Why Do Associations Exist?

Individuals united by a common interest or concern

Coming together to accomplish something it would be impossible to accomplish alone

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1.8 Million Associations in the United States Alone

86,000 trade and professional associations

1 Million philanthropic or charitable

More than 1,000 new associations formed each year

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There Is An Association For Everything (Examples Drawn from National Groups

Only)

International Staple, Nail and Brad Association

Specialty Fastener Association

American College of Obstetricians and Gynecologists An additional 12 national groups representing

specialties within the field

Frozen Potato Products Institute

Society of Investigative Dermatologists

Society of Dance History Scholars

American Society of Association Executives

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Associations Are (Generally) Corporations

Not for profit Corporations Under State LawMembers instead of shareholders or owners

Federal Tax Exempt Status501 (c)(6): Business League501 (c)(3): Charitable, Scientific, EducationalPAC/527: Political

No part of its net earnings inure to the benefit of any private shareholder or individual

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As Directors or Officers of a Not For Profit Corporation…

You still need to operate in a business-like manner and bring in more dollars than you spend

You face the same legal obligations that directors of a for profit corporation face

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Legal Duties Duty of Care

Act honestly, reasonably and diligently Stay informed; ask questions

Duty of Loyalty Act in interests of the association

Not self/business

Not state/region

Not professional sector

Avoid conflicts of interest Support the Board once a decision has been made

Duty of Obedience Act in accordance with mission Consistent with policies, procedures and positions

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AntitrustNo discussions that could be

construed asRaising, lowering or stabilizing

prices or fees

Restricting availability of services

Allocating markets, territories or customers

Encouraging boycotts or exclusions of persons

Even when this means appearing to condone business practices that are fully legal, but distasteful

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Antitrust (cont.)Noerr-Pennington

Doctrine

Safe-harbor immunity protection

Protects lobbying efforts to change laws and official rules

Protects good faith litigation

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Revised IRS Form 990Good Governance Practices

Regulation by Question:

Conflict, Whistleblower & Document Retention/Destruction Policies (SOX)?

Minutes of Board & Executive Committee Meetings?

Compensation procedures & disclosures?

Board review of Form 990 before filing?

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Revised IRS Form 990Good Governance Practices

(cont.)

Review, Compilation or Audited Financial Statements (w/Audit Committee)

Public availability of governance docs, 990, financials

Business & family relationships between directors, officers and key employees

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Conflicts of InterestLegitimate dualities of interest exist, which may

or may not create an actual conflict.

A conflict is created where a director has a direct or indirect interest, financial or otherwise, in a matter involving your association

Financial investment or interest

Management position

Leadership role with decision making authority

Volunteer or for compensation

Actual or Perceived

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Conflicts of InterestThe Board not the individual

determines if a conflict exists and determines the appropriate remedy.

Remedies:Disclosure

Recusal

Resignation

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Due ProcessApplies to conflicts and all other association

actions (e.g., membership, complaints, other disagreements

Decisions should be fair and reasonableNOT arbitrary and capricious

Persons likely to be adversely affected by actionOpportunity to be heardFair and impartial decision-maker

Fair and most likely to lead to the right conclusion

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Board & Member VotingBoard

Duties cannot be met if there was not an opportunity to deliberate

Three permissible modes In person at meetingBy teleconferenceUnanimous written consent w/o meeting

No voting by proxy or mailProvisional action: ratified at later date

Membership (more lenient)Mail, electronically (online or email),

in person, by proxy as designated in Bylaws & allowed by state law

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The “Business Judgment” Rule

You don’t have to be right

You must act with due careHonestly and sincerely to the best of your

abilityOn an informed basisIn good faith and the best interests of the

association

Even if you are wrong, you cannot be held personally liable/legally responsible

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Insurance & Liability Issues

For Directors, Officers, Entity, Staff & Volunteers

D&O/APL for economic claimsHR; Defamation; Plagiarism; etc.Shared limits policy available thru NCRA

General Liability/Business PackageAccidents – 3rd Party BI/PD claimsOffice property Sometimes theft and fiduciary coverage

HR accounts for the vast majority of claims

Invest time and resources in education & prevention

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Manager vs. Leader

Give some words to describe the kinds of functions and activities Managers should be focused on and engaged in.

Give some words to describe the kinds of functions and activities Leaders should be focused on and engaged in.

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The Overly Simplistic Answer

Leaders:Set PolicySet DirectionDefine Outcomes

ManagersFollow DirectionsDo the WorkAchieve the Outcomes

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Which are you supposed to be?

ManagerLeader

Making Board Agendas More Effective

Organize Agenda by Topic AreaAround Strategic-Planning GoalsAround Subject Area Or Long Range Goals

Separate Issues by Nature of Action RequiredFor Information Purposes OnlyBoard Decision Is Necessary

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Consent Agenda & Minutes

Consent Agenda

Presented as a Whole: Approved in a Single Motion

Any Board Member May Ask for Any Item to “Be Removed from the Consent Agenda”

Does not require a vote.

Items Removed from Consent Agenda are discussed and voted on as an individual agenda Item

Prepare minutes of actions not transcripts of the discussions

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Dealing with Emotional/Controversial Issues

Seek first to understand/then to be understoodWhat is perceived isPerspective

Acknowledge and respect validity of personal emotions

Create a fact base and build as far as you can from there

Understand the importance of context

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People judge others based on their behavior; they judge themselves based on their

intentions.Stephen M R Covey The Speed of Trust

Data, Data, DataAre you making decisions based on what you

know or on what you think you know?

Worse still: Are you making decisions based on what you wish were so?

Ask, Ask, AskMore than just formal surveys

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Pitfalls to AvoidConclusions based on a

sample of oneParticularly when that “one”

is “you”

Giving too much weight to "Internet Utterances"Missing the existence of the

silent majorityThe Internet Echo Effect

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Your Community is Your Own Best Resource

State Leadership Bulletin

State Leadership Network

NCSA

State Editors Newsletter

Leadership

NCRA Staff

Etc.

You are not alone!

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What about the questions we didn’t get

to?