1

AHA PMG CHAPTERSAffiliation Agreement UpdateJune 5, 20131 p.m. CT

2

Agenda• Welcome & Introductions• AHA Affiliation Agreement - Liz Summy, VP, PMGs• Update on the tax exempt environment – Paula Goedert, Esq.• AHA Chapter Tool Kit – Paula Goedert, Esq.

• Preparing and filing articles of incorporation • Obtaining an EIN • Preparing and filing Form 1024 – application for recognition of

exemption • Preparing and filing the Federal Information Return with the IRS

• Tips for obtaining insurance – Liz Summy• Tips for obtaining a bank account in the Chapter’s name - Liz

Summy• Open Q&A – Liz Summy & Paula Goedert

3

AHA Chapter Affiliation Agreement• Defines the relationship between AHA/PMGs and their

affiliated chapter as legally separate entities• Defines criteria for affiliation

• Minimum Membership• Membership in Common• Governance and Tax documents• Minimal reporting

4

Tax Exempt Organizations• Background• Current Environment• A view to the future

5

Chapter Affiliation Toolkit

6

AHA Chapter Tool KitCommunication Documents• Executive Summary – message to Chapter leaders• Email Blast to Chapter leaders (same as Tool Kit

Executive Summary message) • Letter to Chapter Leaders explaining Tax Exemption

Instructions

AHA/PMG Chapter Affiliation Agreement (CAA) • Sample agreement (AHRMM)• Sample style guide for managing the brand

7

AHA Chapter Tool KitMust Haves For All Chapters• Bylaws• Federal Employer Identification Number• Minutes

Incorporation• Incorporation: Why and How• Articles of incorporation 

8

AHA Chapter Tool KitTax Exempt Status• Tax exempt status (501 C3, 4 or 6)• Application for Tax Exempt Status• Tax filings• 990, 990EZ or 990N• 1099 if relevant

9

AHA Chapter Tool Kit• Insurance • Link to webinar recordings• PMG chapter website contents• Membership Recruitment Tips• Membership Roster Template• Tips for Securing a Bank Account• Year End Chapter Report Template

10

Sample Chapter By-laws• Should have by-laws

regardless of incorporation status• Sets forth who can be a

member and• How the organization is

governed

• Once adopted, by-laws can only be changed according to the process described in the by-laws.• Be practical

11

Obtaining an EIN• Each chapter must have Federal Employer Identification

Number (EIN), whether incorporated or not.• EIN is similar to a social security number for an entity

How to:• Complete form SS-4 (online at www.irs.gov)• Follow the instructions for completion• Can be filed online• The EIN will be sent to you the same day

12

Application for EIN (SS-4)

13

MinutesEach chapter must keep minutes of board meetings and meetings of members

Key points – Board Minutes• Record the date and time of the meeting• Which Board members were in attendance• Business discussed• Resolutions passed

Key points – Member minutes• Record the date and time of the meeting• Whether a quorum of members was present• Business discussed• Resolutions passed

14

Preparing & Filing Articles of Incorporation

• Each states’ form is different

• Incorporation protects members from liability

15

Application for Tax Exemption(Form 1024)• Forms differ for c3, c4,

and 6c organizations• C6 is the way to go!• 1024 is relatively simple

16

Annual Reports to the IRS

• Each exempt organization must file some version of Form990: either the regular 990, the 990 EZ, or the 990-N.

• Form 990-N can be filed by organizations with less than$50,000 in gross revenue averaged over 3 years.

• Failure to file the appropriate Form 990 can result in finesand penalties.

Key points:The IRS will reject its Form 990 if it does not recognize the entity astax-exempt. Entities which are not tax-exempt must file Form 1120 andpay federal income tax on profit.

If an entity is required to file Form 1120 and fails to do so, it can be charged with civil fines and penalties and also criminal penalties. If it isunincorporated, its members can be personally responsible for these fines and penalties.

17

Form 990, 990-EZ

Association Business Insurance Solutions• Nonprofit organizations should be operated and managed with at

least the same degree of care as for-profit corporations.

• Directors and Officers are subject to three basic duties in executing their obligations:

1. Duty of Care – act prudently 2. Duty of Loyalty – act in the best interest of the organization3. Duty of Obedience – adhere to the organization’s bylaws

Obtaining Insurance

Management Liability Insurance• Directors and Officers (D&O) Liability Insurance• Employment Practices Liability Insurance (EPLI)• Professional Liability Insurance – Errors & Omissions (E&O)

Coverage• Fiduciary Liability and/or Employee Benefits Liability• Crime and/or Fidelity Coverage

Key Point• Chapter Affiliation Agreement requires insurance

ASAE and AON forms

21

Securing a Bank Account• Healthcare Associates Credit Union

• Agreement with the AHA and several state hospital associations, healthcare associations, and healthcare organizations

• Checking, savings, and money market accounts• Credit and debit cards

• Simple application• Proof of incorporation• P.O. Box address is acceptable

22

Healthcare Associates Credit Union

23

Securing a Bank Account

Norma CantrellDirector of Business DevelopmentHealthcare Associates Credit UnionPhone: 630-276-5730Email: ncantrell@hacu.org

www.hacu.org

24

REMEMBER … • Refer to the Chapter Tool Kit (may be revised from time to

time)• Contact your Chapter Liaison• Access resources on your PMG Chapter webpages