1119 South Carolina Avenue, SE
Washington, DC 20003
Tuesday, 16 September 2014
Dear Trustees:
The purpose of this note is to summarize multiple thoughts about revisions to the charter and bylaws. There are three contributing threads:
· Permitting a contribution to Project Vote Smart by the Special Endowment may require amendments to the bylaws and charter.
· The 2010 revisions to the DC Corporation Laws have been reviewed. One minor change is in order.
· There is a dangling reference in Article IB, Conservation of the General Endowment, due to history.
1. Project Vote Smart
A report was reviewed on Project Vote Smart, which provides information to voters. It is a 501(c)(3) organization, and consideration was given to making it eligible and currently nominated for contributions from both the General Endowment and the Special Endowment. However, the wording of the bylaws and the charter do not appear to support that categorization. There is no IRS reason why the Special Endowment cannot continue to Project Vote Smart.
Article 6C8 of the charter reads: “Contributions may be made:”
8. to organizations working for the enactment of legislation in accordance with the objectives of the Fund, or to organizations providing information to voters for objectives in accordance with those of the Fund, or to other similar political or semi-political organizations, provided:
a. that the Board, or the officer authorizing the contribution, is satisfied (i) that the leaders of such organizations are honestly striving to advance the welfare of the mass of the population or of some disadvantaged group, rather than of any (actually or potentially) privileged group, (ii) that the success of such organizations would tend to improve the general welfare, and (iii) that such contributions would not violate either the letter or the spirit of any political campaign financing act, corrupt practices act, or similar law;
b. that
no such contributions shall be made from the Special Endowment.
It is unnecessarily restrictive in restricting contributions from the Special Endowment. The simplest change would be to delete subsection b (and remove the “a” designation). The prohibition against contributions for lobbying by the Special Endowment is adequately made by section 6F8 of the charter: “No contributions are to be made made:”
from the Special Endowment, for any activity involving the influencing of legislation in any manner.
There has been discussion of the supporting bylaws language, but the discussion of that language can be deferred until after the charter amendment is approved.
2. DC Corporation Law
The District of
Columbia revised all of its corporation laws in 2010. There were and are multiple types of corporations
in the District of Columbia (as in other states), such as business
corporations, non-profit corporations, professional corporations, and limited
liability companies. I spent
considerable time reviewing the revisions to the District of Columbia non-profit
corporation law. Only one of them
affects us. The law requires that the
executive function of President and the financial management function of
Treasurer be held by different officers.
We have always required that the executive function of President and the
certifying function of Secretary be held by different officers. The bylaws currently provide, in Bylaw
6E: “Two of the principal offices of the
Fund may be held by one person only if one of those offices is that of
Treasurer.” I propose that that should
be changed to: “Two of the principal offices of the Fund may be held by one
person only if neither of those offices is that of
President.” This will permit one person
to be Vice-president and Secretary, Vice-president and Treasurer, or Secretary
and Treasurer. I don’t think that we
will choose to combine offices, but we should allow it when it is contrary
neither to state law, usual practice, or common sense.
There are many
provisions in the new corporation law that impose
various provisions by default unless the articles of incorporation or bylaws
provide otherwise. These provisions are
important for corporations whose articles of incorporation and bylaws are not
as specific as ours. I did not see any
places where our practice differs from what is permitted when we specify our
practice (as we almost always do), except for the rule about offices.
We can put the rule
about multiple offices in the charter, but, since the law frequently refers to
the articles of incorporation or bylaws, changing the existing bylaw should be
sufficient.
3. Reference in Article IB
Article 1B contains the following:
B. Conservation
of the General Endowment
1. The corpus of the General Endowment shall
not be decreased in amount by the officers of the Fund or by the Board of
Trustees (hereinafter known as the Board), and shall be increased annually by
reinvestment of income by an amount not less than one dollar, except as
provided in chapter E of this By-law, or in the Articles of Incorporation. The General Endowment shall also be increased
on account of any capital gifts to the General Endowment.
IB1 refers to chapter E of the By-law. There is no chapter E. In looking over the history of Bylaw I, that should now be a reference to section 1B5. What happened is that Bylaw I was split into three chapters when the Special Endowment was created, and lettered chapters were renumbered as numbered sections. The reference to chapter E should be changed to refer to section 1B5.
- - Robert McClenon