American Library Association operational practices

Prepared by:

Malore Brown, ALSC
Mary Ellen Davis, ACRL
Greg Calloway, Finance
Jennifer Tam, Finance
Sherri Vanyek, ITTS

Reviewed by:

ALA Division Executive Directors
ALA Management Group
Date: March 9, 2004

Inventory list

1. Divisions with Small Revenue Bases/Number of Members
2. Overhead on Multi-Year Projects
3. Processing Fee for Separately-Ticketed Events
4. Division Fund Balance/Reserves and Budgetary Ceiling
5. Definition of Internal and External Overhead
6. Setting ALA Overhead Fees for Divisions
7. Subscription and Order Billing Services
8. Furniture and Equipment
9. Equipment at Midwinter and Annual Conferences
10. Reprographic Services
11. Distribution and Mail Services
12. Data Processing
13. Telecommunications Services
14. Unrelated Business Income Tax (Periodical Advertising)
15. Division Endowments
16. ALA operating procedures for transfers and withdrawals between division fund balances and the long term investment fund
17. Non-ALA Royalties
18. Bank Fees on Credit Card Transactions

Divisions with small revenue bases/number of members

Practice Number: 1
10/22/91

Policy

Section V. H. of ALA Policy 6.4.1:

"ALA Council has assigned specific responsibilities to Divisions. To carry out these responsibilities, each Division requires a base of operating revenue. ALA recognizes that each Division must have staff and must provide basic services to its members as defined in Section III. When a Division's current revenue from dues and other sources excluded from overhead is not sufficient, ALA recognizes its obligation to provide supplemental financial support up to a maximum of 50% of the funding required. This support would be provided only as a result of a well-planned process that is an integral part of the annual budget process that includes review by COPES and approval by the Executive Board. This type of support would not be available to a division, which, at the end of a fiscal year, happened to find itself in a deficit position.

"Annually COPES and the Executive Board will determine and approve the specific amount of funding required to provide a minimum level of staff and basic services, compare this amount to the Division's estimated revenue, and allocate an appropriate General Fund supplement.

"Divisions must generate from dues and other revenue excluded from overhead at least 50% of the funding required to provide basic services. If a division is unable to meet this 50% level for two consecutive years, its status as a division must be referred to Council by the Executive Board, with an appropriate recommendation. Money from the General Fund will not be used to offset expenses for non-dues revenuegenerative products and services. Divisions may retain the net revenue from these activities to initiate and support other similar activities in the future.”

Practice and responsible parties

Recognizing the diversity of staffing patterns and programs among divisions, the Associate Executive Director for Programs, in consultation with the president (or authorized designee) and the executive director of each affected division, will prepare annually a specific recommendation for providing a minimum level of staff and basic services for that division. This recommendation will use as a benchmark for each division its current year budget, with allowance for inflationary factors and the average salary increase set by the Executive Board. Staff will prepare a justification for any significant changes from the previous year's budget.

These recommendations will be submitted to the ALA Executive Director for approval and transmittal to COPES and to the division prior to each Midwinter Meeting. They will form the basis for each division to use in developing its proposed budget.

On receipt of the proposed budget, COPES will review it and submit its recommendations to the ALA Executive Board. Among the recommendations will be the maximum amount to be provided from the ALA General Fund to make up the difference between (1) the costs of providing a minimum level of staff and basic services, and (2) the division's dues and other revenue not subject to overhead. The Executive Board will act during its Spring Meeting on the specific recommendation from COPES for this allocation from the General Fund. The amount of the budget allocation request for each affected division, approved by the ALA Executive Board at its spring meeting, will serve as the "cap" or maximum amount that may be transferred from the General Fund to each division at the end of the fiscal year.

Small divisions are permitted to maintain reserves that are equal to no more than 50% of the amount required to support their basic services. If at the beginning of the fiscal year in which the budget for the next fiscal year is being prepared the division's reserve exceeds 50% of the amount required to support their basic services, the General Fund budget allocation request will be reduced by the amount by which the reserve exceeds that 50%. For example, if a division's reserve at the beginning of FY92 is $50,000 and the estimated cost of providing basic services in FY93 is $90,000, the General Fund allocation would be reduced by $5,000. One half of the cost of providing basic services would be $45,000; therefore, the small division would be expected to reduce its reserve by $5,000 and commit this amount to providing basic services.

The actual amount of the allocation provided to each division will be determined during the closing of the books for the fiscal year. In calculating the actual General Fund allocation for small divisions, the total expenses for basic services will be subtracted from the total revenues received from dues, royalties, donations, and other "basic" revenues. The allocation will reflect the difference between these two figures. However, the allocation cannot exceed the amount approved during the budgeting process. If the difference between revenues and expenses is less than anticipated, the actual allocation will be reduced accordingly.

Divisions receiving allocations from ALA may solicit and receive donations to establish or add to endowments, consistent with ALA policies and subject to the approval of their own boards. These divisions may not use their reserves to establish or add to endowments. (Operational Practice 6.16, Division Endowments) A report of the ALA Executive Board's action
will be transmitted to the division prior to the Annual Conference. A calculation of the actual division shortfall will be made twice a year and a transfer will be made from the General Fund into the divisions' accounts.

Background

The philosophy underlying the establishment of this practice is contained in the first paragraph of Policy 6.4.1, contained above. In the first year of implementation, a general benchmark was established and used to set the budgets for the three divisions affected, but -- because of the differences among them -- the actual budgets for each differed somewhat. Rather than build into the practice a set of dollar figures that would need constant updating, the benchmark suggested is the current year's budget. Only inflationary increases, including the annual salary merit increase average, will affect the basic service cost.

Prepared by:

Susan Horiuchi, YASD
Sharon Jordan, ALTA
Ann Carlson Weeks, AASL/YASD
Andrew M. Hansen, RASD/ASCLA

Revised, October 16, 1991 by:

JoAn S. Segal, Associate Executive Director,
Programs
Andrew M. Hansen, RASD/ASCLA
Ann C. Weeks, AASL/YASD

Revision reviewed by:

Roger Parent, Deputy Executive Director
October 22, 1991

Overhead on multi-year projects

Practice Number: 2
12/05/89

Policy

Section V.C.2.b of ALA Policy-6.4.1:

ALA charges divisions for the actual cost of the following services of ALA departments:

Fiscal services

• Overhead on non-dues revenuegenerating activities. The rate will be set annually according o an ALA Operational Practice and will be assessed as explained below on non-dues revenue at a composite rate.
• Overhead will be assessed at 100% of the ALA composite rate (at the end of a 4-year phase-in period, beginning in 1991 and ending in 1994) in revenue from:
  • registration fees
  • exhibit space rental
  • meal functions, except for separatelyticketed events (The schedule for phase-in of the ALA composite overhead rate on revenues is: 50% of the ALA composite rate in 1991 and 1992)
  • 75% of the ALA composite rate in 1993
  • 100% of the ALA composite rate in 1994)
• Overhead will be assessed at 50% of the ALA composite rate (at the end of a 5-year phase-in period, beginning in 1991 and ending in 1995, in equal annual increments) on revenue from:
  • net sales of materials
  • subscriptions
  • advertising except in those publications which are provided to division members as a prerequisite of membership
  • other miscellaneous fees

Practice and responsible parties

Financial Services will assess overhead on the appropriate revenues of multi-year projects at the end of the fiscal year in which the event actually took place. Division multi-year budgets for such projects will count overhead as an expense for the fiscal year in which the event takes place.

Background

Past policy at ALA has been to assess overhead against designated expenses at the end of the fiscal year in which those expenses were incurred. The new Operating Agreement specifies that overhead is to be assessed against designated revenues. Under accrual accounting, revenues are not recorded until the month of the event. Therefore overhead cannot be assessed until this time. Therefore overhead will be assessed at the fiscal year for projects or events held during fiscal year.

It is realized that up front expenses to support units of ALA are incurred at varying times throughout multi year projects as real costs. It is also realized that ALA has use of up front revenues to strengthen its cash flow position. Assessing overhead in the fiscal year a project is held reflects this exchange of benefits as well as being good accounting practice.

Prepared by:

Joey Rodger, PLA
Greg Calloway, FS

Reviewed by:

Division Executive Directors
Roger Parent
Jerry Cohen
Linda Crismond

Processing Fee for Separately-Ticketed Events

Practice Number: 3
12/05/89

Policy

Section V.C.2.b of ALA Policy 6.4.1:
"Overhead will be assessed at 100% of the ALA composite rate (at the end of a 4 year phase-in period, beginning in 1991 and ending in 1994) in revenue from:

• registration fees
• exhibit space rental
• meal functions, except for separately-ticketed events . . .

Overhead will not be assessed on revenue from:

• dues
• donations
• interest income
• ALA royalties to Divisions
• travel expense reimbursements from outside organizations
• separately-ticketed events at conferences, (e.g., tours and meal functions)
• advertising in those publications which are provided to Division members as a perquisite of membership"

Practice and responsible parties

Divisions will pay a handling charge per ticket on separately-ticketed events in order to help recover the processing costs incurred by financial services. Financial services in consultation with divisions will determine annually the processing charge per ticket based on transaction costs. To determine this rate, all the costs associated with the accounts receivable clerks will be totaled and divided by the total number of checks processed. The result will be the cost per ticket. This information will be included in the budget instructions.

Division prepare the publicity; work with catering services to negotiate meals and contracts; handle inquiries and questions; keep records on customers; prepare transmittals which include copies of checks and adding machine tapes for batches as well as assigning proper budget numbers; prepare tickets; some division assign seating and mail tickets to customers; pay for xeroxing and postage for event; track customers and tickets assigned to individuals; prepare bills for payment; and prepare and monitor the budgets in order to make the events break even. Reports will be sent to financial services informing them of the number of tickets sold.

Financial services is responsible for auditing the transmittals; posting revenues and expenses to the appropriate project; generating vouchers for and payment of expenses associated with the event; generating monthly performance reports for the event; and on very rare occasions upon receiving ticket requests with conference registration sill send them on to divisions for handling.

Background

Divisions are responsible for separately-ticketed events. Financial services needs to recover the processing cost involved in separatelyticketed events since this is not included as a basic service. The rationale for using a standard handling charge instead of a percentage is that the costs involved in processing revenues for separately-ticketed events are the same whether the ticket costs $5.00 or $50.00. Since many tickets are ordered per table or in groups, the per ticket fee will more than adequately cover financial services processing costs.

Prepared by:

Susan Roman, ALSC
Ann Weeks, AASL/YASD
Sharon Jordan, ALTA
Dave Booz, FS

Reviewed by:

Roger Parent
Greg Calloway, FS
Jerry Cohen, FS
Mary Ellen Davis, ACRL
Andrew Hansen, RASD/ASCLA
Linda Knutson, LITA
Karen Muller, ALCTS/LAMA
Eleanor Jo Rodger, PLA
JoAn Segal, ACRL
12/5/89

Division fund balance/reserves and budgetary ceiling

Practice Number: 4
4/28/91

Policy

ALA Bylaws Article IX, Section 1:

Except for projects supported by grants to the Association, annual estimates of income shall be based upon the unexpended
balance remaining from the previous year plus anticipated revenues for the next budget year. In no case may expenditures be budgeted in excess of the estimates of income arrived at in this manner except for projects supported by grants to the Association.

Section V. D. of ALA Policy 6.4.1:

ALA Division build and maintain fund balances appropriate to their needs. A fund balance is defined as accumulated net
revenue.

Section VIII of ALA Policy 6.4.1:

Divisions may conduct pre-conferences, workshops, institutes, seminars and division national conferences, in accordance with ALA Policy, at intervals determined by division program priorities and supported by sound financial management. A division is responsible for all costs incurred in planning and carrying out such activities.

Practice and responsible parties

At the end of every fiscal year, each division will maintain a positive reserve on the accrual basis of accounting, including the practice of recognizing all expenses at the time they are incurred, but recognizing income only when it is earned.

Division reserves are composed of two elements:

• the accumulated net revenues from prior fiscal years and
• those sums remaining in a budget account at the end of a fiscal year after all revenues are received and expenditures paid.

Reserves may be carried forward from one year to another. Endowment principal is not used in calculating reserves.

Background

Reserves

Division Boards and Division Staff manage their division reserves appropriate to their needs and long-term plans, subject to review by the Executive Director and COPES and approval of the annual budget by the ALA Executive Board. Reserves may be used by divisions to fund special projects, to enhance or expand division programs, to pursue other divisional activities, or to offset net losses from a year in which expenses exceed revenues. The excess of expenses may be due to an actual shortfall of revenues or a decision to fund special projects and programs. Expenses for additional staff positions should be supported from reserves only on a short-term basis; positions should be self-supporting within a reasonable time frame.

Division reserves may fluctuate over time as division leaders seek to:

• maintain appropriate balance between support for existing programs and expansion of services and programs
• maintain an appropriate balance in program between "basic" activities and those that are revenue generating.

Divisions are encouraged to develop financial policies specifying the desired level of their reserves. Reserves contribute to both division and ALA financial stability. Divisions will develop 3-5 year projections of key revenue sources, objects of expense, and personnel and space requirements. For those divisions that do not have an adequate reserve, these projections will incorporate such financial planning goals as annual 1-2% net excess of revenue over expenses in order to build the desired reserve. A minimum two-month operating reserve is desirable.

Implications

Requiring a positive reserve balance at the end of a fiscal year means that any division wishing to hold a major event, such as a national conference, early in a fiscal year, especially in the first weeks, must maintain in reserve an amount much greater than if the event were held later in the fiscal year.

Prepared by:

JoAn S. Segal, AED, Programs
April 28, 1991

Definition of internal and external overhead

Practice Number: 5
12/12/89

Overhead:

1. Internal: that overhead rate applied to units of ALA, e.g., the annual overhead rate paid by divisions for revenue-generating activities identified in this policy document.
2. External: that overhead rate applied for the purposes of external reporting, e.g., grants and taxes.

Prepared by:

Dave Booz, Controller
Linda Knutson, LITA

Reviewed by:

Division Executive Directors
Roger H. Parent

Setting ALA overhead fees for divisions

Practice Number: 6
12/11/89

Policy

Section V.C.2.b. of ALA Policy 6.4.1:

"ALA charges divisions for the actual costs of the following services of ALA departments: Fiscal Services. ...overhead on non-dues revenuegenerating activities. The rate will be set annually according to an ALA Operating Practice and will be assessed as explained below on non-dues revenue at a composite rate."

Practice and responsible parties

ALA will conduct an indirect cost study annually and actual indirect cost rates will be calculated for all units. Indirect cost rates of all General Funds revenue generating units (Graphics, Conference Arrangements, and Publishing Services) will then be dollar-weighted averaged to create an ALA composite indirect cost rate.

Specific assessment of overhead on various division activities is clearly spelled out in the Operating Agreement.

Background

For budgeting purposes, the prior year rate will be used as a tentative figure in preparing the preliminary division budgets. The annual Indirect Cost Study will be carried out in time for the calculation of the composite indirect cost rate to be complete and a firm rate will be available for approval by the COPES at their Spring meeting. The approved rate will thus be available to division staffs in time to prepare the final budgets for the approval of their boards at Annual Conference. (see accompanying chart)

Prepared by:

JoAn S. Segal, ACRL Roger Parent

Reviewed by:

Division Executive Directors
J. Cohen, Financial Services
G. Calloway, Financial Services
December 11, 1989

Subscription and Order Billing Services

Practice Number: 7

Policy

Section V.C.2.c. of ALA Policy 6.4.1:

"ALA charges divisions for the actual costs of ...Subscription and order billing services."

Practice and responsible parties

ALA Publishing Services will assess units for the actual costs of the order billing, subscription and customer services provided to them. Units will provide for these service charges when setting prices for their publications.

Subscriptions and customer service

Transaction cost per subscription. A per subscription transaction rate will be established annually that will cover both subscriptions services and customer service. This rate will be set using subscriber figures for the previous year and projected costs for the next year. To determine this rate all costs associated with subscription services and customer service will be totaled and divided by the total number of subscriptions. The result will be the cost per subscription.

This transaction cost will be added to the GLOBAL system so that as each subscription is processed the appropriate charge will also be levied against the associated general ledger account. This charge would be reported to divisions monthly in separate reports prepared by ALA's Order Billing Dept.

The transaction rate for the coming fiscal year will be provided to units by November 1 to assist units in the budgeting process.

Illustration. In FY 1991 ALA's Order Billing Department projects $168,000 in expenses and had 56,000 subscribers in FY 1989. Using this method the transaction cost per subscription is $3.00.

Order Billing & Customer Service.

Transaction cost per order. Establish a per order rate annually that would cover both order billing and customer service charges for publications. This rate will be set using order figures for the previous year and projected costs for the next year. Total all costs associated with order billing and customer service and divide by the total number of orders received to establish a transaction cost/per order.

This transaction cost will be added to the GLOBAL system so that as each order is processed the appropriate charge will also be levied against the associated general ledger account. This charge will be reported to the divisions monthly in separate reports prepared by the Order Billing Dept.

Note: Mixed Orders. Units involved in mixed orders, (i.e., orders requesting items from more than one unit) will each be assessed a transaction charge. For example, if one customer orders items from ACRL, ALCTS, and ALA on the same invoice this would generate three separate transaction charges; one for each of the three units
involved. This is due to the necessity of posting each of these orders
to different general ledger accounts.

The transaction rate for the coming fiscal year should be provided to units by November 1 to assist units in the budgeting process.

Illustration. In FY 1991 ALA's Order Billing Department projects $232,000 in expenses to process 103,337 orders. Using this method the cost per order is $2.25.

Warehousing/fulfillment

ALA Publishing Services is paying 5% of net sales to an outside warehouse, Longmen Distribution, to store, pick, pack, ship, supply, and count our publications. Divisions using Longmen Distribution will be assessed 5% of their net sales to pay for this service. This fee will be assessed at the end of the fiscal year and will be based on actual net revenues for that fiscal year. Divisions should budget appropriately to prepare for this charge.

Background

Divisions use the Order billing system to process publication orders (including preparing a packing slip and an invoice) and to prepare a variety of other invoices, such as invoices to advertisers and exhibitors.

ALA Publishing Services needs to recover the total costs of its order billing operation and this method of charging divisions for their actual use of the system will begin to distribute the costs of the system among its various users. A standard transaction charge per order was selected as the method to recommend rather than a percentage of the item billed because the costs involved in processing an order/invoice are the same whether the book or invoice is for $5.00 or $1,000.

ALA's Order Billing Department will begin to separate each division's use of the system into the requested general ledger numbers so that the appropriate projects within the divisions pay their share of the costs. The computer programming necessary to do this will begin in November 1989.

Prepared by:

Mary Ellen Davis, ACRL Program Officer
Eileen Mahoney, Director, Order Billing & Subscriptions
Bob Hershman, Operations Manager, Customer Service

Reviewed by:

Roger Parent; Greg Calloway, FS; Jerry Cohen, FS; Susan Roman, ALSC; Sharon Jordan, ALTA; Linda Knutson, LITA; Andrew Hansen, RASD, ASCLA; Karen Muller, ALCTS, LAMA; Eleanor Jo Rodger, PLA; Edgar McLarin, PS

Services provided for order billing/customer service transaction charge.

(Adapted from 1/87 lists prepared by Publishing Services)

1. Receives and opens all publications orders (from interoffice & regular mail, phone, fax, ALANET.)
2. Enters and maintains all publication records (including g/l number, isbn number, inventory, unit cost, actual cost, sales units, sales dollars)
3. Enters and maintains all customer records.
4. Sorts mixed orders for all units of ALA (including free items).
5. Disburses shipping tickets to each unit or forwards to Longmen Distribution as appropriate.
6. Maintains all accounts receivables, sales, and credit records for the auditors and accounting department.
7. Applies payments and processes prepaid orders from all cash customers.
8. Produces statements and sends to delinquent accounts for all ALA products.
9. Accepts returns and processes credit memos.
10. Prepares sales and inventory reports for month-to-date, year-to-date data.
11. Provides written acknowledgement to customer for all approval plan orders for units and send report to unit.
12. Works with units to prepare special reports as needed.
13. Balances inventory after each ALA store.
14. Prepares ledger adjustments so all revenues earned are properly credited to the correct unit.
15. Reconciles accounts receivables with accounting on a monthly basis.
16. Bill back issues of journals.
17. Prepares royalty statements to pay units their share through ledger entries.
18. Works with units to establish marketing codes for special promotional efforts, keys information into GLOBAL system per order received, and provides monthly reports of sales by promotion.
19. Supplies all invoices, credit memos, statement, royalty, envelopes, and return forms stock.
20. Mails all the documents and pays all postage and handling.
21. Maintains a trained staff of customer service operators and familiarizes them with unit publications to maximize customer service.
22. Provides customer mailing labels to unit upon request.
23. Provides inventory adjustments and cost of goods sold to each unit.

Services provided for subscriptions/customer service charge.

1. Establishes and maintains a complete, current subscriber record for two years.
2. Invoices all subscriptions.
3. Send two renewal notices for all subscribers not affiliated with an agency.
4. Handles all subscriber inquiries (phone, mail, fax, alanet).
5. Supplies back issues in response to claims.
6. Applies cash to invoices and processes prepaid orders.
7. Schedules and prints mailing labels with accompanying forms and zip code reports per journal deadline.
8. Communicates with all agencies at least 2x/year with announcements relating to individual subscription price changes and new titles.
9. Supplies all invoices, envelopes, statements, return envelopes, renewal notices, and credit memo stock.
10. Mails all documents and absorbs all postage and handling charges.
11. Provides special programs on demand for zip sorts, wraparounds, and suspended subscriber searches.
12. Provides customer service.

Services provided for the Warehouse/Fulfillment charge.

1. Stores publications.
2. Picks publications to match shipping instructions.
3. Packs orders.
4. Ships orders.
5. Provides all supplies needed to ship and handle materials.
6. Maintains accurate count of all items.

Ref: ACRL Pubs/ALA Order Billing
(oraglO.16)

Furniture and equipment

Practice Number: 8

Policy

Section V.C.1.a. of ALA Policy 6.4.1:

ALA provides to divisions at not direct charge the following services of ALA Departments and offices:

Administrative Services Department

Basic furniture and equipment for each regular division staff member

Section V.F.

ALA will provide basic furniture and equipment to each regular division staff member.

Divisions will retain sole control and use of all furniture and equipment purchased with division funds.

Divisions may acquire additional furniture and equipment in two ways:

1. Above the capitalization limit:
   1. Divisions have authority to purchase capital equipment outright by paying the full price to ALA, with ALA taking the depreciation.
   2. Divisions can purchase furniture and equipment through ALA budget request process by paying the scheduled depreciation, subject to ALA priorities and approvals.
2. Below the capitalization level, Divisions have the authority to purchase equipment outright.

Practice and responsible parties

ALA will purchase basic office equipment and furnishings such as desks, chairs, file cabinets, and typewriters. Additionally divisions may purchase from their own funds other furnishings and equipment.

Divisions acquire furnishings and equipment through Administrative Services and follow established ALA practice for preparing and processing Purchase Orders. Requests for furnishings and equipment must be included in the budget prepared in February of each year for the following fiscal year. Requests are submitted and reviewed through the regular budget approval process.

Because ALA general funds are used for the initial cash outlay, capital purchase requests (those over $1,000) are reviewed as part of the larger ALA ranking process of capital needs.

The timing of purchases of furnishings and equipment (as with all capital purchases) is coordinated by Fiscal Services (Planning and Budgeting) in consultation with the appropriate Department Head, in order to assure the availability of ALA funding for this purpose.

The legal ownership of all furnishings and equipment is vested with the American Library Association; the use of such items is solely by the Division. The Division is responsible for maintenance costs of such equipment, and the purchase of any such maintenance contracts shall be processed through Administrative Services. Liability insurance for such equipment is covered by ALA's policy.

Background

In the past divisions have assumed some responsibility for purchasing PCs, word processors, and other equipment in addition to that supplied by the General Fund. This has enabled divisions to avoid some of the delays that General Fund offices have experienced in upgrading equipment and it has reduced some of the draw on the General Fund capital budget.

Furniture and equipment requests from the divisions with small revenue bases will be reviewed within the operating agreement framework that assures General Fund support of them.

The processing of such purchases, by Administrative Services assures cost-effective purchases as well as standardization, where necessary or appropriate, especially in the case of equipment such as microcomputers, or compatibility with other ALA furnishings. Ownership is vested with the ALA, in that Divisions cannot legally retain ownership. The processing of maintenance contracts through Administrative Services allows for more cost-effective purchase of such contracts.

Prepared by:

Roger H. Parent, Deputy Executive Director
Ernest Martin, Associate Executive Director

Reviewed by:

Division Executive Directors
Linda Crismond
Greg Calloway

Equipment at midwinter and annual conferences

Practice Number: 9
3/30/04

Policy

Section V.c.1.b. of ALA Policy 6.4.1:

“ALA provides to divisions at no direct charge the following services of ALA Departments and Offices…Equipment (e.g., AV and computers including the cost of labor), supplies, services, and space for programs, meetings and offices at the Midwinter meeting and Annual Conference (as defined in an Operational Practice)

Practice and responsible parties

The Conference Services unit arranges and pays for equipment rental and labor, space for programs, meetings and offices; and office furniture, equipment,
shipping, office supplies and photocopying equipment and employees. Conference Services does not pay for computers and Internet connections at
division tables.

The divisions work with Conference Services to meet deadlines, utilize standard forms and standard room sets* (*see example attached), coordinate large room sets, and generally assure an effective process for scheduling equipment for meetings and programs.

Standard set for ticketed events will consist of: 1 podium with mic; the division selects one 1 standard projection devise (LCD panel with laptop computer or overhead projector or slide projector or VCR or DVD player); and 1 projection screen. The organizing division pays for AV sets for preconferences. Sets required other than the standard set as referenced above or as delineated by ticketed events set are paid for by the division. Each division executive director is responsible for approving equipment requests for that division, making a conscientious effort to control costs especially upon Conference Services request, if necessary.

Background

ALA members and other presenters are demanding increasingly sophisticated equipment for meetings and programs. The demand for state of the art presentation equipment has added to the cost of providing it at both Midwinter and Annual Conference. In order to be perceived as being on the leading edge of both governance and continuing education, ALA must provide these tools to its members and other presenters. However, the Conference Services unit and Divisions, both staff and member leaders, have to work together to keep costs at a realistic level. Although some events within the conference program are ticketed, conference attendees can attend the program portion of a ticketed event without charge; therefore a standard AV set is appropriate to support the programmatic portion of the event.

Prepared by:

Sandra Lee, Finance
Keith Brown, Finance
Deidre Irwin Ross, Conference Services
Greta Southard, PLA
Julie Walker, AASL & YALSA

Reviewed by:

ALA Division Executive Directors
ALA Management Group

Date:

March 30, 2004

*Suggested Standard ALA Sets

Board Meetings:

• Table mics for participants (4)
• Table mic for chair (1)
• Flipchart (1)

Programs:

• LCD projector (1)
• VGA cable for computer hook-up to projector (1)
• A/V cart (1)
• Screen (appropriately sized for the room) (1)
• Table mic for every two panelists (1)
• Audio mixer (if necessary) (1)
• Computer (1)
• Set up labor

Other Meetings other than Board Meetings:

• Podium mic (1)
• Set up labor

Reprographic services

Practice Number: 10

Policy

Section V.C.2.2a of ALA Policy 6.4.1:

ALA charges Divisions for the actual costs of the following services of ALA departments: Administrative Services. ...Printing and duplication, as defined in an Operational Practice.

Practice and Responsible Parties

Reprographic services arranges for the purchase and maintenance of copy machines located on each floor of the Headquarters Buildings. Reprographic services also completes the copying work requested by units on offset presses which have higher capacities and additional capabilities.

Reprographic services provides copying services at the Midwinter Meeting and Annual Conference at no charge to divisions in order to support the work of the organization.

When making copies on the machines located around the building, all personnel are expected to complete a form indicating the number of copies made and the budget line to be charged. Reprographic services staff will make the copies requested on standard work orders and notify the unit when the work is complete. Units will be charged for all copies made, according to a schedule of costs based on the machine used and the number of copies made.

Reprographic services staff will also advise on the best copying methods for a particular job and provide assistance with paper and ink selection. Other services provided include: binding, collating and stapling, lettering, and photostats.

Background

ALA benefits from centralized reprographic services. The procedures outlined have been developed over the years in order to balance unit responsibility for copying costs incurred with cost-effective accounting for the services provided. All services are priced at a cost-recovery basis.

Prepared by:

Karen Muller, LAMA/ALCTS
Lee Patenaude, Distribution and Reprographic Services

Reviewed by:

Ernest Martin, Administrative Services
Roger H. Parent, Deputy Executive Director
Division Executive Directors

Distribution and mail services

Practice Number: 11

Policy

Section V.C.2.1a of ALA Policy 6.4.1:

ALA provides to Divisions at no direct charge the following services of the ALA Departments and Offices: Administrative Services Department, Distribution Services.

Section V.C.2.2a of ALA Policy 6.4.1:

ALA charges Divisions for the actual costs of the following services of ALA departments: Administrative services, postage for special mailings, as defined in an Operational Practice.

Practice and Responsible Parties

Distribution services staff deliver incoming mail to each ALA unit and pick up outgoing mail from each ALA unit according to a daily schedule. Distribution services staff also assist with the delivery and shipment of larger packages by: receiving shipments from common carriers; transporting packages to the unit; picking up packages from the unit for shipment; and arranging for shipment.

The reception staff receive express and overnight mail and hand - delivered packages and notify the unit that a package has been received. Such packages are delivered by Distribution Services staff the next day if not retrieved by unit staff.

Telefacsimile transmissions (fax) are centrally received, and units notified upon arrival. Such communications are delivered by Distribution Services staff the next day if not retrieved by unit staff.

Distribution services staff also provide assistance in determining the best way to ship an item, fold material for easier mailing preparation, assist with packing shipments, maintain supplies of packing materials, and deliver the conference trunks.

Unit staff are responsible for completing the appropriate mail request form (regular or United Parcel Service) whenever mailing the same material to a number of recipients and the total number of pieces collectively exceeds six times the prevailing rate for first class postage or when a single envelope or package exceeds six times the prevailing rate for first class postage. Distribution services staff return one copy of the form with the actual postage incurred indicated.

In general, large bulk rate mailings are performed by outside mailing houses.

Background

ALA benefits from centralized handling of incoming and outgoing mail. The procedures outlines have been developed over the years in order to balance unit responsibility for postage costs incurred with costeffective accounting for the services provided.

Prepared by:

Karen Muller, LAMA/ALCTS
Lee Patenaude, Distribution and Reprographic services

Reviewed by:

Ernest Martin, Administrative services
Roger H. Parent, Deputy Executive Director
Division Executive Directors

Data processing

Practice Number: 12

Policy

Section V.C.l.a. of ALA Policy 6.4.1:

"ALA provides to Divisions at not direct charge the following services of ALA Departments and offices ...Data processing (as defined in an Operational
Practice)."

Practice and responsible parties

The Data Processing Department, within ALA Administrative Services, provides the following reports: monthly budget performance reports based upon information supplied by the Financial Services Department, monthly warehouse inventory reports based upon information provided by the ALA Warehouse staff, and monthly lists and labels of new, reinstated, and dropped division members based upon information provided by Membership Services.

Background

Several types of regular information on division operations are required for the management of division programs. Although the information included in these reports is prepared by units outside Data Processing, the information is compiled in the DMG Computer System and printouts are prepared and distributed to Division Offices by the Data Processing Department.

As the Association moves from a WANG to a PC environment, the Data Processing Department is being called upon to assume a more active role
in providing support and instruction in the use of division-owned or housed microcomputer hardware and software.

The Data Processing Department provides support for microcomputer hardware and software owned and/or housed in divisions through initial and follow-up training sessions, on-site consulting concerning purchase and/or use of specific equipment or applications, and minor maintenance assistance. Initially, this support is available only for divisions using IBM compatible equipment.

Policy

Section V.C.2.a. of ALA Policy 6.4.1:

"ALA charges Divisions for the actual costs of following services of ALA Departments and Offices...Specialized data processing, as defined in an Operational Practice."

Practice and responsible parties

The Data Processing Department provides Divisions with a number of specialized services and reports upon request, including division membership print-outs in alphabetical and zip code order, address labels of members for division mailings and for use with divisional journals and newsletters provided as perquisites of membership; and other specialized lists of members as needed by divisions. Divisions are charged on a cost recovery basis determined by staff and machine time needed to sort and print out the information, time required for preparation of any specialized programming, and any special materials required for the project such as pressure sensitive label stock.

Divisions may contract with Data Processing to provide specialized reports of membership information in a hard copy, on diskettes, or on magnetic tape for products such as membership directories.

Divisions may also contract with Data Processing to handle pre- and onsite registration for division national conferences. Pre-registration support includes processing of registration forms; preparation of registration lists in alphabetical order and by specific event; acknowledgment letters to registrants; information for badges in hard copy, on diskette, or on magnetic tape; summary reports by tape of registrant, by number and by name of first time attendees; summary reports of registrants by state and/or country; labels of attendees for division use or for rental to vendors; and tickets for special events.

Data Processing and Administrative Services personnel can provide supervision of on-site registration procedures at division national conferences including collection of registration fees, preparation of name badges; preparation of daily registration and financial reports; deposits of funds received; cash advances for ALA staff working at the conference; and training and supervision of convention center staff, division members, and/or volunteers working in the registration area during the conference.

Divisions are charged directly for staff time or freelance help required for keypunching registration information into the computer terminals and on a cost-recovery basis for Data Processing staff support for all other aspects of the pre-registration process. Divisions pay travel costs and per diem for Data Processing Department and Administrative Services personnel who handle registration processes on site at the conference. In addition, division pay for any specialized materials required such as pressure sensitive labels or multiple copy paper.

Cost estimates for the services of Data Processing and Administrative Services are provided to division staff when the Departments and the Division enter into an agreement. This estimate is based upon prior experience of the Data Processing Department for providing like services for other division conferences. A summary of actual charges, with a explanation of how they were determined, is submitted to the division for payment prior to the end of the fiscal year in which the conference occurs.

Background

Data processing has traditionally provided membership printouts at cost to divisions. With the increased capacity and flexibility of the DMG computer system, additional services and products can be provided to divisions. These materials and services are offered on a cost recovery basis by Data Processing.

The level and range of support for pre-registration activities for divisional national conferences has increased in recent years based upon division needs and Data Processing capabilities. It is more cost efficient and fiscally responsible for these services to be provided through centralized Data Processing and Administrative Services Departments than to be recreated using division or freelance staff within divisions.

Prepared by:

Ann Carlson Weeks, AASL/YASD
Richard Roman, Data Processing
Susan Horiuchi, YASD

Reviewed by:

Ernest Martin, Administrative Services
Roger Parent, Deputy Executive Director
Division Executive Directors

Telecommunications services

Practice Number: 13
03/10/04

Policy

Section V.C.1.a. of ALA Policy 6.4.1:

ALA provides to divisions at no extra charge the following services of ALA Departments and offices: Administrative Services Department...Telephone services: switchboard, 800 number, and internal service, as defined in an Operational Practice.

Section V.C.2.a. of ALA Policy 6.4.1: ALA charges divisions for the actual costs of the following services of ALA departments: Administrative Services: Telephone services not specified in V.C.1.a., as defined in an Operational Practice.

Practice and responsible parties

The Information Technology and Telecommunications Services Department of ALA provides full use of the basic telecommunications services package to the divisions at no charge.

Basic telecommunications service package is defined as the services that ALA contracts for and provides to ALA staff and departments over which the divisions have no control in contracting for independently or ability to opt out of.

• one incoming/outgoing line and instrument per staff
• switchboard operators who receive and direct calls
• toll free line for incoming calls
• equipment
• training
• internet access
• regular maintenance to basic systems
• maintenance agreements
• service agreements
• includes services for all ALA member’s benefit such as Muzak and automated switchboards

Telecommunications Services

Divisions pay their own charges for services they contract for and opt for over and above the basic service package provided by ALA which might include all or some of the following, which are automatically posted to the divisions' accounts on a monthly basis. A report verifying such charges must be sent to the division executive director upon posting.

• outgoing long distance calls
• as many calling card numbers as requested by divisions
• services beyond basic telecommunications services including but not limited to:
  • division dedicated fax machine usage
  • division specific modem lines
  • cell phones, and pagers
  • additional phone lines
  • remote telecommunications for internet access
  • telephone or web conferencing (unless required by ALA policy)
• maintenance or service agreements for additional services or equipment

Background Information

This revision of the operating practice addresses ALA Policy 6.4.1 (Section V.C.1.a and Section V.C.2.a), including a title change better reflecting the current telecommunications environment at ALA. The method of reporting and charging for telecommunications services needs to accurately reflect the costs to the divisions. The Background statement for 1989, “efficient billing to divisions, overall cost-effective service and coordinated service to all ALA and division members, and effective communications within headquarters”, remains in 2003/2004 a fundamental precept to this practice. Telephone service is simply no longer just having a touch tone phone on your desk from which to make calls, but is the most basic infrastructure piece in the contemporary business environment. No longer limited to telephone calls, the phone line is required to carry important information such as internet access, email communications, and a multitude of services from web conferencing to distance learning. Costeffectiveness and efficiency in providing service continues to be a top priority. Regular and comprehensive audits of ALA’s telecommunications requirements and needs are essential to these concepts.

Originally prepared in 1989

Prepared by:

Charles Wilt, ALCTS
Cathleen Bourdon, RUSA/ASCLA
Joanne Pak, Accounting
Kristin Henning, Accounting
Irene Marquez, ITTS

Reviewed by:

Division Executive Directors
ALA Management Group
Date: March 10, 2004

Unrelated business income tax (periodical advertising)

Practice Number: 14

Policy

Section V.J.2 of ALA Policy 6.4.1:

"Unrelated Business Income Taxes (UBIT)To the extent that Divisions incur unrelated business
income, they will assume responsibility for paying the resulting taxes..."

Practice and tesponsible parties

Divisions may conduct activities, such as the sale of advertising in publications, that generate unrelated business income, which is subject to Federal and state income tax. All units generating unrelated business income from periodical advertising will share in the tax liability.

Units with periodical advertising revenue will budget a percentage of their gross advertising revenue as a provision for income tax. As the budget is being prepared, units will be advised as to the percentage to be used in building the budget. This percentage will be arrived at after analysis by the controller of the probable tax liability for all periodical advertising, the need to provide for adjustments due to a possible tax audit, and the history of the relative tax liability of each journal. A minimal percentage will be charged to all units with advertising revenue; major contributors to ALA's tax liability will be charged a higher rate. Each division will pay at least the amount actually identifiable as the "liability" associated with its journal. During the course of a fiscal year, an amount equal to 1/12 of the budgeted sum will be debited against the unit's budget each month.

As the end of the fiscal year approaches, the Accounting Department will do a preliminary review of the probable tax liability. At this time, an adjustment will be made to the unit budget; if the provision for tax is inadequate, an additional assessment will be made; if the provision appears more than adequate, a credit will be added. Should the differences be very small, no adjustment will be made.

A final review of the tax provision of each unit will take place after the filing of the annual tax return (about midway through the next fiscal year.) If necessary at that time, the final adjustment in the assessment will be made. This may result in an unbudgeted credit or debit to the unit's accounts.

Background

ALA conducts a number of activities that generate unrelated business
income; this income is subject to federal and state income taxes. One important source of such revenue is periodical advertising. ALA is one financial entity and its liability for such taxes is calculated on the basis of all such revenue, regardless of which unit conducted the activity.

Between 1978 and 1991, ALA did not have to pay any income taxes, not because it had no taxable revenue (it did, in most years) but because it incurred in 1978 and carried forward a net operating loss so large that, even after each year's tax liability was deducted, there was still a balance to carry forward.

Tax returns were prepared by the Association's auditors until 1989, when the return for the year ending Aug. 31, 1988 was filed. In 1987, the IRS began requiring nonprofit organizations to file quarterly estimated tax returns. In the expectation that the balance carried forward would run out and tax would be due, ALA began to pay its estimated tax.

During discussions of the Operating Agreement, it was decided that divisions should accept responsibility for taxes on their advertising revenue. ALA and its units saw the need to take steps to reduce its tax liability and prepare its own returns. In 1989, ALA hired tax consultant Mike Reap to work with ALA staff to help reduce tax liability to a minimum. Since then, Reap and ALA staff have:

• carefully analyzed ALA's tax returns from 1984-1987 and restated the prior year returns; then filed amended returns resulting in a tax refund to ALA. This effort increased the amount of the loss carry forward;
• examined carefully the consolidated method ALA uses in
  computing periodical advertising taxable income;
• shown where potential future increases in tax liability might lie; and
• helped affected staff allocate appropriate expenses to their journals.

These actions gave ALA some time to prepare for the day when it would need to begin to pay tax. That day has now arrived.

For the 1992 fiscal year, units with taxable revenue have budgeted 3% revenue for taxes. This amount provides adequately for current taxes and for a deferred amount to absorb income tax adjustments that might result from a tax audit.

Prepared by:

JoAn Segal, AED, Programs
Roger H. Parent, Deputy Executive Director
Michael Reap, tax consultant
Russ Swedowski, ALA Controller
Mike Jedzinek, ALA Financial Analyst

Reviewed by:

Division Directors
Ed McLarin
Bill Ott

Division endowments

Practice Number: 15
1/07/92

Revised: 1/21/99

Policy

Section V.E of ALA Policy 6.4.1:

"Divisions may establish endowments or add to existing Division endowments from any source including existing fund balances once the Division has reached a minimum fund balance as determined by the Division and approved in accordance with the budget review process and approved financial plan. The establishment of Division endowments will follow the guidelines outlined in ALA policy. The use of the interest from these Division endowments will be subject to Division Board approval and applicable ALA policy.

See also ALA Constitution, Article IX and ALA Policy #8.5.

Practice and Responsible Parties

Divisions may establish endowments or add to existing endowments.

1. Establishing and adding to endowments.
   If a division wishes to establish an endowment, or add to an existing endowment, it must follow general rules as set by the ALA Endowment Trustees, (see Constitution Article IX and ALA Policy 8.5.) because all endowment funds are ALA Endowment funds, just as all division operating funds and reserves are ALA funds.
   1. The minimum amount for establishing an endowment will be set by the Endowment Trustees. Current policy requires a minimum of $10,000.
   2. Existing unrestricted endowments smaller than the minimum required endowment level may be combined to create one or more larger division endowments to meet current policy, facilitate monitoring and reduce bank charges.
   3. All endowments are subject to the conditions imposed by the donor(s).
   4. Funds in endowments are not considered to be reserves.
   5. The principal shall not be expended unless expressly permitted by the terms of the gift, and upon recommendation of the Division Board and authorization of the endowment trustees and the ALA Executive Board.
   6. A division may establish an endowment from its existing reserve. To do so, it must have reached a minimum
      reserve as determined by the division board and approved in accordance with the division's budget review process and approved financial plan. The establishment of a new endowment is subject to review by the Endowment Trustees, COPES, and must be approved by the ALA Executive Board, who require evidence of a sound financial plan and a planned level of reserves.
   7. A division may add to an existing endowment from its reserve or may combine reserve funds with a gift in order to bring the total endowment amount up to the minimum required endowment level. To do so, it must have reached a minimum reserve as determined by the division board and approved in accordance with the division's budget review process and approved financial plan. Transfers of division funds to an already existing division endowment must be submitted as part of the annual division budget request and will be approved by the ALA Executive Board when it approves the division budget.
2. Divisions receiving allocations from ALA
   1. These divisions may solicit and receive donations to establish or add to endowments, consistent with item 3
      below.
   2. These divisions may not use their reserves to establish or add to endowments.
   3. Interest income from unrestricted endowments must be used to cover costs of basic services, thereby reducing the General Funds allocation
3. Endowment fundraising campaigns.
   1. Divisions may carry out campaigns to raise funds to establish or add to endowments.
   2. Such efforts must be approved by the Division Board and reported to the ALA Executive Board prior to carrying out the campaign.
   3. All relevant ALA policies must be observed.
4. Use of interest
   1. Expenditures are subject to any conditions imposed by the donor(s).
   2. Divisions may use interest from endowments subject to division board approval and applicable ALA policy.
   3. Divisions may use interest from endowments to build endowment principal.

Financial Services is responsible for processing financial transactions and for submitting monthly performance reports for
division endowment projects (principal and interest projects for each endowment).

Background

Divisions may establish and use endowments to generate regular income to support the development, maintenance, and enhancement of projects and activities that fall outside normal operating expenses of the division. Examples are scholarships, awards, research, or other projects. There is a clear rationale for placing division reserves in endowments rather than allowing them to remain as unspecified assets of ALA. While ALA is responsible for the management of all endowment funds, divisions have the responsibility to administer division endowment projects. If a division amasses a sizeable reserve this enlarges ALA general assets, thus strengthening ALA's short-term financial condition. However, if a division wishes to use any of this reserve, it must spend down the balance itself, thus diminishing the general asset. However, when funds reside in an endowment, the division has the option of spending all or part of the interest and leaving the principal intact. This provides ALA with a longer4 term financial advantage.

Division endowments are a way for divisions to earn interest revenues, which are exempt from overhead charges and they contribute to financial stability over the long term. However, the principal is not available for current operations and activities.

Prepared by:

Susan Roman, ALSC
Karen Muller, ALCTS/LAMA
JoAn Segal, AED, Programs
Roger Parent, Deputy Executive Director

Reviewed by:

Division Executive Directors
January 7, 1992
(continue on to next page for 1/21/99 revisions)

ALA operating procedures for transfers and withdrawals between division fund balances and the long term investment fund

1. Transfer process - From Division Fund Balances (Net Asset Balance) to the Long Term Investment Fund (Endowment Fund).
   1. It is desirable that Divisions establish four or more months of reserves - (Net Asset Balances divided by average
      monthly expenses), before any transfers are requested.
   2. Transfers from the Division(s) Fund Balance to the Long Term Investment fund must be a part of the Divisio(s)
      approved annual budget.
   3. Transfers of $50,000 or more must be reviewed by BARC as part of the 3 year financial plan and requested two yearsprior to the execution.
2. Withdrawal process - From the Long Term Investment Fund
   1. Any withdrawal from the Division(s) Long Term Investment Fund, other than emergencies, must be part of the
      Division(s) annual budgeting process. It is desirable that interest is withdrawn first and principal is withdrawn as a last resort.
      1. Emergencies
         The ALA Executive Board shall authorize withdrawals from the Division(s) Long Term Investment Funds when the purposes and programs of the Division would otherwise be seriously impaired. Any withdrawal will carry with it a specific repayment plan. The plan will include a schedule of repayments with the interest rate set at the time of withdrawal. The interest rate will be based off of ALA's borrowing rate. Requests for withdrawal must be submitted to BARC for review and board approval.
      2. Scholarships/Awards
         The ALA Executive Board shall authorize withdrawals from temporarily restricted and unrestricted Division Long Term Investment funds designated for named scholarships and awards to the extent necessary to support the award or scholarship according to its stipulations and requirements. If the amount in the temporarily restricted and unrestricted funds are not adequate, the (principal) of the fund may be used, up to the limits of any permanent or donor restrictions. Requests for withdrawal must be part of the Division(s) annual budget process.
      3. Strategic Initiatives
         The ALA Executive Board shall authorize withdrawals from the Division(s) unrestricted Long Term Investment funds when the Division(s) have identified and or developed a strategic initiative that is determined to be vital to the continuing and or future success of said division. The Division(s) may withdraw, an amount not to exceed fifty percent (50%) of a five year moving average of the appreciation of the Division(s) unrestricted Long Term Investment funds. Any withdrawal above that amount shall carry with it a specific repayment schedule with the interest rate to be set at the time of the withdrawal. Requests for withdrawal must be part of the annual budget process.
3. Approved and review process
   As previously stated in sections I and II, any requested transfers from Division(s) fund balances to the Long Term Investment fund, as well as, any withdrawals of principal and or interest from the Long Term Investment fund must be submitted as part of the annual planning process, reviewed and recommended by BARC for approval by the ALA Executive Board.

In the event of an "Emergency", requests for withdrawal must be submitted directly to BARC, as soon as reasonably possible, for review and approval by the ALA Executive Board.

Revised: 1-21-99

Non-ALA royalties

Item Number: 16
Revised: 03/08/04

Policy

Section V.C.2b of ALA Policy 6.4.1:

Overhead will be assessed at 50% of the ALA composite rate (at the end of a 5-year phase-in period, beginning in 1991 and ending in 1995, in equal annual increments) on revenue from:

• net sales of materials (sales less returns)
• subscriptions
• advertising except in those publications which are provided to division members as a perquisite of membership
• other miscellaneous fees

Practice and Responsible Parties

Other miscellaneous fees is determined to include non-ALA royalties and licensed institute fees, and is subject to 50% of the ALA composite rate paid by divisions for revenue-generating activities. Royalties on any product that is a perquisite of membership that is reformatted are exempt from overhead. To accommodate the collection of the correct overhead rate, the Finance Department will designate a revenue line for ALA exempt overhead and a line for ALA non-exempt overhead.

Background

Divisions bear the burden and risk of creating new entrepreneurial activities and may receive revenue from new business ventures. New product opportunities exist, as do new business methods, such as ecommerce, which post date the creation of the ALA Joint Operating Agreement. In the spirit of good corporate citizenship and in effort to promote financial stability of the ALA, it is now a reasonable expectation that overhead be recovered from non-ALA royalty payments at a reduced overhead rate. It is recognized that new revenue streams are mutually beneficial to the ALA and the divisions and entrepreneurial activities should be encouraged, thus a reduced overhead rate is appropriate and fair to both parties.

Original prepared: 1999

Revision prepared by:

Mary Taylor, LITA
Lorraine Olley, LAMA
Greg Calloway, Finance
March 8, 2004

Reviewed by:

Division Executive Directors
ALA Management Group

Bank fees on credit card transactions

Practice Number: 17
03/09/04

Policy

Section IV Use of ALA services and Section V.C. 1. a of ALA Policy 6.4.1 are indirectly related to this operational practice but no direct policy exists governing bank fees on credit card transactions. Policy IV requires ALA Divisions to use
exclusively services provided by the ALA Administrative Services Department: Personnel, Membership Services, etc. V.C.1. says that ALA provides to Divisions at no direct charge the following services of ALA Departments and Offices.
V.C.1.a. Administrative Services department lists as one of these services membership services, which is presumed to cover the processing of membership dues.

Practice and responsible parties

Membership Dues payments are processed by ALA’s Member/Customer Service unit, a responsibility housed in ALA’s Administrative Services Department at the time the Operating Agreement was prepared in 1989.

In the 1980s it was common for members to pay their dues by check. With the advent of e-commerce and rebate/mileage programs from bank credit cards, it is more common for members to pay their dues with a credit card. Banks charge a
fee based on the percentage of the dollar amount of the transaction for credit card payments. ALA has been absorbing all of the bank fees on the credit card transactions on dues. ALA Divisions have been paying the bank fees on credit card transactions related to services directly provided by the divisions, e.g., conference registrations, book publishing, advertising, etc.

Divisions will also pay their share of the bank fees on their portion of dues paid by credit card transaction, provided that a monthly transaction report detailing the number of credit card transactions and the dollar amounts associated with them is provided.

Background

ALA members benefit from having one centralized processing department that manages dues collection. With the development of appropriate and accurate reports divisions will pay their share of the bank fees on their portion of dues paid
by credit card transaction.