Restricted funds: management and accounting practices

Restricted Funds

A review of three separate events covering the last 15 years: a 1998 incident involving union members and representatives of the United Mine Workers of America (UMWA), the United Auto Workers (UAW) decision to spend a portion of their 800 million dollar strike fund "to finance its push to unionize the foreign auto manufacturers" (Winston & Strawn LLP. January 2011), and the stated use of strike funds to reduce operating deficits by the Ontario Public Service Employees Union (OPSEU); demonstrate that monies accumulated in a strike fund can be utilized for purposes other than paying benefits to workers in the event of a strike scenario. In each case however, there are varying Union Constitutional guidelines as to how these decisions are made and by whom.

Background

One can read any number of union by-laws and Constitutions regarding union funds, and the preponderance of these set out specific rules on how these dues are to be divided. " The UAW Constitution explains how dues are normally divided with 38% staying in the local union, 30% going to the strike fund, and 32% going to the International Union" (UAW.org. N.D.). Further, the Constitution sets out a rebate share of strike fund monies in excess of $500 million held on account (UAW.org. N.D.). The UAW executive board has authority to manage the strike fund and use it for other purposes; provided that the membership votes in favor. The OPSEU Constitution similarly, articulates that "convention by a 2/3 vote changes the Constitution to allow all or some of our Strike Fund to be converted to general use" (OPSEU Insider. March 29, 2011). The overarching point though is that strike funds may be accessed for purposes other than paying benefits.

The posited question of whether a non-profit organizational board can release the restrictions on money in a strike fund leads to an affirmative conclusion provided that the executive board is authorized in their Constitutions or by-laws to do so. An examination of the aforementioned three incidents provides elucidation into this eventuality.

UMWA

A rally in April 1998 by the UMWA ended in a confrontation between union leaders and union members. The rally was designed to celebrate the eight-hour work day passed a century earlier, however; union members took occasion to protest the union's latest negotiation and contract. "The miners were protesting forced overtime and use of money from the union's strike fund for non-strike related purposes" (Welters, D. & Semple, C. June 22, 1998). As with the UAW's Constitution the board is vested with authority to use strike funds for any purpose with which they see fit. In this case the union members objected to use strike funds from the $100 million dollar pool "to fight a global warming treaty, referring to a recent international treaty that places limits on emissions from carbon-based fuels" (Welters, D. & Semple, C. June 22, 1998). Succinctly, the protesters argue that "they are opposed to the use of the strike fund beyond what it was originally intended to do" (Welters, D. & Semple, C. June 22, 1998).