ORGANIZATION STRUCTURE

Common Organizational Forms:

The most common legal forms of employee organizations are:

Unincorporated Association. Any group of persons with a common interest. Formed by bylaws, electing officers and holding meetings.

Mutual Benefit Non-profit Corporation. Formed by filing Articles of Incorporation, establishing bylaws and voting in a board of directors.

Less Common Organizational Forms:

Sometimes other legal entities are created, primarily for tax-avoidance and special purposes:

Non-profit Labor Organization. Sometimes used for sub-organizations being operated by a larger labor organization. Cannot make political contributions.

Charitable Non-profit Organizations. Usually a separate board or trust established to provide tax-deductible donations. Usually associated with an association or corporation. Seldom used to operate a labor union.

Should You Incorporate?

Incorporation provides certain tax benefits and liability protection. Can create greater tax liability; extensive accounting and annual filing requirements. Best organizational form to use if controlling charitable trusts, PAC=s, or other entities. Provides protection from extensive fund-raising activities which may create liability for the group.
Unincorporated association can make contracts, indemnify board members and own subsidiary organizations. Officers have greater liability for association=s activities and subsidiary organizations.

Charitable trusts are usually incorporated, but can be owned/controlled by unincorporated association. However, most groups prefer to incorporate the primary association to provide greater control of trust yet protect corporation from lawsuit.

It is much more costly to run a corporation. There must be a practical as well as a legal need to incorporate; otherwise it may not be worth it.