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The Law of Associations: An Operating Legal Manual for Executives and Counsel
The Law of Associations is a one-volume handbook that will guide association executives step by step through the business, legal and tax issues encountered every day in managing an association.
Publisher: Matthew Bender Elite Products
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The Law of Associations is a one-volume handbook that will guide association executives step by step through the business, legal and tax issues encountered every day in managing an association. This one-stop guide to association management details topics such as the nature of associations, association operation, association lobbying, antitrust and employment law issues, ethical dilemmas, federal tax aspects of association activities, statistical reporting, and other legal and related problems of associations. With the proven guidelines set out by author Hugh K. Webster, a partner in the Washington, D.C. firm of Webster, Chamberlain & Bean who specializes exclusively in the representation of nonprofit organizations, association executives will move confidently within the law and safeguard their tax-exempt status from danger.
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Volume 1 Table of Contents
Chapter 1 THE NATURE OF ASSOCIATIONS: PAST, PRESENT, AND FUTURE
1.01 Constitutional Basis for Trade Associations
1.02 Benefits of Association Activities
1.03 Court Recognition of Role of Associations
1.04 Today’s Functions of an Association
Chapter 2 ASSOCIATION OPERATION: INCORPORATION ANDRELATED MATTERS
2.01 Introduction
2.02 Incorporation
2.03 Bylaws
2.04 Unincorporated Associations
2.05 Federations
2.06 Governance
2.07 Procedural Irregularities
2.08 Governing Law
2.09 Freedom of Information Act Requests
2.10 Legal Audits
2.11 [Reserved]
2.12 Relationship Between Parent Association and Its Chapters
2.13 Can a Nonprofit Make a Profit?
Chapter 2A RESPONSIBILITIES AND LIABILITIES OF ASSOCIATION DIRECTORS AND OFFICERS
2A.01 [Reserved]
2A.02 Role of the Association Board
2A.03 Fiduciary Duties
2A.04 Sarbanes-Oxley and Best Practices
2A.05 Examples of Why Association Directors are Sued
2A.06 Apparent Authority
2A.07 Protections for Directors
2A.08 Standing to Sue
2A.09 Applicable Law
2A.10 Liability of a Director’s Employer for Acts of the Director
Chapter 2B ASSOCIATION MEMBERSHIP ISSUES
2B.01 Constitutional Right
2B.02 Relationship of Members to the Association
2B.03 Rights of Members
2B.04 Membership Criteria
2B.05 Association Appointments, Awards, and Other Internal Actions
2B.06 Termination and Other Discipline of Members
2B.07 Membership Meetings
2B.08 Access to Association Records
2B.09 Ownership Rights in Association Property
2B.10 Dues and Assessments
2B.11 Liability of Members
2B.12 Communication With Members
2B.13 Members’ Relationship with the Association’s Attorney
2B.14 Servicing Members in Restricted Countries
Chapter 3 HOTEL AND CONVENTION CENTER CONTRACTS
3.01 Meeting Contract Issues
3.02 Other Contractual Issues
3.03 [Reserved]
3.04 Contracts With Convention Centers
3.05 Performance of Copyrighted Music
Chapter 4 ASSOCIATION EXECUTIVE COMPENSATION
4.01 Introduction
4.02 Level of Compensation
4.03 Employment Contracts
4.04 Principles Applicable to Employment Contracts
4.05 Employment Contract Provisions
4.06 Tax Treatment of Certain Business Expenses
4.07 Deferred Compensation Agreements
4.08 Retirement Plans
4.09 Cafeteria Plans
4.10 Insurance Benefits
Chapter 5 SUBSIDIARY ENTITIES
5.01 For-Profit Subsidiaries
5.02 Association Foundations
5.03 Maintaining Control of the Subsidiary
5.04 Ensuring Treatment As A Separate Legal Entity
5.05 Transfers of Revenues to the Parent Association
5.06 Fiduciary Duties of Subsidiary Boards of Directors
5.07 Antitrust Issues
5.08 Other Subsidiary Entities
Chapter 6 RESERVED
Chapter 7 GOVERNMENTAL ACTIVITY
7.01 Introduction
7.02 First Amendment Considerations
7.03 Legislative Activity—Tax Issues
7.04 Legislative Activity—Registration
7.05 Legislative Activity—Tort Liability
7.06 Legislative Activity—Federal Funds
7.07 Antitrust Implications of Legislative and Political Activity
7.08 Political Activity—501(c)(3) Associations
7.09 Political Activity—501(c)(6) Associations
7.10 Federal Election Campaign Act Limitations
7.11 Advantages of a Political Action Committee
7.12 Formation of a PAC
7.13 Solicitation
7.14 Legal Restrictions on Contributions to a PAC
7.15 PAC Contributions and Expenditures
7.16 FEC Requirements
7.17 Tax Status of PACs and Other Political Organizations
7.18 Miscellaneous Requirements
7.19 House and Senate Rules on Lobbying
7.20 Foreign Agent Registration Act
Chapter 8 INFORMATION GATHERING AND REPORTING
8.01 The Importance of Competitive Information
8.02 The Legality of Information Exchanges
8.03 Antitrust Overview
8.04 Rule of Reason Analysis
8.05 Key Considerations
8.06 Specific Issues
8.07 Providing False Information in an Information Exchange Program
8.08 Department of Justice/Federal Trade Commission Guidelines
8.09 Conclusion
Chapter 9 SELF-REGULATION: CODES OF ETHICS AND STANDARDS OF PRACTICE
9.01 Introduction
9.02 Why Self-Regulation is Legally Sensitive
9.03 Extent of Involvement of the Courts
9.04 Discipline of Members
9.05 Appeals Procedures
9.06 Flexibility
9.07 Discipline Less Than Expulsion
9.08 Suspension Prior to Decision
9.09 Effect of Deviation from Association Rules
9.10 Legal Relief Available to Members
9.11 Enforcement of Association Codes By Members
9.12 Regulation of Member Conduct
9.13 Free Speech Challenges
9.14 Self-Regulation and Liability of Members
9.15 Defamation of Fellow Members
Chapter 10 ANTITRUST CONSIDERATIONS
10.01 Introduction
10.02 General
10.03 Association Meetings
10.04 Unlawful Agreements
10.05 Concerted Conduct Seeking Governmental Action
10.06 Invitations to Engage in Antitrust Violations
10.07 Economic Vigilantism
10.08 Social Welfare Justification
10.09 Association Antitrust Policies
10.10 Online Discussions
10.11 Model Contracts
10.12 Parallel Behavior by Competing Firms
10.13 Anti-Competitive Conduct by the Association Itself
10.14 Past and Prospective Unlawful Conduct
10.15 Personal Liability for Antitrust Violations
10.16 Limiting Services to Members Only
10.17 Antitrust and Professional Societies
10.18 Collective and Cooperative Buying and Selling
10.19 The Federal Antitrust Laws
10.20 Enforcement Mechanisms
Chapter 11 EMPLOYMENT LAW ISSUES
11.01 Introduction
11.02 Employment Issues Unique to Associations
11.03 The Concept of At-Will Employment
11.04 Employment Laws
11.05 The Hiring Process
11.06 Discrimination
11.07 Federal Contractors and Other Recipients of Federal Funds
11.08 Other Unlawful Practices
11.09 Family, Medical and Parental Leave
11.10 Overtime Pay Issues
11.11 Defamation
11.12 Electronic Mail and Harassment
11.13 Personnel Manuals
11.14 Practical Tips
11.15 Liability Waivers
Chapter 12 STANDARD SETTING, CERTIFICATION AND ACCREDITATION
12.01 Standards Setting
12.02 Certification of Products
12.03 Product Liability
12.04 Certification of Individuals
12.05 Accreditation
Chapter 13 TORT AND OTHER LIABILITY
13.01 Introduction
13.02 Negligent Promulgation of Standards
13.03 Product Certification
13.04 Personnel Certification
13.05 Support of Association Sponsors and Other Suppliers
13.06 Information Liability
13.07 Association Journals
13.08 Other Torts
Chapter 14 RESERVED
Chapter 15 FEDERAL TAX ASPECTS OF ASSOCIATION ACTIVITIES
15.01 Introduction
15.02 The Term “Trade Association”
15.03 Tax Exemption Under Section 501(c)(6)
15.04 Tax Exemption Under Section 501(c)(3)
15.05 Summary of Key Distinctions Between Section 501(c)(3) and 501(c)(6) Associations
15.06 Not Organized for Profit
15.07 Illegal Activity
15.08 Certain Specific Association Activities
15.09 Inurement
15.10 IRS Audits
15.11 Third Party Standing to Challenge Tax Exempt Status
15.12 Why Retain a Federal Income Tax Exemption?
15.13 Foreign Conventions
15.14 State Tax Treatment of Non-Profits
15.15 Sales Tax Exemptions for Educational and Charitable Organizations
15.16 Deductibility of Dues and Other Payments to Associations
Chapter 15A UNRELATED BUSINESS INCOME TAX (UBIT)
15A.01 Introduction
15A.02 Defining Unrelated Business Income
15A.03 Factors in Determining Unrelated Business Income
15A.04 Exemptions from UBIT Applicability
15A.05 Particular Activities
15A.06 How Much UBI Is Too Much?
Chapter 15B TAX PROCEDURE AND FORMS
15B.01 Introduction
15B.02 Filing the Exemption Application
15B.03 IRS Form 990 Information Return
15B.04 Other Relevant Tax Forms and Issues
15B.05 Group Exemption
15B.06 Toward Full Disclosure: Inspection of Tax Forms and Reporting of Salaries
15B.07 Acknowledgements to Donors
15B.08 Revocation of Exemption
15B.09 Effect of Loss of Exemption
15B.10 IRS Audits and Tax Litigation
Chapter 15C OTHER TAX-EXEMPT ASSOCIATIONS
15C.01 Introduction
15C.02 Social Welfare Organizations—Section 501(c)(4)
15C.03 Agricultural and Horticultural Associations and Labor Unions
15C.04 Social Clubs—Section 501(c)(7)
15C.05 Holding Companies—Section 501(c)(2) and 501(c)(25)
15C.06 Section 501(c)(8) Fraternal Beneficiary Societies
15C.07 Section 501(c)(10) Domestic Fraternal Societies
Chapter 16 ASSOCIATIONS AND COPYRIGHTS
16.01 Introduction to Copyright
16.02 Association Works That May (and May Not) be Copyrighted
16.03 Copyright Ownership
16.04 Copyright Infringement
16.05 Fair Use and Other Defenses
16.06 Special Association Issues
Appendix to Chapter 16
Chapter 16A ASSOCIATIONS AND TRADEMARKS
16A.01 Introduction
16A.02 Obtaining Trademark Rights
16A.03 Common Issues with Association Marks
16A.04 Special Kinds of Association Trademarks
16A.05 Guidelines for Selecting a Trademark
16A.06 Trademark Infringement
16A.07 Association Chapter Issues
Chapter 17 OTHER LEGAL AND RELATED ISSUES FOR ASSOCIATIONS
17.01 Legal Services by Business and Professional Associations
17.02 Mergers Involving Associations
17.03 Immunity of Associations from Liability
17.03A [Reserved]
17.04 Reserve Funds
17.05 Charitable Solicitation Registration
17.06 [Reserved]
17.07 [Reserved]
17.08 Postal Rates
17.09 [Reserved]
17.10 Record Retention Policies
17.11 Court Jurisdiction Over Associations
17.12 Trade Shows
17.13 [Reserved]
17.14 Association Building Purchases: A Primer
17.15 Raffles, Lotteries and Other Games of Chance
17.16 Association Research Activities: Joint Ventures
17.17 Dissolution
General Appendices
Articles of Interest
Index
Chapter 1 THE NATURE OF ASSOCIATIONS: PAST, PRESENT, AND FUTURE
1.01 Constitutional Basis for Trade Associations
1.02 Benefits of Association Activities
1.03 Court Recognition of Role of Associations
1.04 Today’s Functions of an Association
Chapter 2 ASSOCIATION OPERATION: INCORPORATION ANDRELATED MATTERS
2.01 Introduction
2.02 Incorporation
2.03 Bylaws
2.04 Unincorporated Associations
2.05 Federations
2.06 Governance
2.07 Procedural Irregularities
2.08 Governing Law
2.09 Freedom of Information Act Requests
2.10 Legal Audits
2.11 [Reserved]
2.12 Relationship Between Parent Association and Its Chapters
2.13 Can a Nonprofit Make a Profit?
Chapter 2A RESPONSIBILITIES AND LIABILITIES OF ASSOCIATION DIRECTORS AND OFFICERS
2A.01 [Reserved]
2A.02 Role of the Association Board
2A.03 Fiduciary Duties
2A.04 Sarbanes-Oxley and Best Practices
2A.05 Examples of Why Association Directors are Sued
2A.06 Apparent Authority
2A.07 Protections for Directors
2A.08 Standing to Sue
2A.09 Applicable Law
2A.10 Liability of a Director’s Employer for Acts of the Director
Chapter 2B ASSOCIATION MEMBERSHIP ISSUES
2B.01 Constitutional Right
2B.02 Relationship of Members to the Association
2B.03 Rights of Members
2B.04 Membership Criteria
2B.05 Association Appointments, Awards, and Other Internal Actions
2B.06 Termination and Other Discipline of Members
2B.07 Membership Meetings
2B.08 Access to Association Records
2B.09 Ownership Rights in Association Property
2B.10 Dues and Assessments
2B.11 Liability of Members
2B.12 Communication With Members
2B.13 Members’ Relationship with the Association’s Attorney
2B.14 Servicing Members in Restricted Countries
Chapter 3 HOTEL AND CONVENTION CENTER CONTRACTS
3.01 Meeting Contract Issues
3.02 Other Contractual Issues
3.03 [Reserved]
3.04 Contracts With Convention Centers
3.05 Performance of Copyrighted Music
Chapter 4 ASSOCIATION EXECUTIVE COMPENSATION
4.01 Introduction
4.02 Level of Compensation
4.03 Employment Contracts
4.04 Principles Applicable to Employment Contracts
4.05 Employment Contract Provisions
4.06 Tax Treatment of Certain Business Expenses
4.07 Deferred Compensation Agreements
4.08 Retirement Plans
4.09 Cafeteria Plans
4.10 Insurance Benefits
Chapter 5 SUBSIDIARY ENTITIES
5.01 For-Profit Subsidiaries
5.02 Association Foundations
5.03 Maintaining Control of the Subsidiary
5.04 Ensuring Treatment As A Separate Legal Entity
5.05 Transfers of Revenues to the Parent Association
5.06 Fiduciary Duties of Subsidiary Boards of Directors
5.07 Antitrust Issues
5.08 Other Subsidiary Entities
Chapter 6 RESERVED
Chapter 7 GOVERNMENTAL ACTIVITY
7.01 Introduction
7.02 First Amendment Considerations
7.03 Legislative Activity—Tax Issues
7.04 Legislative Activity—Registration
7.05 Legislative Activity—Tort Liability
7.06 Legislative Activity—Federal Funds
7.07 Antitrust Implications of Legislative and Political Activity
7.08 Political Activity—501(c)(3) Associations
7.09 Political Activity—501(c)(6) Associations
7.10 Federal Election Campaign Act Limitations
7.11 Advantages of a Political Action Committee
7.12 Formation of a PAC
7.13 Solicitation
7.14 Legal Restrictions on Contributions to a PAC
7.15 PAC Contributions and Expenditures
7.16 FEC Requirements
7.17 Tax Status of PACs and Other Political Organizations
7.18 Miscellaneous Requirements
7.19 House and Senate Rules on Lobbying
7.20 Foreign Agent Registration Act
Chapter 8 INFORMATION GATHERING AND REPORTING
8.01 The Importance of Competitive Information
8.02 The Legality of Information Exchanges
8.03 Antitrust Overview
8.04 Rule of Reason Analysis
8.05 Key Considerations
8.06 Specific Issues
8.07 Providing False Information in an Information Exchange Program
8.08 Department of Justice/Federal Trade Commission Guidelines
8.09 Conclusion
Chapter 9 SELF-REGULATION: CODES OF ETHICS AND STANDARDS OF PRACTICE
9.01 Introduction
9.02 Why Self-Regulation is Legally Sensitive
9.03 Extent of Involvement of the Courts
9.04 Discipline of Members
9.05 Appeals Procedures
9.06 Flexibility
9.07 Discipline Less Than Expulsion
9.08 Suspension Prior to Decision
9.09 Effect of Deviation from Association Rules
9.10 Legal Relief Available to Members
9.11 Enforcement of Association Codes By Members
9.12 Regulation of Member Conduct
9.13 Free Speech Challenges
9.14 Self-Regulation and Liability of Members
9.15 Defamation of Fellow Members
Chapter 10 ANTITRUST CONSIDERATIONS
10.01 Introduction
10.02 General
10.03 Association Meetings
10.04 Unlawful Agreements
10.05 Concerted Conduct Seeking Governmental Action
10.06 Invitations to Engage in Antitrust Violations
10.07 Economic Vigilantism
10.08 Social Welfare Justification
10.09 Association Antitrust Policies
10.10 Online Discussions
10.11 Model Contracts
10.12 Parallel Behavior by Competing Firms
10.13 Anti-Competitive Conduct by the Association Itself
10.14 Past and Prospective Unlawful Conduct
10.15 Personal Liability for Antitrust Violations
10.16 Limiting Services to Members Only
10.17 Antitrust and Professional Societies
10.18 Collective and Cooperative Buying and Selling
10.19 The Federal Antitrust Laws
10.20 Enforcement Mechanisms
Chapter 11 EMPLOYMENT LAW ISSUES
11.01 Introduction
11.02 Employment Issues Unique to Associations
11.03 The Concept of At-Will Employment
11.04 Employment Laws
11.05 The Hiring Process
11.06 Discrimination
11.07 Federal Contractors and Other Recipients of Federal Funds
11.08 Other Unlawful Practices
11.09 Family, Medical and Parental Leave
11.10 Overtime Pay Issues
11.11 Defamation
11.12 Electronic Mail and Harassment
11.13 Personnel Manuals
11.14 Practical Tips
11.15 Liability Waivers
Chapter 12 STANDARD SETTING, CERTIFICATION AND ACCREDITATION
12.01 Standards Setting
12.02 Certification of Products
12.03 Product Liability
12.04 Certification of Individuals
12.05 Accreditation
Chapter 13 TORT AND OTHER LIABILITY
13.01 Introduction
13.02 Negligent Promulgation of Standards
13.03 Product Certification
13.04 Personnel Certification
13.05 Support of Association Sponsors and Other Suppliers
13.06 Information Liability
13.07 Association Journals
13.08 Other Torts
Chapter 14 RESERVED
Chapter 15 FEDERAL TAX ASPECTS OF ASSOCIATION ACTIVITIES
15.01 Introduction
15.02 The Term “Trade Association”
15.03 Tax Exemption Under Section 501(c)(6)
15.04 Tax Exemption Under Section 501(c)(3)
15.05 Summary of Key Distinctions Between Section 501(c)(3) and 501(c)(6) Associations
15.06 Not Organized for Profit
15.07 Illegal Activity
15.08 Certain Specific Association Activities
15.09 Inurement
15.10 IRS Audits
15.11 Third Party Standing to Challenge Tax Exempt Status
15.12 Why Retain a Federal Income Tax Exemption?
15.13 Foreign Conventions
15.14 State Tax Treatment of Non-Profits
15.15 Sales Tax Exemptions for Educational and Charitable Organizations
15.16 Deductibility of Dues and Other Payments to Associations
Chapter 15A UNRELATED BUSINESS INCOME TAX (UBIT)
15A.01 Introduction
15A.02 Defining Unrelated Business Income
15A.03 Factors in Determining Unrelated Business Income
15A.04 Exemptions from UBIT Applicability
15A.05 Particular Activities
15A.06 How Much UBI Is Too Much?
Chapter 15B TAX PROCEDURE AND FORMS
15B.01 Introduction
15B.02 Filing the Exemption Application
15B.03 IRS Form 990 Information Return
15B.04 Other Relevant Tax Forms and Issues
15B.05 Group Exemption
15B.06 Toward Full Disclosure: Inspection of Tax Forms and Reporting of Salaries
15B.07 Acknowledgements to Donors
15B.08 Revocation of Exemption
15B.09 Effect of Loss of Exemption
15B.10 IRS Audits and Tax Litigation
Chapter 15C OTHER TAX-EXEMPT ASSOCIATIONS
15C.01 Introduction
15C.02 Social Welfare Organizations—Section 501(c)(4)
15C.03 Agricultural and Horticultural Associations and Labor Unions
15C.04 Social Clubs—Section 501(c)(7)
15C.05 Holding Companies—Section 501(c)(2) and 501(c)(25)
15C.06 Section 501(c)(8) Fraternal Beneficiary Societies
15C.07 Section 501(c)(10) Domestic Fraternal Societies
Chapter 16 ASSOCIATIONS AND COPYRIGHTS
16.01 Introduction to Copyright
16.02 Association Works That May (and May Not) be Copyrighted
16.03 Copyright Ownership
16.04 Copyright Infringement
16.05 Fair Use and Other Defenses
16.06 Special Association Issues
Appendix to Chapter 16
Chapter 16A ASSOCIATIONS AND TRADEMARKS
16A.01 Introduction
16A.02 Obtaining Trademark Rights
16A.03 Common Issues with Association Marks
16A.04 Special Kinds of Association Trademarks
16A.05 Guidelines for Selecting a Trademark
16A.06 Trademark Infringement
16A.07 Association Chapter Issues
Chapter 17 OTHER LEGAL AND RELATED ISSUES FOR ASSOCIATIONS
17.01 Legal Services by Business and Professional Associations
17.02 Mergers Involving Associations
17.03 Immunity of Associations from Liability
17.03A [Reserved]
17.04 Reserve Funds
17.05 Charitable Solicitation Registration
17.06 [Reserved]
17.07 [Reserved]
17.08 Postal Rates
17.09 [Reserved]
17.10 Record Retention Policies
17.11 Court Jurisdiction Over Associations
17.12 Trade Shows
17.13 [Reserved]
17.14 Association Building Purchases: A Primer
17.15 Raffles, Lotteries and Other Games of Chance
17.16 Association Research Activities: Joint Ventures
17.17 Dissolution
General Appendices
Articles of Interest
Index