SHCA Chapter Toolkit - Governance
- Finance Basics
- Banking and Taxes
- Annual Budgeting
- Budgeting & Contracts for Programs
- D&O Insurance
- Paid Administrative Assistance
AHA/PMG Affiliation Relationship Description PowerPoint
Presented in January 2012 by Elizabeth Summy, Vice President of the AHA Personal Membership Groups and Paula Goedert, Esquire, Barnes & Thornburg, LLP
Bylaws are the framework of how a chapter works. It is a document that defines or organizes an organization and sets forth rules for internal governance and external dealings. Bylaws are the most authoritative governing document of the chapter, with the exception (in order) of a charter, articles of incorporation or association or constitution.
Check with a tax attorney to check with tax status. There are certain requirements please check with a tax attorney to be certain. For more details, refer to the Accounting FAQ section.
Bylaws should be the governing document whenever questions arise as to chapter operations and procedures. The format of bylaws is a lot like a report outline and can be organized in different ways.
All of the bylaws, past and present, should be available to all members, especially if the chapter has a website. If not, the members should be directed to the appropriate board member or organizational support person for the information.
The Board of Directors should review the bylaws annually and update as needed. If using Microsoft Word, try using "track changes" to monitor what has or has not been changed, especially when presenting many changes to the membership for approval.
Bylaw revision should include the date of revision. The board reviews the bylaws and sends out to the membership 30 days for review. Any discussion points from the membership are reviewed by the board. Any changes are sent out to the membership for final approval and a vote. The voting can be done by email, mail or at a business meeting. Once approved, a copy of the revised bylaw is sent to all members.
Chapter Bylaws Samples
You may compare or utilize these sample bylaws as models to fashion your own bylaws or to reflect the workings of your particular chapter and tailor it to your chapter's needs. Additionally, review and incorporate language from any appropriate state acts, statutes or regulations.
To view the SHCA bylaws, click here.
Sample Board of Director Job Descriptions
Board Secretary Job Descriptions
Board Treasurer Job Description
Membership Chair Job Description
President Job Description
A standing rule is a rule that relates to the details of the administration of a society and which can be adopted or changed the same way as any other act of the deliberative assembly. [A deliberative assembly is an organization comprising members who use parliamentary procedure  I think parliamentary procedure is standard. They should look at Robert’s Rule for making decisions.] Standing rules can be suspended by a majority vote for the duration of the session, but not for longer. Some chapters use Standing Rules for their Board or committees which can help in guiding their board/committees from year to year. See attached as a sample.
1. ^ Robert, Henry M. (2000). Robert's Rules of Order Newly Revised, 10th ed., p. 18
2. ^ RONR, p. 86
Election planning should be done well in advance of any election taking place. The different stages, along with strict timeframes, should be according to the chapter bylaws election rules and regulations.
This section will provide samples of different materials your chapter may choose to prepare prior to the beginning of any election process.
There are samples from local chapters and SHCA including nomination forms, ballots, nomination process, and job descriptions.
You may want to think about a two year term for the President, Treasurer, and half of the Directors-at large, and 1 year term for the Secretary and the other half of the Directors-at-large. In this way, half of your board will remain for the third year as you bring in new members of the board.
It is also helpful to also send out a comprehensive job description when you send out nominations request so there are no surprises for the nominee. (See samples below)
For chapters interested in holding online elections, there are several factors to consider.
There are a range of Internet sites that conduct online elections. At the high end are stand-alone elections applications that only do elections; costs for these can run from several hundred to several thousand dollars a year. A more cost-effective option for chapters is free or low-cost survey tools (Survey Monkey). Pricing is usually dependent on number of respondents.
Is voting properly restricted to qualified voters only? Are voters only able to vote once? Essentially, you get what you pay for. A stand-alone elections application can offer higher security than an online survey tool. But you should at least be able to get password protection for your election site. Be sure that whatever outlet you select is in keeping with the elections rules and procedures outlined in your chapter bylaws.
Are elections going to be online only? How will you provide a voting option for members who may not have Internet access or may not be able to successfully use the voting site you select? Who will handle problems and troubleshooting? In some cases, societies may obligated by their bylaws to provide paper ballots or to guarantee access to voting to all qualified members. It is best to make provisions for a paper or back-up option when hosting online elections.
In addition to the ballot, many chapters supply candidate bios or statements, along with other election materials. Be sure that whatever tool you select allows you to present the relevant or mandated elections materials to your voters, or that you make plans to make those materials available to voters by mail or chapter web site or other outlet.
For more information
SHCA has used the following sites and can answer questions you may have about these options in particular:
Survey Monkey - online survey tool
VoteNet - elections application site
If your chapter has used an online election tool or survey site and would like to recommend it to others, please e-mail SHCA.
- Election Ballot
- Nomination Submission Form
- Facility Letter of Support for Board Position
- Call for Officer Nomination
- Bylaws Text Guidance for Electing Officers
- Nomination Timeline
Call for Nominations
Financial Basics for Chapters
Your chapter doesn’t need to make a big deal about accounting – unless you have a big bank account. Then things shift slightly – but only slightly. To be smart, have all of your officers, and especially anyone with the authority to sign checks, bonded and indemnified.
Whether you choose a cash or accrual system of accounting, there are some rules of thumb that apply to not-for-profit associations. (Your chapter is not-for-profit if it has applied for 501(c)-3 tax-exempt status.) As a not-for-profit association, certain parts of the chapter’s income (e.g., dues, educational revenue, and income directly related to the chapter’s purpose) are likely to be tax exempt.
Some Chapters are part of the State Hospital Association, ie: Ohio is part of the State Hospital Association and they the State Hospital association has been taking care of the tax status and information.
Although State Chapters are affiliated with SHCA, they are not under an umbrella exemption with SHCA. As an affiliated chapter, if you are making money then it is suggested that you would need to go to a tax accountant for assistance.
Other income the chapter produces, termed unrelated business income, is subject to taxation. Generally, income from advertising, sales, insurance programs, and booth rentals from trade shows fall into unrelated business income status and, as such, are subject to taxation.
Chapters can maintain more money in their accounts, either cash or investments, than it costs them to operate each year, but there are regulations that limit how much surplus is acceptable. The Internal Revenue Service tends to view more than 6 to 12 months of operating expenses as excessive, and when they deem something excessive, they view it as fair game.
If you don’t have people in your chapter who are comfortable handling money, balancing books or dispensing funds, consider hiring a small CPA firm or local bookkeeper to maintain books for the association. Use of a CPA firm or local bookkeeper does not relieve chapter officers of their fiduciary responsibility to ensure sound fiscal practices, but it does result in financial planning and control.
Learn more about the I.R.S. requirements for tax-exempt status
Banking for your Chapter
A bank account is required if your chapter is collecting revenue and paying expenses. Having 3 board members on the account is helpful in the event the Treasurer is not available. Typically, the President, Past President and Treasurer are the 3 signing the bank card. Checks are ordered in the name of the organization. If the organization has a permanent address, it should be included on the checks. If not, use the address of a trusted individual.
Create an online banking account so monthly paper statements aren’t sent to wrong addresses during times of transition. Also, promptly change the names on the bank signature card when officers change.
In order to maintain non-profit status, the organization has to have federal, and sometimes state, tax ID numbers. In addition, the organization must file taxes annually, even if there wasn’t a lot of revenue during the past year. Federal tax filing deadline is May 15. Check with your state to find out if taxes have to be filed and what the deadline is. here are short forms and long forms, depending upon the amount of revenue in the past calendar year. A useful website is: http://www.irs.gov/charities/.
State Chapter Finance/Accounting FAQ
The information contained in this section is to serve as a general guideline. Please verify information and direct questions to your State and/or the IRS.
For a quick review presented in PPT format, please click here.
Obtaining an Employer Identification Number (EIN)
An EIN is a nine-digit number issued by the IRS and used to identify the tax accounts of employers and certain other organizations with no employees. This number is merely an identifier, similar to a Social Security number for an individual.
Applying for and receiving an EIN says nothing about the organization’s tax exemption status; however, your organization needs an EIN in order to apply for tax exemption or file tax documents.
Banks will not open a nonprofit organization account without an EIN. Most banks will assist in acquiring an EIN when an account is opened.
SHCA recommends as a best practice that affiliated chapters have a federal EIN. This recommendation is in keeping with the requirements of the Association Finance Department of the American Hospital Association, SHCA’s parent organization.
NOTE: Prior to applying for an EIN, make sure your state chapter does not fall under the EIN of a parent organization if part of a state hospital association or other entity.
For more information on obtaining an EIN go to: http://www.irs.gov/charities/article/0,,id=136198,00.html
Applying for State Sales & Use Tax Exemption
Each state differs in its requirements for qualifying for sales and use tax exemption. Most states require organizations to obtain federal exempt status prior to applying for state tax exemption. Some states will only recognize 501c3 federal exemption. It is important to think about your chapter’s objectives and future goals when considering applying for exemption (ie. tax expenses incurred when holding conferences and vendor contributions/donations being tax deductible).
To find out your state requirements you may go to www.ky.gov, and perform a search on sales and use tax exemption. (Replace ky in the weblink with your state’s two letter initial).
Applying for Federal Tax Exemption
Although State Chapters are affiliated with SHCA, they are not under an umbrella exemption with SHCA. To be recognized as exempt from federal income taxation, most organizations are required to apply for recognition of exemption. Applying for recognition of exemption results in formal IRS recognition of an organization’s status.
Organizations applying for exempt status are required to complete an application (IRS Form 1023 or Form 1024).
501(c) exempt status is a broad term. There are actually 27 subsections of 501c depending on the type of the organization, i.e., 501c3 is for charitable/religious and educational organizations and 501c6 is for business leagues. SHCA has 501c6 exemption as well as some other State Chapters. Some states (such as Kentucky) will not accept 501c6 exemption when organizations apply for state sales & use tax exemption.
Contributions/Donations to organizations with 501c6 recognition are not deductible on the donor’s federal income tax return unless it could be considered as an ordinary business expense.
Helpful links when applying for Federal Tax Exemption:
Filing a 990-N Tax Form
Smaller tax-exempt organizations (those normally with annual gross receipts up to $25,000 & who are not required to file a form 990 or 990-EZ) may be required to file an annual electronic notice, Form 990-N. This requirement began in 2008 and may apply to organizations that previously were not required to file returns. The 990-N is an e-Postcard Form that is easily completed and mainly asks for updates to contact information. It is due annually by the 15th day of the 5th month after your Chapter’s tax year. The 990-N cannot be filed until after your tax year ends.
For further information on completing a 990-N Form go to:
Tax exempt organizations should keep books and records detailing all activities, both financial and non-financial. Financial records, particularly information on sources of support (contributions, grants, sponsorships, and other sources of revenue) and expenses should be detailed and include receipts, letters, cancelled checks, treasurer reports, previous tax returns, etc.
Other records would include historical documents such as bylaws and originating documents, detailed minutes of Board meetings, Committee/Activity reports, newsletters, website information, etc.
Federally recognized tax exempt organizations are required to make their tax exempt application, federal tax exempt recognition letter, and recent annual tax returns available to the public for viewing upon request.
Association financial management consists of two basic elements – planning and controlling. Planning and controlling are perhaps equally important to the long-term success of a business. Nevertheless, most business or association failures appear to result from inadequate planning.
The plan for the business or association should be formally organized and preserved through the budget, which is a formal statement of future plans. Budget periods normally coincide with accounting periods and are usually one year in length.
The annual budget, however, is commonly broken down into quarterly or monthly budgets to allow for evaluation and monitoring.
Sample annual budget for a Large chapter
- Additional samples Quick books software by Intuit.
- Google Apps (free, easy to set up) for operations side for technology and website has add on 3 party applications.
- Accesses from YouTube search for Google apps watch video.
Financial statements, including a treasurer’s report and balance sheet should be prepared and reviewed at each board meeting and the general membership meeting. The association president should review these reports in detail with the association treasurer. Reports should provide a monthly or quarterly accounting of the association’s revenues and expenses.
The association should have an independent Certified Public Account (CPA) complete annual audit the association’s finances. Financial statements and association books should be made available to the CPA for this audit.
Sample treasurer's report
Budgeting & Contracts for Programs
The most effective way to ensure that you present a program that stays within a reasonable budget is to plan the entire program year as early as possible. You are better assured of finding a suitable location, desirable dates, adequate attendance, and sponsorship.
A useful tool is the program planner, which can be customized for each program. It assists in keeping your Program Committee in line with deadlines and in making important decisions. Many of the program planning decisions directly impact budgeting and contracting.
When determining where you will hold the program, consider all of your options – hotel, conference center, local hospital, libraries, colleges and universities, community centers, local organizations/clubs.
If you are in a metropolitan area, do you alternate program locations between city and suburbs? If you’re in a large state, do you alternate between North and South, East and West or perhaps a regional area? Will the program be easily accessible to public transportation or major roadways? Accessibility and travel distance may directly impact your attendance and registration income.
Look to your members for possible meeting locales. Some of these sites will provide meeting space to Not for Profit organizations at no charge. Some may require proof of general liability insurance before they will allow you to hold a meeting on their property. If necessary, include the cost of insurance in your program budget. Call several locations to obtain estimates for food, audiovisual equipment rentals, room fees, applicable taxes, etc.
When working with hotels or any other site that will require a contract, endeavor to work with one person (usually a catering manager) only at that site. You may get multiple answers to your questions if you are working with multiple people. When speaking with the contact, take detailed notes to be compared with the contract later. Have one person – a site coordinator – negotiate for your chapter. This usually helps so the hotel has one person to go to also.
You should receive the contract within a few days of negotiation. When reviewing meeting space contracts, make sure the date, time, room, setup, number of expected attendees, fees are accurate. There is usually a required deposit to hold the room. Be wary of hefty “minimum” charges for room and food services. Know when you will have to give the final attendee count to your hotel contact; usually 72 hours before the program start. Some sites may charge additional fees when the guaranteed number changes less than 72 hours before the program. Be aware of your cutoff date for room reservations so your participants can obtain the contracted group rate.
It is advisable to have more than one chapter member review the contract before it is signed. Some chapters require the president and the treasurer to review the contract.
Many hotels, by contract, may require credit card payment. Most chapters do not have chapter credit cards. In that case, request a Direct Bill Application which will allow the hotel to send the chapter a bill that is usually payable within 30 days.
Sample direct bill application
If your chapter has tax-exempt status with your state, be sure to provide the hotel/conference center with a copy of your tax exempt letter or certificate so that you can avoid paying unnecessary taxes. You may also find that if you repeatedly use a particular hotel or conference center for your chapter’s programs that negotiating contracts and fees may become easier and some fees may be waived, e.g., room rental.
Some hotels may comp a room for the president, if there are enough rooms used for your meeting. Ask the hotel if they can do that for you.
Sample hotel contract
You may want to consider co-hosting a program with another chapter. The costs of conducting the program would be borne by both organizations. Using a program planner will ensure that all involved chapters are on the same page throughout the process.
You my also invite advocates from bordering states as another way to increase attendance and revenue.
Including a publication with your program cost can be an added value for attendees. Determine the proper mechanism for providing the publication and be cognizant of copyright laws. Work with your sponsors, if that's an option, on providing funds to bring the publication to your attendees. Be sure to include the publication costs into the program registration fee. For example, a chapter sponsor may agree to pay for books on apologies in health care, to be provided to program attendees at no extra cost. Another option would be for the chapter to purchase the books and include that cost in the registration fee for the program. Also consider working with vendors to sponsor a specific event during the program. For example, a vendor may be willing to sponsor a meal or a specific talk.
In an effort to attract more attendees, some chapters hold drawings at their meetings. The drawing prize is usually a book or useful item. Items from various hospitals that are collected or personal items, that are donated by members or hospitals. The winner is drawn from the list of attendees, and the cost of the prize is totally borne by the chapter. Be sure to check your state laws on this subject and be aware of the differences between a sweepstakes, contests, and raffles. In general, drawings as described here are exempt from state raffle laws.
All of these costs mentioned above must be incorporated into a program budget. Once the expense budget is complete then compute the appropriate program fee keeping affordability in mind.
Silent Auctions and Opportunity Raffles
Items are donated by members, hospitals and/or vendors. Tickets - double coupons - for the Opportunity Raffle are sold to participants. They can be sold in any demonination the chapter prefers - for example, $1 each ticket or 6 for $5, etc. Tickets are drawn at various times during the conference or at the end of the conference. Usually, the winner must be present to claim the prize.
The Opportunity Raffle gifts are donated by members, hospitals, participants and/or vendors. These are displayed at the conference and tickets are placed in an envelope, as many as the participant wishes.
The Silent Auction requires obtaining donations from members, hospitals, and/or vendors prior to the conference. These donations are displayed with a bid sheet so bidders can place their name and bids. At the close of the bidding, all bidding is stopped and the winners are announced. Money is collected for the items won. This process takes a lot more planning and may or may not bring in money as expected. However, it is a fun process to go through.
Click here for sample Opportunity Raffle forms
For more on educational program planning, see the Education section.
Directors & Officers (D&O) insurance extends protection against legal claims for wrongful acts to directors and officers of an organization in the course of performing their duties.
Wrongful acts include omissions, errors, neglect and breach of duty, among other things. Policy beneficiaries are directors, officers or the entity itself. Parties who might sue include: employees, suppliers, competitors or creditors; directors and officers can be personally liable for damages. Three levels of coverage are available:
- A-side coverage: directly covers directors and officers
- B-side coverage: indirectly covers directors and officers by covering claims paid by the entity on their behalf
- C-side coverage: covers entity for claims arising from claims not covered by general liability policies
D&O policies cover claims made during the policy period. It doesn't matter when the wrongful acts occurred. A claim filed in the current year will be covered by the current policy, even if the wrongful act happened in the past.
Some organizations augment D&O policies with employment practices liability coverage (EPL coverage), which safeguards against claims for wrongful dismissal, sexual harassment and other violations of employment or anti-discrimination laws. EPL coverage can be purchased as part of a D&O or general liability policy or as a stand-alone policy.
SHCA does not require chapters to have D&O insurance but recommends that each chapter evaluate the costs and benefits based on its individual situation. Chapters with extensive educational programming and other activities may find it a necessity, while smaller chapters may decide the cost for the insurance is not merited by the extent of their activities. Chapters may find that some volunteers are reluctant to serve as directors or officers without protection from lawsuits.
Chapters interested in securing D&O insurance can contact local brokers for information on rates and specific coverage.
Paid Administrative Assistance
To assist with governance and routine operations, some chapters opt for paid administrative assistance. This can range from a full-time employee to part-time or hourly contractors.
Tasks for this position can include membership dues and billing, program mailings, registration processing, sponsor solicitations and web site updates. Having the same person handle these tasks from year to year provides continuity of information and keeps each new officer from having to get up to speed on these everyday tasks.
It is best to identify in advance the tasks that a contractor or executive assistant will be responsible for, how they should manage their time, and how they will be compensated. This can be laid out in a position description.
Some Chapters who are affiliated with their State Hospital Association also have this function handled by a paid staff member of the Hospital Association.
Other chapters have volunteers that perform these tasks such as the Data Manager who keeps track of membership each year, develops the directory, maintains the list-serv, supports the board and other committees as needed, and is a non-voting member of the board. See the attached job description.