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© 2016 Venable LLP
October 3, 2016Venable LLP, Washington, DC
Legal UpdateLouisiana Society of
Association Executives
Anita Drummond, Esq.Nonprofit Organizations Group,
Venable LLP
[email protected](202) 344-4450
© 2016 Venable LLP
Get your bearings . . . .
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Road Map
• Preserving and protecting key assets • Keep and growing revenue• Innovation• Governance • Crisis management
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Road Map
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Assets
• People• Information and intellectual property• Cash, tangible and real property
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People
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[Can we insert the photo of people analyzing something tgether?]
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People Checklist
• Identify key employees and evaluate security/risks• Human resource policies
– Hiring processes– Performance management– Preventing discrimination and harassment– Termination processes
• Training board, management and staff• Taking care of members• Volunteer policies, agreements and training• Key vendor agreements
– Payroll – Benefits providers
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Intellectual Property & Data
Sit down and have a cup of coffee. List out key information that you’d be lost without. What are your key brands? What is your organization’s copyrighted content that is yours alone?
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Intellectual Property and Data Checklist
• Register, manage and protect trademarks and service marks
• Secure content rights for digital media, publications and educational materials
• Data security and operational redundancy (including vendor agreements)– Corporate records and governance documents– Key services– Member and donor lists– Financial data and management– Operational systems
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Money and Real & Tangible Property
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“Risk comes from not knowing what you’re doing.”
—Warren Buffett
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Money and Real & Tangible Property Checklist
• Investment advisors, broker and investment vehicle agreements
• Loans • Independent auditors, tax preparation, and
other finance service agreements• Core technology systems• Real property acquisition, selling or leasing (or
maintenance and taxes)• Insurance
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Assets
Where can legal advice protect your most important asset? Or reduce greatest risks?
• People• Information and intellectual property• Cash, tangible and real property
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Revenue
• Sources of Revenue
• Protecting Core Organizational Services
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Sources of Revenue Checklist
• Policies for receipt and control of revenue from various sources – Membership dues– Donations – individuals, corporations and foundations– Government grants and contracts– Royalties, sponsorships, trade shows, educational
programs– Service fees– Taxable income (e.g., advertising)– Jurisdiction of revenue source
• Agreements for major income
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Protecting Core Organizational Services Checklist
• Payment processing services • Trade show contracts• Publishing contracts for educational materials• Copyright licenses on key publications• Lobbying registration and reporting compliance, and
lobbying tax compliance• Accreditation and certification programs• Agreements with related entities that provide services
or products to membership and others• Agreements related with third-parties to provide
services to members or the public• Insurance
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Revenue
How can legal advice protect your revenue sources and reduce risk?
• Major revenue streams • Systems and services
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Innovation
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• C.F. Mueller Co. case – law school-owned pasta manufacturer
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Innovation “Flags” for Legal Advice
• New products and services• Joint ventures and partnerships• Vetting business partners• New branding efforts• New forms of revenue• Potential for risk to property or persons• Industry standards, accreditations and certifications• International activities• Don’t let tax, legal and regulatory compliance be
the tail that wags the dog – but be smart
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Checklist so far . . .
AssetsRevenueInnovation
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Governance
• Corporate Basics• Business Management• Tax-Exempt Organization
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Corporate Basics Checklist
• Policies and procedures for basic corporate governance matters
• Orientation on fiduciary duties, policies and procedures for board and senior leaders
• Annual legal update for board and senior leaders • Bylaws and other governing document review• Board and committee meeting minutes • Financial oversight• Corporate public filings• Relationship with related entities • Crisis-management plans• Whistleblower protection
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Business Basics
• State and local business registration and licensing • Corporate records – current, accurate and organized• Financial, personnel, asset and operational quality control• Review and maintenance of insurance policies
– D&O– Business Interruption– Property – General liability
• Management of long-term critical contracts for core services and functions (e.g., payroll, data source hosts, etc.)
• Compliance with agreements for major income sources• Liabilities control associated with particular core functions
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Tax-Exempt Organizations
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Tax-Exempt Organization Checklist
• IRS Form 990• Lobbying implications for a TEO• Political activities• Structuring related v. unrelated activites• Affiliates and subsidiaries• Unrelated business income• Sponsorships, royalties, trade shows, advertising• Private benefit• Private Inurement
– Conflict of interest policy– Other inurement safeguards– Executive compensation
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Building a foundation of legal basics
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• Basics: Bylaws, policies, filings
• Leadership is counseled and sets the standard
• Practice– Trainings– Complying – Maintaining– Processing issues– Planning for growth
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Crisis Management
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Crisis Management Checklist
• Review with legal counsel possible scenarios– Operational loss– Human risks– Reputational– Financial– Tax-exempt compliance challenges– Other legal liabilities
• Established process for management team, board, legal counsel and other professionals when crises occur
• Role of insurance, public relations and other third-parties – ensuring coverage under the attorney-client and work-product privileges if necessary
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• People
• Brand
• Money
• Property
• Information
• Innovation
• Crisis
• Corporate Basics
• Tax-Exempt Organization
• Preservation• Growth
Assets & Revenue
• Stability
• Change
• Mission Delivery
Organization
Assess Legal Needs
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© 2016 Venable LLP
Moving forward . . .
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© 2016 Venable LLP
Considerations in Engaging Counsel
• Counsel who knows your organization or invests in getting to know your association
• Expertise in the legal areas • Experience with specific implications of a
nonprofit• References • Establish a communications norm• Proper legal, financial, and operational planning
for new programs• Reserves for unexpected and insurance
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Cost-Effective Legal Counsel
• Expertise considerations• Hourly• Fixed fee retainer• Capped• Timely billing• General counseling value
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Questions?
To view an index of Venable’s articles and presentations or upcoming programs on nonprofit legal topics, see www.Venable.com/nonprofits/publications or www.Venable.com/nonprofits/events.
To view recordings of Venable’s nonprofit programs on our YouTube channel, see www.YouTube.com/VenableNonprofits orwww.Venable.com/nonprofits/recordings.
Follow @NonprofitLaw on Twitter for timely posts with nonprofit legal articles, alerts, upcoming and recorded speaking presentations, and relevant nonprofit news and commentary.
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Anita Drummond, Esq. Venable [email protected]
t 202.344.4450
Anita Drummond is a member of Venable's nonprofit organizations practice group. She has significant experience working in-house for nonprofit organizations and for the federal government, as well as in private practice. She is well versed in the broad range of legal issues facing nonprofits, and is very focused on using the law to help nonprofits further their mission and achieve their goals.
