AMERICAN COLLEGE OF NURSE-MIDWIVES, INC. AFFILIATE DEVELOPMENT AND SUPPORT BACKGROUND INFORMATION

1. AMERICAN COLLEGE OF NURSE-MIDWIVES, INC.AFFILIATE DEVELOPMENT AND SUPPORT BACKGROUND INFORMATION

2. The primary goals of the ACNM State Affiliates are to: • Support individual ACNM members. • Foster stronger ACNM member communities. • Increase the effectiveness of ACNM’s advocacy for improved access to high-quality midwifery care for women and their families through state legislative, regulatory, and health policy activities.

3. The development of state Affiliates will change the way ACNM members work together within states, between states, and between the state and national organization. 

4. In the early phase of implementation of the Affiliates, state leaders should focus on identifying and prioritizing those elements which will: • Facilitate successful formation of the state Affiliates. • Enable effective communication and coordination between state leaders and between state and national leaders on state legislative, regulatory, and health policy strategies. • Minimize the administrative workload associated with state Affiliates at both the state and national level.

5. The following document provides background information related to the steps a state/ territory/ uniformed services need to move forward with development of Affiliates. • The information in this document and the other governance document samples has been reviewed by legal counsel. It is his opinion that Affiliates should not need legal counsel to develop and/or incorporate. • ACNM will not provide detailed legal advice to individual Affiliates.

6. 4 First Steps: • Determine your current Status • Decide whether or not to incorporate • Determine your tax status • Identify operational requirements

7. STEP ONE: What is your current status? • Locate and review your existing governance documents. These could include, incorporation status, articles of incorporation, bylaw/SROPs, insurance documentation. • If you do not have or cannot locate them, you can start from the beginning.

8. STEP TWO: To incorporate or not? • Affiliates can choose whether or not to become incorporated. However,ACNM strongly recommends that affiliates incorporate.The advantages of incorporation are explained below. The only real disadvantage of incorporation is the cost (approximately $100). An unincorporated association is still a legal entity and can enter into contracts and sue or be sued, but it exposes its leaders to more liability risk than incorporated entities. • Again, a lawyer is not needed for incorporation. We are providing a link to your state website which should have fill in blank forms and easy to follow instructions for incorporating.

9. Benefits of Incorporation: • Liability protection. • If an Affiliate does not incorporate, the members and leaders can be held personally liable for the debts and other legal obligations of the Affiliate. This liability includes more than contractual liability. For instance, if someone drinks too much alcohol at an Affiliate function and has an accident, the injured party could sue the Affiliate, members, and Directors and obtain a judgment, which would be collectible from the individuals if the Affiliate has insufficient assets or no insurance. In an incorporated Affiliate, the members and Directors have protection against that personal liability.

10. Benefits of Incorporation: • Incorporation avoids personal liability exposure in business arrangements. • Unincorporated Affiliates seeking to hold hotel meetings are more likely than incorporated Affiliates to be required to have their Officers sign and guarantee the hotel contracts personally, because hotels (and other business entities) want a definite entity to be responsible for the bills. Such guarantees can lead to personal liability if the unincorporated Affiliate does not have the resources to cover expenses.

11. Benefits of Incorporation: • It is not expensive to incorporate. • For a minor filing fee (usually under $100) affiliates can file Articles of Incorporation with their State to incorporate and obtain the additional protections of incorporation. Most states require the filing of an annual report fee with a fee that is usually less than the cost of incorporation.

12. Benefits of Incorporation: • It is not difficult to incorporate. • Even unincorporated entities need a founding document, called a constitution. For just about the same degree of effort you can create Articles of Incorporation, and establish a corporation to provide some liability protection. • ACNM will have a link to the guidance on each State’s website, as well as a template you can use to insert into your Articles of Incorporation. The state website should also include either guidelines about the law or a copy of or link to the state law governing nonprofit information.

13. Benefits of Incorporation: • Predictable governance. • When you incorporate, your bylaws create a predictable governance system establishing clear procedures for such important issues as officer/board terms, meeting notice requirements, voting rights, officer positions, elections and succession. • ACNM is providing templates for Bylaws.

14. Benefits of Incorporation: • Insurance. • Liability insurance. • Although ACNM’s Comprehensive General Liability insurance policy does not cover Affiliates, ACNM’s insurer has said it can issue extension policies to Affiliates. Liability insurance extended from the ACNM policy would currently be approximately $350 per year, payable by the Affiliate. At present, that insurer said that this Liability insurance would be available to incorporated and probably also to unincorporated Affiliates. • Liability insurance will be required. Affiliates may be able to find a better price and should consult with the local Chamber of Commerce or Small Business Administrations in their state for suggestions about insurance carriers.

15. Benefits of Incorporation: • Director and Officer Insurance (D & O). • A director and/or officer of any corporation has a special personal responsibility for decisions made (or not made) on behalf of the association. In today’s complex environment, the association and its directors and/or officers can personally be sued for alleged antitrust violations, discrimination, financial mismanagement and any number of perceived acts, errors and omissions in their capacity as an association leader. •  ACNM can supply information about the College’s D & O insurance carrier. Incorporated Affiliates will have access to D&O insurance with the ACNM insurer, but unincorporated Affiliates will not. It may be difficult for unincorporated Affiliates to find D & O insurance. • D & O insurance is optional, but recommended. • Unincorporated Affiliates and Affiliates seeking a better price and should consult with the local Chamber of Commerce or Small Business Administrations in their state for suggestions about insurance carriers

16. STEP THREE: Tax Status •  Tax IDs: Tax IDs (otherwise known as the Employer Identification Number (EIN)), are required of every business entity. Also, they protect you because the IRS could mistake an ACNM Affiliate as being responsible for the tax reporting or tax transgressions of another entity, unless the Affiliate has a Tax ID. • Tax IDs are free and easy to obtain. They do not require a statement or proof of official tax status below. It does require filling out a one page document (SS-4). An Affiliate does not need to be incorporated to get a tax ID.

17. 501-(c)(6) Status ACNM strongly recommends 501-(c)(6) status • This allows for significant spending for lobbying. • Applying for tax status is in addition to applying for a tax ID.

18. 501-(c)(6) Status • Dues, donations and other monies received by the Affiliate may not be classified as charitable or non-taxable contributions under this tax status. Therefore, donors may not claim a tax deduction for donations made to a 501(c)(6) organization.

19. 501-(c)(6) Status • 501-(c)(6) tax status does not permit campaign contributions. An Affiliate would need a state Political Action Committee (PAC) in order to make campaign contributions legally

20. 501-(c)(6) Status • Each Affiliate can file for 501(c)(6) status. It is more complicated than incorporating and there is also a filing fee of up to $750. • If you already have this status, great. • If not….

21. 501-(c)(6) Status • ACNM is pursuing a “group ruling” that will allow incorporated Affiliates to use the ACNM 501(c)(6) tax status. • Affiliates seeking to use this group ruling must agree to the same tax year and to terms such as the same scope of activities as ACNM. • Affiliates must agree to file all required tax documents according to state and IRS rules, including filing a Form 990 if the Affiliate income is over $25,000. • ACNM incorporated Affiliates can be added to the ACNM 501(c)(6) tax status

22. State Taxes •  Affiliates need to check with their state regarding state taxes. • Associations that are exempt from federal income tax are ordinarily exempt from state taxes. A separate application for exemption must be filed in some jurisdictions. Check with your state revenue department •  You can find your state revenue department online and in the blue pages of the phone book.

23. STEP FOUR: Operational Requirements • As authorized in the bylaws, whether an Affiliate is incorporated or unincorporated, the ACNM will require Affiliates to:

24. Operational Requirements • Have Articles of Incorporation and Bylaws (for incorporated Affiliates) or a Constitution (comprising the same provisions as Articles and Bylaws, for unincorporated Affiliates) that do not conflict with ACNM national bylaws.

25. Operational Requirements • Avoid any activities or actions that could violate their tax exempt status and avoid activities that could cause ACNM to be legally or financially obligated (unless they obtain written authorization to do so by the ACNM Board).

26. Operational Requirements • Obtain Comprehensive General Liability insurance. • The ACNM insurer can currently make this insurance available to all Affiliates, including unincorporated Affiliates. In order to minimize risk of legal exposure, Affiliate leaders may also want to purchase D and O Insurance, which unincorporated affiliates may find difficult to obtain.

27. Operational Requirements Activities must be consistent with the applicable documents and policies of the ACNM including but not limited to: • Conflict of interest. • Whistleblower Policy. • Record retention. • Confidentiality. • Ownership of Intellectual Property. • Ethics Policy. • Sexual Harassment. • IRS Prohibited Actions. • Lobbying • ACNM will provide templates for these policies.