends, interest, rentals, or royalties in a fiscal period. So your club should retain the T5 and carry on, as nothing further needs to be done.