Air Date: 11-5-2010|Episode 186
Most of us belong to some type of association whether it’s the AAA or AARP or a trade association like those that many of our listeners belong to…
Most of us belong to some type of association whether it’s the AAA or AARP or a trade association like those that many of our listeners belong to. This week we will explore the legal landscape for associations with Steven John Fellman, Esq. a specialist on association legal matters. We will also hear from Glenn Fellman the president of Association & Communications Management Group, which is the association management company serving the Indoor Air Quality Association, Indoor Environmental Standards Organization, and most recently the Restoration Industry Association.
Trade Associations the Legal Perspective.
Most of the IAQradio listening audience belongs to one or more industry trade associations. Association Lawyer Steven Fellman, Esq. and his son Association Manager Glenn Fellman presented a Primer on the Legalities of Trade Associations to IAQradio listeners. The essence of today’s interview can be summed up in a profound observation made by Steve Fellman, “that most association members pay dues but don’t pay attention.”
Nuggets mined from today’s episode:
•The most common forms of trade associations in our industry are 1) trade associations which exchange information to make their members smarter (through development of educational programs), stronger, conduct R&D, or lobby and 2) Professional Societies that exist for the professional development of individual members [doctors, lawyers, bankers].
•The Articles of Incorporation form the skeleton of the association while the Bylaws are the flesh on the skeleton. The Articles of Incorporation are the operative document.
•How democratic must a trade association be? It depends, trade associations must follow the group’s Articles of Incorporation and Bylaws and may operate with a controlled democracy as opposed to an absolute democracy.
•Association board members may be very aware that they have a fiduciary responsibility. That they must operate the association according to its Articles of Incorporation and Bylaws. They must maintain confidentiality and avoid actions that damage or harm the association.
•When queried on what legal facts about trade associations that association members are often most aware of he answered that many members are unaware of what the bylaws say and that most members pay dues but don’t pay attention.
•Members rights are outlined in the Bylaws and Articles of Incorporation. Each state has a nonprofit corporate statute.
•On the subject of Compensation. Contractual agreements between an association and its management firm need to be understood and agreed to by both parties. Management fees depend upon services provided, the more services the association relies upon the management firm to perform the greater the fee they can expect to pay. According to the ASAE, association management fees for firms providing a wide range of management services are in the range of 35%-50% of association income. It’s not unusual to offer the management firm a financial incentive for growing membership and/or adding income opportunities.
•It is reasonable for an association to have continuing education requirements for members holding credentials.Association’s tax returns are filed on a Form 990 and must be available to members and interested parties in the association’s offices.
•Involvement within association pays dividends (personal and professional growth) for those of involved.
•Risks exist for standards writing organizations. There is an antitrust risk when standards are written to exclude those who don’t comply with the standard. Consensus standards are written by a group of volunteers and interested parties who are given equal access to the activities. The group cannot conspire to restrain trade. Another type of standard is written by experts. Standards must be reasonable. Its important to disclose standards writing and/or training activities to insurance underwriters to ensure that insurance claims are not denied due to failure to disclose. The ACGIH is a scientific organization which establishes committees of experts who review peer reviewed scientific information and publish occupational exposure limits for materials at which or below the ACGIH considers to be safe. The ACGIH was sued over its published TLV (Threshold Limit Values) & BEI (Biological Exposure Indices) by industry, because industry felt that their products were safe at higher limits than were published by the ACGIH. This was a first amendment issue, the ACGIH had the right to publish scientific information, that needed not be technically correct but which rested upon a reasonable basis for opinion. ACGIH prevailed in the litigation.
Veteran Association Administrator Glenn Fellman reminded listeners that:
•The association belongs to the members.
•The associations financial proceeds are your money.
•You have the right to know.
•Members need to be invited to participate.
•A few volunteers do the heavy lifting in most associations, the 3% rule where “3% of the members do 90% of the heavy lifting”.
•Associations should be very careful where association monies are invested.
•Associations should strive to maintain a minimum financial reserve of six months, preferably 12 months.
Today’s music: One Voice By: Wailin Jennys
Z-Man signing off