Dollars and Sense

My Dear Rotarians and friends, in particular my Action Presidents,

I have never doubted the difficulties involved in asking people for money. Asking people to pay levies is never a pleasant job. That is why nobody likes the Government or the Inland Revenue Department in particular.

However, as your Governor-elect or Incoming Governor, I am required under the Manual of Procedure to ask the Presidents-elect at the District Assembly to approve a per capita levy for the purpose of funding the expenses of the District in the ensuing year. Early this month, I sent all my Presidents-elect by fax or email two resolutions to be voted upon at the District Assembly scheduled for 6 May. I also enclosed a two-page paper explaining why. I should add, for what you think it would worth, that the proposals had the firm backing of my Provisional Governor’s Policy Committee (GPC), the equivalent of a government cabinet. Now, my GPC comprises six Past Governors, three serving Assistant Governors and two Past Assistant Governors, in addition to the Immediate Past Governor and the Governor-elect. I preside all meetings. One would like to think that following the advice of so many wise people couldn’t be wrong.

I have since been advised by some of my Incoming Assistant Governors and Presidents-elect that perhaps I should provide more background information, hence this letter. So, Rotarians and friends, lend me your ears.

First, let me briefly state the need for the two resolutions. The first Resolution asks members in Hong Kong to pay a per capita levy of $1,100 and members in Macau, $830. The corresponding amounts for the present year are $525 and $335 respectively. The second Resolution proposes a package of financial reforms to provide the District Administration the flexibility it would need to do a better job.

Put in percentage terms, I am seeking more than a 100% increase in annual dues. In absolute terms, everyone is his or her own best judge to decide whether it is money’s worth to pay that amount for the maintenance of the District. Suffice it to say that everyone pays an annual sum to remain a member of a club, and that in Hong Kong, the monthly fee for most club membership runs to about $1,000.

The 2000-2001 Budget

Let me now briefly explain what has been happening in the past and why I have decided to perform this quixotic feat before I tell you how your annual feel of $1,100 will be spent.

Our District established a District Fund in 1989, June 3, 1989 to be exact. Each year, the Incoming Governor proposed and the Incoming Presidents approved a per capita levy. Perhaps times were good, or perhaps people were less inquisitive, but mainly because the District Administration collected from each club a fee for each and every district project on top of the per capita levy, the District ended up having surpluses in most years. Six or seven years ago, we had accrued close to $1 million surpluses, including funds on accounts maintained by the Rotary Information Centre (RIC). It was then suggested that such surpluses were merely idle money and might not benefit anyone or the District. Successive District Administration had therefore proposed and adopted deficit budgets using the handy surpluses. The result is that by now, we have less than $100,000 in reserves, out of which we need to budget for $90,000 for repair works to the external walls of the building that houses our RIC. This means the District will start with almost nothing in the till in July 2000, not a very promising state of finance indeed.

Against this background, I began to prepare the budget for next year. My objective is to propose a balanced budget that would finance the essential and unavoidable programs that the District has been carrying out for years. In addition, I hope the District should maintain a healthy surplus to meet urgent and unforeseen needs that ought to be met in the interest of Rotary in general and of the District in particular. For the record, I am of the view that the decision to wipe out the surpluses of the District Fund was not based on sound and prudent financial principles.

The recurrent essential and unavoidable Rotary programs include the Rotary Youth Leadership Award for which each club has been asked to pay $6,000 each year; the Presidents-elect Training Seminar, $700; the District Assembly, $2,800; programs for youths, $3,000; and other unforeseen items, such as the Group Study Exchange with China, special publicity supplements to coincide with the Presidential Conference in Hong Kong and others. On average, each club pays an additional amount of about $15,000 each year in addition to the mandatory per capita levy. Now let us look at the sums.

For 1999-2000, the District collected about $878,000 from the per capita levy. This was supplemented by a subsidy of $85,000 from the District Fund, so that the budget for the year was $963,000. However, the District will actually be spending about $1.7 million, taking into account the sum of $720,000 (48 x $15,000) collected from clubs from time to time.

Taking into account the expenditure trend in recent years and the known commitments of the District that must be met, including the staff salaries at the RIC, I have drawn up a budget of $1.9 million for next year, broken down as follows:


Maintenance of the RIC 645,000

Staff salaries


Office expenses




Public Relations and IT 200,000

General PR


Information Technology


District Directory


Subsidies for conferences 130,000

District Conference


Other conferences


Training 248,000

District Assembly






Youth Programs 600,000

Group Study Exchange




Youth Forum




Environmental awareness




Total 1,900,000

If this budget is approved, the District will no longer need to go to clubs during the year for contribution towards the various on-going projects I mentioned above. It means that we will not collect the around $15,000 each year from each club for PETS, RYLA, District Assembly, GSE and so on. It means that the Action Presidents-elect, who would then be Action Presidents, will not need to go to their respective Boards and seek approval for the money. It means that clubs and the District Administration will no longer need to waste time on collecting money and chasing after late payments, or on performing other administrative chores that would not add value to our mission, objective and service. Think of the time that can be saved and the misunderstanding between clubs and members that can be avoided.

Very importantly, it would create more awareness in each member of our mission and programs. Each member in the District can proudly tell his or her friends that each Rotarian contributes equally and equitably towards the Rotary program of the District, a program that stresses on our commitment to young people and our desire to add Rotary to our membership through training.

Those of you who are good at figures would notice that I am relying on increases in membership next year to bring in the estimated revenue of $1.9 million. If we fall short of the membership target, we would need to either curtail the program or raise the levy, but this will be something the Presidents and the District will need to study and examine collectively during the year, which brings me conveniently to the second Resolution.

Finance Reforms

The second Resolution seeks to introduce reforms to our system of financing the District Administration in general and financing district projects in particular. Very briefly, so far the District has adopted a convention that goes like this. If an activity was not budgeted for in the Resolution, money in the District Fund cannot be spent. In short, there is no built-in flexibility. The convention is partly responsible for money voted and not spent in the past. That was why the District had to seek agreements from Presidents at their Joint Presidents’ Meetings every time a new spending initiative came up in the past. In my proposal, the District Administration, on the advice of the District Finance Committee (which I would come back to later) will operate the approved budget and seek to contain spending within the budget. The immediate response to a new expenditure proposal will be whether the Budget can support it as opposed to how much each club needs to fork out to pay for the proposal.

I have also proposed that all Presidents will be members of a District Finance Committee with responsibility to amend the Budget and to approve expenditure proposals during the year. It means empowering the Presidents, not removing authority from them. To allow flexibility that would enable the District Administration to commit the District to worthwhile projects at short notice, I have sought delegated authority to spend not exceeding $80,000 on any item.

Once again, and not surprisingly, this has raised eyebrows. Let me quickly assure the membership that this is not a device to enable the Governor to spend as he wishes. No, he does not need that power, and indeed the proposal in the Resolution should not lead to that scenario. First, one should bear in mind that the Budget is limiting. Of the total Budget of $1.9 million, if approved, only $27,000 or 1.4% would be for contingencies. Any proposal to spend on a new project, as I explain before, would not automatically lead to increased spending overall, but rather would result in another project not being carried out unless there are savings achieved from other projects. The delegated authority being sought must be looked at as a package of reforms being proposed. It has regards to the balance between responsibility and authority, something that was not evident under the present system. I have already said that the system seeks to empower the Presidents, let me complete the picture by saying that the system also seeks to make the Governor more accountable through a built-in system of checks and balance. The fear that the Resolution would increase spending is therefore groundless.


I have been asked what the consequences are if the Resolutions are not approved. Subject to legal advice, the short answers are as follows. Rejection of the first Resolution would result in there being no Budget for the District next year. Bearing in mind that the District Fund is almost empty, it means that we will be unable to pay staff salaries or their severance payments. As regards the second Resolution, if rejected, it would mean that the District would be unable to introduce or implement reforms that would enable us to keep pace with our needs.

Finally, I appeal to my Action Presidents-elect and their good sense to vote for the two Resolutions so that we can better serve the District and its needs and so that we can be more useful to our fellow human beings. If I were doing this for a company, public or private, I would be doing something else. I would follow past practices, propose a minimum per capita levy that would be barely sufficient for staff salaries and maintenance of the RIC; I would let the Presidents continue with the practices of their predecessors to argue for continuing with well established and well tried out Rotary projects, and to seek approval from their respective boards for spending moneys on them. But I am not in that sort of business. I am a Rotarian talking to Rotarians whose business is not about politics but about service and serving the people who need our service. I am cautiously optimistic that common sense would prevail in the end.

Talk to you soon.

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