Questions from the National President concerning: NCMA CHAPTER REBATE POLICY UPDATE Board of Directors Meeting 24 January 2009 Las Vegas, NV

2 Submitted Survey to Chapter Presidents –Issued 12 December 2008 –Responses due 19 January 2009 –56 Responses ISSUE: Should NCMA continue to “invest” > $100,000 in chapters each year via Chapter Rebates?

3 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.

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9 What criteria would we use to cut off the rebate? (assuming we still want to do that.) 1. Cash Balance (if you have lots of cash then you don’t need the rebate.) 2. Ratio of Revenue to Cash (on the assumption that chapters who made more, spent more and therefore would need a higher cash safety net) 3. Ratio of Profit to Cash (on the assumption that if a chapter spent all of its income instead of hording the profits, then they would need a higher cash safety net) 4. Ratio of Cash to Members 5. Ratio of Net profit to members In the end, I decided there is not a clear matrix to come up with that is fair to all chapters since there is such a wide range of chapter sizes, revenues, and cash with no clear correlation. ANNUAL CHAPTER REBATE ANALYSIS

10 Should chapter rebates be eliminated as an automatic benefit?

11 Would there be any impact to your chapter operations if you did not receive the automatic annual rebate?

12 Would there be any impact to your chapter operations if you did not receive the automatic annual rebate? If you answered yes, please provide a brief description of the impact. The chapter would even have less cash to provide good programming (speakers) to the chapter members. The additional funds allow us to offer a scholarship program for students pursuing their career as a contract professional. We budget for our officers and board to attend Leadership Conferences and World Congress. Without those additional dollars, some projects will suffer. And, I expect our attendance this next calendar year to decline due to the economy. We're already experiencing a smaller turnout to our functions.

13 Would there be any impact to your chapter operations if you did not receive the automatic annual rebate? If you answered yes, please provide a brief description of the impact. We are barely able to break even each year. some years we are up a few dollars, others we lose a few and that is with the rebate in our budget. It would deplete our savings and not allow us to risk special events, host NES’s due to limited cash flow to back an NES and other such events. Our chapter will take cost cutting measures. We already have, for example we do not have name tags, etc. We will likely reduce our travel to the leadership summits. We may put a moratorium on awards for becoming a certified contract manager.

14 Other than your current chapter rebate is your chapter in need of additional funds?

15 Please provide other comments or suggestions on a more effective use of chapter rebate funds. Receipt of funds should be based on a proposal describing the use of the funds as well as the anticipated benefit. I suggest that a quarterly submission process be established Receiving the rebate, even though it's capped at $10 per 100 members, is an incentive for the chapter to continue recruiting new members. At least the chapter is receiving a small benefit from the membership dollars. I definitely think the chapter rebate should continue and the use should be left up to each individual chapter as long as it's applied to educational assistance (which includes scholarships, conferences & seminars). Every chapter is different, and none of us want to beg for money. I think if it comes to requesting funds the smaller chapters will not request out of pride and the effort to do the extra work to justify their need.

16 Please provide other comments or suggestions on a more effective use of chapter rebate funds. Is creating a grant process really efficient? What is the impact of this? Will chapters with limited funds and volunteers be unduly burdened in order to get support from HQ? Why not have an OPT OUT box on the financial report submitted to HQ where a chapter with sufficient resources can OPT OUT of receiving the annual rebate? If you eliminate the chapter rebate, then no chapter should get it. If there is truly a financial need situation, then that should be addressed with the chapter. I think that funds should go to those chapters that are most in need and can demonstrate a plan for utilizing the money so that the Local and National organization benefits. In lieu of providing the rebate, a chapter could receive reduced rate on the NES course material.

17 Please provide other comments or suggestions on a more effective use of chapter rebate funds. The idea of a grant program to assist chapters with a short term shortfall in funding or a project to further the goals of NCMA is a good idea. But eliminating the rebate entirely is too drastic. A reduction in the rebate or a small increase in membership dues to fund a grant program would be better than a total elimination of the rebates. It would be good to provide guidance on what is a reasonable savings amount based on chapter size as Presidents are concerned about the perception that THEY had a negative impact on the chapter if savings is less than last year. Everyone wants a bailout these days...

18 Conclusions from the Chapter Viewpoint 1.Chapters don’t want their REBATE taken away and if we do their chapter will implode. 2.Most Chapters do not need more rebate. 3.Implementing a GRANT process will be too burdensome

19 Conclusions from the CDC 1.Most Chapters have significant cash balances and should not need rebate money 2.We need to understand why the chapters are keeping huge reserves. 3.We need to understand why chapters with huge balances are not establishing programs (generating income) 4.If National established a Cash Balance cut-off limit, for example $10K, then 30 chapters would NOT received a rebate equating to $30,000. a.What would we do with $30K? b.Would we lose >$30K of Goodwill? BOTTOM LINE: Until we can answer #4, don’t do anything.