Reference no: EM133378469

Case Study: You are the president of a large youth services organization, with 100 chapters located in communities across the country. Of your board of 51 people, 30 are representatives of the largest local chapters, elected at their chapters' annual meetings. Another 15 are business leaders and six are ex-officio members identified in the charter. The ex-officio members include MPs and Senators from the province where the organization was incorporated, several prominent provincial politicians from the first three provinces where chapters were established, and the federal Minister of the Environment. The ex-officio members rarely attend board meetings and the business leaders do so irregularly, so chapter representatives are usually about 90 percent of those in attendance.

Your organization offers a wide range of youth programs, including leadership training, recreational programs for low-income children, drug and alcohol education programs, teenage pregnancy prevention programs, counseling and support for children of military families, and a conservation program that engages young people in outdoor activity in the maintenance of parks and trails. Programs are very decentralized and local chapters decide which ones to offer in their communities, with some chapters offering programs with costs offset by fees charged on a sliding scale and others relying primarily upon fundraising. Most are managed by volunteers. Larger chapters have a paid executive director, but some smaller ones have only a part-time staff person or none at all.

Fund-raising is also very decentralized. Local chapters raise money for their programs and pay dues to sustain the national office. The primary activities of the national office are a public communication/education initiative, development of training programs for local volunteers, and production of program materials that most chapters use but often adapt for their own purposes.

You have been in your position just six months. You have studied your organization's financial situation and have read evaluation reports of its programs undertaken by consultants. You are convinced that it is involved in too many different activities and that some of its programs are not achieving acceptable outcomes. You think it needs to focus on two or three program areas, making those excellent, and abandon the others to competing organizations that have stronger programs. In addition, you are convinced that the programs need to be defined by the national office and that detailed guidelines need to be given to the local chapters on how to manage them and measure results.

You are also concerned that a number of local chapters are running on a financial shoestring with little oversight, leading to uneven quality in programs and even to the possibility of financial mismanagement that would embarrass the overall organization. You think the right approach would be to reduce and standardize the program offerings, increase chapter dues, consolidate chapters, and re-allocate funds through subsidies from national to the less well-funded chapters.

Question: How much of an operating reserve would you suggest the local chapters carry? Explain your answer.