The monthly IRC board meeting of Software in the Public Interest will take place later today, as announced by SPI’s secretary last week. While the announcement is back on time (yay!), the agenda isn’t (aww!).
I’d be quite interested to learn how SPI is going to try to reduce the risk to its reserves, given the current slow decline of its primary bank which is not one of the first US banks getting bailed out. I think the best way for not-for-profits to avoid risking donations at the moment is to avoid having them in their bank accounts, in line with the Better Business Bureau standard that
“the charity’s unrestricted net assets available for use should not be more than three times the size of the past year’s expenses or three times the size of the current year’s budget, whichever is higher.”
Back in June 2005, SPI’s board of the time (Ian Jackson, John Goerzen, Jimmy Kaplowitz, David Graham, Bruce Perens, Benj. Mako Hill, Branden Robinson) decided to “remain noncompliant” with that standard and I fear that chicken could be coming home to roost now. I hope we don’t lose anything, but AIUI we’ve got nearly $150,000 in play.
Update: Unlike its UK analogue, the Federal Deposit Insurance Corporation covers corporation accounts up to $250,000, so SPI is only risking temporary unavailability, not yet a risk of loss. Thanks to bd_ for pointing me to that.
Are non-profit organizations not subject to FDIC insurance? I know that’d only cover $100,000 of it, but if it applied you’d just need to move $50,000 to another bank and you’d be fine, right?
Excellent point! One of the scandals locally has been that the UK FDIC-like plan (the Financial Services Compensation Scheme) hasn’t covered charities (or small businesses), but I hadn’t checked the US details.
Unusually, the US banking system seems to be better than the UK one here. http://www.fdic.gov/news/news/financial/2008/fil08102a.html says that SPI’s balance would be covered up to $250,000. So we’re $100,000 away from this being a terrible risk.
It still seems a good idea to split the accounts between banks, because compensation schemes can take quite a while to pay-out, which could hinder project support.
Thanks for helping me check this out!
It’s not really a problem with the US system, at least for the amount of money within the insured limits. They just pass the accounts over to another bank and there’s a delay of a few days at most, when we access our usual bank accounts under new ownership. If they can’t find another bank to take it, the FDIC runs the bank itself until they can sell the deposits. They don’t tie people’s money up unavailably.
I read over on http://www.co-opnet.coop/viewtopic.php?t=793#p2654 that Washington Mutual (“not very mutual”) was “seized” by FDIC last month. News stories like http://www.tmcnet.com/usubmit/-uneasy-customers-pull-cash-from-washington-mutual-/2008/09/29/3675732.htm?p=news suggest that account holders were only slightly inconvenienced for a short while.
BTW, as if that wasn’t bad enough for WaMu, Microsoft want their licensing fees… http://seattle.bizjournals.com/seattle/stories/2008/10/06/daily20.html