Use of Regional Funds


A. Background.

The Regional Directors of the World Tang Soo Do Association (the “WTSDA” or “Association”) oversee, and have the primary authority and responsibility regarding the use of, the funds in the Regional Accounts.  Many of these accounts were established years ago as a means to provide each region with sufficient funds so that regions would not need to rely on receiving advances or reimbursement from Headquarters as needed for regional events such as tournaments, Black Belt tests, Dan camps, etc.   As the regions are divisions of WTSDA, and not separate legal entities, the funds, by definition, are funds of WTSDA.  Regional Directors and Regional Treasurers are, during their tenure as such, custodians acting on behalf of WTSDA.  In effect, Regional Directors and Treasurers are trustees of those funds, and must treat them accordingly.

B. Policy. 

The overriding principle regarding use of the funds is that regional funds may not be used to benefit, or satisfy the obligations of, any WTSDA member (as a reminder, there are Gup members, Dan members, Master members and Studio members).  The guidelines provided below are based on this principle.  They are also not intended to be an exclusive list of circumstances, but guidelines and samples.  When in doubt, guidance should be sought from the Treasurer/Finance Committee.

The overriding principle can be summarized as follows:

If an expense is incurred by virtue of the Regional Director’s status as a Master Instructor of WTSDA, that expense is not a Regional Expense.

If an expense is incurred strictly as a result of a Master being a Regional Director, that expense would be a Regional Expense.

When in doubt, the best policy is to seek approval from the Association President or Treasurer before the expense is incurred.

  1.  Prohibited Uses.  Things regional funds may NOT be used for:
  2. To pay expenses for any member of the region, including the Director, when the expense involves travel that the Regional Director would be required to incur as a Master Instructor, such as attendance at the Masters’ Clinic or at the World Championships.
  3. To entertain members of the Region, such as a decision to host a dinner for the regional instructors.  See below for a possible exception to this rule.
  4. To purchase equipment for any studio in the region.

Notwithstanding the above, there may be situations in which the use of regional funds may be appropriate in situations closely related to the above.  See Section 2 below.

  •  Possible Permissible Uses.  Regional Directors should remember that what is, and is not, permissible is often a facts and circumstances determination.  That means that no 2 situations should be assumed to be the same and just because an expense is permissible in one situation, does not mean it will automatically be permissible under all circumstances.  Situations in which the use of regional funds should be appropriate:
  • Travel incurred by a Regional Director to events within the Region.  The basis for this rests on the expectation that the Regional Director will attend all events within the Region, whereas other Ko Dan Ja may attend some, but not all, events.  Note that when any Ko Dan Ja, including a Regional Director, is invited to teach at a member studio, the member studio should reimburse travel, not the Region.
  • Costs incurred directly to benefit the region, such as venue costs for events, storage costs for regional equipment (but only if the storage rental is with an unrelated storage company, and not a studio), equipment to be used by the region, such as targets for Black Belt testing.
  • Costs incurred to invite a guest (Grandmaster or Senior Master) to a regional tournament or other regional event, with the caveat that such costs must be reasonable.  Reimbursement can include all out-of-pocket costs incurred by the guest, such as transportation to/from guest’s local airport, parking at the airport, etc.  Regional Directors should not, however, be inviting multiple guests to regional events, since one responsibility of a Regional Director is to maximize event profits to benefit the Association.  This permissible use of funds does not apply to family members.  As an example, should the Grandmaster, as an invited guest, wish to bring his/her spouse, the expenses incurred for the spouse would not be reimbursable, unless the spouse was performing an integral service for the event, such as the services performed by Mrs. Strong at the Masters’ Clinic.  Such a situation would be rare, and, to avoid any possible misapplication of the policy, any time a guest wishes to bring a spouse and believes the spouse will be performing an essential service at the event, prior approval should be obtained from the President or Treasurer.  Note that should the guest wish to bring his/her spouse and pay for the travel costs, it would still be permissible to reimburse the hotel room, provided there is no incremental cost for having an extra guest in the room.  This concept is what’s known as the “no cost fringe benefit”.  Again, the best defense against a misapplication of the policy is receiving advance approval.
  • While a Regional Director’s expenses to attend a regional event may be reimbursed, those costs must be reasonable in nature.  Reasonable expenses would not include first class airfare, luxury hotels or car rentals, or luxury accommodations within a facility, except in those instances in which the Regional Director’s room serves as a hospitality suite for an event, in which case an upgrade would be appropriate.  Similarly, lavish meals and beverages are not appropriate.  Accordingly, the Association may implement a per diem allowance in lieu of actual costs, at the discretion of the Treasurer and President.
  • Costs incurred to reward those who work at an event, such as a dinner.  It would never be appropriate to pay workers.  There should be a recap of the successes and areas of improvement for the event at the dinner.  There needs to be a recognition that volunteers are, by definition, not expecting, nor are they supposed to receive anything in return for their service.  A volunteer event would not be considered necessary to maintain the mission of the Association, and, as such, any recognition must be kept to a de minimus amount.  Rewarding volunteers with leftover merchandise from the event should be a permissible use of regional funds, since most logoed merchandise (i.e., those with dates or the names of the events on them) for a specific event loses its value when the event ends, and the merchandise would be considered a form of advertising when worn by a member.
  • There may be instances in which the region purchases equipment for regional use, such as large screen TV’s to be used at regional tournaments, and permits member studios in the region to use the equipment when not being used by the region, provided the studios understand that the equipment is property of the WTSDA and must be returned should they no longer be a member (such acknowledgement and agreement may be requested in writing, depending on the nature of and expense associated with the equipment).  This should be a permissible use of the region’s equipment provided that all schools within the region have the same access to the equipment.  There can be no special treatment to any studio.  This applies even more so to studios owned by “people in authority”, who are defined as those on the Board, officers, and those given authority by the Board.  Their studios are not to be treated differently than other studios.

C. Procedure.

As a general matter, those items and expenses which are not ordinary and necessary must receive prior written approval before the expense is incurred.  To obtain approval, a Regional Director is to submit a written note (can be a simple email) stating (1) the expense to be incurred, (2) the reason the expense should be a regional expense, which must explain how the expense benefits the mission of the Association, and (3) if the expense is for items which would be considered assets (e.g., ipads, tvs, cleaning equipment, etc.) a detailed explanation of how the items will be stored (or used) between sanctioned events.  Documenting the logic for incurring an unusual regional expense before the fact is the best protection for the Association and the Regional Director.

There are certain expenses a Regional Director may wish to incur that would otherwise not be an appropriate reimbursable expense, such as the occasion in which a Regional Director rents a van to go the Masters’ Clinic because he intends to pick up Masters flying in from other countries at an airport too far from the Clinic for scheduled transportation.  In instances such as these, discussion with the President or Treasurer should occur prior to even requesting approval. 

D. Other requirements/restrictions.

  1. Accounts.  Regional bank accounts should not be used as a clearing mechanism for an event that a member studio wants to host.  If a regional bank account does not exist or cannot be used for any reason, the Regional Director must discuss the options with the Treasurer.  No member studio should use its own bank account as a Regional account.    

Member studios (or personal) bank accounts should not be used as a clearing mechanism for regional events.  Comingling of Regional funds with personal or individual studio funds is not appropriate.  All regional accounts should be in the name of WTSDA- Region #, and should be opened using only the WTSDA’s taxpayer identification number.  Using a personal social security number to open a regional account will result in any funds flowing through that account being recognized by the IRS as personal income to the individual.

  • Submission to HQ.  Regional Directors owe a fiduciary duty to WTSDA, and this duty includes maximizing net revenue from Regional events to support the operations of WTSDA.  Funds not needed for the Region’s expected out of pocket costs should be remitted to WTSDA headquarters to sustain the operations of WTSDA.
  • Expense Reports.  Regional Directors must review expense reports for anyone in the Region seeking an expense reimbursement, and must sign off on such reports.  Further, Regional Directors must prepare expense reports for those expenses for which the Regional Directors seek reimbursement, and those reports are to be submitted to, and approved by, the Association Treasurer or President before any reimbursement is made.    
  • If there is ever any doubt, the Regional Director should consult with WTSDA Treasurer.

E. Ramifications.

It is important to know that failure to comply with this policy (and the corresponding procedures) puts the WTSDA’s tax-exempt status at risk.  Additionally, the receipt of an improper benefit could result in taxable compensation or income to the individual who received the benefit.  Failure to comply may also result in punitive measures, including, but not limited to, removal from the position as Regional Director, Committee Chair, or other officer position or additional time in grade before promotion to next rank.