[Chapter-delegates] Bank Accounts was - deadline for admin funding

Mon Jul 13 09:07:41 PDT 2020

Dear Joyce,

This is essentially an answer to Andrew's question earlier, to elaborate a
little on "the letter changed Chapters".  Yes, the consultation process was
elaborate, some comments were taken into account, but the exercise did
alter the way Chapters worked.  Ten years ago "Chapter Support" was
supportive, fully recognizing the independence of the Chapter and the value
of the work done by Chapters.  A little later, gradually, there was an
unspoken thought that Chapters are peripheral to the central work that
Staff do. It was at this point of time that the Internet Society redefined
itself as a "mission-driven,, or mission based" organization, which in
effect redefined its legal status and 'style' of working as more of a Staff
centric organization.  ( I was once an observer in a BoT meeting where I
thought the BoT meeting was co-chaired by ISOC Staff. )   Against all this
background, the Chapter letter, consulted, yes, comments taken into
account, yes, but finalized by Staff was circulated and came into effect.

There have been more positive support to Chapters, more responsive support,
I have not found any difficulty dealing with Staff, but the overall
framework is now changed, from that of Chapter-Support to
Chapter-Adminstration.

Sivasubramanian M <https://www.linkedin.com/in/sivasubramanianmuthusamy/>
6.Internet at gmail.com
twitter.com/shivaindia

On Mon, Jul 13, 2020 at 7:34 PM Joyce Dogniez via Chapter-delegates <
chapter-delegates at elists.isoc.org> wrote:

> Hi everyone,
>
> I wanted to add some background to the consultation process that was
> undertaken in 2017 to draft the current Chapter charter letter.
>
> The process of revising the Charter involved consultation and
> communications with the Chapter leaders, more than 100 comments were
> received (see: https://isoc.box.com/s/hpfa28z0m7icqw6s773hcful87doep6t ).
> All of the comments were considered and integrated as much as was legally
> possible.
>
> Many one-on-one conversations took place with Chapters that had specific
> concerns & issues with regards to local legal requirements. The resulting
> final version was then brought to the Chapter Advisory Council Steering
> Committee on 13 Dec 2017. They supported this to go out to the full Chapter
> Advisory Council, which it did with the attached message on 17 Dec 2017.
>
> This 18 month process of revising the Charter Letter, including the
> community consultation, reviewing feedback received, getting legal advice,
> incorporating changes was not something taken lightly as it was important
> to find a solution that would comply with legal requirements for ISOC but
> also be workable for the majority of Chapters globally.
>
> I'm attaching a link to the message from December 2017 that has more
> detail.
>
> I hope this provides some background for those of you who were not part of
> this past process as well as some clarity on the consultation process that
> was undertaken.
>
> Thanks,
>
> Joyce
>
>
> On 13/07/2020, 15:02, "Chapter-delegates on behalf of Andrew Sullivan via
> Chapter-delegates" <chapter-delegates-bounces at elists.isoc.org on behalf
> of chapter-delegates at elists.isoc.org> wrote:
>
>     Hi,
>
>     On Mon, Jul 13, 2020 at 11:31:29AM +0800, Winthrop Yu via
> Chapter-delegates wrote:
>
>     >>"/Regardless, I believe that it _would_ be possible, under the
>     >>current chapter engagement letter arrangements, for a chapter to
>     >>find a home inside an NGO who can provide the requisite financial
>     >>shelter/."
>     >Thank you for this, it is at least an avenue that we can explore, as
>     >contrasted against previous responses which insisted on a bank
> account
>     >in the chapter's name.
>
>     The way this normally works in other organizations where I've seen it
> is that the bank account does end up "in the chapter's name."  That is, an
> unincorporated chapter finds a legal, incorporated, non-profit home that
> acts as an umbrella for the chapter, opens a bank account in its name, and
> so on.  This is actually not unlike the way some SIGs have become
> affiliated with chapters, and it's also the way the IETF worked
> approximately from the founding of ISOC until 2018.  It's also the way
> various free software projects I used to work on sometimes funded
> themselves.  It sometimes has certain negative consequences for the
> unincorporated party, because it usually means accommodating oneself to the
> needs of the other organization, but it is often better than the
> alternatives.  It appears to me that the best way for it to happen is for
> the chapters who have the need to do the local research necessary, because
> they are the people who are closest to the local situation.
>
>     >
>     >>"/I am quite confident that the "two or more chapter officers"
>     >>approach is not acceptable given the constraints under which we
>     >>work./"
>     >This is regrettable as i do recall this option being mentioned
> (again,
>     >i do invite comment, challenge or correction of my recollection.)
>
>     I'm totally prepared to believe people thought this would work in the
> absence of legal advice.  Also, US tax law has always been complicated; but
> as the political (and USG income) situation has become more, uh,
> challenging in the past few years the pressure on the IRS to tighten
> regulations to eliminate corner cases has increased.  So the rules keep
> getting stricter.  There's not much we can do about that: the Internet
> Society was incorporated in the US a long time ago, and everything
> (including, please note, essentially all of the income) is predicated on
> that.  So, I'm sorry that this is an impression you formed based on staff
> remarks, but it's not something that is possible today.
>
>     >As "difficult" as that point is, this is the reason i asked -- /if
>     >there is a strict prohibition against ISOC HQ funding chapters that
>     >are not legally-registered, or whether this is something else such as
>     >a risk mitigation measure/?
>
>     Legal registration is not a hard requirement.  Some countries,
> however, require it for bank accounts.
>
>     >Yes. I was referring to Christine's reply to a specific question i
>     >posed regarding those chapters who were already able to procure a
> bank
>     >account in the chapter's name but do not have legally incorporated
>     >status, thus ...
>     >>"/In most cases, a local legal registration is needed for the bank
>     >>to be able to open a bank account in the name of the Chapter.
>
>     I don't want to put words in her mouth, but I think what she was
> saying was that, in most of the cases where there is such a problem, it's a
> local-law problem: chapters can't get a bank account under local
> regulations because they need to be a registered entity to have such an
> account, and it is too difficult (or even impossible) to do that.  There
> are definitely many jurisdictions where unincorporated associations and so
> on can have bank accounts, and the chapter charter letter does not require
> legal incorporation.  (There's more than just bank accounts at stake
> there.  In some places it's effectively impossible to register as an
> association this way.)
>
>     >The question then being -- would even these chapters now be required
>     >to legally incorporate?
>
>     No.
>
>     >requirement -- /if we were to relegate the matter to a (assume ChAC)
>     >working group, would any such discussions or subsequent
>     >recommendations from ChAC actually be able to change the decisions
>     >made by ISOC HQ, particularly the hard requirement for legal
>     >incorporation/?
>
>     As I said, there is no such hard requirement, though there might be
> one for a given chapter because of laws in their country.  The bank account
> rule is not something that we can change: it's due to US laws, regulations,
> and IRS interpretations.  I really am sympathetic with the difficulty this
> creates, but it isn't something we can fix and it is something that other
> US charities are struggling with, too.
>
>     Best regards,
>
>     A
>
>     --
>     Andrew Sullivan
>     President & CEO, Internet Society
>     sullivan at isoc.org
>     +1 416 731 1261
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