Within the documents of the Society of St. Vincent de Paul, there are found a number of instances where hoarding is prohibited. Please look at the Appendix to this document to see those specific references. Unfortunately, there is no specific place in the SVdP documents where the word hoarding is actually defined. There have been many times over the years that the National Office has been called to give a definition so our members can have a better understanding of the prohibition. The explanation was given a number of times in the Q&A section of the National Council’s Frederic’s e-Gazette. However, it has been deemed appropriate by the National Governance Committee to give a formal definition.
Webster’s New Collegiate Dictionary defines hoarding as “to collect and lay-up, amass and conceal.” The considerations related to hoarding within the Society of St. Vincent de Paul, however, are slightly different when looking at this from a Conference perspective and a Council perspective. We will treat each separately.
A. TYPES OF FUNDING HELD BY CONFERENCES
The first consideration before answering the question “What is Hoarding” is to understand the different types of funds that Conferences may hold.
- General Donations: These funds are received from the parishes, members, benefactors, other SVdP entities, bequests made to a Conference that do not designate a specific purpose, other organizations, and fundraising efforts. There is no specific intent associated with these funds other than the assumption that the funds will be used for the purposes of the Society to better serve those in need. These funds should generally be held in the Conference checking account or other liquid financial accounts. These funds are susceptible to hoarding.
- Donor-designated Funds: These funds are received from a donor (individual or organization) that identifies a specific purpose for the use of those funds. For example, an individual gives a check to a Conference and on the line preceded by the word “for” the donor has specified “utility payments.” Another example is a check from a donor that is accompanied by a note or letter that designates the donation for a particular purpose. If a Conference accepts the check, it accepts the responsibility to track those funds and only use those funds for utility payments. A Conference has a legal obligation to ensure the funds are not used for any other purpose. These funds must be used for the purpose given. When not used for the purpose intended, these funds may also be considered as hoarding.
- Funds from Grants: These funds, for the most part, are similar to Donor-designated Funds. They are usually given for a specific purpose and that purpose must be honored. These funds must be used for the purpose given. When not used for the purpose intended, these funds may also be considered as hoarding. However, sometimes, but rarely, grant funds are issued for general use by a Conference. In this case the funds are treated the same as general donations. These funds are susceptible to hoarding.
- Capital Campaigns/Endowments/Disaster Relief: Capital campaigns are normally established to purchase land, buildings, special equipment, or fund special programs. Endowments may be established to provide special programs or services with ongoing income. Disaster relief funds are normally established to provide relief to people suffering from a recent disaster in the area. The key thing about these funds is that donors contribute to them for their specific purpose. These funds are collected for a specific purpose and can only be used for that purpose. These are treated the same as Donor-designated Funds. These funds must be used for the purpose given. When not used for the purpose intended, these funds may also be considered as hoarding.
- Interest Earned: Sometimes Conferences place their funds in financial instruments that gain interest.
- If the donor requires it, the interest earned on his/her donation must be used for the purpose of the fund for which it was originally designated.
- Otherwise, if the allocation of interest creates an unnecessary burden there is no legal requirement for the interest to be restricted for any purpose and may be used as the Conference determines. It may create an unnecessary burden to try to allocate the interest to specific funds.
All interest that is for general use is susceptible to hoarding. All interest designated and used for a specific purpose is not susceptible to hoarding.
- Conference-designated Funds: There are times when the Conference takes a certain amount out of the general fund and sets it aside for a particular purpose. Those funds will remain in the designated area until the Conference decides to use them for another purpose. These Conference-designated funds may be changed from one purpose to another as often as the Conference decides. An example of this is a Conference budget which designates a specific amount of funds to be spent on maintenance of equipment. The budget designations may be realigned at any time by the Conference. These funds, if originated in the general fund, are susceptible to hoarding.
- Conference Reserve Accounts: A consideration for Conference reserve accounts must be included with the above. There is only one mention in the Manual related to reserves for Conferences and it does not use the word “reserves.”
Donations to Conferences — whether they come from church collections, from the members themselves, from benefactors, or from fundraising efforts — are meant to address today’s needs. It is wrong for a Conference to seek financial security by building up a large balance for the needs of the future. Conference balances should not exceed what they expect to spend during an average quarter. Surplus funds should be shared generously with more needy Conferences or the Special Works of the District Council.
It addresses the fact that donations are “meant to address today’s needs” and that “surplus funds should be shared generously.” This applies to most Conferences. So, unless a Conference has some fixed expenses, there is no need for a reserve account. The “balance for the future” and/or the reserve account, if originated in the general fund, are susceptible to hoarding.
- Special Works Reserve Accounts: Stores and other Special Works that may be operated by a Conference may legitimately have fixed expenses. Although the Manual attributes Stores and Special Works to Councils, the recommendation is to maintain a balance for the future of up to six months of expenses. This balance for the future or Special Works reserve account should be maintained at such a reasonable and necessary level as the Conference or the Board of Directors determines is needed to assure the financial stability of the Special Work. Surplus funds should be shared generously with more needy Conferences or Special Works of the Councils. The “balance for the future” and/or the Special Works reserve account may be susceptible to hoarding.
So, it boils down to two types of funds that are held by the Conference: those that are susceptible to hoarding and those that are not. Those funds that are designated for a particular purpose by the donor must be honored (by law) for that purpose. Our concern in this document is to define hoarding, so let us recap which funds of a Conference are susceptible to hoarding:
- All funds held for general use, typically these are in the checking account, but they may be in other financial instruments;
- Grant funds that are designated for general use;
- Interest earned on funds designated for general use; and
- Conference-designated Funds.
B. REFLECTIONS ON HOARDING RELATED TO CONFERENCES
Members must accept the fact that our donors have given the Conference resources to use to help those in need. The reality is that the funds we have belong to the suffering, the deprived, the forgotten, the poor, and those in need. We are stewards of these resources and are accountable for how they are used. There are two primary considerations about the funds our Conferences receive:
- Are the funds we received designated by the donors for a particular purpose? If so, then it is our obligation both legally and morally as stewards of those resources to ensure they are used for the purposes for which they were given.
- Where there is no specific donor designation, then the funds are to be used to relieve the needs of those who come to us for help (with a reasonable amount dedicated to Society approved Conference expenses).
Hoarding occurs when a Conference decides to keep funds in its financial instrument rather than helping an individual or family that it is capable of helping.
The fact is that once the Conference decides that the request is legitimate and it has the resources to fulfill the request, then deciding to keep the money in the bank is the wrong decision and constitutes hoarding.
As Vincentians, we are asked to love those in need in the best way we can. The only way to do that is to treat each case on its own merit. While establishing general guidelines for assistance has some benefit, Vincentians are called upon to assess each home visit as a unique encounter and should not set predefined limitations on the amount of help to be given or the type of help to be given or the number of times to help someone. To love someone in the best way possible is the keep all of our resources available for our Lord’s use. All of our resources include our hearts, our time, our funds, and other things we use to help people.
C. STEPS TO BE TAKEN WHERE A CONFERENCE HAS ACCUMULATED EXCESS FUNDS
Conferences are encouraged to seriously read the Manual, Section 2.1 Conference, Funds of the Conference: “It is wrong for a Conference to seek financial security by building up a large balance for the needs of the future. Conference balances generally should not exceed what they expect to spend during an average quarter. Surplus funds should be shared generously with more needy Conferences or the Special Works of the District Council.”
A review of fund balances should occur towards the end of each fiscal year with Conference members entering into a discussion and consideration of “twinning” to more needy Conferences within their District and/or Council, to SVdP National programs providing direct assistance, to Disaster Services Corporation, or to some SVdP International Conferences.
Appendix: Hoarding in SVdP Documents
In the Rule, Part I, Article 3.14: Nevertheless, the Society uses money and property to help relieve the suffering of those in need. The Society’s funds must be handled with the utmost care, prudence, and generosity. Money must not be hoarded. Decisions regarding the use of money and property are to be made after reflection in the light of the Gospel and Vincentian principles. Accurate records must be kept of all money received or spent. The Society may not allot funds to other organisations, except occasionally for other branches of the Vincentian Family, save under exceptional circumstances.
In the Rule, Part III, Statute 24: Councils and Conferences zealously manage and maintain the Society’s assets. The authority to manage the Society’s assets remains exclusively with Councils that may delegate this authority in accordance with the Rule of the Society and the Bylaws and Resolutions of the National Council.
Faithful to the spirit of non-accumulation of wealth, the next higher Council may determine annually the percentage of the funds of each Council or Conference within their area that may be made available to them. The next higher Council will work with the Council or Conference to determine an appropriate reserve for unanticipated events and direct the allocation of funds which exceed the anticipated demands, which may not be hoarded as a capital sum, to the service of the poor in their own area or abroad in the poorest areas of the world.
In Manual, under Council funds: Sources of Council funds may include contributions from Conferences, donations, bequests, Special Works, and grants. Like Conferences, Councils act as custodians of funds given to the Society, understanding that they belong, ultimately, to the poor. While some Councils prefer not to accumulate funds, others make a point of setting something aside for exigencies. Operating an active Council with a reasonable bank balance is good business practice, not hoarding. A bank balance equal to the operational cost of the Council for six months may be reasonable. A balance of less than three months’ operational cost may be unhealthy. Councils with inadequate balances should review the budget for ways to increase their income or reduce their expenditures. Councils with overly large balances should find ways to expend their excess funds on behalf of the poor, such as subsidizing active Conferences in poorer areas or planning needed Special Works.
In Manual, under Funds of the Conference: It is wrong for a conference to seek financial security by building up a large balance for the needs of the future. Conference balances generally should not exceed what they expect to spend during an average quarter. Surplus funds should be shared generously with more needy Conferences or the Special Works of the District Council.
In Bylaws, Document 1 for Conferences Without a Board of Directors, Article 16: Conferences and Councils zealously manage and maintain the Society’s assets. The authority to manage the Society’s assets remains exclusively with Councils that may delegate this authority in accordance with the Rule of the Society. Faithful to the spirit of non-accumulation of wealth the Upper Councils may determine annually the percentage of the funds of each Conference within their area that may be made available to them. The Upper Councils will work with the Conference to determine an appropriate reserve for unanticipated events and direct the allocation of funds which exceed the anticipated demands, which may not be hoarded as a capital sum, to the service of the poor in their own area or abroad in the poorest areas of the world.
In the Conference Audit Manual, under Bank Account: Every Conference is required to maintain its bank account(s) separate from the parish and separate from the personal accounts of any of the members. There shall be no co-mingled funds. The funds of the Conference must be in standalone accounts not tied to the parish or any of the members. The only exception to this is when a Conference has an approved reserve account. To avoid any perception of hoarding, the reserve accounts should be approved by the next upper Council. The funds in the reserve may be combined into a shared investment account as long as the Conference has sole access to its funds.
In Resolution 114: Be it resolved that legal issues which involve one Council or one Conference have the potential for affecting the whole Society and therefore if not addressed will lead to the suspension and removal from the Society of the offending Vincentian, Conference or Council if not corrected in a timely fashion. Such legal issues include but are not limited to the following:
- Violation of any state statute, local ordinance, or federal law or any regulations adopted by any state, local government, or federal agency which violation relates to the operation of not-for-profit organizations.
- Failing to conduct an annual audit.
- Failing to file a Federal Form 990 or any required state form.
- Adopting Bylaws that have not been updated to comply with federal requirements
- Giving funds to non-Vincentian organizations or for non-Vincentian activity.
- Failing to submit required annual reports
- Failing to allow women or minorities as Conference members
- Maintaining large balances that do not constitute legitimate reserve for future operations and which constitute hoarding,
- Failing to enact Bylaws that are in compliance with those approved by National Council
- Failing to make home or similar visits in pairs – i.e., allowing only one Vincentian to make such visits
- Having officers who are not active members of the Society
- Limiting assistance to certain groups to the exclusion of others
- Acting in an autonomous manner and as though not answerable to the Society
- Changing Bylaws to permit activity contrary to The Rule of the Society
- Removing members without complying with The Rule of the Society
- Violating confidentiality of those being served
- The failure of National Council Members to attend National meetings
- Raising funds across Council boundaries without permission and without adequate disclosure to the public
- Any other issues having legal implications.
*Part Two dealing with Council considerations will appear next week.