risk management overview with meg tully, cae meg tully, cae association development director

Risk Management Risk Management OverviewOverview

withwith Meg Tully, CAEMeg Tully, CAEAssociation Development Association Development

DirectorDirector

What Will You What Will You Learn?Learn?

Learn how to minimize your Learn how to minimize your Chapter’s risk through proper Chapter’s risk through proper management of:management of:

Governance DocumentsGovernance Documents

InsuranceInsurance

Business ManagementBusiness Management

What is a Chapter?What is a Chapter?

Group, organization or association Group, organization or association that has a formal relationship with that has a formal relationship with a parent or umbrella organization a parent or umbrella organization and has jurisdiction over a and has jurisdiction over a geographic areageographic area rather than an rather than an activity or special interest.activity or special interest.

Governance Governance DocumentsDocuments

Keeping these documents up Keeping these documents up to date is vital to date is vital toto protect your protect your ChapterChapter against legal liability. against legal liability. These include:These include:

– Charter AgreementCharter Agreement– Articles of IncorporationArticles of Incorporation– BylawsBylaws– IRS Group Tax ExemptionIRS Group Tax Exemption– Policies and Procedures Policies and Procedures

ManualManual– Job DescriptionsJob Descriptions

IECA ResponsibilityIECA Responsibility

IECA maintains documents governing our IECA maintains documents governing our relationship with Chapters:relationship with Chapters:

– Charter AgreementCharter Agreement Legal rights & responsibilities of each; to be Legal rights & responsibilities of each; to be

updated soon with input from CACupdated soon with input from CAC– IECA BylawsIECA Bylaws

Summary of organizational governance and Summary of organizational governance and rulesrules

– IRS Group Tax ExemptionIRS Group Tax Exemption Extends IECA’s 501(c)(3) status to US Chapters. Extends IECA’s 501(c)(3) status to US Chapters.

Requires Chapters to have bylaws similar to Requires Chapters to have bylaws similar to IECA and file tax documents annually.IECA and file tax documents annually.

IECA Chapters

Chapter ResponsibilityChapter Responsibility

IRS Financial ReportingIRS Financial Reporting

To maintain group exemption, US Chapters must complete a new To maintain group exemption, US Chapters must complete a new Form 990, Form 990EZ or Form 990-N.Form 990, Form 990EZ or Form 990-N.

OverviewOverview

First changes to Form 990 in 30 yearsFirst changes to Form 990 in 30 years Applies to 2008 activityApplies to 2008 activity More financial info at More financial info at StayExempt.org: http://www.stayexempt.org/StayExempt.org: http://www.stayexempt.org/

RecommendationsRecommendations Use an accountant familiar with non-profit accounting to ensure Use an accountant familiar with non-profit accounting to ensure

proper submittal of annual information to the IRS. proper submittal of annual information to the IRS. Chapters outside the US should follow the rules regulations Chapters outside the US should follow the rules regulations

appropriate for their respective countries.appropriate for their respective countries.


Form 990’s 2008 Tax Year (Filed in 2009 or 2010)Form 990’s 2008 Tax Year (Filed in 2009 or 2010)

Form to FileForm to File

Gross receipts normally ≤ $25,000: 990-N (E-Postcard) Gross receipts normally ≤ $25,000: 990-N (E-Postcard) Gross receipts > $25,000 and < $ 1 million, and Total assets < $2.5 Gross receipts > $25,000 and < $ 1 million, and Total assets < $2.5

million : 990-EZ or 990 million : 990-EZ or 990 Gross receipts ≥ $1 million, or Total assets ≥ $2.5 million: 990Gross receipts ≥ $1 million, or Total assets ≥ $2.5 million: 990

Form 990-NForm 990-N Due by 15Due by 15thth day of 5 day of 5thth month after close of tax year month after close of tax year Info needed: EIN, Tax Year, Legal name and mailing address, name Info needed: EIN, Tax Year, Legal name and mailing address, name

and address of principal officer, web siteand address of principal officer, web site Failure to file for 3 consecutive years jeopardizes tax-exempt status.Failure to file for 3 consecutive years jeopardizes tax-exempt status. More Info: More Info: http://www.irs.gov/charities/article/0,,id=169250,00.htmlhttp://www.irs.gov/charities/article/0,,id=169250,00.html


Articles of IncorporationArticles of IncorporationEstablish a U.S. Chapter as a separate legal entity in the Establish a U.S. Chapter as a separate legal entity in the state in which it is based. Outside the U.S., may be known as state in which it is based. Outside the U.S., may be known as proof of business determination.proof of business determination.

This Means:This Means:

Greater freedom for ChapterGreater freedom for Chapter Can enter into contracts in your own nameCan enter into contracts in your own name Can file legal actions in your own nameCan file legal actions in your own name Requires filing your own reports with Requires filing your own reports with

state and federal authoritiesstate and federal authorities Responsible for own financial debtsResponsible for own financial debts Need to maintain “good standing” status with state Need to maintain “good standing” status with state every every

yearyear

Ensure your state Secretary of State lists Ensure your state Secretary of State lists the Chapter in its database. Usually this the Chapter in its database. Usually this can be accessed on line. Ensure a current can be accessed on line. Ensure a current officer or designee (e.g. Chapter attorney) is officer or designee (e.g. Chapter attorney) is listed as a contact.listed as a contact.

Pay the annual filing fee and complete any Pay the annual filing fee and complete any state-required paperwork. State fees can state-required paperwork. State fees can range from $25 - $500 a year.range from $25 - $500 a year.

Chapters based outside the US should Chapters based outside the US should maintain good standing according to their maintain good standing according to their specific laws and regulations.specific laws and regulations.


Maintain “Good Standing” (U.S. Chapters)Maintain “Good Standing” (U.S. Chapters)

Did You Know?Did You Know?

If you do not maintain your Chapter’s If you do not maintain your Chapter’s incorporation status, members may be incorporation status, members may be generally held generally held personally liablepersonally liable for the for the debts and other liabilities of the debts and other liabilities of the Chapter!Chapter!


BylawsBylawsDefines legal provisions of the Chapter including Defines legal provisions of the Chapter including officers, elections, governance, etc.officers, elections, governance, etc.

Policies and Procedures ManualPolicies and Procedures ManualDetails how a Chapter will conduct business including Details how a Chapter will conduct business including meetings, finances, code of conduct, etcmeetings, finances, code of conduct, etc. . Valuable to protect Valuable to protect Chapter director and member interests.Chapter director and member interests.

Job DescriptionsJob DescriptionsSpecifies the roles and responsibilities of each Chapter Board Specifies the roles and responsibilities of each Chapter Board member and any Chapter employeesmember and any Chapter employees. Protects Chapter . Protects Chapter directors from legal liability.directors from legal liability.

Insurance OverviewInsurance Overview

Business Owners (General Liability)Business Owners (General Liability) Directors & OfficersDirectors & Officers Errors & OmissionsErrors & Omissions Event Liability InsuranceEvent Liability Insurance Event CancellationEvent Cancellation

All Chapters should appoint a risk manager (usually a director) to manage the Chapter’s exposure to risk of financial loss. This person should be familiar with insurances and be responsible for the Chapter’s insurance coverage such as:

Business OwnersBusiness Owners(General Liability)(General Liability)Coverage typically includes:Coverage typically includes:

Premises loss of use and medical expenses Premises loss of use and medical expenses for office site activities, natural disaster, etc.for office site activities, natural disaster, etc.

Auto use, records and financial protectionAuto use, records and financial protection Employment practices, e.g. harassment Employment practices, e.g. harassment

protectionprotection Protection against alleged negligence Protection against alleged negligence

resulting in bodily injury, property damage or resulting in bodily injury, property damage or claims of slander or defamation of characterclaims of slander or defamation of character

Directors & Officers Directors & Officers InsuranceInsuranceCoverage typically includes:Coverage typically includes:

Protection against allegations of “bad Protection against allegations of “bad decisions” or “wrongful acts” such as decisions” or “wrongful acts” such as making misleading statements about making misleading statements about Chapter services and policiesChapter services and policies

Protection against claims of false Protection against claims of false advertising or marketing practices advertising or marketing practices (e.g. privacy rights)(e.g. privacy rights)

Employment Practices Liability similar Employment Practices Liability similar to general liability insurance but to general liability insurance but specific to D&O personsspecific to D&O persons

Other InsuranceOther Insurance

Errors & OmissionsErrors & Omissions– More comprehensive than D&OMore comprehensive than D&O

Event Liability InsuranceEvent Liability Insurance– One-time coverage for off-site Chapter One-time coverage for off-site Chapter

eventsevents Event CancellationEvent Cancellation

– Financial protectionFinancial protection in case a Chapterin case a Chapter event can’t be heldevent can’t be held

Costs & Costs & ConsiderationsConsiderations Cost depends on the way the Chapter Cost depends on the way the Chapter

conducts business on a daily basis. conducts business on a daily basis. Does it have an office? Assets? Does it have an office? Assets? Employees? Events? Employees? Events?

Risk ManagerRisk Manager – appoint someone to be – appoint someone to be in-charge in-charge

Selecting a Broker – Selecting a Broker – it’s personal: find it’s personal: find one whose personality type and one whose personality type and objectives match your Chapter’s objectives match your Chapter’s needs.needs.

Business ManagementBusiness Management

Each Chapter should also beEach Chapter should also beprepared to manage other risksprepared to manage other riskswhich may arise.which may arise.

Member Data UsageMember Data Usage – CAN-SPAM act of 2003 – CAN-SPAM act of 2003 (Controlling the Assault of Non-Solicited Pornography (Controlling the Assault of Non-Solicited Pornography and Marketing)and Marketing) and “opting out”and “opting out”

Legal WorkshopsLegal Workshops – Directors should participate to gain – Directors should participate to gain a working knowledge of association lawa working knowledge of association law

Retain Legal CounselRetain Legal Counsel – expect to pay $175-$250/hour. – expect to pay $175-$250/hour. IECA can provide a recommendation.IECA can provide a recommendation.

Indemnity ProtectionIndemnity Protection in state statute and policy of the in state statute and policy of the Chapter (usually in bylaws)Chapter (usually in bylaws)

Next StepsNext Steps

As always, Chapter success and IECA’s As always, Chapter success and IECA’s success are dependent on each other.success are dependent on each other.

We will expand We will expand “Managing Chapter “Managing Chapter Finances”Finances” to include this presentation to include this presentation material.material.

We will add a We will add a checklist of itemschecklist of items you will you will need to do on an annual basis. Look for need to do on an annual basis. Look for it as part of the charter agreement it as part of the charter agreement revisions.revisions.

Call us at any time to get help on Call us at any time to get help on any of these areas of responsibility.any of these areas of responsibility.