Questions from the President concerning: NCMA CHAPTER REBATE POLICY Board of Directors Meeting 22 November 2008 Bethesda, MD

2 Chapter “rebates” are paid at $10 per member not to exceed 100 members or $1000 – Contingent upon their completion of Annual report, financial report and audit, leader rosters This allocation method is not based on needs or on any strategic agenda Many Chapters have significant cash available, and have capacity and demonstrated ability to earn revenues. (Chapter Size is not an qualifier) ISSUE: Should NCMA continue to “invest” > $100,000 in chapters each year via Chapter Rebates?

3 BACKGROUND Prior to 2002 chapters received an annual “member rebate” based on $10 per member. Hence a chapter with 400 members received a $4000 rebate and a chapter with 50 members received a $500 rebate. The intent of this program was to facilitate Chapter motivation in retaining and recruiting current and new members. In 2002 as a result of financial conditions, National limited annual rebates not-to-exceed the first 100 members equating to $1000. –It should be noted that due to the lack of communication and miscommunication, during this transition there were rampant rumors that National was going to raid Chapter treasuries. This did not occur. It should also be noted that those Chapters who’s rebates were significantly cut, their operations did not implode nor did they fail to continue to offer programs to their members. Chapter business kept going on as usual.

4 FINDING: The Chapter Development Committee (CDC) has discussed this issue and based on our analysis of the Chapter Cash Balances report prepared by the NCMA CFO, has determined that the majority of the Chapters generate sufficient “Revenue” such that their year end cash balances are sufficient for ongoing operations and do not warrant the need to receive cash rebates from National.

5 CHAPTERS < 100 MEMBERS (2007 DATA)

6 CHAPTERS MEMBERS (2007 DATA)

7 CHAPTERS >200 MEMBERS (2007 DATA)

8 RECOMMENDATION: The CDC presents the following recommendations for more effective application of NCMA's assets in regards to supporting its chapters. Our recommendation is broken out into 4 key elements: 1.Guiding Principles 2.Communication Plan 3.Qualification Criteria 4.Application Process

9 GUIDING PRINCIPLES 1.We want to insure that those Chapters that need the cash the most receive it. 2.We want to insure that any chapter who has a valid business reason for financial assistance will continue to have the opportunity to receive it. 3.We want to promote the business concept of National realizing the greatest ROI of utilizing their cash. 4.We will establish a process that is simple, efficient, consistent, and with minimal oversight.

10 COMMUNICATION PLAN We believe that most chapters with cash will admit that the annual $1000 rebate is not needed. We need to make it clear that those Chapters who demonstrate that their survival and viability is dependent on financial assistance from national will continue to receive financial assistance. We must insure that the chapter leadership does not perceive this action to be a message that National wants to "kill" chapters by curtailing their funds We must make it clear that we are NOT raiding chapter treasuries.

11 COMMUNICATION PLAN The overriding message is that “NATIONAL CARES”. –We want to insure that Chapters remain vibrant and effective. –We want to insure that current chapter rebate budgets are “earmarked” as discretionary funds available to assist the chapters for: Start-up and recovery chapters. Leadership Development Scholarships Educational programs There has got to be a “WIFM” (What’s In It For Me) in the message for the Chapters. –Fostering the notion of “Chapter Brotherhood” by helping your fellow Chapters who need help the most. –Recognizing and rewarding those Chapters who run effective business operations that generate revenue and are able to be cash positive.

12 COMMUNICATION PLAN When, where and how to communicate the REBATE change. –Send out Survey to Chapter Presidents and ask their opinion. –Present at January Leadership conference.

13 QUALIFICATION CRITERIA Prior year annual chapter report is on file with National <$3000 in total cash assets (THIS IS NOT FINALIZED) Plan for utilizing financial grants –Specific Events –NES –Audio seminars –Student Outreach –Upfront deposit for educational event –Purchase Chapter Asset Projector Laptop –Participation: Leadership Summit, World Congress –CMLDP participation –Scholarship for student Note: Financial Assistance is not to be used to subsidize meals.

14 APPLICATION PROCESS Statement of Need –Narrative request in annual report Goals and plans for coming year. Projected cash flow plan – (see BG model) Prior year financial data submitted Statement of Success of utilization of prior year financial assistance. (If applicable.)

15 OUTSTANDING ISSUES: Does the CDC establish sub-committee to review Financial Grant Applications? Does this sub-committee control how the $100,000 is spent? Assuming the budget is $100,000 how should this be allocated? –X% of total budget for Chapters who meet the criteria in #3 above –X% of total budget for discretionary allocation for chapter start up and/or rescue –X% of total budget for financial assistance for chapter leaders to attend January/June Leadership conference. –X% of total budget for Leadership Development Scholarships

16 OUTSTANDING ISSUES: Are financial grants to chapters based on –$ per head not to exceed X$ –Fixed $ amount? $1000 –Tiered fixed $ amount based on # of members –$ amount requested in annual report not to exceed fixed amount. When is the time frame for submitting Financial Grant requests? –Anytime throughout the year –Once a year, deadline = 1 October –Twice a year 1 October 31 January

17 OUTSTANDING ISSUES: Currently the “Rebate” is the “carrot” for chapters to submit their annual reports. What is the value to National to receive financial reports? –Do we put a minimum bounty on these… $250? –The Chapter has a fiduciary responsibility to turn in their reports. We will make it clear that just as compliance and ethics applies to their every day job, so too it applies to managing the chapter.