or How Can I Keep Myself Out of Jail and Our Building Out of Trouble with the Federal, State and Local Authorities?

Transcription

1 or How Can I Keep Myself Out of Jail and Our Building Out of Trouble with the Federal, State and Local Authorities?

2 or as lawyers call it the fine print. This presentation is a guide and a reference tool. It is not meant to be a comprehensive guide on how a Temple Board should address every issue which may arise. It is merely to be used as a reference for Temple Board members to use to assist them in performing their duties. It is not meant to constitute, nor is it to be used as, a substitute for legal, accounting or other professional advice.

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7 What did you just call me?

8 A fiduciary is a fancy legal term meaning: An individual in whom another has placed the utmost trust and confidence to manage and protect property or money. The relationship wherein one person has an obligation to act for another's benefit.

9 Simply put, you owe the highest standard of care to act in the best interest of the Corporation.

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14 Building Association Bylaws Articles of Incorporation Meeting Minutes Treasurer s and Board Audit Reports Board Policies and Procedures Responsibilities and duties to the owner Lodges Rental Agreements Insurance Policies A List of Corporate Officer s and Their Responsibilities Federal, State and Local Statutes and Regulations Governing your Corporation Employee vs. Contractor Taxes Volunteer Liabilities and Surety Bonds Washington Masonic Code-All of Section 21, Sections 7.12, 8.09.F and

15 What are they and why are they important? 1. These are the rules by which your Temple Board operates. 2. Why are they important? They define: How many Trustees are on the Board How the Trustees are appointed or elected Govern when and where you meet Define what constitutes a quorum The Board officers, who can serve and their duties You must have bylaws in order to operate as a Temple Board. You must NOT violate or act outside your By-Laws. Even if you are not caught by the feds or the state, it is a Masonic Offense.

16 The corporation is a holding company for real property. Temple Boards are 501(c)(2) corporations. A 501(c)(2) title holding corporation is organized for the exclusive purpose of: Holding title to property, Collecting income therefrom, and Turning over the entire amount less expenses to an Owner Lodge or Parent organization as described in IRC section 501(a) and WMC (D)

17 What does all of that mean? 1. The Temple Board is the property owner. 2. The Temple Board manages the property and collects any rents. 3. A title holding corporation must turn over the entire amount of its income, less expenses, to an organization which is itself exempt under IRC section 501(a). In other words you have to give back the left over money. 4. The Temple Board can maintain a reserve amount for emergency repairs, roofing, gutters, etc. on the Balance Sheet 5. Remember: neither the Lodge (or it s officers) dictate or control the decisions of the Temple Board. 6. Also Remember: Temple Boards are not to be Investors of any excess funds. That money belongs to the Lodge. See WMC D 7. As a trustee, you owe a Fiduciary duty to the owner(s) of the building.

18 The type of distribution is not important. It could be termed a dividend on stock or given some other description, or the title holding corporation could provide the parent organization rent free use of the facilities. What is important is the distribution must actually be paid over to the parent organization, not accrued. A mere obligation to use the income for the parent organization's benefit or parental control of the title holding corporation does not satisfy this requirement.

19 Who may incorporate? Washington State Law Provides: Revised Code of Washington (RCW) RCW Who may incorporate Filing fee. Any ten or more residents of this state who are members of any chartered body or of different chartered bodies of any fraternal order or society who shall desire to incorporate for the purpose of owning real or personal property or both real and personal property for the purpose and for the benefit of such bodies, may make and execute articles of incorporation, which shall be executed in duplicate, and shall be subscribed by each of the persons so associating themselves together: PROVIDED, That no lodge shall be incorporated contrary to the provisions of the laws and regulations of the order or society of which it is a constituent part. Such articles, at the election of the incorporators, may either provide for the issuing of capital stock or for incorporation as a society of corporation without shares of stock. One of such articles shall be filed in the office of the secretary of state, accompanied by a filing fee of twenty dollars, and the other of such articles shall be preserved in the records of the corporation.

20 Key Points: 10 or more Washington Residents Who are members of a Chartered Body Of a Fraternal organization or Society For the purpose of owning real or personal property For the benefit of the Organization Can Incorporate

21 You must: File articles in the office of the secretary of state. Execute in duplicate Subscribed to by each of the persons so associating themselves together Pay fees to the Secretary of State. Preserve a copy in the records of the corporation. Not incorporate contrary to the provisions of the laws and regulations of the order or society of which it is a constituent part.

22 Active Participation Committees Board Actions Minutes of Meetings Books and Records Accurate Record Keeping Protect, preserve and manage assets Ensure adequate resources to fulfill the mission Investigation

23 Conflicts of Interest Written Policy regarding Conflicts of Interest Loans Corporate Opportunities Internal Revenue Code statutes regarding self dealing

24 Be familiar with Federal, State and Local statutes and Masonic Code Filing Requirements Governing Documents Seek outside help when necessary

25 But not the Washington Masonic Code right?

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27 Sec B.L. Real Property. A Lodge may acquire and hold real property for its use and benefit, but only when title to the real property is placed in the name of a Title Holding Corporation. No Masonic corporation shall acquire any real property by means of purchase, donation, and inheritance or by any other means until it has obtained a Phase 1 Environmental Site Assessment (ESA) that satisfied the American Society for Testing and Materials (ASTM) Phase 1 standard, in use and approved at the time it is performed. In obtaining the Phase 1 ESA, the Masonic corporation shall use, and hire, at its sole cost and discretion, one of the environmental consulting firms approved by the Grand Lodge. Upon completion of such Phase 1 ESA and any additional investigation recommended in the Phase 1 ESA, all related reports shall be forwarded to the Committee on Finance for approval. Rev Lodges that hold title to real property in the Lodge s name as of June 15, 2007 shall transfer title to such real property to a Title Holding Corporation formed in a manner consistent with Section B.L. Such transfer shall be completed no later than June 1, 2008, unless the Grand Master waives the requirement. No Lodge or Title Holding Corporation shall sell, transfer, of dispose of any real property unless approved as follows: 1. Real property that is owned by a Title Holding Corporation requires the approval of at least ¾ of the Trustees present at a meeting of the Trustees at which a quorum is present and 2/3 approval of the members of each Lodge that is a member of the Title Holding Corporation. The Lodge shall provide its members at least 20 days advance notice of the stated meeting of such vote. 2. Real property that is owned by a Lodge requires the approval of 2/3 of the members of the Lodge present at a stated meeting of the Lodge. The Lodge shall provide its members at least 20 days advance notice of such vote. The requirement of 20 days advance notice shall be waived if the transfer of title is to a Title Holding Corporation.

28 Sec B.L. Borrowing for Building Purposes. No Lodge, either in its name or in the name of an association or corporation, shall undertake to borrow money or assume any debt for the purposes of construction of any Lodge building or site thereof without the written approval of the Grand Master and the Grand Lodge Committee on Finance.

29 Sec B.L. Approval of Lodge Hall Plans. All planning for new Masonic Lodge Halls/Buildings and /or any major remodeling of existing Masonic Halls/Buildings requiring an expenditure greater than the sum of twenty-five thousand dollars($25,000.00) shall be submitted to the Grand Master and the Committee on Finance, together with the financing plan, for approval. Lodges/Building Associations will additionally submit all forms required by the Grand Secretary that demonstrate a current and ongoing ability to financially support the project for approval prior to commencement of any such building program. Rev. 2013

30 Sec B.L. Incorporation of Bodies for Masonic Purposes. 1. A Lodge, Mason, or group of Masons may organize or sponsor an incorporated body for a declared Masonic purpose (including, but not limited to, holding title to Masonic buildings, administering scholarships, and charitable activities), only after receipt of permission of the Grand Master and the Committee on Jurisprudence. This subsection does not expand the number of Lodges that are authorized to incorporate themselves pursuant to Sec B.L. 2. The Trustees of a Title Holding Corporation representing a Lodge shall be elected by the members of the Lodge at a Stated Communication to serve for a specific term. Removal of any Trustee must be in accordance with the Articles of Incorporation, Corporation By-Laws, or by a majority vote of the Lodge members at a Stated Communication after due notice. 3. In the event of the resignation, removal, disqualification, or death of a Trustee representing a Lodge, the Worshipful Master shall appoint a successor Trustee to serve the remainder of the term of the Trustee being replaced. The appointment of the successor Trustee shall be subject to confirmation by the Lodge at the next Stated Communication of the Lodge.

31 Sec B.L. Title Holding Corporations. A. A Mason, or a group of Masons, may organize or support an incorporated body for the purpose of holding title to Lodge property under the following conditions: 1. Adopt Articles of Incorporation and Corporation By-Laws on forms specified by the Grand Lodge, 2. Submit the forms, in duplicate to the Grand Secretary. The Grand Secretary shall transmit a copy to the Committee on Jurisprudence who, after approval, shall forward their recommendations to the Grand Master. If disapproved by the Committee the forms will be returned to the incorporators for changes; and 3. Corporation By-Laws, approved by the Grand Master, shall be effective immediately but subject to confirmation by the Grand Lodge at the next Annual Communication. A copy of the Articles of Incorporation and Corporation By-Laws shall be transmitted to the Grand Secretary so as to become a matter of record. The original Articles of Incorporation and Corporation By-Laws, and one copy, shall be returned to the Corporation.

32 Sec B.L. B. The Articles of Incorporation and Corporation By-Laws may provide for sharing of ownership, management and control of real and personal property by and for the benefit of both Masons and non-masons, or by and for the benefit of a Constituent Lodge or of Masons only, regardless of profit motive or tax-exempt status, provided, however, that no Lodge shall transfer its right, title or interest in any real or personal property to any such title-holding corporation whose Articles of Incorporation do not specifically provide that the net assets of such corporation shall be distributed to the transferring Lodge, or to the Grand Lodge, according to the Lodge's Contribution Percentages upon dissolution of such corporation, C. Amendments to Articles of Incorporation and Corporation By- Laws must be submitted in duplicate for the approval of the Grand Master and the Committee on Jurisprudence on forms specified by the Grand Lodge; and

33 Sec B.L. D. All accumulated annual corporate income, in excess of cash reserve necessary to pay: - annual expenses of operation - maintenance and repairs - taxes and insurance - other current expenses - shall be distributed to the Lodge(s) based upon its share of ownership of the corporation; and To maintain the separate identity of the Lodge and Title- Holding Corporation, the incumbent Worshipful Master, Senior Warden, and Junior Warden shall be ineligible to serve as officers of the Corporation except as members of the Board of Trustees.

34 Sec B.L. Borrowing Money. A title holding corporation shall not borrow money without first securing the written approval of the Grand Master and the Committee on Finance. Sec B.L. Reports of Corporations. The Grand Master shall have the power to require any corporation formed under the provisions of this Chapter, either heretofore or hereafter, to render such reports concerning its activities, receipts, expenditures and plans of procedure as will enable him to make report and recommendation to the Grand Lodge.

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37 Do 1. Place title to all real property in the name of the Title Holding corporation. 2. Incorporate. 3. Prepare and follow your bylaws. 4. Submit copies of your documents to GL for approval. 5. Prepare reports to the GM when requested. 6. Distribute all accumulated annual corporate income, in excess of necessary cash reserve to the Lodge(s) based upon its share of ownership of the corporation. 7. Make sure you file your 990, Income Taxes and other documents required to do business in your area. 8. Prepare and distribute minutes/activity reports and financial reports back to the owner lodge(s).

38 Don t 1. Form a corporation without GL approval. 2. Purchase or acquire property without GL approval. 3. Purchase or acquire property without an environmental study. 4. Perform major renovations without GL approval. 5. Borrow money or assume debt without written GL approval. 6. Sell property without notice and approval of the Lodge. 7. Allow the WM or Wardens to also hold an office on the Temple Board. 8. Comingle funds or use funds for any purpose other than to benefit held property.

39 Minutes We Don t Need No Stinking Minutes

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41 It is a record of what you have discussed and the actions you have taken. If there are ever questions, you can refer back to the minutes. If you are ever sued, you will be required to produce your minutes. If you don t have them it may be presumed you destroyed them or that they were not kept for a reason. IT IS REQUIRED BY LAW.

42 Simply put, this will: Show how much money you have to spend Show how much you have spent Help prepare a budget Determine operating costs Make long term plans for maintenance and repairs Ensures that your money is being properly managed. You should have a simple audit on a quarterly basis. And a thorough audit should be performed annually. Grand Lodge Finance Committee has developed a simple Excel program that helps track, report Lodge or Temple Corporation financials. It s Free! Just ask.

43 Every board should develop policies and procedures AND FOLLOW THEM: Policies and procedures should cover things like: Building Maintenance Building Security Rental Policies Emergency Contacts Volunteer and Employment Policies Internal and External Audits Conflicts of Interest

44 Each Board will have unique needs. Therefore, your policies and procedures will need to be tailored to your unique circumstances. Ask other Temple Boards if you can review their policies and procedures to get ideas. Review them often to determine if they need to be revised. But most importantly-know THEM AND FOLLOW THEM.

45 Make sure that you have current leases for all your tenants Leases define each parties rights and responsibilities You need a lease even if your Lodge is the only renter Exemplar commercial leases are available online Know what insurance you needs: General Liability Policy Commercial Property Insurance Earthquake Insurance Flood Insurance D&O Workers Comp (L&I) Health Insurance Employment A lease will protect you if a dispute arises with a tenant. Insurance is only expensive if you don t need it.

46 These should be defined in your bylaws and your policies and procedures. At a minimum you should have a Chairman, Secretary and Treasurer. And these should be different people. You should conduct an Annual Meeting at which the officer s are nominated and elected. If you are elected as an officer KNOW YOUR RESPONCIBILITIES.

47 Conduct your meetings in accordance with your bylaws Make sure you have a quorum when conducting any business Hold an Annual Board Meeting Remember We are all Masons and Brothers We can disagree, but you are Brothers and should always act accordingly. Besides, we have all taken Masonic charges to act and part ON THE SQUARE.

48 Constructive Partnership Mission Driven Strategic Thinking Culture of Inquiry Independent Mindedness Ethos of Transparency Compliance with Integrity Sustaining Resources Results Oriented Intentional Board Practices Continuous Learning Revitalization

49 Your Lodge, Your Brothers and Your Tenants are Counting on You.