1. Welcome AHA-Personal Membership Groups Chapter Relations Webinar January 11, 2012

2. Introductions Liz Summy, Vice President, Personal Membership Groups of the AHA Paula Goedert, Esquire Barnes & Thornburg, LLP

3. Objectives Describe the AHA/PMG relationship Describe chapters as separate legal entities Describe advantages of chapters as separate legal entities Describe incorporation of a chapter Describe Federal tax status of a chapter

4. The AHA AHA –Responsibility for the Association Leadership and Business Development –Not for profit –For profit –Subsidiary Personal Membership Groups (501c6) –9 groups –AHA Certification Center –Membership Services

5. AHA – PMG relationship Division of Personal Membership Groups -34,500 members -Advocacy, Education, Leadership Development -253 chapters -Domestic -International

6. PMG Strategy Map – 2011-2013 AHA Vision: A society of healthy communities where all individuals reach their highest potential for health. Our Mission: As a division of mission-driven membership groups, we are committed to healthcare improvement through professional leadership and development. Values: Innovation Respect Accountability Commitment Trust Authenticity Goal 1: Contribute to the AHA (Help the AHA help its Members) Strategy 1A: To help the AHA serve its members, we provide education and resources through our membership base to improve hospitals and healthcare organization performance. Strategy 1B: To generate financial resources in support of the AHA mission and the PMG vision. Goal 2: Advance the Membership Strategy 2A: Develop the skills and capacity of the professions we serve through timely and relevant educational programs, advisories, and publications. Strategy 2B: Provide forums for networking and professional development Goal 3: Advance the Industry Strategy 3A: Leverage our membership network and subject matter expertise to support new and evolving practices to improve hospital and healthcare organization performance. Strategy 3B: Develop future leaders who contribute significantly to meeting the challenges of a new healthcare delivery system Strategy 3C: Develop mastery of well-defined bodies of knowledge through professional certification. Goal 4: Optimize the Operational Effectiveness of the PMGs Strategy 4A: Utilize technology and operational efficiencies to support higher performance of staff and the division as a whole.

7. PMGs

8. PMG Chapter Relations Activities PMG Chapters are “separate entities” PMG By-laws Chapter Affiliation Agreements Chapter relations activities vary

9. © 2008 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. This Barnes & Thornburg LLP publication should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer concerning your situation and any specific legal questions you may have, or address any questions concerning the foregoing to a Barnes & Thornburg attorney. What is a separate legal entity? A separate legal entity can enter into contracts in its own name and can sue or be sued. Separate legal entities may be incorporated or unincorporated.

10. © 2008 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. What does it mean to be incorporated? An incorporated entity has filed appropriate papers with a state to obtain corporate status. Reports must be filed with the state to maintain corporate status. What happens if reports are not filed when required? Corporate status dissolves and the entity is considered an unincorporated entity.

11. © 2008 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. What is the advantage of incorporation? Incorporation forms a protective shield around the activities of the corporation. Unless an officer, director or member has engaged in personal wrongdoing, it is rare for them to be sued for debts or obligations of the corporation. What is a member’s responsibility for debts or obligations of an unincorporated entity? In most states, a member can be held personally liable for the debt or obligations of an unincorporated entity. That is true for officers, directors, and other members.

12. © 2008 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. When are bylaws required? Bylaws are required of all separate entities, whether unincorporated associations or corporations. The bylaws are the entity’s own rules for self-governance. When is an employer identification number required? Every individual and entity must have its own “employer identification number” or “EIN”, whether or not it is an employer.

13. © 2008 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. What is tax-exempt status? That is a status which permits entities to pay tax on some revenue streams but not others. Those entities are typically charitable and educational organizations, social welfare organizations and trade and professional associations.

14. © 2008 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. How does an entity obtain tax-exempt status? An entity obtains tax-exempt status by filing an application with the Internal Revenue Service. Form 1023 is filed for Section 501(c)(3) charitable and educational organizations. Form 1024 is filed for other types of tax-exempt organizations.

15. © 2008 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. What kind of annual reports does the IRS require? Each exempt organization must file some version of Form 990: either the regular 990, the 990 EZ, or the 990-N. Form 990-N can be filed by organizations with less than $50,000 in gross revenue averaged over 3 years. Failure to file the appropriate Form 990 can result in fines and penalties.

16. © 2008 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. What is the result if an entity fails to file for tax-exempt status? The IRS will reject its Form 990 if it does not recognize the entity as tax-exempt. Entities which are not tax-exempt must file Form 1120 and pay federal income tax on profit. If an entity is required to file Form 1120 and fails to do so, it can be charged with civil fines and penalties and also criminal penalties. If it is unincorporated, its members can be personally responsible for these fines an penalties.

17. © 2008 Barnes & Thornburg LLP. All Rights Reserved. This page may be freely copied and distributed if kept intact and the copyright notice appears. Is it necessary for an entity to purchase insurance to cover its activities? The purchase of general liability insurance and directors and officers liability insurance is always a good idea. The purchase of such insurance is crucial if the entity is unincorporated.

18. Questions

19. Re-cap Education and tools -Chapter officer orientation -Chapter workshops -Affiliation agreements – updates

20. AHA 155 N. Wacker Drive Suite 400 Chicago, IL 60606 Elizabeth Summy, MSc., CAE Vice President, PMGs 312-422-3717 esummy@aha.org