Not a target. Not a goal. A cap written into our bylaws.
Administrative expenses shall not exceed five percent of annual dues and donations, or $2,500, whichever is greater. — LCV Bylaws, Article VI
Most organizations tell you an overhead percentage they achieved last year. It’s a result. It can change. Nobody has to answer for it.
Ours is a ceiling in the governing document. The board cannot exceed it by deciding to. Changing it requires amending the bylaws, which requires a vote of the members. If we ever break it, it will be visible in the annual report and it will be a governance failure, not a rounding error.
That’s the difference between a marketing number and a rule.
This is not a definition we invented to flatter ourselves. It’s how the IRS Form 990 itself categorizes nonprofit expenses: management and general vs. program services. We use their line, not a friendlier one.
The cap reads “5% or $2,500, whichever is greater.” Here’s the honest reason.
In year one, our fixed legal costs — state filings, D&O insurance, a bank account, accounting software — run roughly $1,000 to $1,500 no matter how frugal we are. Five percent of a small first-year budget is less than that. A pure 5% rule would make it mathematically impossible to carry insurance, which would be irresponsible.
So the floor covers a small organization’s unavoidable legal minimum. The 5% figure governs from roughly $50,000 in revenue upward — which is the point where anyone comparing organizations starts looking. As we grow, the floor becomes irrelevant and the 5% cap does all the work.
We could have written “5%” alone and quietly broken it in year one. We’d rather publish the arithmetic.
On every disbursement above $500.
By bylaw, the Treasurer may not be the President. The person who watches the money is not the person who spends it.
Every reimbursement requires a documented business purpose and receipts within 60 days, with excess advances returned. It applies to the President exactly as it applies to a first-week volunteer.
And an annual financial report to members even when the numbers are tiny. The habit matters more than the amounts.
Not after.
The annual report goes to every member automatically. Our IRS filings are public.
Under the board-adopted compensation policy, the President’s compensation is tied to defined revenue milestones. Below the first milestone, no cash compensation is paid — a stipend is authorized by the board and recorded as conditional, payable only if and when the organization reaches revenue targets set in advance. Reasonable and documented business expenses are reimbursed under the accountable plan from day one, at every stage.
Compensation is set only by disinterested directors, with the President recused, using comparability data from similarly-sized civic organizations, and recorded in contemporaneous minutes — the three steps that give rise to the IRS’s rebuttable presumption of reasonableness under the excess-benefit rules.
The full ladder is published in our governance documents. We would rather you read it than wonder about it.
A meet-and-greet costs almost nothing. A workshop costs the price of printing. The Empty Ballot List costs postage and somebody’s Saturday.
The reason we can cap administration at 5% isn’t discipline. It’s that the work itself is cheap and the results are large. Ten dollars puts a name on a ballot. Your thirty-dollar membership is not a drop in a bucket here — it’s a meaningful fraction of what it costs to give a county an election it wasn’t going to have.