 Hey, it's certainly a pleasure to be here with you today. Welcome to the IG seminar. For those of you who don't know me, my name is Ed Hartman. I'm the Inspector General of my primary responsibility as IG is to oversee all of our departments, chapters, and numbers, and to ensure that everybody's in compliance with the Constitution by all of the organization from A to Z. So it's quite a lot to cover. And every year I try to find a theme or find a topic to discuss at that convention. And one thing really stood out to us at the National Organization last year. I thought this time of year when we started reviewing annual financial reports of chapters and departments in terms of what our chapters and departments are doing in terms of spending their money. So with that being said, today we're going to talk about what we should be doing as a chapter and as an department with our donors' funds. And one thing that we have to remember is that funds given to Duke D.A.D. are not ours. We're the vessel from which those funds are transferred to provide service to veterans and their families in the organization. So we're simply facilitating the funds that we receive from the generous public, right? So at all levels, we have the chapter level, the department level, the national level. We have a moral and responsible ability to ensure that we are doing what we're supposed to be doing with those funds. And so, yeah, that's not a lot of it. I'm good, I'm good. That way I can kind of cruise around a little bit because I am headed down here to copyright those all so I might speed up on it. Before we get too far along with this and of course wanting to get started on time, I wanted to make sure that we had some time for Q&A at the end as well. So we'll have the opportunity to ask questions and get some answers. So, again, it's our responsibility to ensure that we spend our donor's money on the programs for which they were intended. So kind of simply put, what does that mean? What does it mean to make sure that we spend our money on the programs for which we raise them for? So anytime we do a fundraiser in the community, right? Especially at the chapter level, whether it's for Give Me Not or for State Fair and County Fair and we're asking the general public for funds, we should be telling them what we're doing as an organization that would encourage them to support us, right? We should talk about our transportation network. We should talk about our TSO programs, our BAPS programs, our local veterans assistance program, and then the fact that as an organization in our community, we provide financial relief to those needy veterans who might fall upon our times. So we make a promise to the community when we're out there raising money that we're going to do, we're going to spend those funds in the fashion for which they were raised. So that's part of keeping our promise, right? Not just to the veterans that we serve, but also to our donors. Because without our donors, we cannot fulfill our mission at all. We're acceptable DAD programs to be funded by DADMTs. And of course, we follow this model at all levels for the International Organization, departments, chapters, but we certainly look at what we have done in this work. What is DAD known for? And since the beginning of times, beginning of DAD, obviously we're known for our service to veterans and families, right? Our CSO, our DSO programs. We're known for our transportation network. We're known for our voluntary service programs in the hospitals and communities. Our hospital service program programs. And then again, our direct support to veterans and their families in our local communities. Of course, the National Service Foundation, Charitable Service Trust, and the Columbia Trust are all programs that certainly can be provided or can be supported by chapters and departments as well. So that's a picture of kind of what we can support in terms of DAD. What are we not supposed to be supporting? We go ahead and do the firm supporting in terms of DAD's organization. So we have a very specific Charitable Service, MassFive Service, free program service for disabled veterans and their families, right? That's the only thing that we're supposed to be doing. That's what our tax exemption status is based upon for the internal revenue service. So as an organization, when we raise money, we should not be turning around and giving those funds to any other entity. And as I mentioned at the onset, we noticed last year in reviewing some of the financial reports that there's money going everywhere at the chapter level, at the department level, to programs like Boy Scouts, Girl Scouts, narrow OTC, Church Groups, First and Spinal Organizations, Civic Groups, and then probably the biggest no-no of them all are political organizations. We are obviously a non-partisan organization. We cannot take part in politics, but as a non-profit organization with a federal charter that is provided to us by Congress and our IRS tax exemption provided by the Internal Revenue Service, we have to spend our money on the programs for which we are raising those funds here. So while it's great and it's understandable, I know that a lot of chapters benefit from having Boy Scouts troops, Girl Scouts troops, JROTC programs of organizations coming out and helping us with our giving out programs. That's absolutely fine and dandy and great. We appreciate it all day long, but we can't turn around and give them a portion of the proceeds from the funds that we just raised. If they want to help us in many times, that is the cases that they have a certain amount of volunteer hours that they have to fulfill or to get a certain bag or something, that's what they're there for. So they're there to help us to support their cause, and we shouldn't therefore be turning around and providing a portion of the proceeds that we just raised or were getting on to get back to them in recognition of it. JROTC programs, same thing. People always make the point or make the argument that, well, they will be veterans. They might, they might not, but they're not right now. So we can't help them right now. Everything that we do as an organization has to be centered and focused on providing three programs of service to disabled veterans and their families. So with that being said, what about other veteran organizations? Are we able to branch to support other veteran-related charities? In general, the answer is no. Of course, we're all dual members of other organizations, whether that be Legion or Amphibus or DFW. You know, when we go into those meetings, we should not be acting in the best interests of another organization to detriment the DE. In other words, if I'm a member of the DFW post and work on our times, we, the air condition just went out, the roof's leaking, the plumbing's backed up, but we don't have any money. So at the next post meeting, you know, I should not be going in there as a DAP member knowing that DAP's doing pretty well and that we've got some reserves in the bank and we've got some money to spend. I should be going in there and saying, hey, at the next DAP chapter meeting, I'm going to make a recommendation. We give the DFW post $10,000 to buy a new air conditioner, patch the roof, fix the plumbing. That's their responsibility. If they want to own a building, they want to operate a building, their responsibility to raise money in their community to support their growth rates. DAP certainly should not be doing that. So that's what we're talking about when we're talking about the general-purpose operations or the profit of net net charity in terms of giving them a correct donation. It is permissible for a DV entity to provide funding to another veterans organization. If that organization is hosting or sponsoring or promoting or conducting an event that falls in line with our chartered purpose of providing services to disabled veterans and their families. A good example of that is the stand-out. The local DFW post is hosting a stand-out for homeless veterans in the community. They come to DAP, ask for financial support to help put the program on. Absolutely nothing wrong with that at all. However, there's got to be the caveat that the money is provided to that DFW post that they be earmarked, specifically be used for this particular program. And also, more importantly, the chapter should receive recognition back from the DFW, indicating that they've received that donation so that we can provide both the internal-revenue service and or our general donors in the community if ever questioned why we gave a $10,000 donation to another organization. While it's in line with our chartered purpose of providing services to disabled veterans and their families, they have a stand-out. We certainly wanted to help them support that cause. So we did. And of course, there are other examples of events and opportunities that might crop up other than stand-outs. But the one thing that we always have to ask ourselves is how am I going to answer the general public if we're ever questioned about a donation that we made as an organization to another organization? And if the answer is that it is directly in line and supports our chartered purpose of helping disabled veterans and their families in the community, we're always going to be on the right side of things. But if we find out and tell them in the community that we decided to give BMW $10,000 premium room on because they do good things in the community, that's certainly wrong. Because at the end of the day, there are non-profit organizations like we are. They have every opportunity to raise funds just like we do for their programs. If a donor wanted their funds to be spent or provided to that organization, they would give to that organization in the first place. They did. They gave that money to DAB. So they trust, and it's our obligation, our responsibility to spend those monies on DAB programs and services in our communities. I just noticed our national commander has been standing back and forth for a few minutes. I wanted to acknowledge the commander of Marshall so that he could stop and intervene with us for a little while this afternoon. So the quickest way to lose the trust of our community is to not be good stewards of funds, right? You know, we have to safeguard funds. We have to protect funds, make sure that they're not stolen, misallocated, used for other purposes. If we do that and the community finds out, guess what? Our support from our communities and our individuals in each state at the department level dries out those businesses that support department conventions and department events and the transportation network that quickly dries out the bills right because DAB is not doing what we're supposed to be doing with those funds. So it's our obligation and our responsibility to absolutely, positively make sure that we support DAB's programs of services. Next point's coming. What about supporting this is a very generic organization that may rise for fallen veterans? Obviously we're talking about a certain organization but I'm not going to mention it by name. I can't tell you the disappointment all of us see and have on our face when we look at the annual financial report we see these huge sums of money from a department, from a chapter going out to an organization that is itself for profit entity. So donations to support active grease for fallen veterans better known as how do you say it? Again, they are their own non-profit organization but they're a non-profit organization within a for-profit company and that for-profit company guess what they're in the business of? Maintain grease, cut down trees and make grease. So not if there's anything wrong with that but if they want to have a non-profit organization to have this program be nationally recognized, that's fine, that's great. We endorse that but we shouldn't be supporting that. We shouldn't be providing D&E funds to support not only their non-profit aspect of that but more importantly the bigger picture is supporting that for-profit entity that is directly benefiting from this non-profit. So interestingly enough I don't know how many folks do a lot of research do any investigations or do a little digging before they get to an organization but I encourage you all to do a little bit of digging and see what you can find in terms of some of these organizations that are out there. Of course as we all know since 9-11 veterans charities have cropped up all over the place. Everybody wants to be an advocate or a supporter of veterans and that's great if they're legitimate but unfortunately there are many that are not legitimate they have the best interest of themselves their heart and not of the veteran community so we have a responsibility to make sure that if we are supporting a program or an organization that has to defend our activity and is in line with our publicly chartered purpose of providing service to disabled veterans and their families that we researched and made sure that they are dealing with those funds exactly what they said that they're supposed to do because at the end of the day we have to answer to our veterans. So in reviewing annual financial reports of course many times it requires us and prompts us to call the chapter call the department and say oh we don't make a donation to this group this organization has nothing to do with the saving of veterans or the families or our commercial development purpose and they say well they're they're quasi-affiliated there's a connection there between the military and the board of command or the president of this organization and veterans I think one of the best examples or pleadings that I heard from a chapter commander was it was a donation made on behalf of chapter to a chapter member's son who was eight years old was on a traveling baseball team and he did I don't remember how it was twenty five hundred bucks three thousand dollars to go to a big baseball tournament how do you justify that to the community? and their argument was well it's the son of a disabled veteran well your right is but how is that twenty five hundred dollars helping disabled veterans and families in the community it's not so it's really easy and it's simple to draw a line between something unrelated and veterans we can do that and draw those conclusions all day long but at the end of the day we just have to make sure that we can look our public in the eye and give us money and funds whether that's for particular programs or other fundraisers in the community and tell them that we are spending their money on what we tell them we're supposed to be spending on as I mentioned this whole discussion really kind of began at the convention last year when we started reviewing annual financial reports for a year in 2021 we all know that our annual financial reporting period is the same as our membership period which is July 1st through June 30th so our twenty twenty two year just into June 30th right so what's that mean? it's time for everybody to start reviewing the financial reports together and getting them to either the 4th and the end of the national organization by September 30th so what are some of the things that we look at when reviewing annual financial reports and again it's our responsibility ultimately to make sure that we're doing more supposed to with money it's my responsibility to identify that funds aren't going where they're supposed to reach out to departments and chapters and question and get answers and figure out what's going on so as a result of that we had required details for certain specific fundraisers certain expenditures donations and other guests so when we're looking at annual financial reports typically we'll find that accurate in other words how much money came in from a particular fundraiser how much money went out to a particular program so most expense lines on the ANR certainly require a schedule so if you've got a line item for grants for homeless or needy veterans you just can't put a dollar amount on there and say this is the amount of money that you spend on homeless and needy veterans during the course of the year you got to break that down into detail you got to tell us at minimum the name of the veteran that you helped how much that how much money was provided to them or how much support was provided to them and what support was it or rent was it or electricity was it or in all of the real affairs that they get tuned from their job to help support their family we have to be accountable not only to the public but to each other's members as chapter members we have to ask questions don't just take the word of the treasurer standing up there and giving a financial report that yes this is what we've done during the course of last month this is what we've done during the year make them show you because unfortunately there have been instances where a chapter has been led to believe that there are there's $100,000 in the bank so the chapter treasurer gets reported every month and he's done that $100,000 in the bank and then come to find out because they've never the chapter has never asked for copies of bank statements found out that there is no $100,000 anymore he's been using his own personal piggy bank or ATM machine for the last year so be accountable to each other not only to the public but be accountable to each other ask to see statements as members of the chapter as members of the department so I mentioned earlier about getting recognition letters from our nation remember what we were talking about if we're going to support another organization to fund a particular program that is in line with our target purpose of providing services to disabled veterans and the families it's our responsibility to get a recognition letter back and saying, hey, you know, hey, thank you for giving me chapter one for your $5,000 contribution to support our almost better understanding down on August 7th, 2022 for case one meeting because of course those are certainly required on the most important that you could require on the annual financial report you've got to provide some documentation and validation that's more than one you've spent but it also makes it easier to share with the public if you need to so other mistakes we see not providing the appropriate schedules for expenditures not providing the correct bank statements excluding the names of authorized bank signers and bank names and locations the reason that's important is obviously the necessity to revoke the charter or not necessarily a department that's not happening I said it couldn't but it's typically a chapter and so therefore the appropriate department need to know where those funds are located so that they can go and gather them and keep them as an equal family whether they have them shuffle off from the organization or walk to one of the members some more common mistakes on AFR since it is that time of the year as well as incorrect reporting of membership dues from the national organization we have found that there are some chapters out there that are still requiring I shouldn't say still requiring but that are asking for and requiring their members dues every year and sometimes they're quite costly so our bylaws are very very specific we only dues of a member in DAB are those that are directed towards their life membership in DAB chapter can't have their own internal dues program, collection or process as a second line they're not providing for the quest trust and then most specifically the quest reporting program how many of you are aware of the quest reporting program from national so if you guys listen to the forward record report either at the initial forward record meeting on Friday or the report given this morning we hear a lot these days about funds and donations coming in by way of requests wills and trust we get these all the time but one thing that we notice is that on a good occasion on some occasions we get it in the mail it came to us but it's not it's not ours it doesn't belong to the national organization nobody dropped it in the mail and sent it to the national organization but it really was intended for a chapter the world was intended for a department so being good stewards of our own response and the intent of their donation obviously and being legally binding upon the quest of trust we forward it along to the chapter of the department along with the message say hey have you seen this national headquarters and we're viewing it it is very clear that either by way of the name of the entity along to the quest of the trust or the address used for the quest of the trust or the EIN number used for the quest of the trust this clearly belongs to your chapter of your department so that was becoming more and more frequent so that kind of started the process of our legal team thinking this is happening to us all the time certainly it's got to be happening at the chapter level and the department level as well so therefore that is what prompted the creation of the quest of court approval so anytime a chapter or department receives a legal document of a quest for the trust along with the check where the case might be that information hasn't been uploaded and provided to the national organization to make sure that those funds are truly intended for the chapter or the department and again it's all of our intent to have the best wishes and uphold the final wishes of a person who depends of their donation so very seldom when a request for trust is reported through the request of reporting program do we ever identify and say well hey chapter one is truly truly yours it was intended to come to national but it does happen and that was the wish of the deceit so we certainly want to make sure legally that we follow their wishes and it just keeps everybody honest keeps everybody out of trouble and again we do it regularly any request any trust that we get the exact same scrutiny and evaluation goes into it we want to make sure that the proper entity is receiving the actual gift but one of the biggest mistakes we can see in any of those entities that have large fundraising operations for the course of the year that generate more than $400,000 of income as a CPA review by a certified public accountant I noticed that a lot of times somebody might have or a chapter or a department might have a building that they sell they no longer are using it they don't need it they acquired it, they sold it they got a request that resulted in them having over $300,000 of income during the year if there's one event or one activity during the course of the year that put the chapter or the department over that $300,000 threshold as long as we've got documentation to assure ourselves that that's where the funds came from nine times out of ten we'll waive the requirement of that CPA review because CPA reviews are not cheap they're not as expensive as a CPA audit but still we certainly want to make sure that we're not wasting the funds and spending them on CPA reviews so if you do have a request or a trust that comes in that's rather large, put you over that $300,000 figure gives us a call because more likely we'll waive that to save you guys $7,000, $8,000 and have a CPA review In closing how many of you have been called from membership report liaisons about your annual financial report either receive a call, an email from either April Pears Denise Bronson others from the membership staff or I see back there you guys did that every year you can figure why at this time you had it all figured out so so our membership liaisons that oversee and look at and kind of crunch the numbers on the executive financial reports they're doing what they're supposed to be doing so if they do reach out to you and they ask you for specific information whether it's from a donation that was made or to justify or validate the donation that was made or to validate a source of income that the chapter received just remember that if they're doing their job they want to keep everybody above board and try to give them a too hard time so probably the best way to ensure as a treasurer of the chapter of the department is keep running by them, right? don't wait until June 30th to now all of a sudden pull out all the receipts all the expenditures, all the bank statements and sit down and spend two days looking for everything and trying to match up to a specific line keep running balance you need to be your supply first start beginning balance as you have income as you have expenses incurred in the course of the year make those immediately so at the end of the year on June 30th all you have to do is print a report that is in line and you can certainly use QuickBooks or any other accounting software to put together a program that is a meter of our annual financial report so that you can have all of your service expenditures are clearly noted on line 12 and keep running entirely during the course of the year so come June 30th you guys can be one of the first to get your reports into us between August 1st and July 1st and September 30th so it certainly makes it easier for you as a chapter makes it easier for our membership of fourth liaisons and it prevents a lot of confusion in terms of going back and forth to the questions between chapters during the course of the year