Business Matters

Business Matters Jerry Sigler & Brenda Herman June 2, 2007

Club Operations Articles of Association and Bylaws Tax-exempt Status Insurance Considerations Sales Tax Exemptions Raffles Sponsorships Logos

Club Operations • Operating Funds • Used to cover communications, events and other activities that engage alumni • Should be held in separate checking account – never co-mingled with an officer’s individual funds • Consider requiring two signors for larger amounts • Scholarship Funds • Generally held at U-M – to maximize earnings and minimize risk • Should not use AAUM annual funding to club for scholarships. Club funding is to underwrite alumni engagement activities

Club Operations • Reporting • Expectation is that club board meets regularly, i.e., a minimum of four meetings per year • Annual budget approved by board • Treasurer’s report (in writing) at every meeting • Minutes prepared for every meeting

Articles of Association and Bylaws • Articles of Association – the instrument under which the club is organized • Bylaws – the regulations that provide the basic rules for the conduct of the club’s business and affairs

Why have bylaws? • Conveys to volunteers what their responsibilities are and the length of their terms • Legitimizes that volunteers are working in an official capacity for the club • Provides clubs with a road map for conducting business

Model Articles of Association and Bylaws • How we developed them • Used existing club bylaws • Input from Clubs Council • Input from Regional Relations staff

Where do we start? • Form a committee to review the model articles of association and bylaws and prepare a draft document • Clubs that have a separate 501c3 status should have them reviewed by someone knowledgeable about their state’s laws, rules and regulations governing non-profit organizations • Consult with AAUM staff • Submit proposed articles and bylaws to the club’s board for a vote of approval • Review on a regular basis and amend as necessary

Tax-exempt Status • Recognized clubs benefit from AAUM’s tax-exempt status, but are not themselves 501(c)(3) – cannot separately accept tax deductible contributions • Discourage clubs from applying for separate tax-exempt status (some have been turned down; if approved, record-keeping and reporting is onerous and some have lost exempt status due to failure to submit reports) • Cannot participate in or contribute to political campaign activities or attempt to influence the outcome of an election

Insurance Considerations-Events • U-M’s insurance extends to official activities of AAUM’s recognized clubs • Events requiring “proof of insurance” – contact Regional Relations staff, allow sufficient time for U-M Risk Management to review contract • Co-sponsored events – depends on documented level of U-M club’s involvement • Get participants to sign Liability Waiver for strenuous or risky activities

Insurance Considerations-Individuals • Coverage for club officers and directors, while acting within the scope of their duties (bylaws should define officer’s roles) • Alumni volunteers are covered—but only to extent it is clear they are acting within the scope of their duties, so board minutes or other documents should define expectations • Does not cover losses from bank accounts not controlled by U-M (e.g., club checking accounts or separate scholarship accounts)

Sales Tax Exemption • Sales tax exemptions varies from state to state • Many (like Michigan) accept proof of Association’s Federal tax-exempt status…but others (like California, Florida and New York) do not • Do not assume – verify with a local expert

Raffles • Persons purchasing a raffle ticket must not be led to believe that the cost is tax-deductible. To the contrary, the purchaser has received something of value in return--the opportunity to win a prize (regardless of whether he/she actually wins.) Thus, the cost of the ticket is not tax-deductible. • Postal regulations prohibit the sale and delivery of raffle tickets via US Mail. • State of Michigan requires a license for each raffle, there are specific requirements and the state is very strict about compliance

Raffles continued • Clubs must maintain detailed financial records of all activity and submit a financial report at the end of the raffle. • An unauthorized or improperly administered raffle could affect the ability of other U of M clubs (or even the Alumni Association) to obtain a license in the future, so please contact the Alumni Association prior to preparing to conduct a raffle. • Outside of Michigan—please a consult with local expert

Sponsorship • Specify in writing what the benefits are to the sponsor, i.e., mention on club’s website, an information table at the event, an opportunity to give a commercial pitch at the event, etc. • Specify in writing what the costs are to the sponsor • Cannot give sponsors alumni contact information

Sponsorship continued • Prohibited from securing sponsorships from the following companies that have exclusive partnerships with the Alumni Association • Bank/financial institutions (currently La Salle Bank) • Credit card/affinity card (Bank of America) • Insurance (Liberty Mutual, American Insurance Administrators) • Moving/relocation company (Stevens Worldwide) • Check with Dave Schuler, AAUM Advertising and Sponsorship Manager, at 734.763.9754

Use of UM and AAUM logos • Clubs can use the Block M and U-M seal, logo and name on their Web sites, in listserv messages and on club fliers • Printing of these items on merchandise for sale or distribution is strictly prohibited • If you have questions or would like additional information, visit the University Identity Guidelines Web site at http://www.logos.umich.edu/about/quickref.html

Use of UM and AAUM logos continued • Alumni Association logos and images are available on the Club Leader Web site at http://umclubs.com/clubleaders/index.php?page=club-graphics These cannot be used on club merchandise, but can be used on club business cards, event programs, event signage, club Web site and on club listserv

Business Matters