Financial & Legal Rules and Requirements for a 501(c)6

Catherine Oakes, CPA

SVP, Operations

Robin Fenton

Director, Chapter Support

SCTE

• Financials• Tax Status – 501(c)6• Each Chapter is under our IRS Tax ID• Your Chapter Financials are reported to the IRS• Form 990

• Legal• Your chapter and board members are covered under our

liability insurance however board members have a responsibility to the chapter and the entire society (SCTE) as a whole.

Your Chapter Bylaws

Legal - The chapter shall comply with all federal, state and local laws, rules and regulations governing chapter operations. Also, the chapter shall comply with all applicable policies and reporting requirements to Headquarters in order for SCTE to maintain its tax exempt status.

Liabilities - Except in cases of fraud or acts of bad faith, the directors and officers of this organization shall not be held personally responsible for debts, obligations, or liabilities of the organization, or for their actions on behalf of the organization.

Fiduciary Duty of the Board

Directors owe duties of "care" and "loyalty" to the organization. These duties require the board of directors to:

• act in good faith, • with the care of an ordinarily prudent person in a like

position would exercise under similar circumstances, and • in a manner he or she reasonably believes to be in the best

interest of the organization and its members.

Fiduciary Responsibilities

• Funds used to accomplish SCTE Mission• Keep accurate financial records• Enforce financial internal controls• Follow policies, procedures & bylaws• Safeguard funds• Keep chapter board informed

Why so many policies?

• Changes since 9/11 & Katrina• Sarbanes Oxley Rule• Internal Revenue Service

• Revised IRS Form 990

• Tax-exempt purpose• Members best interest• Safeguard assets

Internal Controls and SCTE Policies

• Supporting Documentation• Check signing policy• Bank Signature Cards• Investments• Credit Card transactions• Expense reimbursements

Internal Controls and SCTE Policies (cont.)

• Cash handling• Raffle tickets and other games of chance• No advances or loans• No debt financing• Charitable Contributions

Chapter Assets

• Article VII of the chapter bylaws• The chapter assets are those of SCTE

Headquarters as they are reported on SCTE tax returns.

• So the SCTE board is ultimately responsible AND LIABLE for those assets.

• Goes to the heart of “Fiduciary Duty”• Duty of Care & Loyalty• Conflicts of Interest