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.
Elly Blue has been writing about bicycling and carfree issues for BikePortland.org since 2006. Find her at http://takingthelane.com
Deeply troubling news from the state’s largest bike-advocacy organization. I wonder if this will give current members pause before renewing their memberships?
My membership expires in October. I have been lazy about sending in my renewal. I’ll make sure to get it in ASAP and throw in a couple of additional dollars. I would hope that this information would encourage current and former members to dig a bit deeper into their pockets and help the BTA in a time of financial need.
This is a very odd “news” item for the BTA to disclose to BikePortland.
First, accounting errors are very common, and they often flush out during the annual audit by an independent CPA firm. No big deal. This is not news, and errors are usually not made public, because corrections are made prior to issuance of the annual audited financial statements.
Second, an operating loss for the year is no big deal. Ideally it would be small, and of course losses cannot be maintained forever, but annual swings between profit and loss are common. This is what reserves are for.
Third, I’m afraid readers with no understanding of accounting may misinterpret this “news” as evidence of fraud or missing funds. No such thing has occured, at least based on the story. beth h’s response above almost appears to be this type of a reaction.
Weird. And generally “negative net income” is referred to as a “net loss”. Okay, now I’m just being an ass. =)
It is disconcerting that a $38K error was created in 2007/2008 and was not found until 2009. That assets were claimed on property not owned by BTA.
It comes down to confidence in an organization, and this organization has lost the confidence of a large number of the cycling community. Bad money management does not help improve this situation.
Outside of the deadbeats who did not pay the BTA what was owed, these were stupid mistakes that should have been avoided.
I wish the best to Roopal Patel in cleaning up these issues.
Thanks for weighing in with your accounting expertise, Schrauf.
We certainly don’t want to skewer the BTA for its budget woes, and hopefully have not painted an unfair picture. But we did feel that we had to report on this — and BTA staff clearly also felt that the issue was important enough to contact us before the Annual Report was released.
Schrauf. This is excellent insight. I agree totally that it is EXTREMELY odd that bikeportland publishes this information BEFORE the BTA annual report even goes out to the donors; a breach of trust, in my view.
The general public does not understand how business finance works. What this article does not thoroughly focus on is the increasing responsibility and exponential growth of the BTA, per public demand.
We are asking our non-profit advocacy group to take on many issues, and they have to prioritize based on man-power, volunteer power, and budget. It has not helped that there has been a serious turnover within BTA staff that was desperately needed.
Bricker has accomplished a lot in his 2 year tenure. I can only hope that his continued expertise with the city and state politic, his decade long advocacy relationships, and his big-picture transportation commitment will be as transparent as the minutae illucidated here in this article about the budget. bikeportland also failed to mention that because of the last layoffs, the BTA is now in the best financial position it has ever been.
I’m upping my contribution to the BTA because biking in PDX, over the past 18 years, has brought to light exactly how much the advocacy group is needed to keep our biker fingers in the public till.
Thank you for reporting on this issue. I see it as good news and see it as the BTA responding to growth by changing their structure to that of a bigger organization with more responsibility.
I suspect that the BTA would rather have the Bike Community hear this new hear than in the Oregonian (frankly, I would).
I knew of some structural changes, so to see the bigger picture of what is going on is helpful.
As a regular Safe Routes To School volunteer, I think this program offers an amazing opportunity to kids all over Portland. Scott Lieuallin does a great job developing and maintaining relationships with volunteers to have volunteers be an integral part of the program’s culminating community ride. I started volunteering before he was part of the BTA and now I get regular emails with opportunities. The last ride I went on, I rode back to work with a smile on my face thinking of the group of kids and how much fun they had on their community ride. It is truely inspirational!
The BTA crew is doing some fabulous work and they need to support of the biking community to continue!
Qualified bookkeepers are cheap! This is the kind of corner-cutting that sinks most small businesses. Glad to hear they hired someone qualified to clean up the mess, and it sounds like they might have caught it in time to pull it together.
they need to hire Arthur Anderson!
John (#7) – define “cheap”. The BTA can now afford one, but many small nonprofits can’t afford to hire a qualified bookkeeper, and those duties in small nonprofits are typically filled by volunteers with no formal experience.
It speaks volumes about the BTA professionalism that they have never once pointed the finger or laid blame to the inadequate hiring practices and leadership ability of the previous ED. Bricker has taken this on and dealt with all the cleanup and dirty work.
Having served on several non-profits as a board member, rapidly growing organizations have growing pains, and while these may be particularly embarassing and perhaps should have been caught sooner, I think the critical questions BTA board members and members should be asking:
1) Are adequate processes and controls in place on a going forward basis?
2) Are expenses in line with revenues?
3) Does the organization have a revenue base that sustainably supports its mission?
I’m sure BTA board members have asked these tough questions, and I suspect the answers are a resounding yes.
I run a small/mid size business and accounting errors are just a part of business. And it sounds like with the new finance director in place they have made the right decision to move to the next level of accountability.
No biggie folks. Trust me.
the conventional p.r. wisdom since the tylenol tampering scare of 1982 has been that a company needs to get out in front with negative information so they can control the conversation. there is nothing weird about BTA contacting “friendly” press in advance of the release of a report containing “bad” news, especially where there is some nuance and complexity involved. some of the reported misreporting is pretty surprising, and would lead naturally to the question, hey, don’t you guys have any internal controls? who handles your books, anyway? but this is exactly where Patel steps in and tries to smooth things over. there will be some negative press in the next week or two, but nothing like there would have been had they not come out ahead of the story.
already renewed for next year, even though I disagree with a pretty good chunk of their legislative agenda.
I don’t know what kind of further proof people would need to be convinced that the message that the BTA is not well run.
I suppose we could ask the US Chamber of Commerce to study the issue further, after they get done with that global warming study they’re promising.
It’s good to see such interest in accounting and internal controls. It’s vital for any organization to maintain a foundation of solid infrastructure in order to support its mission, and that’s what the BTA is doing.
The timing of this story is a little unfortunate since the report has not been sent to donors and members yet, but we can look beyond that.
What’s important is that there’s a ton of real good news starting with the fact that in this economy, as we watch countless businesses and non-profits falter or fail, the BTA is getting stronger. We have a talented group of highly dedicated staff who are working harder than ever to focus on our mission. Even better, we have many partners with a shared mission who are doing the same.
We appreciate being asked tough questions and don’t mind when we’re held to task. That’s how we improve. But since we’re mission driven, it’s important to know that our ultimate goal is all about making our communities better by making bicycling awesome in Oregon. I can guarantee that the BTA has its eye on that prize.
Operations and Communication Director
Ok, yes, some accounting errors were made and yes, this happens all the time.
Big question here, though, is who was in charge of REVIEWING the work done before everything was finalized??
Journal entries are made after the fact; doubled-up entries should have been caught by a second pair of eyes and corrected before anything was finalized.
Angela, I believe that you are wrong in regards to the timing of this report here on BikePortland.
I don’t know what the BTA’s bylaws say about releasing financial information to the members and donors in advance of releasing it to the media.
However, out of respect for your members and donors, you should have sent it out to them first and then released it to the media.
There’s already a feeling out there that the BTA is out of touch with members and prospective members. Releasing this information in the bass-ackward manner you did, you further alienate the very people you are trying to court.
And then glossing it over as no big deal!! Seriously!! What value does a BTA membership hold, then?
Everyone — We’ve just sorted out that the BTA asked BikePortland to hold off on publishing our story until the report is released (should be tonight or tomorrow morning). We got our wires crossed and published it early. We take the trust of our sources and the community very seriously and this is really unfortunate. We did work hard to get all the details right and to make the story fair, and I sincerely hope that our telling of it did not negatively affect the impact of the news on BTA members and donors.
I ended my membership when Bricker became Executive Director and I will not renew until there is a new Executive Director. Best of luck to all the staff and I sincerely hope they make the improvements they are working towards.
if it was not supposed to be published, then take it down. i know it is sort of a cat-out-of-the-bag thing, but whatever. at least shows you are willing to take some responsibility for a problem you created.
18 FULL TIME EMPLOYEES???? What the heck are you doing? Is this large staff needed?
I just donated some money to the BTA this week. I feel even better about that donation after reading they had a short fall. This is an organization that provides a lot of value to me as a cyclist and I am excited about the work they do. Glad to see they have some new team members to help them manage the books. I am confident they will get a good hold on this. Coming forward with these mistakes clearly shows they are planning to get it under control. I look forward to the work they will continue to do in our community!
I just hope I never make a $92,509 mistake in my small business, we would be in deep trouble! Can the BTA explain such oversight? I am sure they work hard at what they do for all of us. thank you
> 18 FULL TIME EMPLOYEES???? What the heck are you doing? Is this large staff needed?
Eighteen staffers for a statewide advocacy org is “large”? Think about how many people work at other advocacy orgs (think about AAA!).
Errors are human but $92K worth of errors reeks of poor management oversight. Perhaps the culture of friends-first-business-later at the BTA needs to change.
I wonder if the BTA’s sudden and childish walk-out of the CRC project awhile ago had something to do with the budget issue?
The budget issue also explains BTA’s standing position to claim SW Washington as part of its area, but never actually do anything in Vancouver except collect membership dues.
Good job to Bike Portland for reporting the errors.
I worked for a small manufacturing company(ten people). After being in business for eight years, four with the same bookkeeper who was a cpa. It was disclosed to the employees that the YEARLY federal employee taxes had not been submitted to the IRS. Long story short. I guess this just encourages us all to double check our own bills and checking accounts. Not all of us are acountants, or need to be. Best of wishes to Roopal, you have stepped where many of us dare not tread.
That is 7.2% of their income by my calculation, that does not seem so bad. When you look at the number you think that is a lot of $$ but if you look at the percentage which is really the relative factor then it puts the number in place.
Anyone else with business budget experience, is this an unusual percentage of errors/overexpenditures?
efglez – this article is EXPLAINING what happened and how they are putting a focus on this in the future.
Well done Roopal and the BTA team.
To Every One Upset About the Press Release:
There is no law, oridence, bylaw or standard or practice that mandates an accounting errors must be disclosed to BTA members before Bike Portland runs an article on it.
Also, where is the benefit of having the BTA notify everymember of the mistake? How would they do it? Email, phone, costly mass mailing of letters?
And here is the big one: First Amendment Rights and News Ethics. BikePortland was free to disclose the mistake as soon as it was discovered and the BTA is not entittled to speacil treatment by ethical standards of news reporting.
Granted, asking to hold off posting the article for a day was a reasonable gesture, but I doubt it would have made a differnce in the BTA being able to tell the rank and file members of the group. The BTA has had months to tell people and has not done so. Guess, the BTA just wanted to make it appear like it was going to tell people about it on their own.
Lastly, the issue at hand is the BTA’s accounting practice. Several posts also have expressed concern that the BTA is losing touch with its membership base. For the BTA to even attempt to distract from those issues about a few hours difference in a post is not childish but reeks of an elistist and self-entitlement attidude.
I have always paid my membership dues and included additional donations. Unless the BTA can show why it is still a viable group and not a self-serving entity, I will not be renewing.
Marcus, thanks for your comment. Actually honoring embargoes is pretty important when it comes to journalistic ethics (or at least to relationship building). The first amendment isn’t the issue here. And I don’t think you’ve seen the BTA crying foul here — they were upset but forgiving. Far from whining about it. — Elly
“Eighteen staffers for a statewide advocacy org is “large”? Think about how many people work at other advocacy orgs (think about AAA!).”
Think about how many members AAA has vs BTA. Think about the services offered by AAA for the fees paid vs services offered by BTA. Think about the fact that AAA is for profit.
Marcus #30, I was referring to what the BTA’s bylaws state as far as communicating annual financial information to the members.
As a member of a non-profit membership organization (not the BTA), and as a member of the board of directors for the same organization, I know what our bylaws state as far as financial statement, cash-on-hand reports, etc.
What does the BTA’s bylaws say about it?
Some 501(c)(3) non-profit membership organizations of a certain size are required to release the financials to the members; some membership organizations that are non 501(c)(3)’s are also required to post the financials for their members (SCCA being one– they include it in their monthly magazine and on their website in a “members only” section).
Also: maybe the BTA hasn’t had “months” to inform the memership– extensions being what they are, the accounting work for the form 990 could have just been finished last week for the due date next week.
Not everyone gets their business taxes and accounting done by the March 15 due date.
Ok, here’s some hard numbers. 1.3 million in rev, 18 employees. That’s over 76K in average salary. Understand that there are other expenses but something smells here. BTW, are they hiring? I would be nice to see them post a financial statement on their website. Unfortunately this is what happens when organizations are spending someone elses money.
@ Cary #33.
That doesn’t translate into anything NEAR 76K in salaries. Salaries might be their largest single expense, but consider rent, travel, utilities, paid media, utilities, etc.
“Understand that there are other expenses but something smells here. BTW, are they hiring?” Have you ever done a budget for a non-profit, or for-profit? You need to understand that it is not something where you can just pull pretend numbers out of the sky.
For a group like the BTA their people ARE their main asset and hence a place where a lot of money goes. This goes not mean that people are their output, the work that they are able to do is there output.
They made an accounting error, this is common. Assuming they are doing proper controls to prevent it from being a systemic problem is huge worry.
Running at a loss for a year also happens, as long as they have cash reserves to deal with it and the ability to get their budget back in balance all will be fine.
Serious problems with the Board – who failed at their fiduciary duties – and the Executive Director, who is trusted to oversee the finances. All of these errors happened under Bricker. Yet they blame the support staff? Lame and irresponsible.
The responsibility lies at the management level (or perhaps failed auditors), and it’s extremely disappointing. Screw up a $20 donation is understandable, but $38,000 donation?
Glad they’re slowly righting the ship, but that righting should include a Board and ED shake-up.
Responding to the article. Revs tripled since 2004 and infact increased over last year 270K. Just provide an accounting of the expenses. I have donated many times to this organization just out of a civic duty. If I’m running a non-profit, I put the money in the bank and try to run the organization as if revenue will decrease every year. Heck look at the government, spending money it doesn’t have. This is totally unexcusable. 92K over budget is not a minor error. Cut staff, cut expenses, and control costs. I still want to know what 18 staff members are doing and why they are needed.
I think Marcus was sort of right: WHEN Bike Porltand published the mistake should not distract from the conversation that the mistake OCCURED.
But, Elly has a valid point too.Once Bike Portland made the agreement to wait, they should have waited.
I WILL BE renewing my BTA membership unless soemthing truely hideous comes out.