The Real McCoy? 

 Are you familiar with the saying, “A 

good deed never goes unpunished?”. It 

may be true. I was traveling on TDY last 

fall and stumbled upon an employee group 

organized to raise funds for local 

orphanages. Some of the members took 

the time to show me pictures of the 

children. Unfortunately, it was my 

responsibility to inform post 

management that the 

organization needed to disband 

or establish itself under the 

umbrella of the employee 

association at post. 

Employee groups 

(sometimes referred to as 

spousal groups) have existed at 

many posts overseas for a 

number of years. It is believed 

that their beginnings were likely 

informal social gatherings of 

dependents at post. Over time, 

many of these groups began to 

play expanded roles taking on 

new shape and meaning. Some 

assumed the role of organizing and 

sponsoring fundraising activities to 

provide the Community Liaison Office 

with the financial resources to host 

community events. Still others, lacking a 

CLO coordinator at post, began to 

fundraise in order to subsidize 

community events. In 

the case described above, proceeds from 

fundraising activities provide support to 

local communities in need. 

In their fundraising efforts, employee 

groups identified the need to secure 

additional resources in the form of space, 

manpower, and funding. As a result, some 

groups began purchasing and reselling 

logo and gift merchandise. Others began 

holding happy hour events. Space and 

other resources were made 

available at many posts. 

Boards of Directors were 

formed, often a mix of 

dependents and USG 

employees. Operating 

documents came into being 

and bank accounts were 

established. Ad-hoc 

accounting and filing 

systems were put into place 

if any were done at all. Yet 

none of these groups 

acquired insurance policies 

or ensured that funds were 

properly safeguarded. 

 So, what’s wrong with 

this picture? Maybe nothing. Maybe not. 

 Section 31(a) of the State Department’s 

Basic Authorities Act gives the Secretary 

of State the authority to “authorize and 

assist in the establishment, maintenance, 

and operation by civilian officers and 

employees of the Government of non-

“...6 FAM 500 

regulations 

provide the only 

authority that 

allows the USG to 

support employee 

organizations by 

furnishing space, 

utilities, and 

other forms of 

logistical support. 
Government-operated services and 

facilities at posts abroad, including the 

furnishing of space, utilities, and properties 

owned or leased by the Government for 

use by its diplomatic, consular, and other 

mission and posts abroad.”. Regulations 

carrying out this legislation are contained 

in 6 FAM 500. In fact, 6 FAM 500 

regulations provide the only authority that 

allows the USG to support employee 

organizations by furnishing space, utilities, 

and other forms of logistical support. 

These authorized groups are generically 

referred to as employee associations. 

So, how do employee associations 

differ from employee or spousal groups? 

In some instances, the only difference is 

the authority, or apparent lack thereof, to 

exist. Some of these groups 

are performing employee 

association functions (e.g., 

procuring and reselling 

goods, organizing 

community events, hosting 

happy hours, etc.) but are 

not authorized to do so. 

Some are doing so with 

space and utilities provided 

by post – putting the USG 

at risk since employee 

groups are not appropriately insured. And 

worse, those individuals who are 

performing these good deeds may be 

putting themselves at personal risk should 

a lawsuit be filed. They are not covered by 

any bonding or liability insurance and the 

USG cannot indemnify them. Employee 

associations exist, in part, to solve these 

kinds of issues. 

As more and more of these 

organizations are identified, we have met 

with great resistance to right the wrong. 

Much of this resistance stems from the fact 

that employee groups are concerned with 

the loss of fundraising revenue as 

employee association revenue is subject to 

an annual assessment by the Central 

Commissary and Recreation Fund. Recent 

discussions with the Department’s Family 

Liaison Office yielded similar concerns 

given that fundraising efforts often benefit 

CLO programs at post. As such, we will 

be seeking approval from the Central 

Commissary and Recreation Fund Board to 

exempt certain fundraising revenue from 

the annual assessment. A notification will 

be provided to the field pending the 

Board’s review of the request. 

Although the financial aspect is 

troubling, some employee groups also 

struggle with the loss of control over the 

activities as groups are folded into existing 

employee associations. The elected 

employee association Board of Directors 

assumes responsibility for monitoring all 

association activities and must therefore 

have the corresponding 

authority to do so. The 

employee group’s board 

may be appointed by the 

association’s Board of 

Directors to serve as a 

subordinate fundraising 

committee. The 

committee could then 

make recommendations to 

the Board on fundraising 

activities and how funds 

should be disbursed. 

Other concerns may exist. As such, it is 

our goal to ensure a smooth transition by 

developing guidelines for doing so. 

Guidelines will be issued in the coming 

months to assist posts in identifying those 

groups that will be affected and how 

transitions should occur. 

In the interim, we encourage your 

questions. Please contact CR Director 

Diane De Vivo or Operations Team Leader 

Annie Cocchiaro by phone (202-663-

1330), fax (202-663-1329, or email 

(crlogon@erols.com). 

The above article was written by CRonicle 

Editor Annie Cocchiaro. 

“...those individuals 

who are performing 

these good deeds may 

be putting themselves 

at personal risk should 

a lawsuit be filed. 

They are not covered 

b b di
Beg, Borrow, or Steal? 

Financing Capital Improvements

I like to get cooled off in the 

hot season, and I have a taste for 

ice cream. The only problem is 

that I quickly get debilitating ice cream 

headaches. You know, the kind where 

your brain freezes from ice cream 

overload? What I want is to be cooled off. 

Some of the people like ice cream some of 

the time, but in the hot months all of the 

people want to be cool all of the time. 

A good ice cream maker and a new air 

conditioner cost about the same amount of 

money to purchase and install. The 

difference in the two, from a financial 

perspective, is that the ice cream maker 

will directly generate revenues against 

which the costs can be charged. The costs 

of an air conditioner are real, but its 

benefits are harder to calculate. You might 

even say they are nebulous. Either way, if 

you try to charge people for cold air, 

they’ll think you are blowing smoke. 

 Americans like their ice cream to be 

only so soft. Without a good air 

conditioning system, members are going to 

stew. “Build it and they will come” is the 

old adage about baseball parks. Install a 

new air conditioning system at the 

American Club and members will stay and 

eat ice cream all day long. 

 If the association is flush with cash, you 

could simply write a check and chill out. 

Not an option? Well, this is where the 

begging, borrowing or stealing comes in. 

As associations tend to have a captive 

market, you could turn to the membership 

to finance a new air conditioning system 

by increasing member fees and deposits. 

Personally, I prefer an increase in fees over 

deposits due to the fact that it may be some 

time before you realize adequate cash flow 

to allow for the return of deposits. 

Borrowing may be a good alternative as 

interest rates remain low. Employee 

associations are not prohibited from 

acquiring loans from banking institutions. 

Loans for capital improvements may also 

be available from the Central 

Commissary and Recreation Fund. 

Applications are available from the 

CR intranet site 

(http://aoprcr.a.state.gov) via the 

Department’s internet explorer. 

Central Fund loan interest rates are set 

at the rate of interest of U.S. Treasury 

bonds corresponding to the term of the 

loan. For example, if the term of the loan 

is for three years, the interest will be set at 

the three year Treasury bond yield. The 

date for establishing the rate will be the 

date of the loan application. 

Making the case, in the form of a 

business plan for the funds being 

requested, can be simplified when the item 

being financed is known to generate “X” 

dollars of revenue over a certain period 

while you incur “Y” costs. It is, of course, 

the net profit from that activity that allows 

for the financing. From a cashflow 

perspective, research will be required to 

determine if the venture is feasible. 

Central Fund loan applications are 

reviewed in CR with recommendations for 

approval forwarded to the Central 

Commissary and Recreation Fund Board 

or Finance Committee (depending on the 

amount of funds being requested). Loan 

requests have been heavily scrutinized in 

recent months given that one former 

employee association defaulted on a loan 

and another came close to default. As a 

result, we have placed stricter 

requirements on the approval of loans and 

believe fewer loans may be approved in 

the future. 

Being a Certified Public Accountant 

from Minnesota, where I was required to 

take an ethics exam, I won’t even suggest 

methods of stealing. Robbing Peter to pay 

Paul does happen, but generally gets you 

into trouble with Mary. 

The above article was written by CPA and 

CR Accountant Chuck McShane. 
Employee 

Association 

Manager of the Year 

Award 

In April, Ms. Willemieke 

McCarthy of the American 

Community Association 

(AmCom) in Addis Ababa, Ethiopia was 

selected as the 2002 Manager of the Year 

(based on her performance during 2001). 

In her nomination, the AmCom Board of 

Directors cited Willemieke for restoring 

the association to financial health, 

strengthening internal controls, increasing 

the association’s membership base through 

successful implementation of the Third 

Country Diplomat program, and increasing 

sales by 22 percent over the previous year. 

Congratulations to Mr. Edward Brown 

of the United States Employee Association 

(USEA) of Islamabad, Pakistan and Ms. 

Ingrid Romero of the Post Employee 

Services (PES) association of Bogota, 

Colombia for second and third places, 

respectively. 

The remaining nominees in alphabetical 

order by post are: 

Leo Parpart – Cameroon 

Carolyn Spicer – Dar es Salaam 

Annette Nuttall – Dhaka 

Cheryl Ross – Kuwait City 

Tara O’Day – N’djamena 

Carmen Jimenez – Panama City 

Robin Huyett – Quito 

The annual awards process is 

announced each January. Nominations are 

submitted by Boards of Directors based 

upon the manager’s performance for the 

calendar year just prior. The winners 

receive framed certificates and a cash 

award. Copies of this year’s nominations 

are available from CR upon request. 

Congratulations again to 

the winners and nominees 

for making 2001 a great 

year! 

As you can see, the CR 

mailbox is still a bit empty. 

At the time of this writing, 

we are a few short weeks before the June 1 

submission of the compliance 

certification. The May 1 deadline for the 

submission of the questionnaire, 

association prepared financial statements, 

and audit report has come and gone. 

Unfortunately, a number of employee 

associations remain delinquent in 

submitting one or more of these reporting 

requirements. We encourage employee 

associations to meet these deadlines and 

keep us informed of unexpected delays. 

The information we gather from these 

reports assists us in supporting you. For 

those associations currently delinquent in 

submitting one or more reports, please 

contact us and request an extension of the 

due date. We are available by phone 

(202)663-1330, fax (202)663-1329, 

Department email, or via the internet 

(crlogon@erols.com). 

Please, 

Tell Us Who You Are.... 

 

On occasion, CR receives unidentifiable 

financial reports, questionnaires, inquiries 

for guidance, etc. from employee 

associations. What some may not know is 

that there are a number of employee 

associations using the same acronym 

and/or same name. Therefore, sending 

correspondence from the “AEA” or the 

“American Embassy Association” may not 

tell us much . Did you know there are 

more than a dozen employee associations 

using the acronym “AEEA”? Please 
remember to include city and country on 

all correspondence. 

Operating 

Documents 

Why all the fuss?!? 

 Per 6 FAM 551.1, “All employee 

associations must operate under a charter 

approved by its Board of Directors and the 

Assistant Secretary for Administration.”. 

Employee associations have no authority 

to operate in the absence of an approved 

charter. In addition, 6 FAM 552 and 525 

mandate the requirements for approved 

bylaws and license agreements. It is 

important that documents are current at all 

times. 

How do you know when an 

update or revision is required? 

THE CHARTER 

 As you may know, the charter provides 

the association’s legal name and also 

outlines all services and activities to be 

provided. Therefore, a revised charter is 

required... 

 When a name change takes place (even 

if the change is so slight that the 

acronym remains the same). Also, we 

will ask for confirmation that all legal 

records and documents have been 

changed accordingly. 

 Prior to the implementation of new 

services/activities. 

 When an association is approved for 

mini association status. 

It is also a good idea to revise the 

charter when a significant number of 

services/activities are being cancelled or 

when the document is simply outdated due 

to changes in the CR boilerplate. 

THE BYLAWS 

The bylaws primarily provide 

designated membership categories and the 

corresponding privileges, parliamentary 

procedures and Board composition. 

The bylaws should be revised when... 

 A name change takes place (even if the 

change is so slight that the acronym 

remains the same). 

 The employee association conducts 

branch operations at any place not 

listed in its current bylaws. 

 Membership categories and/or changes 

in the privileges accorded to specific 

membership categories. 

 Any changes in provisions pertaining 

to the Board of Directors, elections, 

meetings and the conduct of meetings. 

Bylaws may also be required as a result 

of a policy change that was previously 

included in the bylaws. We discourage the 

use of the bylaws for documenting specific 

policies such as fee/deposit structures for 

this reason. 

THE LICENSE AGREEMENT 

 The license agreement (in the past 

referred to as a Memorandum of 

Understanding) primarily outlines 

logistical support provided by the USG, as 

well as the employee association’s location 

on USG owned or leased property. 

 The license agreement must be revised 

when... 

 A name change takes place (even if the 

change is so slight that the acronym 

remains the same). 

 The terms for reimbursement change. 

 The location of the employee 

association’s facilities change. 

A revised license agreement will also be 

required if the employee association takes 

over the operation of USG owned or leased 

TDY quarters. Special language is 

required for employee associations 

operating USG owned or leased 

TDY quarters. 
Why are these things so hard 

to get approved?!? 

They’re not. Or, at least, they shouldn’t 

be. 

Boilerplates are provided for each of the 

documents. The boilerplates have been 

approved by an Attorney Advisor in the 

Department and contain provisions 

designed to specifically protect the 

association, its officers and members, as 

well as the USG. As such, we become 

sticklers when some of the standard 

language is altered. But, it’s for your own 

protection! 

So, how do we get 

started? 

1. Obtain the appropriate 

boilerplate(s), All 

boilerplates are available from our 

intranet site. Access to the site is via 

the Department’s Internet Explorer. 

From the Department of State 

homepage, click on “Bureaus and 

Offices” and then “Administration”. 

Scroll down and click on “Office of 

Commissary and Recreation Affairs”. 

The boilerplates may be found in the 

“Library” link. 

2. Make all the appropriate changes. For 

the charter, this should simply be a 

change in services/activities and/or the 

association’s name. For the bylaws, 

Sections 3-6, 9, 13-15 and 17-18 of the 

boilerplate should remain as written. 

For the license agreement, paragraphs 

5-6 and 8-12 should remain as 

written. 

3. Forward the document via email or fax 

for preliminary review. 

4. Upon CR review, we will either let you 

know there are required edits or we 

may ask for clarification. The 

documents should be resubmitted with 

any edits and appropriate clarification. 

Once we reach an acceptable 

document, we will inform you. 

5. In the case of the bylaws, a 

membership vote must be taken. 

6. The final step will be to submit the 

original, signed document. 

When forwarding the original 

document, please ensure the designated 

signatures have been obtained. For the 

charter, the signatures of at least two 

Board members and the Principal Officer 

or his/her designee to the Board of 

Directors is required. The bylaws must 

contain the signatures of at least three 

Board members. The license agreement 

should be signed by the appropriate post 

management and Board of Directors 

representatives. 

 Upon final approval, copies are 

provided to post. The original documents 

remain on file in CR. 

Copies are always 

available upon request. 

The above article was 

written by CR Operations 

Officer Christy Chesnutt. Please contact 

the CR Operations Team if you have any 

questions regarding your operating 

documents. 

Here We Grow.... 

Welcoming the newest CR employee 

 The newest edition to the CR 

Operations Team, Christy Chesnutt is the 

former General Manager of the American 

Employees Association (AEA) in Vienna, 

Austria. Prior to that, Christy served as the 

AEA’s bookkeeper. She is a native Texan 

and is currently a senior at the University 

of Maryland studying for her Bachelor’s 

Degree in Accounting. Christy is engaged 

to a Foreign Service Officer she met in 
Vienna and is currently planning a 

November 2002 wedding. 

The next issue of The CRonicle 

will be published in August 2002.