CHAPTER PLAYBOOK

Governance Documentation

Certain documents are considered fundamental to the creation and proper maintenance of a Chapter and should be created, in place and properly maintained for the life of the organization. Such documents include:

Articles of Incorporation

Incorporation is a critical step for the protection of an organization, as well as for it's officers, directors and members. In addition to providing legitimacy and a sense of permanency for the entity, it conveys certain legal rights and benefits, including recognition as a nonprofit entity and the tax advantages available to this classification.

Articles of Incorporation are a legal document filed with your Department of State to officially incorporate your organization. The format is often specifically prescribed by your state and should be closely followed, with consideration of necessary wording for obtaining an IRS Letter of Determination as a nonprofit entity.

Many states have a specific corporate designation for nonprofit corporations. Should this be the case in your state, you should definitely incorporate accordingly.

Articles of Incorporation are a fundamental governance document and an official copy should be maintained by the organization in perpetuity, including any revisions to update the corporate name or any other provisions.

Obtaining a FEIN

An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entity. Generally, businesses need an EIN, even if they do not have employees.

A Chapter should have established corporate status, consistent with the instructions above, prior to applying for an EIN. An organization should not apply for a second EIN under any circumstances; however, if one is needed for the formation of an entity, it can be applied for by clicking here.

An EIN is also a fundamental element of governance and should be maintained in perpetuity.

IRS Classification

Section 501(c) of the Internal Revenue Code consists of 29 sections that list specific conditions particular organizations must meet in order to be considered tax exempt.

Subsection 6 provides for the exemption of business leagues, chambers of commerce, real estate boards, boards of trade and professional football leagues, which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.

An organization that otherwise qualifies for exemption under Internal Revenue Code section 501(c)(6) will not be disqualified merely because it engages in some political activity. In addition, the organization may engage in lobbying that is germane to accomplishing its exempt purpose without jeopardizing its exemption. However, if the organization engages in political and/or lobbying activities, it may need to give members notice of dues used for such activities, or be subject to a proxy tax on the amount of the expenditures.

To ensure that the IRS concurs with your assertion as qualifying for tax exemption, organizations should file Form 1024, Application for Recognition of Exemption.

Upon review of your application, the IRS should determine that the Chapter meets the threshold for tax exempt status and issue a Letter of Determination, another fundamental governance document that should be maintained in perpetuity.

Bylaws

Bylaws are, in effect, a contract between an organization and it's members that provides rules for the entity to govern itself. They provide for the basic structure and system of operations for an organization.

NAIFA Chapters are required to adopt bylaws that are substantively compliant with the Model Bylaws provided by the home office, and are subject to review and approval by the Vice President of Member and Chapter Services.

State Chapter Model Bylaws
Local Chapter Model Bylaws

Bylaws are also a fundamental element of governance and should be, in their current and previous formats, maintained in perpetuity.

Board Manual

A Chapter Board Manual should be updated at the beginning of every association year and given to each board member during Board Orientation.

The Board Manual should include items such as:

Board Roster
Governance Documents
Financials
Board Meeting Materials
Leadership Positions & Responsibilities
Local and Affiliate Map
Chapter Agreement Compliance Checklist
Calendar of Events

A model Board Manual can be downloaded and modified to suit your Chapter needs.

Policies

Policies are an essential tool in guiding an organization. They interpret the governing documents and provide additional clarity and specificity on how they are to be followed, as well as important expressions of granted or limitation of delegated authority.

For additional guidance on policies, click here.

Policies are also a fundamental element of governance and should be, in their current and previous formats, maintained in perpetuity.