Fiduciary responsibilities

Filed Under: About AIGA , governance

Fully informing board members and officers

AIGA will keep complete, current, and accurate financial records. The board will receive and review timely reports of the organization’s financial activities and will have a qualified, independent financial expert audit or review these statements annually in a manner appropriate to the organization’s size and scale of operations.

The board of AIGA has instituted policies and procedures to ensure that the organization (and, if applicable, its subsidiaries) manage and invest its funds responsibly, in accordance with all legal requirements. The full board reviews and approves the organization’s annual budget and monitors actual performance against the budget.

Budget and budget process

The budget is developed in the spring for review by the executive committee, which presents the major assumptions and implications to the full board at the board meeting in May/June. The budget is then revised based on board and chapter leadership comments and reconsidered by the executive committee. The budget is adopted provisionally on October 1 (the beginning of the fiscal year) based on the executive committee’s review and confirmed by the full board at the September/October board meeting.

The budget is prepared by object of expense for each project (e.g., publication, competition, awards, etc.). This detail is provided to the executive committee and is available to other board members on request. The detail presented to the full board is frequently at a summary level, depending upon the recommendation of the executive committee. Quarterly financial reports are provided to the executive committee.

AIGA is committed to transparency in its financial reporting, except in personnel matters, where it will publish its compensation policies but not individual compensation data. All financial data are available to the executive committee for review on behalf of the board and members.

AIGA spends a significant percentage of its annual budget on programs that pursue its mission, as reported in its annual 990 filing. The budget should also provide sufficient resources for effective administration of the organization, and, if it solicits contributions, for appropriate fundraising activities.

Auditor

Officially, the external auditor reports to the executive committee and the full board approves the selection of an auditor, with special interest that the auditor is independent of management. The current auditor—Friedman LLP—audited AIGA’s books for the first time in 2009. The executive committee chair (secretary/treasurer) or a member of the executive committee will meet with the auditor in February each year to receive the audited financial statement.

Legal counsel

AIGA’s legal counsel for organizational questions is Hugh Webster, Esq., of Webster, Chamberlain & Bean in Washington, D.C. Webster is also the legal counsel for the American Society of Association Executives and is a widely published expert on association and nonprofit affairs. He handles issues related to our nonprofit status.

Policies and procedures

The personnel policies and procedures and the operating policies and procedures are documented and are available for review and recommendations for changes by the board annually.

Compensation policy

AIGA sets compensation ranges for each of its positions based on the 50th percentile of positions with comparable responsibilities at for-profit and not-for-profit organizations of similar scale and scope in the New York metropolitan area. These ranges are determined by a third-party, objective consulting firm, the Hay Group, that specializes in compensation strategies.

A comprehensive analysis of all positions was undertaken in 2014. The policy objective for the analysis was to use an average of the mean and 75th percentile comparables as a target to assure that AIGA can attract and retain talented and highly productive professionals.

Liability insurance

Association professional liability insurance is provided by Chubb & Son, up to $5 million for each occurrence.

“Insured directors and officers” means any person who has been, now is or shall become a duly elected director or a duly elected or appointed officer of the insured association.

“Insured person(s)” means any person who has been, now is or shall become a duly elected director or trustee, a duly elected or appointed officer, an employee or committee member whether or not they are salaried and any other person acting on behalf of the association or at the direction of any officer or board of directors of the association.

Copies of the policy are available from the executive director.

Loans to directors, officers or trustees

AIGA shall not provide loans (or the equivalent, such as loan guarantees, purchasing or transferring ownership of a residence or office, or relieving a debt or lease obligation) to directors, officers, or trustees.

The practice of providing loans to board members and executives of nonprofits, while infrequent, has created both real and perceived problems for them. While there may be circumstances in which a charitable organization finds it necessary to offer loans to staff members, there is no justification for making loans to board members. Federal laws prohibit private foundations, supporting organizations and donor-advised funds from making loans to substantial contributors, board members, organization managers and related parties. 

When AIGA deems it necessary to provide loans to an employee—for example, to enable a new employee of a charity to purchase a residence near the organization’s offices—the terms of such loans should be clearly understood and approved by the board. Such loans then must be reported on the organization’s annual information returns (Form 990).