Principles of IEEE Financial Operations

IEEE Geographic Units must annually report their financial status (using the L50 form) covering the period of 1 January - 31 December. This period is the fiscal year for all IEEE Geographic Units. The financial report is due by the third Friday of February following the end of the fiscal year.  A report must be signed and submitted, noting beginning and ending balance, even if there was no financial activity during the one-year period.  The Unit Treasurer should retain a copy of the report.

As part of standard audit procedure, a Unit Officer other than the Treasurer (assuming the it is the Treasurer that has prepared the report) must review the financial report. The Treasurer and the Unit Officer who have reviewed the report should sign and date the report in the spaces provided.  If an independent accountant has audited the Unit's records, a copy of the audit report must accompany the report.  However, if the audit report has not been completed by the due date of the financial report, the report should be submitted anyway and the audit report submitted when it becomes available.

The annual financial report is essentially structured to use the principles of cash basis accounting throughout the year, but adjusted for revenue and expense accruals at year-end, if necessary.  Cash basis accounting means that only those transactions that involve the receipt or disbursement of cash should be reported.  For example, cash received by the Unit Treasurer would be included as revenue (receipt), and a check drawn on the Unit bank account would be an expense (disbursement). 

At 31 December, if your Unit has incurred revenue that has not been received or expenses not paid (both known as accruals), it should be reported in the financial report.

In addition to the principles of financial operations on this Web page, Treasurers of Units in the United States should refer to the Principles of IEEE Financial Operations for Regions 1-6.

Forms and instructions necessary to complete the financial report are updated and available on the web in December each year.

The annual L50 financial report should reflect financial transactions for the year related to the following:

1. General Activity: All Unit events and other activities normally associated with the operation of the Unit should be included (e.g., Unit meetings, social events, seminars, publications).
2. Subunit Activity: Sections should include Subsection, Chapter, and Affinity Group financial transactions with those of the Section.  Financial data for Joint Section Chapter and Joint Section Affinity Group activities should be reported by the managing Section, and based upon actual cash transactions and year-end accruals.  Care must be taken to prevent duplicate reporting of Joint Chapter and Affinity Group activities by multiple Sections.
3. Conferences: Conferences with budgeted income/expense of US$25,000 or more must forward a detailed budget to IEEE Conference Services for approval.  The report should be submitted at least one year in advance of the conference.  It should include written Unit approvals, and should note if Unit cross endorsement has been sought. (PM 10.1.4)

Conferences must also close their financials by preparing a detailed final financial report and submitting it to IEEE Conference Services twelve months (within 6 months is desired) following the date of the conference. Bank Accounts must be closed six months after the Conference is held. Closing bank statement(s) must be submitted to IEEE Conference Services with the final financial report, (PM 10.1.11).

Conferences where IEEE has greater than a 50% financial responsibility, including conferences that are solely IEEE sponsored, and where the actual or budgeted income or expense is US$100,000 or more must be audited by a professional, independent, outside source.  This could include IEEE Operations Audit, an external accounting firm, or another qualified source (e.g., an internal auditor from a University or other organization).

Conferences with revenues under US$100,000 will be audited on a periodic basis.  The IEEE Operations Audit Department will schedule and arrange for the audits of these conferences.  For those conferences not scheduled for an Operations Audit review in a given year, an audit should be conducted by a committee composed of individuals who have no direct or indirect responsibility for the financial transactions of the conference (PM 10.1.10; FOM.2.E.1.a).

The IEEE provides each Section with a rebate upon receipt and approval of all required reporting (meeting activity, financial activity, and current officers) from the Section and its Subunits. Details for rebate eligibility requirements and amount of payment can be found on the annual Rebate Schedule.  For each calendar year, a Section may earn all of the following:

• An annual Section allowance.

• Rebate payment per Member, Student, Associate, Affiliate, Senior and Fellow Grade, based on 31 December statistics of the prior year.

• Subsection Rebate for Sections that have Subsections.

• Chapter Rebate for each Chapter or Joint Chapter.  Rebates for Section Chapters will be included in the rebate distributed to the Section; Council Chapter rebates will be distributed to the Council.  These funds are intended to support the activities of reporting Chapters.

• Affinity Group Rebate.  Rebates for Affinity Groups will be included in the rebate paid to the Section or Council to which they belong.  These funds are intended to support reporting Affinity Groups.

• 10% bonus for Sections whose reports are submitted by the February deadline.

• Activity bonus.

Rebates for Geographic Units established during the calendar year are prorated, based on establishment date of the Unit and upon receipt and approval of the required annual reports.

Geographic units with annual revenues or expenses of US$100,000 or greater are required to have their financial reports and supporting records audited by a professional, independent, outside source (i.e., by someone who has the appropriate auditing credentials and is not a member of the involved unit).

The audit may be done by a certified public accounting firm, the IEEE Operations Audit Department (e-mail), or another fully qualified source.  A copy of the resultant audit report should accompany the annual financial report (L50) for the geographic unit that is submitted to IEEE as part of the requirements for receiving the annual rebate.  For the geographic unit audits that it performs, Operations Audit assesses fees at the rate of six-tenths of 1% of the geographic unit's annual revenues or expenses, whichever is greater.

Geographic units with budgeted or actual revenues or expenses of less than US$100,000 are audited by Operations Audit on a rotational basis.  Operations Audit selects the units to be audited and notifies them of the selection, shortly after receipt of the involved unit's L50 for the year just ended, i.e., selection of units to be audited for the calendar year 2010 will be based on the information included in their 2009 L50.  No audit fees are assessed on the audits conducted on a rotational basis.

IEEE Grant Administration staff can assist volunteers with obtaining grants and contributions from government agencies, as well as private and corporate foundations to support IEEE conferences, projects, and programs.  Assistance is provided with:

• identifying funding sources;
• drafting proposals;
• understanding and following funding sources proposal guidelines;
• submitting the proposals;
• compliance with funding sources regulations regarding financial and technical reporting.

Limited funds, as prepared by the Member and Geographic Board, are allocated to Regions to assist Sections having financial difficulties.  These funds are known as "Section Support via Regions" or SSVR.  These funds are distributed directly to the Regions for distribution to the Sections.  Sections must submit a request for financial assistance to their respective Region Director who will review the request for approval.

Money on hand in the IEEE Societies, Technical Councils, Geographic Units, and Conferences is the property of IEEE.  The only exceptions are conferences co-sponsored with non-IEEE entities.  Any Society, Technical Council, Geographic Unit ,and Conference funds may not be used for:

• Payments of any kind for the preparation or presentation of papers, whether to an individual unit, speaker or author of a paper, except for reasonable travel expenses.  This policy does not apply to compensation for lecturers or other IEEE sponsored educational activities where a fee (or tuition) is charged.
• Monetary or equivalent prizes or awards over US$2000, except for scholarships and other approved awards for students.  Awards above US$2000 must be approved by the Awards Board.
• Electioneering of any kind for any IEEE or unit office.
• Electioneering of any kind for local, state or federal office.
• Commercial promotional activities.
• Donations of a philanthropic nature, including scholarships, unless authorized in advance. 
• Personal or commercial loans of any kind for any purpose.
• Purchase of real estate, without prior authorization.
• Investment of surplus funds in any investment vehicle other than the IEEE Investment Fund.

If your unit has a reasonable and urgent need for a waiver of any of the prohibitions listed above (with the exception of the last item), a request may be submitted by the organizational unit through the Region Director.  Pending the decision of the IEEE Board of Directors on the request for waiver, no action contrary to the policy stated above may be taken (FOM.2.E.2.b).

Requests for permission to contribute IEEE funds allocated to IEEE organizational units in excess of US$5000 must be addressed to the IEEE Board of Directors, via your Unit's Region Director.  Each request should contain the following information:

• purpose of the proposed contribution;
• amount and source of the funds to be contributed;
• name, location, and other pertinent information concerning the grantee organization or individual;
• a statement of the reciprocal benefits to be enjoyed by the IEEE and the grantee.

For contributions in an amount of US$5000 or less, the same process described above should be followed, except requests for permission must be addressed to the appropriate Major Board Vice President or President, as such authority has been delegated by the Board of Directors.

• In the case of a contribution to an organization or individual to be selected after permission is granted (as in the case of scholarships, fellowships, grants-in-aid, etc.) the qualifications to be met by the grantee, when selected, shall be stated.

• Requests to make contributions on a recurring or continuing basis (such as annual scholarships) should be submitted to your Unit’s Region Director who will then present it to the IEEE Board of Directors for approval. (FOM.2.E.4)

IEEE Units may accept contributions on behalf of IEEE.  Accepted contributions should be reported in the annual financial report (PM 11.2.E.2).

Contributions received in excess of US$250 must be reported to the IEEE Development Office, so that appropriate acknowledgements may be sent and records kept (FOM2.E.3).

IEEE funds allocated to Societies, Technical Councils, Conferences, and Geographic Units may be used to supplement the operation of Student Branches (FOM.2.E.5).  E-mail Student Services for more information.

It is the policy of IEEE to comply with all applicable U.S. (federal, state, or local) or non-U.S. (at each governmental level) charitable solicitation and donation laws. 

Fund-raising projects and initiatives of, for, and between IEEE organizational units, members, and staff worldwide, and with the IEEE Foundation, Inc. are coordinated by the IEEE Development Office.

The IEEE Development Office (e-mail) is the primary office to support and coordinate fund-raising activities for IEEE organizational units, members, and staff worldwide.  This office should be informed in writing of any fund-raising activities at least 60 days in advance of such activities.  IEEE organizational units contacting potential donors for the intent of soliciting funds must post their fund-raising projects on the Fund-Raising Development Calendar prior to any solicitation (FOM.7).

It is IEEE policy to provide general liability insurance, including coverage for property damage and bodily injury, to cover IEEE organizational units.  IEEE Volunteers are included as additional insureds under IEEE general liability insurance policy while acting within the scope of authorized duties on standing and special committees. 

It is also IEEE policy to provide fidelity bond coverage for those individuals who have access to funds for IEEE activities and/or organizational units.  IEEE fidelity bond coverage applies only to funds under the exclusive control of IEEE staff or volunteers.  The coverage does not apply to funds held jointly by IEEE and any other organization.  For this reason, IEEE volunteer officers who have access to funds held jointly by several organizations should be covered by a separate fidelity bond policy, which may be arranged for locally by the organization.

If difficulty is encountered in securing separate fidelity bond coverage, please e-mail the IEEE Insurance Department for assistance.  Requests should be made at least sixty days prior to the date for which the coverage will be required.  IEEE cannot guarantee that fidelity bond coverage can be obtained (FOM.5.A;B).

Each IEEE organizational unit that generates revenue, or is authorized by the IEEE Board of Directors to receive assessments or a portion of IEEE dues, may have custodial responsibility for a portion of IEEE Reserves, to the extent determined by the Board of Directors (PM 11.4.A).  Reporting of the reserves will be included in the year-end reports (FOM 4.A).

Section reserves should be adequate, but not excessive.  As a general guideline, a reserve greater than three times the annual rebate, after known commitments and unusual requirements are deducted, would be considered excessive.  There will be special cases where this may not apply.

In special circumstances, such as being in a good location for conferences, some Sections can provide outstanding services to their members and, in the process, generate surplus funds.  In keeping with the policy of avoiding large reserves, the level of activity should be increased so as to best serve the interests and needs of the members.  This can be done through additional meetings, conferences, educational programs, publications, etc., or by putting these funds to work elsewhere in IEEE, through Member and Geographic Activities, Technical Activities, Educational Activities, or other Sections, Chapters, or Branches within the Region (PM 9.7).

The IEEE Controller's Office (e-mail) must be notified of purchases and disposition of capital items through the unit's annual report so that the IEEE property records reflect the value of all IEEE capital assets (FOM.3.A.4).

A capital asset is generally defined as tangible property with a minimum value of US$1500, a useful life greater than one year, and intended for long-term use.  Examples include land, buildings, computers, furniture, and other equipment.

Sections and Chapters frequently hold small technical, professional, educational, and social meetings throughout the year.  Many of these meetings involve guest speakers and other events designed to meet member needs.  These meetings are sponsored by the related organizational unit and open to all members.

The costs of meetings are generally supported by the budgets of the involved IEEE organizational units.  Most of these meetings are free, or minimal fee.  Occasionally members may be asked to pay for meals and entertainment.  Donations or grants may also help support these meetings (PM 10.0.C & 10.2).

Contracts in excess of US$25,000 must be reviewed by IEEE Contract Management.  IEEE units may negotiate contracts with a value of US$25,000 or above, but shall not give final approval or "execute" contracts. 

Contracts up to US$25,000 in value may be executed locally, but a copy must be sent to IEEE Contract Management for central record retention (FOM.8.A).

Travel for IEEE purposes must be approved by an authorized person.

• Transportation - the most economical airfare must be used. If travel is by other means (e.g., train, private car), reimbursement will be the actual cost, as long as it does not exceed what the most economical airfare would have been.
• IEEE will reimburse mileage at the current approved rate (use current Expense Report Form).  Car rentals should only be used when economical public transportation is unavailable or impractical.
• Lodging - single room occupancy will be reimbursed.
• Receipts - original receipts must be submitted for any single expenditure in excess of US$25.  However, where the expenses are being shared with another organization and IEEE is requested to reimburse only a portion of the expenses, legible photocopies are acceptable (FOM.6).
• Please reference the IEEE Travel Guidelines and Reimbursement manual (PDF, 54 KB) for more information.

Failure of a Section to meet the minimum required activities for a period of one year shall result in the Section automatically being placed on probation, effective 1 January of the following year. 

The Member and Geographic Activities (MGA) Board may dissolve any Section for any reason deemed sufficient by the MGA Board, including Sections failing to maintain a reasonable level of activity.  Remaining funds and assets in the custody of that Section will revert to the IEEE (MGA Operations Manual, Sections 9.4.M and 9.4.N).  E-mail MGA staff with questions.

Conflict of interest is defined as a situation in which a member’s decisions or votes could substantially and directly affect the member’s financial or business interests.

It is the responsibility of all IEEE members in any elected, appointed, or volunteer position of an IEEE activity to consider each item of business where they have a vote or decision authority to determine if a conflict of interest may exist.

Potential conflict should be made known immediately to the person in charge of the activity (or the next higher authority if the member is in charge).  After consultation with other individuals in the activity, this person will advise the member of the proper course of action and note the action in the activity’s record.  This policy also applies to non-members who are serving IEEE (PM 9.9).

Nonprofit, not-for-profit, for-profit…what is the difference?  Both for-profit and nonprofit organizations are allowed by U.S. law to earn profits at the unit level.  But only for-profit organizations are allowed to pass along profits to those individuals or corporations that control them.  Nonprofit organizations are required to use their profits for their program activities to accomplish its stated purposes.  The purposes of IEEE are stated in Section 2 of the IEEE Constitution.

Sometimes the term not-for-profit organization is used instead of nonprofit organization.  Are the terms synonymous?  As a matter of law, no.  The two terms are often used interchangeably in good faith, but the proper legal term is nonprofit organization.  The law uses the term not-for-profit to apply to an activity rather than to an entity.  For example, a hobby is essentially a not-for-profit activity.