Posted by Elly Blue (Columnist) on October 8th, 2009 at 10:56 am
The Bicycle Transportation Alliance, Oregon’s largest nonprofit bicycle advocacy and education organization, has been undergoing substantial internal changes in the past year and a half.
These changes were thrown into stark relief with the release of the organization’s Annual Report for the fiscal year of January 1 through December 31, 2008. The report — scheduled to be released to the public by the end of this week — states a loss for the year of $92,509. In a letter published in the report, Executive Director Scott Bricker notes that the loss is due to “inadequate accounting systems and oversight.”
The BTA’s total revenue for the year was $1,376,577. This number is up from $1,102,734 the year before, and has nearly tripled since 2004. The organization currently has 18 full time employees.
We first learned of the loss on Tuesday when we were contacted by the BTA’s Finance and Human Resources director Roopal Patel and Operations and Communication Director Angela Koch. I sat down with both of them to learn more about the situation.
“This is not a matter of simply putting one number in the wrong column.”
— Roopal Patel, BTA finance director
The posted loss is the result of a series of accounting errors made over the course of the year, Patel said. “You can’t just add these items and have them balance to the 92k. It is a combination of debits and credits as well as coupled journal entries. This is not a matter of simply putting one number in the wrong column.”
The largest discrepancy is the double recording of $38,000 in revenue from a youth programs contract. It was recorded once (properly) when it was committed in 2007; it was recorded a second time when it was actually received in 2008.
An accounting error was made in which the fleet of bikes used for youth education programs worth $13,000 were recorded as BTA assets. The bikes are in fact owned by the City of Portland. This incorrectly capitalized equipment did not have an impact on the BTA’s budgetary expectations, Patel said.
Another $14,200 for the value of helmets for education programs was incorrectly held on the balance sheet when it should have been recorded on the yearly financial report as an expense.
$15,900 in income was recorded according to for-profit accounting rules, in which it would be considered deferred revenue, rather than non-profit ones where revenue is recorded when it is promised rather than when it is received.
$3,800 in costs that were incurred at the very end of 2008 but actually paid in 2009 were improperly recorded as 2009 expenses.
Bad debts account for another $1,700. These comprise commitments, usually donations, that were made to the BTA but never paid. This figure was reached after a considerable amount of follow-through, including board members stepping up to call in promised sums ranging from $100 to $5,000.
These numbers have been a gradual revelation since March of this year, Patel said, when she became the organization’s first Finance Director, and first employee with experience in the world of professional finance. The first project she launched was preparation of the organization’s finances for a professional audit by a CPA. Audits, an annual ritual of the nonprofit world, involve a thorough review of an organization’s financial statements to ensure they are correct and fairly stated.
Staffing changes, including three layoffs this fall, have been made, Koch said, to allow the BTA to prevent a budget shortfall and to create another two positions (one is an advocacy position partly funded through a grant) to address its evolving organizational priorities.
Many job titles and descriptions have also changed as part of a broader effort to scrutinize institutional structures, processes, and culture.
Organizational budgeting and spending practices have also been cleaned up this year, said Patel. The BTA’s budget did not, until recently, dictate project specifics for work that does not fall under government contracts like Safe Routes to School. Patel says that one of her main priorities has been to work with staff to develop program budgets, identify gaps in funding, and balance the organization’s mission with funding priorities.
“It’s not that people were spending money at random,” Patel said. But she expects to see major reductions in several specific line items in the 2008 budget, particularly in the line items for Training and Conferences ($13,399), Meals and Meetings ($12,710), and Travel ($18,596).
Program Supplies — which cost $110,572 in 2008 — is another area where spending is expected to be reduced as managers create specific budgets.
The $110,708 in Professional Fees includes payments to independent contractors, from the auctioneer at the Alice Awards fundraiser, to web designers, to the independent financial auditors. This amount is expected to decrease in future years as the BTA’s approach to fundraising events changes and as Patel’s oversight reduces the many hours auditors must spend parsing the organization’s ledgers.
The position of overseeing the organization’s finances had been unfilled for three months before Patel’s arrival, and the BTA had no Development Director from December of 2008 until the hiring this May of Eileen Trudeau, another experienced professional who has been working with Koch and Patel to upgrade and streamline the organization’s processes.
Patel’s hire fulfills the need to bring in business expertise, Bricker told me in an earlier interview. Other staff have spoken about a multi-level push to dramatically rework the BTA’s organizational structure in order to recover from a period of upheaval and unplanned staffing changes and to address new needs resulting from the organization’s nearly threefold growth since first taking on the city’s Safe Routes to School contract in 2005.
The organization is now run by a team of Directors consisting of Koch, Trudeau, and Patel, who report to the Executive Director, Bricker. This represents a major change from the previous “flat” structure in which Bricker and his predecessors directly managed all staff. In interviews, all have praised the new structure, and said that it has created immediate changes. “It’s like night and day,” Bricker said.
Editor’s note: This story was intended for publication after the BTA sent its Annual Report to members and donors later in the day. Wires got crossed and BikePortland mistakenly published the story early. Our apologies to all concerned.