Ewald at the Capitol: Chaotic Start to Legislative Session
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Attorney Heidi Christianson of Nilan Johnson Lewis joined Ewald Consulting Chief Client Experience Officer Eric Ewald on January 14 for an insightful discussion on legal trends that are affecting associations. Here are five leading issues Heidi identified that association leaders should watch out for:
Strategic alliances can be as simple as a one-time agreement to share services (perhaps to present a joint conference or a marketing trade-out to expand reach) or much more complex. For instance, an association could offer reciprocity for event attendance or membership with other associations. It can provide a benefit for sponsors. And Heidi has worked on a number of mergers or formal arrangements that are more permanent.
In the case of a merger between two associations, it allows one employer to operate both organizations while allowing both organizations to keep their corporate structure. That kind of merger provides for efficiencies in staffing and completing documents like 1099s and 990s. Heidi noted that the concept of a merger always seems simpler than the execution. The dissolution of a shared services agreement can also be surprisingly complex. If your organization is considering setting up or dissolving a strategic alliance, Heidi suggests setting up a subcommittee with representatives from both organizations. Expect it to take about a year to complete an agreement.
It’s vital to pay attention to unrelated business income tax (UBIT) implications. Heidi recommended using your organization’s Form 990 (Part III, line 2) to explain how the new activity supports the mission of the association. If you do that in the tax year when the activity begins, the IRS will have a record. This can avoid many more questions from the IRS should your association happen to be audited.
Heidi says that if your organization receives a proposal from a sponsor or partner to sell goods or services, you need to parse through the offer very carefully. These contracts have become increasingly complex, and you should be sure the requests from partners are in alignment with association policies. Some recent requests have included an ex officio seat on the association board or member data.
If the income from such a proposal is related to the association’s mission, it won’t be subject to UBIT. However, advertising can be subject to UBIT. It can be hard to figure out what is and is not taxable. If the sponsor is agreeing to share a portion of revenue, that is a classic UBIT situation. An attorney can help you advise you in setting up sponsorship agreements, including how to categorize income. “It’s really important for you and your CPA to be on the same page regarding sponsorships,” Heidi says. She also notes that agreements between a tax-exempt entity and a for-profit entity cannot benefit the for-profit entity more than the nonprofit.
Heidi stressed the need to be vigilant about what your association is willing to provide to a partner/sponsor; you want to protect your intellectual property and your members’ data. A non-disclosure agreement (NDA) is good practice. Eric noted that sources of non-dues revenue are essential to an association’s success so the organization isn’t too dependent on any one source of revenue. In the past, it was more common to simply have sponsors for a conference or major event — but now, associations often offer a yearlong, customized bundle of benefits to sponsors and partners. Talk to your attorney or CPA if you have questions about setting up partnerships.
Heidi says her firm received several questions about Americans with Disabilities Act (ADA) accommodations at conferences. Generally, associations want to meet the needs of attendees, but it’s helpful for the association to know about these requests well in advance of the event. When you start promoting a new event, include a request for ADA accommodations in the registration. In some cases, an accommodation is required by law.
Other member issues include challenges to certification programs, breach of confidentiality claims, and use of a member’s IP address by another member. In many situations such as these, it’s helpful to regularly provide members with reminders of association policies. An attestation of agreement for the organization’s code of contact is useful.
Board members are volunteers with other full-time jobs who are multitasking. To interact successfully, Heidi suggests that you need to remind them about key responsibilities and what their focus should be. Association strategy is one key responsibility for board members.
Eric reported that the pandemic had an impact on volunteerism, with a 7% drop from 2019 to 2021 in the U.S. The reasons for the drop include people not having time or money to volunteer. Many of us face the challenge of attracting/recruiting good volunteers. A one-to-one interaction is more important than ever to recruit leaders for committees and boards.
Association leaders have seen a proliferation of AI note-takers at association meetings. When your meeting agenda includes a sensitive topic that could result in a legal issue, all AI note-takers should be turned off. Heidi said AI-generated notes should not be used as the official record of the meeting; AI often attributes statements to the wrong person or makes other errors. Meeting minutes should include general discussion, not who said what. Board members/staff should destroy any notes once the minutes are distributed. Your association should have just one official record for each meeting.
Watch the video of this webinar for more details.
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ELECTION UPDATES |
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On Tuesday, November 5, voters went to the polls to elect President and Vice President, Members of Congress, and the Minnesota House of Representatives, including one special state Senate election. Along with the Presidency, Republicans were able to gain a majority in the U.S. Senate by flipping key seats in Pennsylvania, West Virginia, Montana and Ohio. Several seats in the U.S. House of Representatives are still too close to call. Republicans came into the election with a 220-212 majority in the House. While attention was mainly focused on the presidency, we are closely watching the state legislative races. This year, Minnesotans voted on races in the Minnesota House of Representatives and one seat in the Minnesota Senate (District 45), which was a special election to replace retiring Sen. Kelly Morrison, who stepped down to run for Congress. This was an extremely important race for both parties, with Republicans hoping to flip both houses. Coming into the election, Minnesota already had a unique legislative dynamic, with Democrats having a trifecta holding the Governorship, the Minnesota Senate with a 34-33 majority, and the Minnesota House with a 70-64 majority. Democrats ultimately were able to keep control of the Senate with DFL Senator-elect Ann Johnson Stewart winning 52% of the vote. Meanwhile, House Republicans needed to win four seats to take control — they managed to win three. Republicans won vacant seats in districts 26A and 7B (both previously held by DFLers), and in 18A newcomer Erica Schwartz defeated incumbent DFLer Jeff Brand. This brought a 67-67 tie between the parties. State law dictates that when a state legislative candidate wins by less than 0.5%, there is a publicly funded recount in that race. So, two races are automatically headed to a recount due to being too close to call. In District 14B, Democrat Dan Wolgamott won reelection by 28 votes, while in District 54A, Democrat Brad Tabke won reelection by 13 votes. What if there is a 67-67 tie? The last time this occurred in Minnesota was in 1979 — we had a peanut farmer in the White House and the number one movie in January 1979 was a re-release of Disney’s 101 Dalmatians. The Minnesota Secretary of State is charged with gaveling in a new House, and so that year, Secretary of State Joan Growe, acting as temporary presiding officer, presided over the tied body to perform basic business — but she could not name committee chairs or set committees. After five days, an agreement was reached where the Republicans would get the speakership and the DFL would chair the rules, taxes, and appropriations committees and get one vote majorities on those committees. Bills that got to the House floor almost always had bipartisan support, and members rarely missed committee meetings or floor sessions. But as with all stories that start off easy, the end gets a little more colorful. If you’d like to learn more on the whole story, you can find it here.
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Seasoned association leader Avi Olitzky joined us on Oct. 15, 2024, to share how membership engagement can lead to improved member retention and attraction.
Focus on service
Avi’s first message is that the goal of associations should be to serve members, especially in a post-COVID world. This focus helps us stay true to our association’s mission. If you’re serving your mission, people will scream your praises from the rooftops. Think about a great restaurant: they may need to do a little marketing to begin with, but after that, word of mouth will build the business. You’re still recruiting, but others are doing the work for you.
The minute you label yourself as a “nonprofit,” you put on an unfortunate blinder that you’re coming from of a position of scarcity. The difference between a nonprofit and a for-profit is that a nonprofit puts any excess money back into the mission. But nonprofits need to learn how to develop a mindset of abundance.
Avi says that beginning in 2016, society entered an era of hyper-transition. Innovation is central to staying relevant in this environment. The benefit provided to your member will be out of date by the time they realize they’re getting it, and you need to focus on the next benefit that is coming.
Connect regularly
Connect with members every quarter or every month to be sure they’re using the benefits you offer. If you engage members regularly and well, members will be your ambassadors. But this doesn’t mean sending multiple emails every week! Instead, find ways to go deeper. Perhaps each board member could call a few members and have a conversation about what they need right now.
Measure Success
We also need to find new ways to measure our success. Net Promoter Scores don’t speak to the happiness factor. We must figure how happy and engaged members are now compared to the past. This will require quantitative and qualitative engagement measures. Quantitative measures show how many people are using the association’s services or how many people you’re connecting with regularly. Qualitative engagement is about measuring happiness, which is a more profound conversation.
Use AI
As many of our Associations Trends Talks presenters have stated throughout this year, Avi says that we all need to start using AI in some way. Use it to assist you in prediction and to help you move faster as you innovate. You’ll need to test the results with pilot projects and test cases, but AI will help you generate ideas.
Additional resources:
NotebookLM.google (creates podcasts from PDFs)
Great by Choice by Jim Collins
Master of Change by Brad Stulberg
NEW LAWS NOW IN EFFECT Effective dates for laws passed during a legislative session vary. Some are specified to be effective immediately once a bill is signed by the governor. Most budget bills take effect July 1 to coincide with the start of the new fiscal year and most bills without an effective date take effect August 1. Some new laws that took effect on August 1 include:
These are just some of the many laws that took effect as of August 1. For all new laws taking effect, you can view a more complete list here. |
ELECTION UPDATES |
On August 8, Democratic presidential candidate Kamala Harris announced Minnesota Gov. Tim Walz as her running mate and candidate for Vice President. This marks the first time since 1984 that a Minnesotan has been on a presidential ticket. The announcement came just two weeks after Vice President Harris announced her candidacy for president. If the Harris/Walz ticket wins in November, the following would take place:
Some additional considerations:
You can also see this interview with Minnesota Senate President Bobby Joe Championwhere he laid out what would happen if Gov. Walz wins and assumes the position of Vice President. As a reminder, voters will head to the polls in November to vote for several races — including President, U.S. Senator for Minnesota, all 8 members of Minnesota’s U.S. House of Representatives delegation, and all 134 Minnesota House of Representatives districts. The Minnesota state senate is not up for election this year, but a special election will be held in Senate District 45, where Kelly Morrison resigned the state senate to run for U.S. Congress in the Third Congressional district. Some important election dates to remember: June 28–August 12: Vote early by mail or in person for the August 13 primary elections August 13: Primary Election Day September 20 through November 5: Vote by mail or in person November 5: Election Day For more voting information such as how to vote, where to vote, and other questions you may have you can visit the Secretary of State’s website here. The Ewald Consulting Government Relations team has compiled a list of candidate filings. To find more detailed information in the races up for election, you can visit this candidate filings list. |
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