As I understand him.

IF (BIG IF) the National handled all of the money for the Chapters, the larger Chapters would be required to send Auditors to the National on a regular basis to keep in compliance with rules and regulations.

That is how I understand the original statement, YMMV.

-Hudson

Then you should know that to conduct the audit you have to examine the books and records and work with the people who processed them. The client can either bring all of that to you or you can go do field work at the clients office; in either case you're talking about a considerable expense for anyone any distance from where the work is done.

Bob H

Bottom line:

There is no imaginable need for individual chapters to engage auditors and dispatch them to the National (especially severally) and even if there was you would engage a local firm, Philly is loaded with them.

The English Language can be so ambiguous as times...

I think the "several days" comment means that they have to hire a CPA to audit the books, that audit process takes several days and thus there is a significant expense.

That raises other issues -- for example a chapter may have a multi-year contract with a firm in their area, some one has to negotiate a new contract with the new firm and then there is the learning curve effect where the firm and the client get used to working together, to say nothing of transition costs or differences in rates.

an nauseum

Bob H

I'm trying to make this as simple as possible but apparently, I'm unable to get through. One last time.

According to their 2011 990 on Guidestar the NRHS reported $545,716 in revenue, which means according to Maryland's Charitable Organization law, (despite being located in Philadelphia, the 990 indicates an MD domicile, they must be audited because they have revenues in excess of 500k

http://www.sos.state.md.us/charity/Instructions.aspx

Now Part Vi, Section C says the must file the 990 with PA, and Pennsylvania's audit requirement is lower -$300,000.

http://www.portal.state.pa.us/portal/se ... ons/571847

Even if they drop below those thresholds, they will stil be required to have a review, which is an engagement that provides more limited assurance about the financial statements. More limited does not mean deficient, and banks will often accept reviews of the financial statements of small businesses, because the cost is significantly less.

In short they are already required to be audited by law. As pointed out by another poster, the NRHS and Chapters are different organizations. Even if the National held custodial funds-they don't, and there was no legal requirement, the chapter could engage a firm for an "agreed upon procedures" engagement to provide assurance that the moneys were held in appropriate vehicles, titled appropriately, secure, and unimpaired.

Under the present relationship, or any possible future one, there's no imaginable need for individual chapters to engage an auditor to travel to HQ. Even if PA eliminated the requirements (the threshold was raised in 2006) to conform with other states such as Oregon:

http://www.councilofnonprofits.org/nonp ... quirements

The expense could be minimized by using a local firm or by collaborating.

Part IX, Line 11 indicates that about 12K was expended on "accounting", and we can assume audit fees are less, since they engaged a Mechanicsburg PA firm for tax preparation. Even if the tax prep fees are minimal, splitting 12k among a couple hundred chapters means this is not an issue.

The real question is what are they getting from Fernley & Ferney (a management advisory firm) for 162K.

NRHS is a Md corporation and if they don't file with them every year, they lose their status as a corporation. They also have to file with Pa.

As I previously stated, NRHS uses it's audit report to establish CFC eligibility and for other purposes.

Bob H

Fantastic! What does that have to do with your original assertion?

There is another railroad heritage organization that disgruntled persons with railroad interests should check out. The Railroad Heritage Alliance, Inc. began operations in January 2012, and after a very successful first year, continues to grow and prosper in 2013. The website is www.railroadheritagealliance.org.
RHA is a 501(c)(3) organization entirely managed by volunteers. Very reasonable dues of $15 per year for individuals and $20 for a family membership make this a very affordable group to join. Youth memberships are offered at $5 per year and the rate for seniors (age 72+) is only $10.

RHA is able to offer these rates thanks to volunteer services, and distribution of information is via electronic media. Newsletters are sent via email and annual reports are on CDs. Most business is transacted via the internet with the exception of quarterly board meetings.

The goal of the founding directors was to create a railroad heritage group with the focus being on members and the local membership groups. RHA's purpose is to coordinate the efforts of the local groups, including program sharing, promoting local excursions and other special events. Several smaller groups combine their efforts and enjoy bigger and better activities. This approach was very successful during 2012 with many combined group events and 2013 continues that trend.

The RHA quarterly newsletter focuses on recent activities, a schedule of coming events, and feature articles on restoration projects completed by local groups. The first issue was dedicated to publishing the RHA bylaws and a brief description of the organization. The second quarter 2012 issue introduced the initial officers. If you would like to receive copies of these issues plus the current June 2013 issue, please send your request to the address below.

In addition to the quarterly newsletter, RHA has a network to send out special email bulletins as soon as RHA learns of important items of interest. This has been a very valuable service and greatly appreciated by our members.

RHA does not like to hear reports of persons just walking away from the hobby of railroad history and preservation. RHA is currently offering a special for all persons joining now. For the remainder of 2013, all applications received will have an expiration date of December 31, 2014. Application forms are available on the RHA website.

The annual membership meeting will be in Spartanburg, SC on Saturday, September 21, 2013. More information will be available soon.

Thank you for considering the Railroad Heritage Alliance, Inc.

Lester Collins, President
Railroad Heritage Alliance

lestcoll@bellsouth.net

I knew.
They may not even need to be a corporate entity, depending on their activity level .


Anytime you see the words "lawyers" and "big bucks" in a sentence, it means you're dealing with a naysayer.

Obviously that's not true. First, I didn't say that National should handle the money for the chapters. Second, even if it did, you claim you need lawyers to "co-mingle" money from two separate organizations, oh, good grief.

I wanted to take donations, *snaps fingers* Amazon. Done.
I wanted to take Visa/MC for sales at remote locations, *snaps fingers* Square.
I wanted a ticketing contractor who would handle everything soup to nuts... BrownPaper, done! Ticketriver, Eventbrite, eTix, or if you run a lot of trains, Vendini, Whistletix, etc.
OH MY GOD, WE ARE CO-MINGLING FUNDS WITHOUT A LAWYER! Please. These types of relationships are totally routine.


I wasn't even thinking of that, but hey, you went there. Obviously it isn't even stupid to have corporate NRHS cut checks for chapters. But cutting the checks is the easy part and the chapters already do it. The hard part is all the other stuff that's connected with cutting a check - from the accounting to simply confirming that the invoice matches the P.O. and the product was received. That lends itself to automation, e.g. a Kashoo type service, or the shopman goes into his smartphone app and snaps a picture of the shipper and product, and taps "received in good order" which then releases that invoice to be paid.

Mind you, NRHS wouldn't even have to brew this technology themselves, they could simply contract it for chapters. Why roll your own ticketing system when you can just do a volume deal with Vendini or somebody?

There have been a number of good comments on this discussion, but some who are not active in the organization probably don't know the history of some of the ways NRHS operates. Some of these are being changed, but it is a hard process. For example, members can renew their membership through the NRHS website, but many chapters have refused to cooperate and want all renewals to go through them. The suggestion to send news and other items via e-mail has also been looked at, but again many chapters have refused to cooperate by forwarding the e-mail addresses of their members. The NRHS does have an e-mail signup that members can join, and it is used for a number of items.

There was recently a situation where several chapter newsletter editors included information passed on from another chapter. The person who originally wrote the article had not attended the meeting that he was reporting on and there were certain pieces of information that were very incorrect. When the editors were contacted, they refused to make the corrections or to pass on the contact info for their members so updates and corrections could be made. Almost since it was created, the NRHS has been made up of a large number of little fiefdoms - similar to the efficiencies of other similar organizations (say for example the United Nations) - where there are many goals and objects which often conflict when you get to the national level.

There have been changes lately, like allowing on-line registration for the conventions (95%+ did it this way the last two years), mailing convention tickets when asked for (85% in 2012, 75% for 2013), allowing non-members to attend a convention by joining when they register, posting information immediately on Facebook and the NRHS website, and a number of other improvements. However, many of the more senior members in positions of power have fought these changes, saying that no one wanted them. There were hours of protest over mailing convention tickets instead of making people show up at the hotel for a long line, and selling tickets online almost made some people's heads explode. As with almost every established group, the senior members in position of power are generally comfortable with the way things are and are just as happy if people who want to change or improve the system would just go away.

Many years ago, I moved to a new town and was invited to a local NRHS meeting. I was introduced to several of the senior members as a past president of another chapter and as someone who had worked in the railroad business. I was immediately told that there probably wasn't anything I could do for the chapter and I probably should go elsewhere. The same several folks had run the chapter for twenty years and they didn't want to loose that power. When they died, there was no one left to keep it running. This simple story may explain many of the problems that the NRHS national organization has, and many other organizations losing members and chapters.

Finally, about dues. I am a member of several professional organizations in and out of the railroad business, and none of them have a membership cost of less than $200, and their conventions normally start at about $2000, so the NRHS is still a bargain if you actively participate and use their resources.

Your post raised many really valid things, which I largely agree with.

But I must point out one important difference: professional organizations are typically for ones commercial interests. The NRHS, for most members, I would argue is a recreational pursuit, and must therefore be priced like other entertainment options.

The issue of recreational versus professional costs is a real issue, especially with the economy the way it has been for the past half decade. However, the issue of whether $50 is too much (plus a chapter dues if you belong to one) gets back to what benefits a person is looking for and what benefits they use. I am sitting here next to the lake watching people buzz around, and they are certainly spending more than $50 for a few hours on the water. Many people will spend thousands of dollars on a vacation. So what people need to do is sit down and see what benefit they get from their investment. The NRHS is certainly not for everybody, and I know of no organization that is. Hey, I'm a member of a railroad historical group with less than 100 members, so that is a real issue.

One of the reasons that NRHS has suffered some financial setbacks as of late is a demand for more and more services while fewer and fewer people will reliably do the work. For example, there were several comments about mailings coming over several days. In most cases, that came about because someone volunteered to do the work but didn't get it done in time to merge with another mailing. While savings are possible, moving more and more of these functions to a professional staff is not a simple answer, and probably will not result in a financial break even situation. Additionally, not all of the leaders of NRHS over the years have business or management backgrounds, and their decisions made many years ago are still impacting what is going on today. For example, until fairly recently, the finances of the organization were kept in simple bank accounts because some on the board didn't understand investments.

A final issue is whether many of the railroad groups (not just the NRHS, but many others are suffering as people join less and share publicly via the web) are going to stay as volunteer groups led by a small core of individuals who do it their way, or will the groups become more of a professional organization. Groups such as Railroad Passenger Car Alliance (RPCA) and the Association of Tourist Railroads and Railway Museums (ATRRM) started as more social groups to share information, but have recently focused heavily on legal issues and regulatory compliance. Since they provide clear benefits, training, etc., their memberships have remained strong even with relatively high membership dues. NRHS has traditionally been a group of just a few thousand members (at least until the Southern steam days) and it will be seen if that is a more appropriate size, much like the Railway and Locomotive Historical Society (RLHS) and a few of the other larger rail enthusiast groups are.

As I sit here thousands of miles away from home and in an area where things are done quite differently from where I come from, I'm reminded of the story a member of my own Chapter told me about how he was a member of another chapter, and walked out and never returned the night that the members of that chapter got into a 45-minute argument over the color of the jackets the crew members were going to wear as onboard crew on a mainline steam excursion...........

Folks, balderdash such as whether who does what audits of the treasury, what order the meeting is run in, etc. is simply getting lost in what key the damn violin is in while Rome is burning.

And it is balderdash and minutiae like that which keeps new folks from joining, new chapters from forming, etc. I've been too close to bolting too many times over that stuff.

What I don't understand is why there is a need for more than one national non-professional organization for rail history preservationists and railfans. And now, what real need is there for a national organization if the leaders cannot do anything to benefit the individual members or chapters? There is no need at all, unless the National can play an important part in rail preservation on a national level.