May 2012 PSA
By Dralyn Montsier
Hey everyone! Something we decided at this year's admin meeting was to utilize our global announcement feature to put up posts about different topics. This is the first post in that new series of history lessons about the Tower. The purpose behind these is to give insight into the background and/or history about different aspects of the organization. We'll be posting one of these every few weeks, and we'll post the information in the Library as well so that it's there for posterity. We hope you enjoy it!
This first post is about our incorporation and our corporate status - what we were before we incorporated, why we decided to incorporate, how it affects our community, etc. I wanted to be the one to make this post because I was the one who actually did all the paperwork for this and was there from start to finish. I know that there are many who have questioned why we did this, so hopefully this will help shed light onto a process that wasn't well advertised. If you have any questions, feel free to ask! I'll answer them to the best of my knowledge, and if I don't know, I'll try to find out the answer. Keep in mind, though, that I'm not a lawyer, so my knowledge is purely practical and limited in scope.
Our early years
For the first eight years of our existence, TarValon.Net was a sole proprietorship owned by our founding Amyrlin (Melissa). This meant that she was the only one who had any legal or financial responsibility for what went on in our community. Because of the way the legalities work, that meant that when members gave money to TarValon.Net, they were really giving money to Melissa, the sole proprietor of TarValon.Net, who was under no legal obligation to use that money for the reasons it was given to her. If TarValon.Net were to be sued, it would be Melissa being sued, not the organization. Things like that.
When we were really small, this all worked just fine. As time passed, though, we became larger, and our expenses became greater. More people started signing their name to contracts meant for TarValon.Net (such as our Mistresses of Revels), and they were not protected legally for anything that might occur because of a broken contract, nor was Melissa and/or TarValon.Net protected from people who might sign contracts falsely in the organization's name. More people were joining who didn't know Melissa that well and so didn't have the assurance of a personal relationship with her that their donations were being used appropriately. The increase in expenses was resulting in greater cash flow, and Melissa was increasingly unable to countersign her personal assets against some of our expenditures (such as party deposits, damages assessed by party venues, etc).
At the same time, our administration was becoming more formalized as I became Keeper and started organizing things the way I needed them in order to have a functioning organization. As an organization, we were incorporating more fundraising for charities into our online and offline events. Our membership experience was becoming more standardized, we were talking about changing to having Bylaws, and in general we were becoming more professional.
As a result of these things, Melissa threw out the idea of actually becoming a charity ourselves. Given that we were holding more and more charity fundraisers and were trying to incorporate more of the concepts behind being "Servants of All" into our membership experience, it made sense. So we started researching.
Becoming a corporation
In 2009, we actually incorporated as a non-profit corporation in the state of Alabama in the United States. I am our incorporator, and our original Board of Directors consisted of Melissa as President and by default Chairman of the Board, myself as Vice President and Secretary, and Arisaema as Treasurer. The positions of President, VP, Secretary, and Treasurer are required by Alabama law, which is why we have them. Over the following year, Arisaema needed to step down, so we asked Riley to become our Treasurer. Now we are expanding our Board to include Jaim and Caerwyn so that the total number of Board members is 5.
After our incorporation, we spent a lot of manhours preparing our application for 501(c)(3) charitable status. We were already considered a non-profit, but we wanted to become a charity, primarily so that when people made donations to us, they could claim those donations as deductions on their personal taxes. The IRS response made it obvious that we would never qualify for a 501(c)(3) - charities must have mission statements that are solely focused on their charitable purposes, and we have a two-pronged mission statement that includes our community. Without completely changing our entire organization, we were never going to qualify as a charity. We did, however, qualify as a 501(c)(7) social club, which is what we became.
Board members and Officers
In the early days of the incorporation itself, the Officers also had positions on the Board, which is why there was an overlap between the two. When we got together and had meetings, some of what we covered was the business of the Board, and some of it was the business of the Officers. There was no need to differentiate at that time, however, because the overlap was complete. Now, however, 3 of our 5 Board members will not be Officers, so that differentiation is important.
The Board's responsibilities
Currently, the Board is responsible for things that affect or are affected by our Mission Statement, our Articles of Incorporation, our Bylaws, and our legal status. So things like selecting or removing Officers, selecting or removing members of the Board, expanding the Board, changing our Mission Statement, overseeing the top level finances (like who has access to our bank accounts), who can sign accounts in our name, and the like are all in the domain of the Board. Most of these things are business aspects that don't really affect our membership at all.
The Officers' responsibilities
The Officers are responsible for the duties outlined in the Bylaws and in general the day-to-day operations of our organization. They handle our community's membership and any issues that arise there. They handle most aspects of our finances. They are responsible for our philanthropy and our community outreach and our marketing. Basically, if it's handled by one of our Departments or involves our membership in some way, the Officers are probably the ones who are responsible for it.
That differentiation is why most of our membership has never noticed a huge difference in their membership experience here. The things that used to be handled by Melissa on her own at the top level are now shared amongst the Board as a whole, but all the day-to-day things are still handled by the Amyrlin Seat, the Keeper, the Shatayan, and the Archivist.
Selection of Board members and Officers
The Board selects its own members, and it chooses the Officers. At any time, assuming that the conditions laid out in the Bylaws are correct, the Board can also remove one of its own or an Officer. The reverse is not true - the Officers cannot remove a member of the Board, nor can they remove each other, though each Officer could of course approach the Board and make a case as to why another Officer should be removed. This whole process allows there to be more oversight and more checks and balances.
Now, most of our Bylaws are pretty standard. They don't look that different from the Bylaws of a lot of other corporations. Probably the biggest difference, though, is that we define the Hall. The reason for this is that the Hall does touch on our finances (specifically choosing the scholarship recipient), and so we needed to specifically create the Hall and define and limit its powers with regards to the scholarship and any other financial things it may deal with.
Benefits of incorporating
So what did the incorporation and 501(c)(7) approval do for the community as a whole? Well, as I stated, it didn't really change a whole lot for the membership experience as a whole. The biggest changes were seen in the upper levels of administration. A few of the benefits (from my perspective, at least), are:
- We are no longer a dictatorship. Previously, because Melissa was the only one who was legally responsible for everything, she had the final say on everything, and there were no checks and balances on her other than her desire to keep the membership as a whole happy (which was a pretty powerful influence in and of itself, though it wasn't a legal/official one). Now, we have two sets of people who are legally responsible for our organization - the Board of Directors and the Officers. While that means that we are still not a democracy (yes, yes, I know - that's what some of you would like, but it's highly unlikely to ever happen), we are also ruled by more than just one person, and our structure provides us with many more checks and balances than we previously had, removing the ability of any one individual to make all the decisions unilaterally. The CEO/Amyrlin still has final say, but she is ultimately responsible to the Board of Directors, who can remove her from her position if they feel she is not performing her duties properly.
- We have more financial responsibility to those who donate to us. As mentioned above, as a sole proprietorship, Melissa was under no obligations to use the money donated to TarValon.Net for the purposes for which it was donated. At any point, she could have taken all of the money in the bank accounts and taken a very nice vacation to Fiji, put a down payment on a house, bought herself a car, paid off student loans, or whatever else she thought up, and she was under no legal obligation to disclose anything about those finances to any of the people who gave her money. Now, as a legal non-profit corporation, we have responsibilities to the IRS (we must file taxes and prove that we are using our money in ways that do not provide personal profit), to our donors (we have to use money for the purposes for which it was donated), and to the public at large (specific aspects of our finances must be made available).
- We have more protection legally. Now, when one of our Mistresses of Revels signs a contract for an event, they sign it in our name (not their own), and they are legally protected should something go wrong. If there are damages at the facility, TarValon.Net is responsible for them, not the Mistress of Revels. If we have to back out of a contract, TarValon.Net is responsible for any punitive fees, not the Mistress of Revels. On the flip side, if an unauthorized person signs a contract in our name, we can point to our operating documents and resolutions and say, "No, this person did not have the authority to sign this contract," and it helps us to not be responsible for whatever the unauthorized person did.
At this point, we've been incorporated for 2.5 years and had our 501(c)(7) status for over a year. We are a legally recognized non-profit social club that is incorporated in Alabama in the US. While I'm sure there are a few who would say that this change had drawbacks (and most changes do have at least one), it has been on the whole a remarkably positive process, and one that I feel was necessary to our continued growth as an organization.
Members of the Board of Directors
Our current members of the Board of Directors are:
- Melissa S.C. Dombrowski (Eleyan - Founder)
- Amanda Keen (Dralyn - Incorporator)
- Riley Robinson (Riley - Chairman)
We’ll be voting in Joe Pistritto (Caerwyn) and Jim Beattie (Jaim) in the next week or two.
Our current Officers are:
- Kristen Bowersox (Vivianna – CEO/Amyrlin Seat)
- Lacy Johnson (Leora – COO/Keeper of the Chronicles)
- Riley Robinson (Riley – CFO/Shatayan)
- Amanda Keen (Dralyn – CRO/Tower Archivist)