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Did you think the IRS was joking???

Over the past few months, we’ve sent out numerous reminders to member societies and State Fraternal Alliances encouraging them to make sure that they and all their lodges submitted a 990 form to the IRS to ensure their tax-exempt status. Some folks evidently didn’t get the message or didn’t take it seriously because over the past few weeks, the IRS has sent over 11,000 notices to non-profit organizations – including dozens of fraternal lodges – advising them that “your organization’s tax-exempt status has been revoked.” Not exactly the news you want to hear. The Alliance is helping several societies navigate the IRS procedures to ensure that their lodge’s tax-exempt status is reinstated, but like most government programs the process can be complicated, time consuming and potentially expensive. If you’ve received one of these notices and need some help deciphering and complying with it, contact Elizabeth Snyder of the Alliance at esnyder@fraternalalliance.org.  A word to the wise: it’s a lot easier to file those 990 forms by the due date than it is to reinstate your organization’s tax-exempt status. Make sure your society has a procedure in place to get this done each year. Need help? Call or email us and we’ll guide you through that mine field.

Momentum for modernized governance structures continues to build…

We noted with interest an article in the most current issue of GCU’s member publication that the society’s members have overwhelming approved a referendum amending the organization’s by-laws so that the officers are hired by the Board rather than elected by the convention delegates. The GCU Board indicated that they “responded to recommendations from state insurance departments that Fraternal Benefit Societies have a succession plan in place that allows for a continuation of operations in the absence of any of its full time officers. The Board realized that the process in place prior to this referendum did not necessarily guarantee that individuals selected will have the knowledge, experience and expertise to manage the challenges of a company with assets in excess of $800 million.” Congratulations to the GCU Board and executive team, led by President and CEO George Juba (who was officially hired by the Board after the referendum was approved by the members) for their courage in addressing this issue – which has proven to be divisive for many societies – in a straightforward manner. Modernizing societies’ governance structures is one of the most important ways a Board can contribute to the long term health and stability of the organization. I’d like to hear from other societies that have recently updated their governance protocol. What were the obstacles? How did you overcome them? Share your stories with others in the system by posting your comments here or sending them to me in an email…

Members’ Right to Access Board Information…

Many societies have members who ask for detailed information about what goes on with the organization’s Board. Here are a few suggestions from Jed Mandel, the general counsel of Association Forum in Chicago. Mandel’s comments should not be construed as legal advice – you’ll need to consult your own attorney concerning your specific situation. Nonetheless, they do provide a solid baseline on which to build your response to members:

  • There may be a difference between what you must do and what you should do. The “must” part is governed by state law and your organization’s corporate governance rules and policies. In most cases, state law does not require that all members be given access to what happens at board of directors meetings.
  • Further, most organizations’ articles of incorporation or bylaws do not require that board information be provided to members. And yet some organizations have created an expectation of openness and availability of information to members. For example, some groups routinely allow members to attend board meetings, even though there is no “right” to do so and even though attendance by members can compromise the confidentiality of board discussions.
  • So, in general, organizations are not obligated to provide board information (other than, possibly, official board minutes) to members. However, that doesn’t mean that organizations shouldn’t provide such information. In part, the “should the information be provided” question is a function of each organization’s personality and culture.
  • It is prudent to know what the law in your organization’s state of incorporation requires and to establish a policy on information sharing consistent with that law and with practices that organization is omfortable following when a member asks for board information—irrespective of the specific facts of each situation.

One Response

  1. Good info. Looking forward to more.

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