Incorporation FAQ

Incorporation Communications Timeline 2017

Date

Content

Audience

April 17

“Seeking volunteer attorneys, accountants, and folks with non-profit administrative experience” email to DSA Leaders sent by Maria Svart, National Director

Chapter Leaders (note: Please notify the national office ASAP if new leaders are elected)

May 20

“Guidance on bank accounts coming soon” email to DSA Leaders sent by Sasha Hammad, Operations Director

Chapter Leaders

August 5

Incorporation Workshop at the Convention led by Incorporation Committee members and Sasha

Convention Delegates and Alternates

mid-October

Maria’s Director’s report and Sasha’s Operations report prior to the NPC both outlined the incorporation project  process/plan

NPC

October 28

Sasha’s proposal to provide incorporation guidance to chapters by Thanksgiving 2017 sent by Maria to the NPC

NPC

October 30

Steering Committee call discussion about incorporation kit status

NPC (note: Full NPC receives Steering Committee call documents and can participate in calls)

November 9

“Update on Chapter Bank Accounts and Sample Bylaws” email sent by Sasha to DSA Leaders

Chapter Leaders

November stakeholder calls

Sasha was on each call to answer members’ questions about the incorporation and group exemption process - why they came about and what the next steps are

Chapter Leaders

December 11

Steering Committee call discussion about first draft of sample chapter bylaws

NPC

December 12-14

Cover letter and first sample bylaws draft shared on stakeholder calls, along with December 26 deadline (2 weeks from Dec 12)

Chapter Leaders

mid-December

Notes to December stakeholder call participants with the cover letter, sample bylaws draft, and checklist sent by Lawrence Dreyfuss, Program Associate

Chapter Leaders

December 19

December 22 and 23 call information for chapter leaders to discuss sample bylaws



sent by Hannah Allison, Traveling Organizer, as follow up to December stakeholder calls

Chapter Leaders

December 22, 12.30 pm ET and

December 23, 2 pm ET

Calls for chapter leaders to ask clarifying questions regarding the draft content. Goals: chapter leaders understand

+ why we’re going through this process

+ what the bylaws should accomplish

+ confusing content

Chapter Leaders

December 26

9 am PT deadline for open comment by chapter leaders on draft sample bylaws

Chapter Leaders

December 27

NPC to discuss the revised chapter bylaws that include chapter leaders' input on Steering Committee Call

NPC

Next Steps

On December 27, the National Political Committee's Steering Committee decided to postpone finalizing sample bylaws and submitting our group exemption application until May 2018, at the earliest. We believe there was not sufficient communication about the process and that the results are therefore less than ideal at this time. We apologize for the confusion this has caused. We also appreciate the patience of chapters who have incorporated and are waiting to hear confirmation of our group exemption, as well as the patience of Organizing Committees who have been waiting for standard bylaws to expedite our volunteer-run chapter approval process. National DSA is committed to facilitating members' ability to organize and build enough power so that we can transform society, in whichever way fits chapters' local contexts.

The NPC will decide on more concrete steps during their next meeting. In the meantime, national DSA staff and volunteers will be shifting gears to finalize the Incorporation Kit that chapters have been waiting for. Thank you to the 60 members who joined the December 22 and 23 calls, to everyone who took the time to prepare and share recommendations in a respectful way, and to all who reached out to the national office with your concerns and feedback.

Frequently Asked Questions About Chapter Incorporation, Sample Bylaws, and Group Exemption

 

What is chapter incorporation?

Democratic Socialists of America, Inc. is a 501(c)(4) nonprofit organization. Currently, most chapters have no legal form, leaving both elected chapter leaders and national DSA vulnerable to politically motivated attacks, such as those used by the right against ACORN, Planned Parenthood, and worker centers in recent years.

The 2015-2017 National Political Committee, following results of its own research and the advice of national DSA’s attorney, recommended that chapters file articles of incorporation and form nonprofits in the state where they operate. DSA staff oriented the 2017-2019 NPC to this process in the lead up to the October 2017 NPC meeting.

A forthcoming Incorporation Kit - developed by a national volunteer incorporation committee of 20 DSA members with professional experience in accounting, the law, and nonprofit governance, in consultation with national DSA’s attorney - will outline the step-by-step process for nonprofit incorporation. The kit will also contain a state-by-state guide to filing fees, turnaround times, and direct links to incorporation applications. The goal of the Incorporation Kit is to provide the structure that will facilitate chapters’ local fundraising ability and capacity to carry out grassroots campaigns. After the kit is released, we'll hold calls to walk members through the process and answer questions, so that members may make an informed decision as to whether or not your chapter should incorporate. We’re also setting up a virtual help desk so that members can assist other members through the incorporation process.

For updates, chapter leaders should make sure you are subscribed to the DSA Leaders list by emailing lisa@dsausa.org and cc’ing a prior chapter chair so Lisa can confirm that you were in fact elected.

 

My chapter just wants to open a bank account. Do we need to incorporate?

You may obtain an Employer Identification Number and open a bank account without incorporating. However, if your chapter hopes to be exempt from federal income tax, you will want to incorporate as a nonprofit organization in your state in order to be eligible for DSA’s group exemption from the IRS. Since we’re a democratic organization, choosing whether or not to incorporate is a decision your chapter will need to make on the local level.

 

What’s a group exemption?

All newly incorporated chapters who expect to operate as 501(c)(4)s are required by the IRS to file Form 8976 within 60 days of incorporation. Otherwise, you’ll have to pay fines.

DSA has been working for almost a year putting together a request for the IRS to grant us a group exemption ruling, meaning that the IRS will recognize incorporated chapters as exempt from federal income tax if they are “affiliated” with DSA. This process would save chapter leaders the administrative burden and cost of submitting individual applications for 501(c)(4) status. Although it may take the IRS about six months to review our request, incorporated chapters who have filed form 8976 on time will be grandfathered into the group exemption.

 

What’s with sample chapter bylaws?

Sample chapter bylaws will be part of DSA’s group exemption request to the IRS, in order to show how an “affiliated” chapter may operate. Our application must also include a couple of actual chapter bylaws to show that they largely follow the sample chapter bylaws.

Additionally, our 2017 constitution states that newly approved chapters must adopt a “Standard New Local Constitution.”

Rather than have the NPC update the sample chapter bylaws exclusively, we have opened up the process to all chapter leaders for the first time so that members who have the lived experience of chapter governance can share your input, and we can shape the sample bylaws collectively across the organization.

During the November stakeholder calls, we let chapter leaders know we would be discussing drafts of sample chapter bylaws in the month of December. The sample chapter bylaws process so far has been:

  • The NPC discussed the first draft of the sample chapter bylaws on the December 11 Steering Committee Call
  • We shared the cover letter and sample chapter bylaws draft on December 12-14 stakeholder calls, along with an invitation for chapter leaders to add their feedback to the draft during the open comment period until 9 am PT on December 26, 2017

 

How will sample chapter bylaws affect me?

DSA is a big tent organization. Not everyone may agree on politics or structure, but all members share a vision in which we come together to fight capitalism and build a world where each of us has a real voice in our workplaces and neighborhoods. As long as your chapter bylaws do not contradict the final sample chapter bylaws, or DSA’s national constitution and bylaws, you will not have to change your local bylaws. Here are a few points which may clarify how sample chapter bylaws will affect you:

  • Only brand-new chapters will adopt the “Standard New Local Constitutions” once they’re finalized in 2018. In other words, any OC’s who have already applied to become a chapter may choose to adopt the standard bylaws if that’s easier, but this new set of sample bylaws will not be required to be used on a chapter application until the final bylaws are ready, and those OC’s will have their existing application reviewed. Please be in touch with the OC/ Chapter Committee if you have further questions about your chapter or OC application.
  • All chapters will have at least by July 2018 to make sure your most recently ratified bylaws do not conflict with the 2017 national DSA constitution and bylaws. Being in touch with chapters regarding your most recently ratified bylaws should have already been standard practice, but staff and national volunteers have had limited capacity these past few months. National DSA will follow up to support your chapter through this process. Please note that if you plan to incorporate, you may need to adjust your bylaws slightly to fit the requirements of your state. If we apply for group exemption in January 2018, we expect to hear back from the IRS by July 2018.
  • Incorporated chapters who wish to take advantage of the IRS group exemption will additionally have to revise your bylaws to make sure they are aligned with the final version of the sample chapter bylaws. The final sample chapter bylaws will indicate which language is required vs. which is merely recommended and can be modified by chapters.

 

How can I get involved in shaping the sample chapter bylaws?

Please remember the document that we are soliciting input on is a draft, not a final product, so it is subject to change based on the alternative language that DSA members propose. Our goal with this process has always been to shape the sample bylaws collectively across the organization. We invited the feedback of all chapter leaders so that member input is grounded in lived experience. The next steps in the bylaws drafting process for chapter leaders are:

  • Add your questions, comments, and proposals for alternative language in the sample chapter bylaws draft by 9 am PT on December 26, 2017
  • Join a call for chapter leaders. The zoom links have been provided in the December 19 email to DSA Leaders for either
    • December 22, 12.30-1.30 pm ET/ 11:30 am -12:30 pm CT/ 10:30 -11:30 am MT/ 9:30 -10:30 am PT, or
    • December 23, 2-3 pm ET/ 1-2 pm CT/ 12-1 pm MT/ 11 am- 12 pm PT

If no one from your chapter’s elected leadership can make the call times, please comment directly in the google doc and send your questions regarding the draft bylaws content to incorporation@dsausa.org by 9 am PT on December 26.

We hear that individual members who may have expertise such as union organizing or leading a working group would also like to contribute to the sample chapter bylaws. Please send your proposed language to incorporation@dsausa.org.

 

What has been the NPC’s role in shaping the draft sample chapter bylaws?

The draft bylaws were written by members who have volunteered their time with the Incorporation and the OC/Chapter Committees and Sasha Hammad, DSA’s part-time Operations Director. You can reach Sasha at incorporation@dsausa.org. The document was drafted with an eye towards approval by local Secretaries of State, being broad enough so that chapters do not have to rewrite their existing bylaws, and upholding DSA’s principles.

NPC members discussed the first draft of the sample chapter bylaws on the December 11 Steering Committee Call. Their feedback was incorporated by Sasha, and some pending comments are still live on the google doc. The December 26 deadline is so that chapter leader feedback can be incorporated and the NPC can discuss an updated draft of the sample chapter bylaws that includes chapter leaders' input on the December 27 Steering Committee call. After the NPC’s final feedback is reflected in a new draft by Sasha and members of the Incorporation and the OC/ Chapter Committees, National DSA’s attorney will review the sample bylaws and make sure they can be submitted to the IRS as part of our group exemption request.

 

Why is there only a two-week open comment period?

We plan to file our group exemption application in January since it will take about six months to hear back from the IRS. Additionally, some chapters have incorporated on their own in 2017 because of natural disasters or pressing local needs and are waiting on national DSA to request group exemption, particularly as the spring approaches.

--

 

We hope this flexible chapter infrastructure support will free up DSA leaders to focus on education, organizing, and winning steps towards democratic socialism. In the coming months, we’ll be reaching out to collectively draft a chapter agreement to clarify the relationship between chapters and national DSA. We will be in touch with chapter leaders about your ideas about a transparent, democratic process to draft the chapter agreement together in early 2018. If you have any questions not covered in these FAQs, please email incorporation@dsausa.org.


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New Member Call, May 27

May 27, 2018

May 27, 2018

9pm ET/8 CT/7 MT/6 PT

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