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Bylaws Amendment (Adopted Aug. 14, 2010)

The membership voted on August 14, 2010, in Toronto, Ontario, to adopt the following proposed changes to NACDL's bylaws.

Recent previous versions of NACDL's bylaws and recent bylaw amendments are available at NACDL's bylaws archive.

Bylaws Amendments to Article VII: Committees

The following amendments to the bylaws were submitted by the Board of Directors to the membership at a regularly scheduled meeting in Memphis, Tennessee on May 1, 2010.  

Article VII: Committees

The Association shall have Standing Committees. The Standing Committees are: Audit, Budget, Bylaws, Elections, Executive, Investment and Nominations.

Section 1. -Composition

Committees shall consist of volunteers appointed by the President from all Article IV membership categories.

Section 2. -Rules

All committee procedures, except as provided in these Bylaws, may be governed by Robert’s Rules of Order as provided in Article III, Section 1. Only members of a committee appointed by the President as set forth in Article V, Section 6(a) shall vote on any committee matter. Any Officer or Director appointed by the President as set forth in Article V, Section 6(a) as liaison to a committee shall have a vote on any business of the Committee.

Section 3. -Committee Reports

All committee chairs shall file a timely written report before each scheduled Board Meeting for distribution to the Board of Directors. (Same as current Article VII, Section 3).

Section 4. –Executive Committee

(Article V, Section 8, will be moved to this section, and subsequent sections of Article V renumbered accordingly).  

Section 5. –Nominating Committee

(Article VIII, Sections 1 – 4, will be moved this Section, and subsequent sections of Article VIII renumbered accordingly).  

Section 6. –Elections Committee

(Article VIII, Section 7, will be moved this Section, and subsequent sections of Article VIII renumbered accordingly).  

Section 7. -Budget Committee

(Article XI, Section 3, will be moved this Section, and subsequent sections of Article XI renumbered accordingly).  

Section 8. –Bylaws Committee

(Article XIII, Section 1, will be moved this Section, and subsequent sections of Article XIII renumbered accordingly).  

Section 9. –Audit Committee

(a) Purpose. The Audit Committee shall provide oversight of the Association’s financial practices, internal controls, financial management and standards of fiscal conduct. It shall be responsible for (1) reviewing financial statements, (2) reporting to the Board of Directors that financial statements accurately reflect the Associations financial condition, (3) determining the adequacy of internal controls surrounding financial information systems, and (4) ensuring adherence to the Association’s conflict-of-interest policy. The committee shall meet with the outside auditor at least twice each fiscal year – once pre-audit and once post-audit – and at such other times as necessary to fulfill its fiduciary obligations or as directed by the Board of Directors or its Executive Committee. The committee shall keep the Board of Directors and the Executive Committee informed of the fiscal yearly audit status.

(b) (1) Composition. The Audit Committee shall consist of no fewer than five members, the majority of whom shall be current Board members. Notwithstanding any other provisions of these Bylaws, appointments to the Audit Committee shall be made by the president, with the consent of the Board of Directors at the first Board meeting following the Annual Membership Meeting. Notwithstanding any other provisions of these bylaws, the Audit Committee shall annually choose its chairperson.

(2) Notwithstanding any other provisions of these Bylaws, members shall be appointed to renewable five-year terms. Initially the appointment of terms shall be: 1 year, 2 years, 3 years, 4 years, and 5 years.

(c) Rules and Regulations. Any rules and regulations promulgated by the committee shall be submitted to and approved by the Board of Directors.

Section 10. –Investment Committee

(a) Purpose. The Investment committee shall develop and implement investment policies, investment ratios and oversee the investment advisors and managers so as to preserve the Associations capital and increase it in a prudent manner.

(b) Composition. The committee shall consist of no fewer than five (5) members, the majority of whom shall be current Board members. No member of the Investment Committee shall be a member of the Budget Committee or the Audit Committee.

ACTION REPORT

This bylaw proposal has two objects: (1) it gives bylaw status as Standing Committees to a newly created Audit Committee and Investment Committee; and (2) it moves all the committees currently found in different articles in the bylaws into Article VII (Committees) and designates them as Standing Committees. After considering the proposal in committee the Bylaws Committee recommends passage of the proposal. The vote in the committee was in 5 for and 0 against. Voting for: Bill Gallagher, Marvin E. Schechter, Penelope Strong, Irwin Schwartz, and Cynthia Orr

I. HISTORY

As the Association has grown, its finances have become more complex. The Budget Committee which has long been the repository of financial matters, along with financial actions taken by the Executive Committee between meetings, has been supplemented in recent years by two committees: Audit and Investment. The Audit Committee was formed many years ago in the wake of an internal financial scandal, specifically an embezzlement of funds by a former controller of the Association. Its intended purpose was to insure that proper safeguards were in place for the handling of funds, that those safeguards comported with legal regulations and requirements and that procedural changes to meet developing needs would be discussed, entertained, anticipated and promulgated with Board approval. In recent years it was the Audit Committee that first discussed changes to the financial checking system employed by the Association and the need to change to an updated, computer model and likewise the same committee dealt with Sarbanes-Oxley issues and their affect on not-for-profit associations. It was the Audit Committee that also first dealt with the issues now imposed on not-for-profit associations regarding financial disclosure by and among Board members. The likelihood of future financial issues, particularly now in what appears to be a return to greater regulation, underscores the need for this committee to be permanently encapsulated in the bylaws.

The Investment Committee has permitted the Association to have one committee focus on the accumulated money that the Association’s Board of Directors has mandated be saved year-to-year for future uses. Investment was not a subject singularly dealt with by the Budget Committee, and it certainly was not within the ambit of a duly constituted Audit Committee. In short, the Investment Committee meets with our investment advisors and monitors their progress. In recent years, the Investment Committee has after deliberation recommended a change in the investment advisors. In the years ahead there will be a need for other governance committees such as budget to have a working knowledge of the status of investments and advice from a specific committee will give the Association focused expertise upon this subject.

Many of the subjects that arise in the Investment Committee and the Audit Committee are intertwined with or impact upon the Budget process. In some cases the issues which arise in these two newly created Standing Committees affect the Budget process of the Association years hence. As such, the creation of these two committees enhances the ability of the leadership and the Association to approach its finances in the most efficient and beneficial way to permit proper budgeting of future funds, allocation of resources and the prioritizing of monetary needs.

Committees in an association are of two types: “Special Committees” which go out of business upon completion of a specified task and “Standing Committees” which have a continuing existence. A “Standing Committee” is one constituted to perform a continuing function, and remain in existence permanently or for the life of the assembly that establishes them. Ordinarily members of such committees serve for a term corresponding to that of the officers in the body unless the bylaws otherwise expressly provide. See Robert’s Rules of Order, Newly Revised (RONR) (10TH ed.), p. 473, ll 18-25. A Standing Committee must be constituted by name (a) by a specific provision of the bylaws or (b) by a special resolution (our Article XIII, Bylaws Amendments, specifies the process for amending the NACDL Bylaws).

II. REASONING BEHIND THE PROPOSAL

Currently committees such as Nominating, Elections, Bylaws Budget and Executive can be found in different Articles of the Bylaws. By moving all committees to one bylaw article the thought is to render the Bylaws more readable by concentrating the committees in one place. In the future, if amendments are offered pertaining to the committees it will be easier for all to comprehend the effect of changes by having only one place in the bylaws for reference.

The Audit Committee is unique among all governance committees, since by the very nature of its mission, it must be truly independent. With this consideration, the composition of the committee recognizes several new principles. First, the appointment of committee members will be by the president with the consent of the Board of Directors. However, using this appointment process requires language which reconciles it with the president’s sole power to appoint and remove members as set forth in Article V, Section 6(a), and this is accomplished with the language of Article VII, Section 9(b)(1), “Composition,” which begins with “Notwithstanding any other provision of these bylaws...”

Additionally this same “Notwithstanding…” language also solves the problem of staggered terms now proposed in Article VII, Section 9. Normally an incoming president appoints chairs and members and is not confronted by the appointments of a predecessor president. With the “Notwithstanding…” language, an incoming president will have the ability to appoint a member of the committee but will also have to recognize previous member appointments. The terms are renewable which permits presidents to re-appoint members.

Under this bylaw proposal the composition of these committees will consist of no fewer than 5 members, the majority of whom shall be current Board members. This provision allows presidents the flexibility to add more members as needed, and by having the majority of the committee as current Board members allows the association to utilize the committees as training grounds for future leaders.

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