[Chapter-delegates] Why can't one be a Trustee and Chapter leader at the same time? (was Re: Message from Internet Society Audit Committee Chair)

[Veni Markovski]

Oh, wow.
That's something new, but the way I read it, there are two, or may be
even three options:

1. A chapter leader runs for ISOC Trustee and (s)he is not elected.
Nothing to do here.
2. A chapter leader runs for ISOC Trustee and (s)he is elected. Options:
2.1. (S)he steps down from the chapter leadership role (as per Andrew's
email)
2.2. (S)he doesn't step down, but the chapter discontinues getting *any*
funds from ISOC
2.2.1. (S)he doesn't step down, the chapter continues getting - at some
point in the next three years - some funds from ISOC. The statement of
interest is declared by that Trustee (correct me if I am wrong, but this
should not be CoI, Conflict of Interest, as the Trustee is not the one,
who decides what money ISOC gives to what chapter), and ISOC risks a
potential check by the IRS, and may be an audit.

Just to put this in perspective - if that rule existed few years ago,
some of the Trustees would have never made it to the BoT (unless they
would give up their chapter leadership position), and this would be
unfortunate. I may be wrong, but I remember a lot of chapter leaders,
who have served on the Board, starting with myself.

But, Andrew, you are not saying that this is the only possible way; you
actually said if a chapter leader is a Trustee, that puts extra burden
on ISOC in case it is to be audited by the IRS. An audit doesn't mean
ISOC is doing anything wrong, or that the chapter leader cannot be a
chapter leader; it seems like by asking the chapter leaders to make that
choice, you're just making it easier on ISOC with regards to a possible
audit. And it's a possible audit, right, it's not that there's a "must
audit" in this case? Because the IRS might investigate, and find out
that, well, it's normal for a small country in Asia, LAC, Africa or
Europe, to actually get $ 2,000 from ISOC as administrative support, and
that does not threaten the tax exempt status of ISOC (the 501(c)(3) that
you quote), right?

Further to that, in some cases ISOC chapters don't have 'officers', as
in the US legal world. They may not have a "president/ceo", but just a
chairman of the board. These could be non-paid positions, and there's a
difference between the responsibilities of board members, who are
compensated for their work, and those, who work pro bono.


Kind regards,
v/

On 11/5/20 12:48, Andrew Sullivan via Chapter-delegates wrote:
> Hi,
>
> I will leave the discussion about why the CoI rules for the Board are
> as they are for the Board, because it is a governance issue.  But
> there is a straightforward tax answer to the question below:
> On Thu, Nov 05, 2020 at 01:56:39PM -0300, Flávio Rech Wagner via
> Chapter-delegates wrote:
>
>> And I am very surprised to know that Chapter leaders should not serve
>> as Trustees. This does not make any sense. Chapters elect four
>> Trustees exactly to bring their perspectives to the Board, and their
>> leaders are the persons that best understand and represent those
>> perspectives.
>
> Chapters are, legally speaking, separate organizations from the
> Internet Society (i.e. the corporation incorporated in the District of
> Columbia in the US).  The US Internal Revenue Service requires that
> Trustees disclose, in the annual 990s we file with them, any case
> where they have an interest in another organization that receives
> money from the Internet Society.  In principle, any Chapter can be in
> receipt of money from ISOC because of the admin fund, because of the
> money that flows through the Internet Society for Beyond the Net, and
> because of the Chapterthon.  If an officer of a Chapter were to be in
> a Chapter that receives any of that money, then we would have to
> report it to the IRS and undergo a bunch of additional investigation
> and audits and so on (because, as an officer of such a Chapter they
> have a fiduciary relationship to the Chapter and so are deemed to have
> an interest).  It would be a risk to the organization and our
> 501(c)(3) status.  That is why it is important that nobody in a
> Chapter leader position be a Trustee at the same time.
>
> That is not to say, of course, that people who have been leaders in a
> Chapter should be excluded from selection as a Trustee.  We often have
> people who become Trustees while they are Chapter leaders.  They
> simply have to give one up or the other.
>
> I hope that provides the information you need.
>
> Best regards,
>
> A
>

-- 

Best regards, 
Veni
https://www.veni.com
pgp:5BA1366E veni at veni.com

The opinions expressed above are those of the 
author, not of any organizations, associated 
with or related to him in any given way. 

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