[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)

[borka at e5.ijs.si]

Veni, I agree with your views - explanation of the different 
possibilities.

Regards,

Borka


On Thu, 5 Nov 2020, Veni Markovski via Chapter-delegates wrote:

> 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. 
> 
>