Transcript Articles of Incorporation and Association Bylaws

Training Module 3:
Articles of Incorporation and
Association Bylaws
Presented by the
Southern Early Childhood Association
Topics to be Presented….
• Advantages and disadvantages of
incorporation
• Incorporation procedures
• Articles of Incorporation
• Association bylaws
• Dissolution statement
An “incorporation” is…
…an artificial legal entity composed of
individual members but considered to have
its own existence apart from its members
for purposes of organization, operations,
liability, longevity, holding property, and so
forth.
Important Characteristics of
Nonprofit Corporations
• As mentioned in the definition of “incorporation,”
nonprofit corporations are separate legal entities from their
leadership and membership.
• The tax-exempt status of an organization is unrelated to
whether or not it is incorporated, as are employment
standards, discrimination laws, and requirements regarding
employee taxation.
• An incorporation remains incorporated until it is legally
“dissolved.”
Advantages and Disadvantages of Incorporation
Advantages
Disadvantages
• Eliminates personal
liability
• Establishes continuity
• Protects association name
and logo
• Allows for greater court
protection
• Eases insurance process
• Encourages reputation for
stability
• Increases costs to
associations
• Adds restrictions to
association operation
• Increases difficulties of
disbanding the
organization
* DISCUSSION *
How do the advantages and disadvantages of
incorporation discussed in this presentation
apply to your organization? Make a chart
outlining the advantages and disadvantages
of incorporated status for your association.
Procedures for Association Incorporation
1. Determine name, purpose, membership,
activities, etc
2. Define association’s nature and scope
3. Identify location for incorporation
4. Register as a foreign corporation, if
necessary
5. Choose incorporators
6. Draft and file Articles of Incorporation
Procedures for Association Incorporation
(continued)
7. Draft and adopt association bylaws
8. Adopt manual of policies and procedures
9. Gain approval for charitable contributions
10. Prepare IRS documentation for tax
exemption
11. Pay required fees
12. Ratify the acts of the incorporators
* DISCUSSION *
If your association is already incorporated,
were any of the incorporation procedures
discussed in the presentation omitted from
your association’s incorporation process? If
so, what can be done to address them now?
If your association is not yet incorporated,
how would you manage the incorporation
procedure?
Articles of Incorporation are…
…an association’s agreement with the state
granting its incorporated status, establishing
the basis for that association’s separate legal
existence.
Items to include in the Articles of Incorporation
• Full name
• Specific, tax-exempt
purpose
• Duration of existence
• Addresses of operation
• Legal agent
• Initial board of
directors
• Membership status
• Bylaws status
• Provisions for internal
affairs
• Dues requirements
• Dissolution
procedures
• Distribution of assets
• State approval
Other Important Aspects of the
Articles of Incorporation:
• Submission process
• Amending the Articles of Incorporation
* DISCUSSION *
If your association has already filed its
Articles, is all of the necessary information
included? If anything is missing, how
might you amend the Articles?
If your association has yet to devise its
Articles of Incorporation, write a sample
document based on the guidelines presented
in this discussion.
Bylaws
Bylaws are rules adopted and maintained by
an association to define and direct its
internal structure and management.
Legal Characteristics of Bylaws
• Serve as subordinate (yet complementary)
guidelines to the Articles of Incorporation
• Describe relationships, rights and
obligations of all participants
• Honored and enforced in a court of law
• Assist in attaining tax-exempt status
Formation and Revision of Bylaws
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Authority
Periodic review
General guidance
Available to all members
* DISCUSSION *
Who in your organization is in charge of
writing, maintaining and revising your
association bylaws?
What is the process by which your association
bylaws are revised? (Be very specific in
outlining this process.)
Content of Association Bylaws
•
•
•
•
•
•
•
•
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Detailed purposes
Membership qualifications
Officers’ qualifications
Filling of vacancies
Voting procedures
Meeting procedures
Property procedures
Indemnification
Committee structure
• Delegation of authority
• Organizational
relationships
• Association logo
• Financial procedures
• Office locations
• Amendment procedures
• Dissolution procedures
• Legal compliance
* DISCUSSION *
Examine your association’s bylaws carefully
and determine whether or not they contain
all of the necessary information.
If your association does not maintain its own
set of bylaws, write a sample document
based on the guidelines presented in this
discussion.
What is a Dissolution Statement?
A statement of dissolution is intended to
define the fate of your organization’s assets
if the organization ceases to exist.
The statement must make it clear that none of
the remaining assets will benefit a private
person, but instead will be distributed to
another tax-exempt nonprofit.
* DISCUSSION *
If your organization has non-profit tax-exempt
status, how are its assets to be distributed if
the organization ceases to exist?
If you do not already have a Statement of
Dissolution for your organization, write a
sample document based on the guidelines
discussed in this presentation.
Resources consulted for this presentation:
• Jerald Jacobs. Association Law Handbook.
3rd Edition. Washington, DC: American
Society of Association Executives, 1996.
• www.BoardSource.org , 2005
Any final thoughts or questions?