Unapproved minutes of the September 7, 2000 Board of Directors Meeting.
HOUSTON AREA LEAGUE OF PC USERS
MINUTES OF September 7, 2000
BOARD OF DIRECTORS MEETING
4543 Post Oak Place
Houston, Texas
Any corrections, changes, additions to these minutes will be noted in the next month's
minutes when the minutes are approved by the Board.
ATTENDEES:
Officers
President Robert Gunn
First Vice President -SIGs Mike Mashburn
Vice President -Programs Stephen Cravey
Vice President -Communications Jay Thomas
Recording Secretary Anne Sipes
Membership Secretary Tiffany Kong
Treasurer Wes Leggett
Directors:
Michelle S Annis
Mel Babb
Norman Blaylock
Matthew Castillo
James Coon
William A Goetschius
Robert P Grefe
Moe Jones Absent
J Kolenovsky Absent
Tim Kraemer Absent
Donald B McGowan Absent
Ray Morris
Joseph E Morris Jr
Mike Novominsky
David R. Pausky
Brian Sadler
Parliamentarian: Marilyn Gore
Guests:
David Turner
John Cochran
H. Farb
Pat Freeman
John Gilstrap
Jeff Hupp
Nancy Ward
I. CALL TO ORDER AT 7:00 PM
Ray Morris objected to conducting any business on the basis
that he had not received the BoD Packet within 5 working
days of the Board Meeting. The President asked him what the
postmark was on his Board Packet. Ray Morris stated that the
BoD Packet was postmarked August 31st. The President asked
the Recording Secretary when the Board Packet was mailed.
The Recording Secretary stated that the Board Packets had
been deposited at the main post office on August 29th.
Several Board members stated that their BoD packets had also
been postmarked August 31st. The Recording Secretary stated
that the BoD packets had in fact been mailed on the 30 th and
apologized for having incorrectly specified the date. She
also stated that was still within the time allowed by the
bylaws. The Parliamentarian read the pertinent portion of
the HAL-PC bylaws:
The Recording Secretary shall notify each Director of the
time, place and agenda of Board meetings at least five (5)
working days prior to the meeting. Notice shall be deemed to
have been made by delivering the required notice (a) by
regular mail to each Director at his or her last known
mailing address at least one (1) day prior to the day the
notice is due, or (b) by electronic mail, or within a
specified message area on HAL-PC's bulletin board, if such
electronic delivery has been authorized in a writing
delivered to the Recording Secretary.
Ray Morris pointed out that Monday, September 4th had been a
holiday. The Recording Secretary had in fact counted
Monday, September 4th as a working day.
There was discussion regarding whether the Board Meeting
should be adjourned. The Parliamentarian read the pertinent
portion of the Texas State Non-Profit Corporation Act.:
Art. 1396-2.19. Place and Notice of Directors' Meetings.
A. Meetings of the board of directors, regular or
special, may be held either within or without this State.
B. Regular meetings of the board of directors may be held
with or without notice as prescribed in the by-laws.
Special meetings of the board of directors shall be held
upon such notice as is prescribed in the by-laws.
Attendance of a director at a meeting shall constitute a
waiver of notice of such meeting, except where a director
attends a meeting for the express purpose of objecting to
the transaction of any business on the ground that the
meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting,
unless required by the by-laws.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.19.
The President asked Ray Morris if his attendance at this BoD
meeting was for the express purpose of objecting to the
transaction of any business on the ground that the meeting
was not lawfully called or convened. Ray Morris stated that
he would like to have the Board Meeting.
The Recording Secretary collected conflict of Interest
statements from Ray Morris, Mel Babb and Tiffany Kong.
Ray Morris requested copies of all of the conflict of
interest statements.
The President asked if there were any objections to waiving
the reading of the minutes of the July 31st Board of
Directors Meeting.
Ray Morris stated that he had not had adequate time to
review the minutes and that he was therefore objecting to
waiving the reading of the Minutes.
David Pausky moved to table the approval of the minutes of
the July 31st, 2000 BoD Meeting.
The President stated that he did not believe that motion was
in order.
The Recording Secretary read the entire text of the minutes
of the July 31st, 2000 BoD Meeting:
Unapproved minutes of the July 31st, 2000 Board of Directors
Meeting.
HOUSTON AREA LEAGUE OF PC USERS
MINUTES OF JULY 31, 2000
BOARD OF DIRECTORS MEETING
4543 Post Oak Place
Houston, Texas
Any corrections, changes, additions to these minutes will be
noted in the next month's minutes when the minutes are
approved by the Board.
ATTENDEES:
Officers
President Robert Gunn
First Vice President -SIGs Mike Mashburn
Vice President -Programs Stephen Cravey
Vice President -Communications Jay Thomas
Recording Secretary Anne Sipes
Membership Secretary Tiffany Kong Absent
Treasurer Wes Leggett
Directors:
Michelle S Annis
Mel Babb Absent
Norman Blaylock
Matthew Castillo
James Coon
William A Goetschius
Robert P Grefe
Moe Jones
J Kolenovsky
Tim Kraemer Absent
Donald B McGowan Absent
Ray Morris
Joseph E Morris Jr
Mike Novominsky
David R. Pausky
Parliamentarian: Marilyn Gore
Guests:
5276 Gerald Zimmerer
43876 John Cochran
48469 Nino S. G. Ramos
50203 Brian Sadler
11972 Carla Cawlfield
26990 Nancy Ward
3989 Jimmie Stewart
47324 Marvin Kaiser
41349 Mary Ann Mitscherling
18082 John Koppenhauer
27469 Bob Bartlett
23874 John Moore
32 Charles Evans
39394 H. Kelly Brown III
29427 Jeff Hupp
23136 Randy Herzstein
31035 Eric Hirtriter
I. CALL TO ORDER AT 7:00 PM
Ray Morris objected to conducting any business on the basis
that he had not received the BoD Packet within 5 working
days of the Board Meeting. The President asked him what the
postmark was on his Board Packet. Ray Morris stated that the
BoD Packet was postmarked July 24th. The President examined
the envelope and confirmed the postmark was July 24th, 2000.
The President asked the Recording Secretary when the Board
Packet was mailed. The Recording Secretary stated that the
Board Packets had been deposited at the main post office on
July 23rd and that there had been a witness present. The
President asked other Board Members if they had received
their Board Packets within the time prescribed by the bylaws
and there were no negative responses.
The President asked Ray Morris when he had received the
packet via e-mail. Ray Morris replied that he did not
remember but that since he had not agreed to accept the
Board Packet via e-mail it did not matter when he had gotten
it.
Ray Morris' objection to the meeting was overruled by the
President, Robert Gunn. Ray Morris left. He asked that the
Recording Secretary include in the minutes that he was
leaving because he considered the meeting unlawful.
The Recording Secretary distributed an Amended Agenda.
Joe Morris, Jr moved for adoption of the Amended Agenda.
The motion passed by acclamation.
Robert Gunn asked for objections to his appointment of
Marilyn Gore as parliamentarian.
Hearing no objections Marilyn Gore was appointed
Parliamentarian.
Robert Gunn asked for the approval of the minutes of the
June 8th, Board Meeting with the following amendments:
381. Mike Novominsky no
526. Ann Herbage
570. Deleted
641. Mike Novominsky was against being placed on a
committee that he had no knowledge of.
David Pausky asked that the following additional changes be
made:
95 honored guest (outgoing directors)
He requested that:
60 Carla Cawlfield
89 Jeff Boggan
be moved under line 95.
Hearing no other objections the minutes of the June 8th,
2000 Board of Directors Meeting were approved as amended.
II. REPORTS
PRESIDENT'S REPORT (Attachment 1, with Attachment A and
Attachment B)
The President distributed his report and delivered the same
report verbally.
The President then asked for questions about the President's
Report. There were no questions offered.
TREASURER'S REPORT (Attachment 15)
The Treasurer distributed a corrected Treasurer's Report.
He commented that the Treasurer's Report that was
distributed with the Board Packet has some spelling and
typographical errors but that the content of the report
remained unchanged.
The President then asked for questions regarding the
Treasurer's Report. There were no questions offered.
VICE PRESIDENT-SIGS
Education Committee (Day, Evening, Clear Lake) (Attachment
2)
Product Distribution Committee (Attachment 3)
SIG Committee (Attachment 4)
The President asked for questions regarding the VP-SIG's
reports.
There were no questions offered.
VICE PRESIDENT-PROGRAMS
Programs Committee (Attachment 5)
The President asked for questions regarding the VP-Programs'
Reports.
There were no questions offered.
VICE PRESIDENT-COMMUNICATIONS
Headquarters Communication facilities and the Magazine
(Attachment 14)
Internet (Attachment 6)
The President asked for questions regarding the
VP-Communications' Reports.
There were no questions offered.
MEMBER SERVICES DIRECTOR
Member Services Committee (Attachment 7)
The President asked for questions regarding the Member
Services Director's Reports.
There were no questions offered.
RECORDING SECRETARY'S REPORT (Attachment 9)
The President asked for questions regarding the Recording
Secretary's Report.
There were no questions offered.
III. UNFINISHED BUSINESS
IV. NEW BUSINESS
The President explained the use of the consent Agenda. He
stated that any Director had the right to request that any
item be taken off the Consent Agenda and discussed. He
stated that so long as no Director had any objections, the
Consent Agenda would offer the Board a way to approve
several non-controversial items at one time. He stated that
the Consent Agenda was an acceptable form according to
Roberts Rules of Order.
David Pausky objected to lump summing items for the Board's
approval under any circumstances.
The President stated that if David Pausky would object to
any item on the Consent Agenda then it would be removed from
the Consent Agenda and opened for discussion.
David Pausky did not object to any specific item on the
Consent Agenda.
Matthew Castillo moved that the Consent Agenda be approved
as presented.
David Pausky objected.
The President asked David Pausky if he was objecting to the
use of the Consent Agenda as a whole and not to any specific
item on the Consent Agenda. David Pausky said that he was
objecting to the use of a Consent Agenda.
The President ruled that all items be moved off of the
Consent Agenda on the basis of David Pausky's objection.
Jay Thomas moved (MOTION 000701) that the Board confirm
Meredith Foster's appointment as the HAL-PC Magazine
Publisher.
The motion passed by acclamation.
J Kolenovsky moved (MOTION 000702) that the Board confirm
Matthew Castillo's appointment to the Programs Committee.
The motion passed by acclamation.
J. Kolenovsky moved (MOTION 000703) that the Board confirm
Anne Sipes appointment as Programs Committee Chair.
The motion passed by acclamation.
Stephen Cravey moved (MOTION 000704) that the Board confirm
Mike Mashburn's appointment to the Product Distribution
Committee.
The motion passed by acclamation.
J Kolenovsky moved (MOTION 000705) that the Board confirm
David Pausky's appoint as Product Distribution Committee
Chair.
The motion passed by acclamation.
Mike Mashburn moved (MOTION 000706) that the Board confirm
Pat Freeman's appoint to the Library Committee.
The motion passed by acclamation.
J. Kolenovsky moved (MOTION 000707, AGENDA ATTACHMENT 13)
that the August Board of Directors Meeting be cancelled.
Moe Jones objected.
The motion passed by voice vote.
The floor was opened for Nominations for a replacement
Director.
Norman Blaylock nominated Brian Sadler.
J Kolenovsky moved (MOTION 000708) that nominations be
closed.
Brian Sadler was appointed a member of the HAL-PC Board of
Directors by acclamation.
Because the Bylaws currently require that the BOD elect
members to the executive committee in July or a subsequent
meeting the floor was opened for nominations to the
Executive Committee as prescribed by the bylaws.
Joe Morris, Jr nominated James Coon and David Pausky.
J Kolenovsky moved (MOTION 000709) that nominations be
closed.
James Coon and David Pausky were appointed to the Executive
Committee by acclamation.
J Kolenovsky moved (MOTION 000710, AGENDA Attachment 11)
that HAL-PC form a donations Committee.
The motion passed by acclamation.
William Goetschius moved (MOTION 0711, AGENDA Attachment
12) to assign authority to the Vice President-Programs.
David Pausky stated that he was against the direction that
the Programs Committee had taken and that it was his
intention to take the matter up with the Programs Committee.
Mike Novominsky stated that he was not opposed but would
prefer that the VP-Programs submit a plan to the Board for
approval.
William Goetschius withdrew the motion.
Mike Novominsky moved to cancel the August General Meeting.
Norman Blaylock amended the motion (MOTION 000712) to cancel
both the August and the October General Meeting.
The motion passed by acclamation.
The Treasurer moved (MOTION 000713) to assign a new
depository.
Mike Novominsky asked if the new depository would be able to
handle our lock box.
Wes Leggett resaponded yes and do it locally.
Robert Gunn stated that we would not close the existing
account.
Brian Sadler asked about rates offered by Citizens National.
Jay Thomas responded that with our balance the fees would
not be an issue.
The motion passed by voice vote.
The Treasurer moved to adopt a resolution to request a grant
of $75,000 from the Greater Houston Community Foundation.
The Treasurer stated that a substantial portion of HAL-PC's
funds had been transferred to this account immediately prior
to the June 6th election. He stated that we should not have
to do this again.
Brian Sadler asked how much we had in the account.
Robert Gunn stated that we have approximately $800,000.
The motion passed by voice vote.
The Recording Secretary read the Synergy/HAL-PC Joint
Venture accounting and report (Attachment 8) as submitted by
Gerald Zimmerer.
J Kolenovsky moved to accept the report and final
accounting.
Mike Novominsky objected.
Mike Novominsky asked if a representative of the Education
Committee was present? He asked how we could know that the
final accounting was correct. He also stated that HAL-PC
had gone to a lot trouble to offer the Cisco classes and the
club had spent
a lot of money. He stated that it was his opinion that this
was a poor way of handling the accounting.
Gerald Zimmerer stated that HAL-PC expended no out of pocket
funds. He said that he had set it up that way.
The President confirmed that no checks had been signed to
cover any expenditures relating to the Cisco training
classes.
David Pausky stated that there was a loss of revenue as a
result of the classes using HAL-PC resources.
The President stated that the previous Board had approved
this arrangement.
Mike Mashburn confirmed the amount owed.
Mike Novominsky withdrew objection
Gerald Zimmerer stated that he had a problem with the
amount. He wanted to give a round number so he had made the
check for $15,000.
He also said the Cisco Training classes had gotten fabulous
reviews.
He asked the Board to modify the motion to accept at least
14,987.50.
J Kolenovsky moved (MOTION 000714) to accept Gerald
Zimmerer's
report with an amendment to accept payment in the amount of
$15,000.
The motion passed by acclamation.
Gerald Zimmerer asked the Board to let him know if we wanted
to do this again.
J Kolenovsky stated that he would like to see HAL-PC offer
more opportunities like the Cisco Training Classes.
The Treasurer moved (MOTION 000715, AGENDA ATTACHMENT 10) to
adopt the FY 2000 Budget as presented.
Mike Novominsky stated that the positive $15,997.76 was the
result of a $213,596.55 contribution from HALNet. He said
that he had no objection as long as the Board understood
that the contribution from HALNet was there.
David Pausky expressed appreciation for all the work the
Finance Committee had put into developing this budget.
Robert Gunn thanked everyone involved.
The motion passed by acclamation.
Mike Novominsky objected to the immediate publication of the
minutes.
David Pausky stated that he would prefer they not be posted
until they were approved.
The discussion developed and the Board determined that they
would take a week to review and approve the minutes before
they were posted.
J Kolenovsky moved (MOTION 000716) to adjourn
The July 31, 2000 Board of Directors Meeting adjourned at
8:03pm.
Respectfully Submitted,
--
Anne Sipes
Recording Secretary
Wes Leggett moved to waive the reading of any attachments
that had been included with the July 31, 2000 BoD Packet.
Ray Morris and Mel Babb objected.
The President pointed out that Ray Morris had not been
present for most of the July 31, 2000 BoD meeting. He asked
how Ray Morris could have an opinion on the minutes of a
meeting he did not attend.
The motion passed by voice vote.
The Recording Secretary read the entire Presidents Report
and attachments from the July 31, 2000 BoD meeting because
that report had not been included with the BoD packet:
ATTACHMENT 1
Houston Area League of PC Users, Inc.
President's Report to the Board
31 July, 2000
I. HAL-PC is now sponsoring a co-educational Explorer
Post through The Boy Scouts of America which will focus on
computers and the internet. Anyone who has an interest in
helping with this project, please contact the president.
II. Eric Hirtriter resigned from the HAL-PC Board of
Directors effective July 13, 2000. A report of the Legal
Committee regarding the procedural issues involved in this
matter is included in this report as Attachment A. His
replacement will be elected at this meeting.
III. Pat Freeman has resigned as a member of the Bulletin
Board committee.
IV. We are updating our assumed name/DBA status with
Harris County and the Texas Secretary of State's office.
V. In response to Ray Morris' concern as voiced at the
June 2000 BOD meeting, a copy of an FAQ regarding Internal
Revenue Service Code Sec. 4958 dealing with Excess Benefit
Transactions for 501(c)(3) Tax Exempt Organizations is
included in this report at Attachment B. The relevant
portion of the statute is highlighted. Briefly, the only
transactions that are prohibited are those where the benefit
exceeds the value of the service performed. To my
knowledge, no one has suggested that any employee or
contractor of this organization is receiving compensation of
any kind in excess of the value of services performed.
Robert E. Gunn
President, HAL-PC
ATTACHMENT "A"
To: The Board Of Directors Of HAL-PC
From Legal Committee, HAL-PC
Re: Memorandum Of Opinion
Date 29 July 2000
____________________________________________________________
___________
Background
Eric Hirtriter, a Director of HAL-PC, in his message of 13
July 2000 to Robert Gunn, President of HAL-PC, stated :
"There was a secure site for financials, BOD area for
info, getting messages from other board members, getting
notifications to committee info? etc. It was my
understanding that all BOD members were getting this a free
hal-net acct in order for us to provide service to the
membership. If this is incorrect or you are going to change
this policy, I just assume cancel my volunteering to the
BOD, The Product Distribution Committee, Build or Buy Sig,
etc. where I volunteer to help. If this is your decision,
or the BOD's decision to cancel this free HAL-N et acct, let
this letter act as my resignation. Effective immediately!
As well as refunding my entire HAL-PC dues."
Replying to the foregoing, Gunn answered:
"You resigned in your e-mail message of June 13th.
Your resignation has been accepted and a check issued to
refund your HAL-PC membership dues. This is precisely what
you asked for in your message to me."
In the reply, Gunn said to Hirtriter:
"The Board of Directors WILL NOT BE GETTING FREE
INTERNET ACCOUNTS while I am president of this club. It is
patently obvious that to give directors accounts that other
members are required to pay for is not legal under the
HAL-PC bylaws", and quoted from Article V of the Bylaws:
"ARTICLE V. CONFLICT OF INTEREST
A. No Director may accept any
compensation or remuneration for serving as a Director."
Apparently, Hirtriter then wrote to others, we assume (from
the penultimate and terminal sentence) to other directors
than Gunn, questioning the authority of Gunn to terminate a
free HALNET account or to accept Hirtriter's resignation:
"Does the BOD vote to have a free HALNET acct or the
President? Should all Directors have a free HALNET acct? I
was asked today to give a forwarding address so that I could
get my refund for HAL-PC dues, as if a decision was made
about this topic
and that Mr. Gunn accepted my resignation and cancelled my
membership. Please respond to me back to:
rehirt@hotmail.com
I was forced to get this email account today since it
was implied that my HALNET email would be disconnected. If
that is the will of the BOD, I will gladly resign. Please
let me know how you all feel about this topic and send a cc:
to president@hal-pc.org"
Apparently, Hirtriter then also addressed Gunn directly:
"I have not resigned. Since it not the President's
ability to accept a resignation, I will be at the next BOD
meeting and we will discuss the use of HAL-NET for BOD
members in order to perform the tasks that the members
voted for them to perform. See you there!
Request for Opinion
President Gunn has asked the Legal Committee to render its
opinion on the effect of Hirtriter's communication to Gunn
on 13 July 2000:
"I'd like to get the opinion of the legal committee
on this. I take the position that Eric resigned to me in a
writing. He will not be getting a free Internet account,
and the board will not be allowed to vote on free Internet
accounts for board members because it is illegal under the
bylaws (Article V, Section A) and consequently cannot come
to the floor."
Sources of Basis for Opinion
The Bylaws of HAL-PC impart to the President of HAL-PC the
following executory powers:
"D. The general responsibilities of the officers are as
follows:
1.Conduct day-to-day HAL-PC business.
2.Preserve the assets of HAL-PC.
E. The specific duties of HAL-PC officers are as follows:
1.The President shall:
a. Serve as the chief executive officer of
HAL-PC.
b. Preside over General, Annual and
Special meetings.
c. Serve as Chairperson of the Board.
d. Preside over all Executive Committee
meetings.
e. Conduct relations with other user
groups."
The duties and responsibilities of the Board of Directors
are set forth in the By-Laws as follows:
"B. The general duties and responsibilities of the Board
include the following:
1.Establish policies and procedures for the
conduct of HAL-PC's affairs.
2.Approve the HAL-PC budget.
3.Approve any oral or written communication on
behalf of HAL-PC.
4.Sponsor meetings in the name of HAL-PC.
5.Set general policies for all HAL-PC
publications.
C. Specific duties of the Board include the following:
1.Recommend the amount of annual dues.
2.Recognize, certify and decertify Special
Interest Groups ("SIGs").
3.Confirm the President's appointments of
committee chairs.
4.Recommend to the membership the removal of any
Director.
5.Appoint, when necessary or as appropriate, the
User Journal Editor, Member Services Director, Vendor
Liaison Officer, Membership Exchange (Swap Meet) Director,
Bulletin Board System Operators, Volunteer Coordinator,
Welcome Committee Chairman,
Exposition and Special Events Coordinator, Software
Librarian and other such functionaries as the Board deems
necessary and appropriate.
6.Elect the Officers of HAL-PC.
D. Except as provided below the term of office of Directors
shall be two (2) years and shall run from the date of their
election to the commencement of the second following Annual
Meeting at which their successors are elected. To implement
these amendments to the
Bylaws, the twelve (12) Director candidates receiving the
highest number of votes at the June, 1994 Annual Meeting
shall serve a two (2) year term, and the remaining vacancies
shall be filled by the Director candidates receiving the
next highest number of votes to serve a one (1) year term. "
Opinion
There are two dispositive issues to the question presented.
I. Was there an effective resignation?
II. Was acceptance of the resignation required?
I. With respect to the first issue, the Hirtriter
communication of 13 July 2000 stated
"If this is your decision, or the BOD's decision to
cancel this free HAL-Net account, let this letter act as my
resignation. Effective immediately!"
The decision to which the foregoing referred is:
"There was a secure site for financials, BOD area for
info, getting messages from other board members, getting
notifications to committee info? etc. It was my
understanding that all BOD members were getting this a free
hal-net acct in order for us to provide service to the
membership."
The President, I am informed, had indeed decided not to
renew free HALNET accounts to directors who received them on
the sole basis of a directorship position, on the basis that
free HALNET accounts constituted illegal compensation or
remuneration under Article V.A.
of the By-Laws. Since a policy to provide free service
HALNET accounts to members of the Board of Directors would
contravene Article V.A. of the By-Laws, no act of the Board
would be necessary to revoke the unpermitted policy.
Accordingly, there having been a decision of the President
not to renew free HALNET accounts to directors who received
them on the sole basis of a directorship position, the
condition to the resignation was met and the resignation was
not conditional upon a later event but was effective when
delivered, "effective immediately".
VI. With respect to the second issue, the members of
HAL-PC repose in the Board of Directors and the President
the powers granted in the By-Laws. There is no specific
provision in the By-Laws specifying a manner of voluntary
resignation by a director. While the Board of Directors has
the power to recommend involuntary removal of a director,
nothing in the responsibilities and duties of the Board of
Directors requires a voluntary written resignation of a
director tendered to the President shall be ineffective
unless and
until accepted by the President or ratified by the Board of
Directors. Since the By-Laws do not specify that a
resignation voluntarily communicated to the President is not
effective upon
delivery, even a refusal to accept the resignation would not
be effective to prevent the resignation. The President, as
"chief executive officer" of HAL-PC has plenipotentiary
powers to execute the affairs of HAL-PC not assigned to
other officers or reserved to the Board, so receipt of a
communicated voluntary resignation is well within his
powers. Acceptance of the
resignation is not required. While President Gunn
"accepted" the resignation, that was un-necessary for its
effectiveness.
Submitted by the Legal Committee this 29th day of July, 2000
Tim L. Burgess
Reginald Hirsch
ATTACHMENT "B"
[Thompson & Thompson] [Attorneys and Counselors]
FAQ's -Excess Benefit Transactions for 501(c)(3) and
501(c)(4) Tax Exempt Organizations
In 1996 Congress passed legislation which gave the IRS
more flexibility in correcting perceived abuse in the area
of excessive compensation for executives of tax exempt
organizations.
This subject generally comes under the heading of "private
inurement" for tax purposes. Under prior law, any amount of
an exempt organization's net income or net assets (including
excessive compensation) `inuring' to the benefit of a
nonprofit insider (such as a key executive or board member),
no matter how small the inurement, was grounds for
revoking the exempt status of the organization. Now, rather
than taking this drastic measure, at least with respect to
excessive compensation, the IRS can simply impose fines.
This has potentially both good and bad consequences
for exempt organizations. On the one hand, an
organization's exempt status is less in jeopardy based on a
board's judgment as to the proper level of executive
compensation. On the other hand, the IRS will undoubtedly
be policing this area more, leading to increased scrutiny
and a second-guessing of nonprofit boards.
Consider the following quote as reported in THE WALL STREET
JOURNAL on August 7, 1996:
"Previously, the IRS had only a single, and largely
impractical tool at its disposal: revoking the tax-exempt
status of the organization. 'We only had an atomic bomb
before,' said Marcus Owens, director of the agency's Exempt
Organization division. 'Now we'll have less severe
weapons.' The new, intermediate sanctions are an attempt to
gain, more oversight of burgeoning nonprofit sector, whose
1.2 million organizations now constitute 11% of the U.S.
economy."
A summary of the new tax on excess benefit
transactions (new Internal Revenue Code Sec. 4958) is as
follows:
A. Excess Benefit Transaction Defined.
1. An excess benefit transaction is any transaction
in which an economic benefit is provided by an organization
directly or indirectly to or for the use of any disqualified
person if the value of the economic benefit provided exceeds
the value of the consideration (including the performance of
services) received for providing such benefit.
2. An excess benefit transaction includes any
transaction in which the amount of any economic benefit
provided to or for the use of a disqualified person is
determined in whole or in part by the organization's
revenues and results in any private inurement.
3. The new rules apply to any 501(c)(3) organization
(except a private foundation) and any 501(c)(4)
organization as of September 14, 1995.
B. Key Definitions.
1. A "disqualified person" is: a) any person who was
(within the last 5 years) in a position to exercise
substantial influence over the affairs of the organization;
b) a member of the family of an individual described in the
preceding clause; and c) a corporation, partnership, trust
or estate of which 35% is owned or controlled by persons
described in this paragraph.
2. An "organization manager" is any officer,
director, or trustee of the organization (or any individual
having powers or responsibilities similar to those of
officers, directors, or
trustees).
3. "Correction" means undoing the excess benefit to
the extent possible, and taking any additional measures
necessary to place the organization in a financial position
not worse than it would be if the disqualified person were
dealing under the highest fiduciary standards.
C. Amount of Tax.
1. 25% of excess benefit is taxed to the disqualified
person involved.
2. 10% of excess benefit is taxed to any organization
manager who was knowingly involved.
3. 200% of excess benefit is taxed to the
disqualified person involved if correction is not made by
the end of the taxable year.
Reading of the minutes and the attachments took
approximately and hour and a half.
The President asked if there were any corrections to the
minutes of the July 31st, 2000 BoD meeting.
Mike Mashburn stated that he had not confirmed the amount
owed on the Synergy/HAL-PC Joint Venture. He had in fact
confirmed that there were no out of pocket expenditures.
Ray Morris complained that the minutes were not showing the
seconds to the motions.
The President stated that the fact that the motion passed
implied a second.
Ray Morris stated that the seconds should be in the minutes.
The parliamentarian read the pertinent part of Robert=s
Rules of Order.
It was agreed that it is not necessary to include the
seconds in the minutes.
Mel Babb complained that there were no line numbers on the
copy of the minutes that she had received. She also stated
that she would like to receive the minutes via U.S. Mail as
well as e-mail. David Pausky stated that he would like his
copy of the minutes mailed to him as well.
Brian Sadler moved that the minutes be approved as
corrected.
Ray Morris abstained on the basis of his absence at the July
31, 2000 BoD meeting.
The motion passed by voice vote.
II. REPORTS
TREASURER'S REPORT (Attachment 2)
The President asked for questions regarding the Treasurer's
Report.
Ray Morris asked if it was true that the $75,000 withdrawal
from the Greater Houston Community Foundation had not been
made. The Treasurer stated that it had not been necessary
to withdraw those funds yet.
Ray Morris said he would like to see more detail in the
Treasurers Report. He was interested in seeing the cash
balance and the money that had been spent. The Treasurer
stated that he was working on it. He said that there are
some changes that are being made in the office that should
make that kind of detail available in the future.
Mel Babb asked if we were up to date on paying our bills.
She said that she had not received her reimbursement check
yet. The Treasurer stated that to the best of his knowledge
we were current on paying our bills. Michelle Annis asked
if Mel Babb had turned her expenses in to LouAnn Coy. Mel
Babb stated that she had turned her expenses in to LouAnn
Coy. David Pausky suggested that she resubmit her expenses.
He stated that he waited for a month and half and had to
resubmit his expenses in order to get reimbursed for out of
pocket expenses this time.
Ray Morris asked if the next Treasurers Report would show
how close we are getting to staying within the budget.
The Treasurer stated that was the goal.
There were no further questions about the Treasurers Report.
VICE PRESIDENT-SIGS (Attachment 3)
Education Committee (Day, Evening, Clear Lake)
Product Distribution Committee
SIG Committee
The President asked for questions regarding the VP-SIG's
reports.
There were no questions offered.
VICE PRESIDENT-COMMUNICATIONS (Attachment 4)
Headquarters Communication facilities and the Magazine
Internet
The President asked for questions regarding the
VP-Communications' Reports.
Ray Morris asked how we stood on Internet accounts. Robert
Gunn stated that we were right at 8100. The VP-
Communications stated that we were staying pretty flat.
Ray Morris asked if we were seeing an increase in DSL
accounts. The VP-Communications stated that we were in fact
seeing an increase. We have been having some problems with
Southwestern Bell and we are working with them on that. He
said that we are seeing users of alternative OSs (Operating
Systems) like Linux and Mac OS choosing HALNet because we do
not force them use PPPOE (Point to Point Protocol Over
Ethernet). He also stated that we are getting some users
back from other ISP's because they have had time to become
disenchanted with the service they received through those
other ISP's. Mike Novominsky stated that SWB was going to
charge him an extra $100 to use HALNet as his DSL ISP. The
VP-Communications stated that was one of the problems. He
also said another problem was SWB switching HALNet customers
to SWB Internet service without their knowledge. He said
that often the user doesn=t know that their ISP has been
changed until they are no longer able to send their e-mail.
He said that this week one customer who had HALNet DSL for
a while had only requested the service be transferred to a
different address and SWB had somehow managed to switch the
ISP to SWB internet service. He said another problem is
that SWB seems to be taking much longer to install DSL
service to customers who choose an alternative ISP. He said
that sometimes customers who ask that their ISP be changed
will be without service for a month or even a month and a
half. He said this is because SWB processes this type of
change as a disconnect and then re-install as new. David
Pausky asked if we have published information to help our
subscribers know how to deal with this. Robert Gunn stated
that we do have a Web Page. Jeff Hupp stated that right now
SWB is a moving target. The VP-Programs said that SWB keeps
changing things which makes it very difficult to publish a
procedure for getting HALNet DSL and keep it to date.
Michelle Annis stated that the front desk volunteers are
being kept informed of the procedures as they are developed.
There were no other questions offered.
RECORDING SECRETARY'S REPORT (Attachment 5)
The President asked for questions regarding the Recording
Secretary's Report.
There were no questions offered.
III. UNFINISHED BUSINESS
IV. NEW BUSINESS
Ray Morris said that he would like to hear from the
Membership Secretary. The Membership Secretary, Tiffany
Kong stated that she was resigning her position as
Membership Secretary effective at this BoD Meeting. She
stated that other responsibilities had interfered with her
ability to give the job the time that it required.
Michelle Annis offered that Membership was at 12,400 to
12,500. She stated that we are steadily signing new members
but we are loosing members as well.
Mike Novominsky stated that he would like to hear from the VP
Programs. He stated that the Programs Committee should
present some kind of a plan for the General Meeting.
The VP Programs stated that other obligations had kept him
from being able to give Programs much attention. He stated
that he would have a plan to present to the Board at the next
Board of Directors Meeting. Mike Novominsky stated that by
waiting until next month the Programs Committee had
effectively decided not to have an October, November or
December General Meeting. He stated that It takes two months
to get anything in the magazine. Ray Morris said that there
had been several moves to kill the General Meeting and asked
if this was another one of those. Robert Gunn stated that we
are required by the bylaws to have at least two General
Meeting a year. The VP Programs asked the Programs Committee
chair to verbally present the plan to the BoD. The Programs
Committee chair stated that the plan that would be presented
to the BoD was to go to a quarterly General Meeting with the
next planned General Meeting being the January Business
Meeting which would be held on January 20th at Headquarters.
Wes Leggett moved to adjourn
The September 7, 2000 Board of Directors Meeting adjourned at
8:47pm.
Respectfully Submitted,
--
Anne Sipes
Recording Secretary
ATTACHMENT 2
HAL-PC Treasurer's Report for September 2000
Operations over the past month resulted in a net gain for HAL-PC. Our cash
flow, as reflected by the balance in our Bank of America account supports
this. We began August with a balance of $68,310.70 and had an ending balance
of $112,605.70. Deposits were 160,749.99 and withdrawals were $116,454.99.
As of September 22, 2000 HAL-PC had a balance of $94,304.25 in this account.
We have yet to need access to the trust funds to support our daily
operations. The balance in the HAL-PC Endowment Fund of The Greater Houston
Community Foundation is 752,924.73 as of the statement dated June 30, 2000.
HAL-PC has made no contributions to or accepted any grants from this fund
since the June 30th statement was issued.
The Prudential Securities Account has a balance of $1,947.52 and has had no
activity for the past month.
This month, bookkeeping responsibilities were reassigned with the goal of
doing a more timely and thorough job. We also expect the resulting records
to be more useful and less costly to produce. As a result of this, there
has been considerable effort devoted to learning how to use Business Works,
our accounting program, but we feel this was necessary and for the long
term good of HAL-PC's operations.
The budget for the current fiscal year has yet to be entered into the
accounting system as we are still learning about this portion of the
accounting system. It is my impression that, at present, all departments
are within their projected spending limits.
We are continuing to focus on cost saving measures in the short term even
with the ongoing goal of membership growth. By husbanding our resources we
will be able to provide more of those services that are of value to the
majority of the membership.
Respectfully submitted,
Wesley L. Leggett
ATTACHMENT 2
Member Services Report 8/29/2000
For the month of August Member Services brought in $327.00 from sales
of software that is currently listed on the web site. On June 17, 2000
Member Services implemented this program and has brought in a total of
$942.00. Once a new logo has been accepted Member Services will look
into purchasing other products such as Shirts, Mugs, etc.
William A. Goetschius
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