• Karen Avidar

Tips for managing your sports team’s funds

It’s not uncommon for nonprofit organizations, such as sports teams, to create a banking policy only after cash has gone unaccounted for, or even missing. In fact, millions of dollars go missing each year in the youth sports sector alone because of poor banking practices. So what’s the best way to manage your sports team’s money? First, it starts with choosing the best bank account for your sports team and putting in place some guidelines for better financial management. In this article, we’ll teach you how to manage your sports team’s funds more efficiently.

Why are sports teams vulnerable to fund mismanagement and fraud?

Before we talk about how to manage your sports team’s funds, we’d like to discuss why sports teams are vulnerable to fraud and fund mismanagement in the first place. As sports organizations, such as sports clubs, grow larger, many begin opening team bank accounts that are managed by volunteer treasurers. Opening a bank account for a sports team enables the team to operate independently of the sports club and alleviates the burden on club administrators. While this can provide a sports team with flexibility, it also creates risks when the account is not managed well.

According to the Center for Fraud Prevention, there are three main reasons why sports organizations such as youth and college sports teams are vulnerable to fraud:

  1. Members are volunteers. Finding volunteers that have a financial background or experience is difficult, and usually, the volunteers who offer to take on the role of treasure have little financial experience. If we’re being honest, for most sports teams, the treasurer is one of the important jobs that nobody wants, which makes the position vulnerable to mismanagement and abuse.

  2. The organization lacks a formal structure. In well-run organizations, monthly financial reports are generated and carefully reviewed by officers and boards of directors. Moreover, there are checks and balances in place for those who have access to organizational bank accounts. This is not always the case with sports teams. Because of the lack of financial experience among volunteers who often run team bank accounts, financial reports are not generated or no one on the board is experienced enough to review them. Furthermore, many sports teams have no formal budgeting process where organizational leaders can compare budgeted figures with real-time figures. Many sports teams do not have a board or do not have volunteers willing to oversee the sports program, resulting in an informal group of people with undefined roles left in charge of running the organization.

  3. Volunteers are part of the same community. Board members and other organizational leaders of sports teams are usually neighbors, parents of kids who go to school together, or college students who attend classes together. There is an inherent level of trust that is unique to these types of organizations and this trusting environment can lead to someone committing fraud or embezzlement as they may believe they cannot get caught. The risk for fraud increases when the same person holds the position of treasurer for several consecutive years and a natural level of trust is in place. In reality, sports teams are vulnerable to fraud precisely because of the trust that exists within the organization. Usually, the organizations that lose the most money to fraud and embezzlement are usually the ones who have the same people in a role, especially the role of treasurer, for several years.

How to establish best practices for your sports team

Open a team bank account

The first tip we have for managing your sports team’s funds is to open a bank account for your sports team if you don’t have one already. Creating an account for your team, that is separate from your Club’s account, is the best way to take responsibility for your funds and implement best practices for your team’s financial management.

Opening a bank account for your sports team rather than choosing to rely on peer-to-peer payment services is critical. Sports teams should not allow the use of personal Venmo or PayPal accounts to collect funds from teammates and donors since there is no way to fully control these accounts. When you set up a team account on a peer-to-peer payment provider such as Venmo, your team volunteers will have to sign up using their personal information and the accounts are not transferable. Furthermore, there are several other risks, including tax implications, that make using a peer-to-peer payment app a risky choice for your sports team.

Setting up a separate bank account for your sports team is the first step you can take to gain back control of your organizational finances and make managing team money easier and more accessible.

Create a financial handbook with policies for your team

After setting up a bank account for your sports team, the next step you can take to guide your sports team to financial success is to set up rules and guidelines regarding team funds and how they are handled. It’s essential for your sports team to establish some basic rules for how your treasurer manages your organizational funds so that everyone is on the same page about how to manage organizational finances. These guidelines should include your sports team’s policies on expenses, such as expenses for tournaments, games, and travel, as well as record keeping, and team fundraising. You can use our free template to create a treasurer handbook with financial policies for your sports team.

Create a team budget

Team budgets help your organization plan and maintain control of expenses. To keep things consistent, we suggest using a budgeting template for team treasurers, such as our budget calculator. Make sure to choose a deadline by which the team budget should be completed and distributed to the rest of the team (for example, before the first game of the season). Your sports team budget should include tournament registration fees, trips, travel expenses, and any other event that will require team payments.

After creating and sharing your budget with the rest of your sports team, the next important step is to periodically check in to compare your budget with your sports team’s actual spending. We also recommend checking your budget at the end of each season. Conducting these reviews establishes an environment that is less susceptible to abuse and keeps the whole team accountable for team expenses.

Our playbook for financial success

Your sports team does not have to suffer financial losses. You can prevent fraud, embezzlement, and fund mismanagement in your organization by implementing a few simple steps that will keep your sports team's funds safe and secure. By setting up a bank account for your sports team, creating a treasurer handbook, and putting in place a budget, your sports team will be better positioned to thrive financially. By following these steps, your sports team will establish effective financial controls and accounting for your team funds.

Crowded’s solution for sports team banking

Crowded is the first banking and financial management platform designed specifically for member-based nonprofit clubs and groups. We work with a range of youth-focused organizations such as student clubs, sports clubs and teams, and fraternities and sororities to offer them an all-encompassing solution for easy fund management.

With Crowded, your sports team can store, collect, and spend organizational funds using one login. Some of our game-changing features include digital Visa® debit cards for easier management of team expenses and a payment request builder that enables you to collect, receive, and track incoming payments with an intuitive and automated user experience.

Curious to find out if Crowded is the right banking partner for your sports team? Let’s talk about it.

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