Institute for Organization Management - A Program of the U.S. Chamber of Commerce

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A PROGRAM OF THE U.S. CHAMBER OF COMMERCE FOUNDATION
 

IOM Blog

January 13, 2017

You Are Not a Lawyer… But You Have to Know Some Laws

The increasing complexity of laws and regulations related to the management of associations and chambers of commerce has elevated the need for staff to stay abreast of laws and to effectively engage legal counsel as their partner in minimizing the risk of a potential legal problem.

According to Jeffrey Tenebaum, Esq., Chair of the Nonprofit Organization Practice, Venable LLP, employee litigation is the most prevalent category of litigation against non-profit organizations. Organizations should develop written policies on the myriad of employment- related issues, including hiring, performance management, discrimination, termination, etc. These policies should be periodically reviewed by legal counsel to determine if the policies are in compliance with current laws and regulations. Also management staff should receive training on these policies.

Associations and chambers of commerce are frequently parties to contracts with consultants, hotels, speakers’ bureaus, etc. Staff should be trained to review contracts to identify the areas of the contract that would be applicable if a problem would develop with the fulfilment of the contract. Those areas include: termination provisions, location of legal jurisdiction in the event of a dispute, indemnification, etc. It may be worthwhile to engage legal counsel to conduct a training session for staff members who are involved in contract negotiations.

The cost of responding to a security breach can be exorbitant. A breach can be damaging to an organization’s reputation. There are new state and federal laws that require specific responses to a security breach. According to Connie Mastovich, CISSP, Senior Security Compliance Analyst, Reclamere Inc., the penalties for not implementing security measures have become so stiff even the most jaded business maker now takes them seriously.  Intellectual property, copyrights, and trademarks are critically important to an organization’s operations.

Legal counsel should be consulted during the evaluation phase of potential new types of revenue opportunities to ensure the opportunity is aligned with the mission of the organization and to explore potential income tax regulations. A new revenue source may result in a change in the structure of the organization (i.e. forming a political action committee, foundation, etc.). The program staff should possess a basic understanding of income tax regulations involving royalties, program sponsorships and charitable contributions. Lisa Hix, Esq., Partner, Venable LLP has stated that as a “rule of thumb” a non-profit organization should be concerned about maintaining its tax-exempt status when 15% of the organization’s revenue is unrelated to its primary mission and is reported on the organization’s IRS Form 990T.

Staff should periodically request their legal counsel review governance documents and procedures. Governing documents should be reviewed to determine if they are reflective of the organization’s current operations. Also staff should review these documents to ensure the organization is operating in accordance with the governing documents by maintaining board of directors meeting minutes, ensuring that a quorum is present for voting, having the prescribed number of meetings per year, etc.

Sensitivity and awareness of potential legal issues should be integrated into an organization’s operations in order to strengthen and to protect the organization.

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Jewell Lester

Jewell Lester serves as the vice president of Finance and Administration for the Pennsylvania Chamber of Business and Industry. As vice president, she oversees the membership, marketing, finance and information technology departments of the Chamber. She is also responsible for strategic planning.

Lester graduated from East Stroudsburg University with a bachelor's degree in Management. She received her Master of Business Administration from Case Western Reserve University, Weatherhead School of Management, in which she concentrated in marketing, product management, and promotional marketing.

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