|
|
|
Drafting and filing governance documents
You’ll need to draft and file several kinds of documents to officially establish your dharma center and get things underway. They are not difficult to write, but you may wish to find an attorney with experience in nonprofit incorporation and ask him or her to look over your documents before you file them with the government. The board secretary is the officer in charge of documents and recordkeeping for your temple; he, she or they are responsible for making sure that your records are up to date and documents filed in such as way as to be retrievable and usable by the board and staff.
articles of incorporation
In the eyes of the law, your articles supercede all other documents in your organization. They include information such as:
Look at a few examples of Articles of Incorporation (especially from nonprofits or even other Zen centers in your state) to see how they’re put together. When yours have been approved by your board of directors, submit them to the state Secretary of State’s office, along with any required fees. Information about incorporation is usually available on state websites.
- Your corporation’s name. Your name has to be different from any other corporation in your state. Filing with the state also ensures that later organizations cannot use your name.
- Your official location. The articles must include the address of your office, where legal papers or other official documents will be delivered. If you have more than one facility, choose one to serve as the legal location and incorporate in that state. If you do not have a facility, it is acceptable to designate a home address as the legal location.
- Your status as a nonprofit corporation. Your articles must state that no part of the assets of the corporation is to benefit the members; for instance, your corporation will not be selling shares and distributing dividends. It may be necessary or advantageous to state that you are incorporating as a church, if indeed you are doing so.
- The intended lifespan of your corporation. You are likely establishing a corporation intended to exist in perpetuity, although it is possible to set up a corporation that exists for only a specific and limited period of time to carry out a particular function. If yours is a permanent corporation, it will remain in legal existence unless you fail to send in the annual renewal fees and forms, or you inform the state that the organization will be dissolving.
- The name of the person(s) organizing the corporation. Articles often include the names and signatures of your initial board of directors.
Look at a few examples of Articles of Incorporation (especially from nonprofits or even other Zen centers in your state) to see how they’re put together. When yours have been approved by your board of directors, submit them to the state Secretary of State’s office, along with any required fees. Information about incorporation is usually available on state websites.
bylaws
While the Articles of Incorporation legally establish your corporation, they don’t say much about how your temple will actually operate. Those details are described in the temple’s bylaws, the internal rules of your organization that describe where authority lies, how decisionmakers are chosen, and how decisions are made. It may be that in your state, your corporation doesn’t legally exist until its bylaws have been drafted and adopted.
The process of writing your bylaws will raise important issues for board discussion, and in that way it will help make sure your center has its bases covered. The conversations and decisionmaking necessary for the drafting of bylaws are as important as the finished product, because they bring to light areas of unclarity about priorities, authority, vision and scope. This is not a cotton-candy exercise, something to be gotten through as quickly as possible to satisfy the government formalities and never looked at again. It’s an opportunity for directors to begin talking over how things will actually work at the center on a day-to-day and month-to-month basis.
No, mommy, see pa!
There’s a handy mnemonic you can use to remember the skeleton of what goes into your bylaws: NOMOMECPA. That stands for Name, Object, Members, Officers, Meetings, Executive Committee, Committees, Parliamentary authority, and Amendment. With these things in place, the board will have established the basic infrastructure of the center.
In addition to these standard elements, you may wish to include other items in your bylaws:
Affiliation with Sotoshu, a particular lineage, or another center, if relevant
The role, scope and authority of the head cleric, including his or her relationship to the board, general duties, means for resignation or removal, and how a new head cleric will be found and installed
Staff hiring authority and reporting
Financial rules, such as setting the fiscal year and the authority to incur debt on behalf of the center
There’s something of a fine line between the guidelines incorporated into the bylaws and those that become policies. Both are elements of your center’s governance, but bylaws are harder to amend than policies, and they cover the bigger-picture aspects of running your center.
The process of writing your bylaws will raise important issues for board discussion, and in that way it will help make sure your center has its bases covered. The conversations and decisionmaking necessary for the drafting of bylaws are as important as the finished product, because they bring to light areas of unclarity about priorities, authority, vision and scope. This is not a cotton-candy exercise, something to be gotten through as quickly as possible to satisfy the government formalities and never looked at again. It’s an opportunity for directors to begin talking over how things will actually work at the center on a day-to-day and month-to-month basis.
No, mommy, see pa!
There’s a handy mnemonic you can use to remember the skeleton of what goes into your bylaws: NOMOMECPA. That stands for Name, Object, Members, Officers, Meetings, Executive Committee, Committees, Parliamentary authority, and Amendment. With these things in place, the board will have established the basic infrastructure of the center.
- Name: State the official name of your center, as well as any other acceptable forms of its name or any names under which it does business.
- Object: Describe the object of your activities. If you have an agreed-upon mission statement, use it here.
- Members: State whether or not the corporation will have members. If so, you may include a description of membership qualifications and privileges, or you may simply state that the membership program shall be as determined by the board of directors.
- Officers: List the qualifications, responsibilities and limitations for directors as well as the officers of the board: the president or chair, vice-president or vice-chair, treasurer and secretary. Explain how they will be chosen, how many will serve, the length of their terms, mechanisms for removal, and what will happen if someone leaves the board before his or her term is up.
- Meetings: Describe how frequently the board meets, who presides, how much notice is needed, when and how the annual meeting is held, and how special meetings of the board or sangha will be called.
- Executive committee: The executive committee holds and can execute the authority of the board in between official board meetings, allowing for a quick response to a crisis or opportunity that would not be possible if the entire board had to be gathered for a vote. It’s an important mechanism in particular for boards that only meet annually or quarterly, since the center’s staff will need approvals and direction more frequently throughout the year. The committee is typically made up of the incumbent officers: president or chair, vice president or vice chair, treasurer and secretary. It may also include the immediate past president or chair, so that his or her experience and leadership do not disappear with the expiration of the term. In your bylaws, list the officers who make up the executive committee and describe the group’s role, scope and authority.
- Committees: Your board may establish several other standing, general and ad hoc committees. Standing committees operate indefinitely and make policy recommendations to the board, take on longer-term assignments, and contribute to carrying out the ongoing achievement of the mission. General or standing committees do work that supports the center and its mission but is not directly related to issues of policy or governance. Ad hoc committees are project teams formed to accomplish a particular project or address a specific issue. Once that work is completed, the committee disbands. Your bylaws will explain the role, scope and authority of each, along with its reporting relationship. You can describe ryos, or workgroups related to more formal practice, in your bylaws as well if you like, but be sure to distinguish them from committees of the board as their reporting relationships and functions are likely to be different. Since bylaws are relatively unchanging, you may wish to describe the types of committees without committing yourself to forming or maintaining particular groups. On the other hand, if the board wants to ensure that committees remain an integral part of the center and don’t fall by the wayside, writing them into the bylaws is one way to do that.
- Parliamentary authority: This section of your bylaws explains how board meetings will be conducted and decisions made, including the definition of a majority for the purposes of voting. Your center may use a standard parliamentary authority, like Robert’s Rules of Order or The Standard Code of Parliamentary Procedure, or you may develop and adopt your own set of procedural rules. If you draft your own set, you may want to incorporate them into the bylaws by reference, that is, make specific mention of the document’s complete and accurate name. This makes the document an official part of your bylaws without repeating all of the text.
- Amendment: Finally, you’ll need to spell out the circumstances under which the bylaws can be amended, and the requirements for doing so. In some organizations, an amendment requires the support of a supermajority (two-thirds) of the entire membership; in others, it requires a simple majority (51%). Instead of the whole membership, it may be only the board itself which votes on the amendment in the course of a regular meeting. Some bylaws allow for voting by proxy, mail, e-mail, or telecommunications, but some require those voting to be physically present. Bylaws may specify that everyone qualified to vote will receive notice (14 days is common) of an impending amendment, or that such an amendment can be offered and discussed at any time but cannot be voted on until the following meeting. All of these rules are designed to ensure that changes to the bylaws are made carefully, with much thought and transparency, and not according to whim, coercion, or panic.
In addition to these standard elements, you may wish to include other items in your bylaws:
Affiliation with Sotoshu, a particular lineage, or another center, if relevant
The role, scope and authority of the head cleric, including his or her relationship to the board, general duties, means for resignation or removal, and how a new head cleric will be found and installed
Staff hiring authority and reporting
Financial rules, such as setting the fiscal year and the authority to incur debt on behalf of the center
There’s something of a fine line between the guidelines incorporated into the bylaws and those that become policies. Both are elements of your center’s governance, but bylaws are harder to amend than policies, and they cover the bigger-picture aspects of running your center.
Internal Revenue Service documents and other filings
If your center is a “church” that meets the requirements of Internal Revenue Code section 501(c)(3), it’s automatically considered tax exempt; you don’t have to apply to the IRS in order to have this status. Nonetheless, you may wish to get a IRS Tax Exemption Ruling Letter so that you have it in your file and can produce it as necessary when setting up bulk mail permits and accounts with vendors, working with funders, or ensuring that your property is tax exempt.
Whether or not you have any employees, as a tax-exempt organization your center will likely also want to get an employer identification number (EIN) from the IRS. It serves as an identifier for the center, and you’ll need it when you open a bank account or file tax returns.
Check with your state’s Department of Revenue or similar department to learn how to apply for nonprofit exempt status with regard to sales tax. With certification of your status, the center can buy some supplies necessary to its functioning without paying sales tax. Note that this exemption does not allow your center to sell items without collecting sales tax; it only covers purchases the center makes for its own use.
Your city may require a solicitation license before you can do fundraising; investigate whether this is necessary as you draft and submit the rest of your governance documents.
Whether or not you have any employees, as a tax-exempt organization your center will likely also want to get an employer identification number (EIN) from the IRS. It serves as an identifier for the center, and you’ll need it when you open a bank account or file tax returns.
Check with your state’s Department of Revenue or similar department to learn how to apply for nonprofit exempt status with regard to sales tax. With certification of your status, the center can buy some supplies necessary to its functioning without paying sales tax. Note that this exemption does not allow your center to sell items without collecting sales tax; it only covers purchases the center makes for its own use.
Your city may require a solicitation license before you can do fundraising; investigate whether this is necessary as you draft and submit the rest of your governance documents.
Mailing permits and eligibilities
If you are incorporated as a nonprofit, you may be eligible for reduced postage costs. File form 3524 with the US Postal Service to establish your qualification to mail at nonprofit rates. You’ll also need to provide your IRS letter of exemption, articles of incorporation, and something that shows how you operate, such as meeting minutes or publications. Complete information about supporting documentation is on the back of the form itself.
If you plan to do several mailings a year of at least a few hundred identical pieces at a time, you may wish to apply for a bulk mail permit. Printing your permit number on your mailed pieces allows you to mail at reduced rates, and without buying stamps and affixing one to each piece. However, you will be required to do other kinds of work on your mailing, like sorting it by ZIP code and filling out forms before bringing it to the post office, in order to take advantage of the discount. You can often ask your print vendor to take care of preparing and mailing your piece for an additional fee – and it may be worth it rather than learning to do the prep and keeping up with changing regulations yourself. The savings in postage charges over standard single-piece mail rates will often more than offset the additional printer cost.
Once you file Form 3615 with the postal service and pay the requisite fee, you’ll be given a permit number. Include this number in the indicia that you imprint on your mail pieces, and make sure to design the piece to meet postal service guidelines. You’ll also need to establish an advance deposit account with the post office and put funds into it prior to your mailing. The costs of the postage will be deducted from that account as needed when you do bulk mailings.
Your permit will remain active unless you don’t pay the annual renewal fee or don’t do any mailings for two years. If it goes inactive, you’ll need to pay the application fee all over again to make it useable again, so make sure you are or will be in a position to use a bulk mail permit before getting started on it. For complete information about bulk mail for nonprofits and necessary forms, visit the postal service website.
If you plan to do several mailings a year of at least a few hundred identical pieces at a time, you may wish to apply for a bulk mail permit. Printing your permit number on your mailed pieces allows you to mail at reduced rates, and without buying stamps and affixing one to each piece. However, you will be required to do other kinds of work on your mailing, like sorting it by ZIP code and filling out forms before bringing it to the post office, in order to take advantage of the discount. You can often ask your print vendor to take care of preparing and mailing your piece for an additional fee – and it may be worth it rather than learning to do the prep and keeping up with changing regulations yourself. The savings in postage charges over standard single-piece mail rates will often more than offset the additional printer cost.
Once you file Form 3615 with the postal service and pay the requisite fee, you’ll be given a permit number. Include this number in the indicia that you imprint on your mail pieces, and make sure to design the piece to meet postal service guidelines. You’ll also need to establish an advance deposit account with the post office and put funds into it prior to your mailing. The costs of the postage will be deducted from that account as needed when you do bulk mailings.
Your permit will remain active unless you don’t pay the annual renewal fee or don’t do any mailings for two years. If it goes inactive, you’ll need to pay the application fee all over again to make it useable again, so make sure you are or will be in a position to use a bulk mail permit before getting started on it. For complete information about bulk mail for nonprofits and necessary forms, visit the postal service website.
Directors and Officers insurance
While incorporating as a nonprofit protects individuals from personal liability for any debts owed by the corporation, it does not protect individuals from being named in lawsuits filed against your center – and that includes board members and officers. In other words, while creditors can’t go after individuals’ personal assets, directors and officers can be sued individually or as a group for claims involving everything from wrongful termination or sexual harassment to discrimination or failure to meet environmental or financial regulations.
That’s scary for board members, and some candidates will refuse to join your board unless you have directors and officers (D & O) liability insurance. Grant funders too may be reluctant to support you without insurance in place that covers you from the date of incorporation.
That’s scary for board members, and some candidates will refuse to join your board unless you have directors and officers (D & O) liability insurance. Grant funders too may be reluctant to support you without insurance in place that covers you from the date of incorporation.
A few words about minutes
It’s good to follow proper practices with regard to minute-taking right from the start. The minutes perform several important functions:
Your minutes should include the following elements:
- Demonstrate that your center is operating according to its bylaws. In a legal challenge, the minutes can provide some defense, showing that you have done business properly and are functioning according to the federal, state or other guidelines that apply to you. This is why the board officially adopts each set of minutes as its legal record.
- Provide continuity for future board members. Being able to review past board actions allows new directors to come up to speed quickly and get a sense of the way your temple operates.
- Serve as a policy reference. In order to keep from violating policies already on the books, the board needs to know what they are. It sometimes happens that a board will take official action only to find that the organization’s board of several years ago took the opposite action. If there is no handy policy reference, the board can unknowingly reverse itself, sending a message of confusion and disregard to the sangha.
- Provide context. Sometimes knowing how things came to be is vital to deciding how to proceed. The minutes reflect not only the action itself, but perhaps also who made and seconded the motion, and any alternatives considered or mitigating circumstances. A board that takes action without considering the history of a particular issue in the sangha risks damaging relationships.
- Form the basis of the next agenda. The minutes show when someone is directed or assigned to a particular task, and what the next steps might be for the actions the board takes. Referring to the minutes when writing a new agenda ensures that everything that needs to be included is there, such as follow-up reports and necessary subsequent decisions.
Your minutes should include the following elements:
- Name of the group holding the meeting. List the group as it appears in the bylaws, i.e. “Board of Directors” instead of just “the board.” Putting the minutes on your center’s letterhead makes it easy to also include the address and other corporate information.
- Date, time and location of the meeting.
- List of attendees, including visitors and non-voting members. Indicate office-holders, i.e. “Leigh Vicars, Treasurer.” If any directors are absent, indicate this as well.
- Formal approval of any previous minutes. You must show that you’ve adopted the minutes as your center’s legal record; otherwise, they’re just the creation of the person who took them.
- Motions passed. Record each motion verbatim, without interpretation or “correction.” Each voting board member has the right to make any motion he or she pleases, in any form. If things aren’t stated clearly, the motion can be amended, with the agreement of the person who seconds it. If there’s any confusion, read the motion back to the group so that everyone agrees about the measure being considered. Highlighting the approved actions in some way, such as making them bold or italic, makes it easier to scan the record for them later. While you are not required to note who made and seconded each motion, it can helpful to be able to discern later on who actually proposed each action, especially if there is any difference of opinion about the wording of the motion. You might use the following format:
M/S/P Quick, Nicholas to authorize the head teacher to purchase a new computer for the office at a cost not to exceed $3000.
This tells the reader that Quick made the motion, Nicholas seconded it, and it was passed. An item which is officially moved and seconded but not passed must also be recorded:
M/S/F Casey, Pearce to establish a mini-golf area in the grassy area on the north side of the Zen Center building.
In other words, Casey moved and Pearce seconded that this initiative be undertaken, but the board did not pass the motion and it failed.
If a board member abstains from a vote, perhaps because of a conflict of interest or the perception that she would personally benefit somehow from a particular outcome, this too must be noted in the minutes. Discussion that doesn’t result in any official action, including motions made and not seconded, need not be recorded unless it seems that being able to follow the progress of the board’s thinking on a particular issue might be important later on.
If your board uses a consensus model rather than taking and counting votes, your minutes will not record individuals making and seconding motions and everyone taking a vote; instead, you might record an action as being agreed to by consensus. Whatever your model, your minutes are still your legal record and must be written to serve that function. - Official adjournment: Adjournment should be recorded as you would any official action; otherwise, technically the meeting, and the arena for official board action, does not come to an end.