Academic journal article Business Case Journal

Midwest Youth Rowing Club: A Case of Financial Responsibility in a Transient-Member Nonprofit Organization

Academic journal article Business Case Journal

Midwest Youth Rowing Club: A Case of Financial Responsibility in a Transient-Member Nonprofit Organization

Article excerpt


"That's what happens when you don't have a boathouse!"

The statement was a bit of trash-talking from a rival youth rower after his boat had won a race, but it made Rob Smith ask himself, "Why would a kid from another club even think to say that? Taunting over a boathouse?"

Rob was struggling with the whole boathouse idea. As a member of the Board of Directors and the treasurer of the nonprofit Midwest Youth Rowing Club (MYR), he would need to take a position either for or against building a boathouse for the club. The club had been founded three years ago on a shoestring and had just begun to stabilize. It appeared to have reached a viable membership level and had an appropriate inventory of equipment, both in terms of the quantities of boats, oars, etc., and in their quality. Maybe this was the time to take the significant step of building a boathouse.

A boathouse would provide storage and practice space at MYR's lakeside site. It would be a symbol of permanence that could prove useful, if not critical, in sustaining membership and/or to achieving future growth. However, the club was successful without a boathouse and the financial commitment would be substantial. A boathouse could prove too large a burden and lead to MYR's demise. As MYR was a youth sports organization, its members were committed for a relatively short duration, maybe five years on average. This short-term commitment made financing a boathouse challenging for the club as a whole. It also made it difficult to match benefits individual members would receive from using a boathouse to paying for it through dues and fees.

As a board member, Rob had a fiduciary responsibility to the club and its members to act with due care--but he felt that responsibility pulling him in different directions. Acting with due care might mean determining that the financial commitment of a boathouse was too risky and he should oppose it. On the other hand, acting with due care might mean determining that a boathouse was critical to MYR's sustainability and he should favor it.

In the Beginning

Rowing was sort of a "cult" sport in Rob's upper Midwestern U.S. city. That is, the sport had a relatively small number of devoted participants compared with other sports. Two rowing clubs had long existed in the city, each in a different part of the metropolitan area; both established in the 1800s. They were private clubs in which an individual purchased a membership and paid annual dues and activity fees. Club members included descendants of club founders and individuals who had rowed on college teams, most likely on one of the coasts and either returned "home" or found themselves in the upper Midwest through career, marriage, or other life circumstances. Others joined for the competition or for rowing's recreational or fitness benefits. The clubs sponsored competitive racing teams and less serious "sport" racing teams and provided recreational rowing activities--all for adult members. They also sponsored youth programs with competitive racing teams for youth aged 14-18. Youth could enroll in the programs for a fee, but were they not bona fide club members.

Five years ago, Rob's older son fell in love with the sport of rowing at age 14 and rowed with one club's youth program for two years. Then, three years ago, Rob's younger son turned 14 and appeared to be interested in rowing as well. Though Rob found that rowing was subject to some parental over-involvement regarding coaching, competition, etc., he found that it was substantially less so than in other youth sports like baseball and basketball in which his sons had participated. In a conversation with a friend whose daughter had also been in a "cult" sport, Rob and the friend concluded that these sports were still enough out of the mainstream in the metropolitan area that "the parents had not yet screwed them up."

However, Rob had found disorganization in his older son's youth program. …

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