Keeper of the Sporran: Financial Controls and Investment Strategy
- Bart Forbes
- 3 days ago
- 4 min read
By Kenneth T. Erwin, Treasurer, Clan Irwin Association (CIA)
"You must gain control over your money, or the lack of it will forever control you.”
— Dave Ramsey, Founder and CEO of Ramsey Solutions and a co-host of “The Ramsey Show,” a nationally syndicated radio program.
Treasury controls and investment strategy are crucial for Scottish heritage societies because they ensure financial sustainability, responsible stewardship of funds, and long-term viability. Societies often rely on donations, memberships, and grants. Effective treasury controls help manage cash flow, ensuring funds are available for ongoing operations. A well-planned investment strategy allows societies to grow their financial resources, supporting initiatives like ancestral tours, educational programs, and community-building efforts. Proper financial oversight minimizes risks associated with fluctuating funding sources, economic downturns, or unexpected expenses.
By maintaining financial health, societies can invest in digital archives, restoration projects, and outreach programs that make Scottish heritage more accessible to global audiences. Strong financial controls enhance credibility, ensuring funds are used ethically and in alignment with the society’s mission.
Kenneth T. Erwin, Clan Irwin Association (CIA) Treasurer, has offered his own approach as “keeper of the sporran” for his association. Please note that this is not investment advice! You are responsible for your decisions, not Mr. Erwin nor COSCA.
There are many financial related issues that need to be managed when acting as a clan’s treasurer. These issues include: budget formulation and execution, financial controls and reporting, filing taxes, and investing.
Probably the most exciting of these is investing. Since I took over the Clan Irwin Association’s investment strategies in May 2023 our investments are up 87% vs the Standard & Poor 500 (SP500) gain of 27.5%. And the overall level of risk to our portfolio has gone down.
Here are some generic questions and answers that we implement at the CIA.
What financial controls and procedures should be instituted?
This is a critical question and the one I think you should pay the most attention to in your Society. Get this right and the rest will follow.
At the CIA we have a strong history over decades of financial management and reporting.
We track and report on our expenditures by category on a monthly and quarterly basis. This is done by the treasurer and reported to the Chairman level monthly and to the Executive Committee (EC) level quarterly.
Using this data, we formulate our annual budget for the year for each category (income: membership, merchandise, donations; expenses: advertising, donations, scholarship, history and outreach (including our premier publication the Holly Leaf Chronicle), genealogy, games, and generic expenses (postage etc.).
We use commercial banks and software to track, record, and report on every transaction that goes through the Association. No one person has control over the entire system and we have monthly Executive Committee meetings to discuss current balances and future strategy.
Finally, we file federal income taxes annually and review these filings amongst the EC prior to submittal.
I cannot over-emphasize how important the relationship between the Treasurer and the Chairman is in managing a Society’s finances.
What are your short-term and long-term goals?
For the short term, our goals are to track our income and expenses; cover the costs; and work to maintain and increase our membership and sell merchandise so we have cash flow to cover our needs.
For the long term, our goals are to increase our membership and outreach; provide outstanding information in our publications and genealogy research; support and increase our scholarships; and improve our investment position.
What general advice can you provide?
Communication, transparency, and engagement are critical. We publish all our financial reporting to our membership in our publications. Our most difficult challenge is driving engagement. This is a societal level problem and one all Societies are dealing with. Our most current initiatives involve Facebook advertising targeting new members, and recruiting officers. The level of work that the EC does is high and the more people you have helping, the better.
How should a society start investing?
With one exception it is inadvisable to be in one specific stock. Stick with generic investments like the SP500 or an equivalent proxy. After a decent position is established, a Clan can start looking at other more risky investments for a small part of the portfolio (e.g. 5-10% of investments in gold, bitcoin, real estate, or a single stock, such as META). We don’t buy bonds because inflation and interest rate changes are killers to bonds and we have a long term time horizon.
At what level should a society start investing the “surplus” of their treasury?
We hold between $5,000 to $7,000 in our Clan’s operating account at any one time. If you sell tartan material, one thing to be mindful of is that it is getting more expensive and we like to have a lot on hand. You get bigger discounts the more you buy and make sure you buy new tartan material at the best price and you have enough on hand for long term demand. Inflation will impact tartan and costs will go up so buy it now if you have the funding available, even before putting money into investments.
Separately, our Clan goes through about $7,000 per year of expenses, donations, scholarships, genealogy, and our premier publication, the Holly Leaf Chronicle.
If you have funds available above that, you can put your funds into a brokerage (using a 501c3 account) and make decisions on how to build a portfolio over the long term.
What is a good mix for a portfolio?
Until recently, the clan invested solely with Berkshire Hathaway “B” (BRKB), an American multinational conglomerate holding company. More recently we’ve added small positions in MicroStrategy (MSTR), an American technology company; Sprott Physical Gold Trust (PHYS); and Meta Platforms, Inc., (META) an American multinational technology company that owns Facebook, Instagram, Threads, Messenger and WhatsApp.
Kenneth Erwin has been Treasurer of the Clan Irwin Association for the last three and a half years. His professional accomplishments are numerous in the field of nuclear engineering. Send any questions, comments, or feedback via email to: treasurer@clanirwin.org. You can also follow him on LinkedIn.