Important Information for Clubs

MD5M District Governor Information Sharing - March 2007

Subject:  Club Administration Funds & Club Community Funds

 Below is information that 5M8 DG Robert Hoofnagle received orally at the 2005 USA/Canada Forum and later received in an email.  Basically what it says:  if the Public is involved in a fundraiser the proceeds must be returned to the Public, see the second paragraph down.

“This is in response to your inquiry today regarding the means to raise monies for administrative expenses. These expenses are funded through club member dues, fines, and other monies from members as explained herein. The next two paragraphs describe ways in which clubs may raise funds for charity and administrative purposes:

Some clubs sell ads in the club newsletter. If this publication is distributed only to Lions, the ad revenue may be used for administration. A club may hold a fundraising activity confined solely to Lions and their spouses and may use the proceeds from the activity for administration.  Once members of the public are invited to a Lions club fundraiser, it is governed by the rules for publicly raised funds. This type of activity becomes a public fundraising event and the revenue from Lions may not be separated or used for administration.

A Lions club may identify an opportunity in its area where members can work at the event of another organization. If the members are not dressed or otherwise identified as Lions, but rather work as individual citizens, their compensation can be donated to the club's administrative account. It is important that the organization who compensates the members understand and agrees with this usage of funds.

In addition, enclosed is a legal opinion of the International Board of Directors with respect to funds raised from activities. I believe that after reading the policy of the International Board, you will agree that all funds raised from the public must be returned to public use. The only deductions which may be made from activities accounts are the direct operating expenses of the fundraising activity. Money accumulated from interest must also be returned to public use.

Clubs may hold publicly raised funds for a reasonable length of time—a reasonable period is usually considered to be one year. A club may hold funds longer than one year if they are earmarked for a specific project with a targeted completion date. Deviation from this recommendation may jeopardize a club's tax-exempt status.

Consistent with the above, Article VII, Section 3(g) of the Standard Form Lions Club Constitution under the duties and powers of the Club Board of Directors provides:

It shall not authorize, nor permit, the expenditure, for any administrative purpose, of the net income of projects or activities of this club by which funds are raised from the public.

If you have additional questions, please do not hesitate to contact us.

Very truly yours,

Amy J. Peña

Staff Attorney

Lions Clubs International

300 West 22nd Street

Oak Brook, IL 60523-8842

Telephone: 630-571-5466, Ext. 298

Facsimile: 630-571-0953

Email: amy.pena@lionsclubs.org

AJP:ksj

Enclosure:

Legal opinion of the International Board of Directors with Respect to Funds raised from activities.

LEGAL OPINION - FUNDS RAISED FROM ACTIVITIES

QUESTION:

May funds raised from the public be used for administrative or other non-public purposes?

OPINION:

No. The Articles of Incorporation of The International Association of Lions Clubs state that the association is organized, among other things, "to govern all such chartered clubs so that they shall be nonpolitical, nonsectarian, not for profit of the individual club or its individual members."

Therefore, the Articles of Incorporation of The International Association of Lions Clubs expressly forbid that any part of the net earnings from activities shall inure to the benefit of any individual Lion or Lions club. Since districts are created by the association to facilitate its administration of individual Lions and Lions clubs, this proscription, by implication, runs to district administrative expenses as well.

The wisdom of this proscription is clear. To finance and fulfill their basic function of service, Lions clubs ask the public to patronize fairs, circuses, raffles, show and the like, and to purchase products infinite in variety. This public support is sought, and given, on the mutual understanding that the net funds raised thereby will go to finance some community need. Consequently, any diversion of such funds to other purposes constitutes a breach of faith with the contributing public. The proscription in the article quoted exists to prevent any such breach and to protect and preserve the image of Lions Clubs International. Therefore, the use of any such funds to finance convention trips, politics or candidates, or administration dues, deficits or expenses at the club, district, or international level is a breach of faith and an express violation of the basic document of the association.

This opinion shall be interpreted to mean that there shall be no public solicitation of funds to defray administrative expenses of a Lions club. DG Bob Hoofnagle