Policy & Protocol Changes FAQ

1. What will change?

Policy 8.4, Section 1A states the specific fixed amounts of per-member membership dues transferred to the District via the District reserve account to support District activities. This will change these specific fixed amounts to a flat 25% of the amount of membership dues collected by Toastmasters International.

Additionally, this recommendation proposes that the 25% allocation be defined as the “District Membership Dues Allocation.”

2. Why is this being changed?

To simplify the governing documents, Policy 8.4, Section 1A lists six (6) different amounts to be allocated to the District, depending on the membership dues period. These fixed amounts are based on a 25% allocation of the prorated dues amounts paid by each member to Toastmasters International, and therefore must be changed any time there is a change in member dues.

These amendments will eliminate the need to further amend this policy whenever a membership dues change goes into effect, and to eliminate the multiple fixed-dollar allocation amounts in favor of the flat 25% these amounts are meant to represent.

3. Does this change the membership dues paid by the member?

No. Membership dues are governed by Policy 8.0 and will remain unchanged.

4. Does this change the portion of the membership dues allocated to Districts?

No. Districts will continue to receive 25% of the membership dues received by Toastmasters International.

1. What will change?

There will be a term of “District Membership Dues Allocation,” as indicated in the amendments to Policy 8.4, Section 1A, to be used in Policy 8.4, Section 4 to define the District contribution that supports District activities by Toastmasters International.

2. Why is this being changed?

To eliminate ambiguity relating to the calculation of the District’s five (5) percent contribution. Policy 8.4 states that “each District will contribute five (5) percent of its previous year’s membership income annually”; while it was always intended that this will be understood to mean five (5) percent of the 25% dues allocation, as opposed to five (5) percent of the District’s total membership revenue, the lack of clarifying terminology led to occasional confusion. The amended wording clarifies this point.

3. Does this change the amount Districts contribute to Toastmasters International to support District activities?

No. The change only adds wording to clarify how the District contribution amount is calculated.

1. What will change?

Policy 8.4, Section 1A states the specific fixed amounts of per-member membership dues transferred to the District via the District reserve account to support District activities. This will change these specific fixed amounts to a flat 25% of the amount of membership dues collected by Toastmasters International.

Additionally, this recommendation proposes that the 25% allocation be defined as the “District Membership Dues Allocation.”

2. Why is this being changed?

To emphasize District leaders’ fiscal responsibility and encourage the implementation of fiscal policy that furthers the District mission while encouraging break-even budgeting.

3. If our District’s reserve falls below the Required Retention, how do we make up the difference?

In the subsequent year, the District will need to realize a profit by increasing revenues or decreasing expenses to cover the deficit. Exceptions may be made with the approval of the Chief Executive Officer.

1. What will change?

Protocol 8.4, Section 3 has been amended to establish and define the term “Required Retention,” which refers to 25% of the prior year’s District Membership Dues Allocation. This change will require that 50% of the surplus of the June 30th District reserve amount that exceeds 1.25 times the Required Retention be reallocated to Toastmasters International for purposes supporting the organization’s strategic plan and enhancing overall member value. Please note reallocations are calculated once a year at the program year-end and will be reflected on the June statement.

2. Why is this being changed?

This change is being implemented to ensure the organization’s funds are used effectively. The District reserves have increased 185% from 2011 to 2018, and as of June 30, 2018, they have globally exceeded the Required Retention by over 4 million USD. This proposal allows the organization to access these idle funds and use them effectively in support of its strategic plan and the enhancement of overall member value.

3. Does this transfer District funds to Toastmasters International?

No. District accounts are the property of Toastmasters International, and the disposition of District funds is ultimately determined by the Board of Directors. Per the Bylaws of Toastmasters International, Article XII, Section 2: All expenses incurred by Districts “shall be paid, subject to the approval of the Board of Directors, out of Toastmasters International funds authorized by the Board for District activities and operations in accordance with District expense policies adopted by the Board.” The amendments are in line with this system and constitute a means by which Toastmasters International may reallocate funds to maximize value to the member and the organization.

4. If Toastmasters International is charging five (5) percent as a District contribution, why is it also receiving funds from the District via this protocol update?

The five (5) percent District contribution is made to offset costs for specific District-related initiatives (e.g., the District accounting system, the lead management system, Concur, various banking fees, etc.) incurred by Toastmasters International, while the reallocation only applies when Districts accumulate District reserves over a given threshold.

5. What is the effective date?

The changes will become effective on July 1, 2020, with operational practice for District budgets starting with the 2020-2021 term. The first District reserve reallocation adjustments would be recorded on the June 2021 District statement.

1. What will change?

Protocol 8.4, Section 4 will be updated to set the annual budgeted District Membership Dues Allocation equal to the prior year’s District Membership Dues Allocation.

2. Why is this being changed?

This update has been the practice of the organization during the annual District budget process; this simply formalizes it into protocol.

3. Will Districts be able to budget a different District Membership Dues Allocation?

Yes, Districts will be able to budget a different District Membership Dues Allocation if so approved by the Chief Executive Officer. Districts may request an exception if historical trends support a budget different to the prior year’s District Membership Dues Allocation. Additionally, if general market conditions suggest another budgeted amount should be used in a given budget year, it will also be within the authority of the Chief Executive Officer to make an exception to protocol.

1. What will change?

Protocol 8.4, Section 4 will be updated to disallow Districts from budgeting expenses that exceed revenues.

2. Why is this being changed?

To promote good fiscal management by requiring Districts to develop operational plans to be economically self-sustaining each year.

3. Does this mean a District cannot realize an actual overall loss?

No. Occasionally, unforeseen difficulties (e.g., unfavorable market conditions, natural disasters) may arise that may prevent Districts from realizing their budget for the year. Generally speaking, however, Districts are expected, at minimum, to break even each year.

4. If a District is not able to budget a loss, how can it use any of its District reserve greater than 1.25 times the Required Retention?

The intent of the protocol update is for each District Leadership Committee to practice good fiscal management and not depend on past District reserve surpluses to maintain fiscal performance.

5. What should a District do if its preliminary budget results in a loss?

A budgeted loss stems from either a revenue shortfall or excessive planned expenses. The District’s first act should be to look for areas where expenses can be reduced. If a District has exhausted all of its possible expense reductions, it should look for other sources of revenue consistent with the District mission. If a District can demonstrate a history of favorable membership growth trends, it may appeal to the Chief Executive Officer to budget the District Membership Dues Allocation at an amount over that of the prior year.

6. If a District has excess District reserves over the Required Retention, how can we use these funds?

Even though Districts will not be able to budget a loss, actual performance could result in a loss, and this would have the effect of using a portion of the excess District reserve over the Required Retention. This is a provision that Toastmasters International will need to monitor to ensure it is not intentionally used to materially draw down District reserves. Additionally, if the District reserve is growing, the District may request an exception from the Chief Executive Officer to budget its Membership Dues Allocation at an amount greater than what was earned in the prior year.

1. What will change?

Protocol 8.4, Section 1A is being changed to better support the District mission and highlight those categories that Districts should be focusing the majority of their spending on. The addition of Protocol 8.4, Section 1C reinforces that failure to appropriately manage District funds, as outlined throughout Protocol 8.4, may result in financial penalties or disciplinary action being enacted against the District.

2. Why is this being changed?

The current Protocol 8.4, Section 1A provides a listing of spending priorities, but leaves it unclear how each relates to the District mission and the order in which Districts should focus on them. Moving forward, District budgeting priorities and the relevance of each to the District mission should be substantially clearer.

3. What happens if a District fails to comply with the funds usage priorities outlined in the governing documents?

Any noncompliance relating to District funds usage may result in possible disciplinary action and/or the withholding of District funds and reimbursements.

1. What will change?

Allowable budgeting maximums are changing to better guide Districts toward building budgets that further the District mission, as indicated in the revised Protocol 8.4, Section 5G. Modifications have been undertaken to overhaul the budget expense category table for readability, and to revise and expand multiple District expense categories for clarity and improved distribution of funds. Language was added to require the following activities to break even: annual District conference, the District store, and fundraising. Any losses in these activities will be deducted from the District Membership Dues Allocation in the following program year.

Further, the percentage of budget funds considered allocated toward a particular spend category will henceforth be derived from the budgeted District Membership Dues Allocation, rather than a District’s total budgeted expenses.

2. Why is this being changed?

After an in-depth review of District financial statements, it was determined that an update was required to better align with District actual spend patterns, as well as the District and Toastmasters International missions.

3. Is this too restrictive for the Districts?

The updates provide guidance and direction on how best to achieve the District mission and the District Success Plan. The modified budget expense category limits better focus District spending and enforce greater accountability on District leadership. Since actual District spending patterns were used to establish these category limits, they should be sufficient to achieve the goals of the District Success Plan.

4. Why does a District need to make up a shortfall of a break-even event if the District’s overall revenues exceed expenses at the end of the term?

This measure ensures that the District practices good fiscal management for individual profit center events and for the District budget as a whole. The membership relies on District leaders to make sound fiscal decisions, and proper management of these events is key to demonstrating the ability to make such decisions.

5. A District experiencing a shortfall related to a break-even event may not need to complete the process outlined in Question 4 if “exempted by the Chief Executive Officer.” What does this mean?

6. What is “marketing outside Toastmasters”? Why is there a minimum? Is this money going to World Headquarters?

7. What if a District needs more than a given percentage of its budget to be allocated to a particular spend category?

1. What will change?

Multiple updates were made to Protocol 8.4, Section 4 to better ensure the District is meeting its financial communication obligations within a proper timetable and approval schedule. Modifications have been undertaken to include: (a) additional signers and controls on single expenses over 500 USD; (b) an amendment of the signatory policy on the District budget to certify the understanding and participation of District leaders in its creation; (c) the expansion of profit-and-loss statement sharing within the District to a monthly timetable; (d) clarification of those parties responsible for the approval of District expenses; (e) and reorganization of the documents to maintain consistency between Protocol 8.4, Sections 4M and 6E.

2. Why is this being changed?

The update better defines District-level financial controls.

3. Why was the Finance Manager removed from the consultation process of the 500 USD expense?

Per the original wording of the amended section, District leaders were not required to submit the expense to the District Finance Manager for approval, merely “consultation”; replacing this “consultation” with formal approval from the Program Quality Director or Club Growth Director adds an extra layer of financial control to such expenses.

1. What will change?

Updates to Protocol 8.4, Section 5 better clarify the budgeting process and remove confusion.

2. Why is this being changed?

The update better clarifies who will provide and present the budget—and when they will do it—during the budgeting approval process.

3. What is the effective date?

The update will become effective on July 1, 2020, with operational practice for District budgets starting with the 2020-2021 term.

1. What will change?

Protocol 8.4, Section 6 is to be updated to better explain and provide guidance for the biannual District audit process.

2. Why is this being changed?

District audit materials are to be delivered to the District Audit Committee and Toastmasters International on the same date. The update will now provide a two-week period between the dates that the District Audit Committee and Toastmasters International must receive the documents, affording the Audit Committee additional time to review said documents.

This recommendation additionally provides a clear listing of items to be delivered to the District Audit Committee, as well as a thorough accounting of the parties responsible for presenting the audit report to the District and the final audit package to Toastmasters International.

3. Is there enough time for the Finance Manager to deliver the documents to the District Audit Committee?

With assistance from the District Finance Department at World Headquarters, Districts will have enough time to deliver the documents to the audit team if they are managing their finances effectively and are up to date.

4. What is the effective date?

If approved by the Board of Directors, the recommended changes would become effective on July 1, 2020, with operational practice for District budgets starting with the 2019-2020 year-end audit.