Chapter Incorporation and Tax Exemption Issues C.

Transcript:Chapter Incorporation and Tax Exemption Issues C.:
Chapter Incorporation and Tax Exemption Issues C. Scott Litch, Esq. CAE Chief Operating Officer and General Counsel slitch@aapd.org Why incorporation matters AAPD Bylaws Chapter VII, Section 1.B. provide that: “State Units shall be duly incorporated, non-profit organizations governed by an adopted constitution and bylaws which shall not be in conflict with or limit the constitution and Bylaws of the Academy.” Legal protection is important – incorporation protects against individual liability of officers and directors. A brief word about directors and officers liability insurance The AAPD provides directors and officers (“D&O”) liability insurance for each of the recognized district and state chapters. This coverage is provided under the AAPD’s overall D&O policy. Note that coverage also extends to those Canadian provinces with state-equivalent chapters. The AAPD pays the premium for this insurance. This membership benefit for chapters hopefully frees up additional resources in your budget. The D&O policy covers directors, officers, employees and the association as an entity, with aggregate coverage of $5,000,000 (including Employment Practices Liability and Third Party Liability) and $2,000,000 aggregate coverage for Fiduciary Liability. Further, legal defense costs are covered outside of the liability limit. The D&O carrier, Arch Insurance, was selected by the American Society of Association Executives their endorsed D&O carrier for associations. D & O Coverage Coverage includes: Up to $250,000 for crisis management costs (including legal and public relations) for fund-raising fraud, management crisis, public relations event, or regulatory crisis. Up to $100,000 for crisis management costs for network security breach and privacy violation. Up to $50,000 in business travel accident coverage. Unlimited extended reporting period for all past board members. Up to $25,000 for conference cancellation. How incorporation works Most chapters are incorporated in their home state. Exceptions: Maryland, Massachusetts and Minnesota are incorporated in Illinois which has a very user friendly non-for profit corporation statute. You can check the status via your Secretary of State’s website. Annual reports with a modest fee must be filed each year to keep the incorporation valid. This can be done online. If your chapter is NOT incorporated let AAPD know. We can help with filing in your state. Our outside law firm Barnes and Thornburg in Chicago has assisted chapters with incorporation. WHAT GOVERNS YOUR OPERATIONS State Not-For-Profit Corporation Law Articles of Incorporation Bylaws- AAPD keeps a number of chapter bylaws on file and appreciates being apprised of any updates. Not being in conflict with