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Association Bisnow
   
September 22, 2008
 
       
 

Form 990
Is Topic A


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For our latest roundtable we brought together three association CEOs, each of them reaching their positions via a different road: American Council of Life Insurers CEO Gov. Frank Keating comes from politics (was the title a tipoff?); Association of American Medical Colleges CEO Dr. Darrell Kirch was CEO of Penn State’s medical center; and Associated Builders and Contractors CEO Kirk Pickerel rose up through the association ranks.

 

Darrell, Frank, and Kirk are framed by our sponsors: Jerry Jacobs, head of the non-profit practice at the Pillsbury law firm and Sudhakar Shenoy, CEO of IMC, the tech experts for business and government. We got them all together for lunch at McCormick & Schmick’s to fuel their insights on the latest hot topics. John Ford, Bisnow on Business association correspondent, played emcee.

Bisnow: Have your prior careers helped in running your associations?
   
Darrell: Being an executive of a member organization does give you great perspective. Something I couldn’t do in a health system, though, is think about bigger issues. It was the tyranny of the urgent. What I’ve enjoyed is stepping back and thinking about policy issues, whether it’s healthcare or tax structure, instead of just keeping the trains running. 
   
Frank: The American Council of Life Insurers has traditionally had a political leader. Our first president was Grover Cleveland after he lost the presidency and my predecessor was Carol Campbell, who was Governor of South Carolina and a member of Congress.
   
Bisnow:

Did something in your political background make you the right fit?

   
Frank: Well, insurance is state regulated, so they wanted someone who understood the state system. We also have federal tax issues, and I have experience as Associate Attorney General and Assistant Treasury Secretary. So I think they thought, this is a guy we should approach.
   
Kirk: I got my start as a membership director at our Virginia chapter and then ran our Philadelphia chapter for nine years before going to the national office. I’ve been CEO since 2000. I’m the first to come out of the chapter network, but I think I’m positioned well. I understand the needs of the chapters and I’ve been a consumer of ABC National services on that end. 
 
   
Jerry: I think the larger the organization by budget, impact, membership, the more likely they are to want a person who’s walked the halls of Congress or a state capitol. But at the mid-size, $2 to $15 million range, there’s a trend toward hiring professional association people. They’re more likely to pick a professional manager and then hire a separate advocacy expert. 
 

 

Bisnow: What are people asking you about these days?
 

 

Jerry: Governance issues. The fallout of Sarbanes is still hitting associations. And the new Form 990 is pushing things further.
 

 

Bisnow: How so?
 

 

Jerry: You’re going to have to answer yes/no on some difficult questions. Are you going to share your financial reports with the public? Will your board or compensation committee review all senior staff compensation? Are you going to share your Form 990 with your board? The trade press is going to be harder on you because they’ll have more information. Your top executives are going to have their salary and benefits itemized.
 

 

Kirk: We just had our chapter presidents’ conference in San Diego and the 990 changes are creating a lot of conversation. The IRS is asking very intrusive questions. Stuff you don’t necessarily want to share with the competition. Supposedly there’s no right or wrong answer, but there is. The less transparent you are, the more questions that’s going to raise. 
 
   
Bisnow: What’s the number one concern about the Form 990?  The competition seeing your salary information?
   
Frank: Sharing some information could make it more difficult in hiring a new person, but we’ll do what we need to in order to be competitive. 
   
Kirk: It’s internal, too. The thresholds are fairly low. First they were talking $100,000—at least now it’s up to $150,000. But you look at your senior management, most of them are above that. They’re going to be seeing what everybody else is getting.
   
Bisnow: Did you advocate against the salary rules?
   
Kirk: ASAE led the charge but many individual associations, including ours, filed comments with the IRS. But you have to do what they tell you to do. 
   
Bisnow: What about the optional information?
   
Kirk: There are questions like, do you have a whistleblower policy? Do you have a conflict of interest policy? No law applies to the non-profit world in those areas yet so they’re really just collecting information. But again, you might look inept if you don’t have some of those best practices. And the form is quite long.
   
Jerry:  With the instructions and schedules, it’s over 300 pages total.
   
Darrell: Your perspective is different if you’re representing a for-profit industry.  Our members are not-for-profits. For us, a bigger concern than the 990 has been Senator Grassley’s work on not-for-profits—everything from compensation to their community benefit. He’s made himself the champion of public accountability. But at the same time, non-profits are being asked to form entrepreneurial relationships these days, and that raises a whole bevy of conflict-of-interest issues. 
 
 
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