Double duty for boards. (Legal).

Q: Can the board of a 501(c)(6) association serve as the board of an affiliated 501(c)(3) foundation? What are the legal implications of having identical or interlocking boards?

A: There is no prohibition against having identical or interlocking boards. However, individual board members will have separate fiduciary responsibilities for each corporate entity and need to be reminded of that fact. It is important that each entity observes corporate formalities (i.e., separate meeting agendas, minutes, books, accounts, budgets, and so forth). The activities of the 501(c)(3) organization must be consistent with its tax-exempt purpose. If the (c)(3) is used to advance the mission of the (c)(6), the (c)(3)'s tax-exempt status could be in jeopardy.

Board meetings can be scheduled back-to-back, but the agendas and discussions must be kept completely separate. To limit any suggestion that the (c)(3) is carrying out the (c)(6)'s mission statement, consider holding the (c)(3)'s board meeting first and having different chairs, secretaries, and treasurers for each entity. Establishing a cost-sharing agreement to apportion expenses and allocate revenue between the entities should also be considered.

Submitted by Lawrence G. Keane, vice president and general counsel, National Shooting Sports Foundation Inc., Newtown, Connecticut. The "Legal" item is not intended as legal advice but rather as an educational overview