🚀 go-pugleaf

Jalut asked some good questions about KTI, and it's relationship to
the SCA.  I'm no board member, (and may the universe protect me from
such folly) but I'll add my conjecture to the mix.

  What legal actions was the board or the West worried about? Was it
  mostly insurance concerns? With a seperate incorporation, how can
  Kingdom Trust take advantage of any non-profit rules that are used by
  the SCA, Inc? Does an inter-corporation agreement exist that bind both
  parties?

If the SCA is required to pay a fine, by the court, the money to do
so can come from two places.  From the insurance policy, if the policy
covers that amount, and from funds held in SCA bank accounts.  If
the funds are held by another corporation, those funds are separate.
By the same token, if KTI buys land and property, and some legal
judgement comes out of that, it's insurance and funds would pay
those liabilities.

It seems remarkably clear to me that the international membership of
the SCA should be fiscally separate from a piece of property that
was funded purely by members of the West, and vice versa, and if
I were a Board member, that's how I would treat it.  Of course, there
is room for opinion on both sides.

As for the second question, any Corporation which incorporates under
California and Federal Law as a non-profit, get's the same rights and
privileges as the SCA has.  I have no idea how KTI and SCA Inc, inter-
relate.  I believe that the West Kingdom Land Fund was a separate
trustee account, belonging to the SCA but administered by citizens
of the West, and that Trustees had to be approved by a vote of the
SCA Incorporated's Board of Trustees.  Once the funds belong to an
independent Corporation, I doubt the SCA will have any responsibility
whatsoever.

As to whether there will be an interlocking directorate, I have no idea.
I'm of two minds as to whether it would be a good thing or not.  I
suspect not, but I'd love to hear arguments both ways.

  When acquiring land, how will KTI represent itself to state and local
  government, especially with regards to property tax liabilities?

I can't begin to tell you.  Someone would have to check California Law.

  How did the transfer of funds occur? Isn't that a huge tax liability?
  What are California laws like on this question?

If you read the Articles of Incorporation, you will discover that the
SCA can only transfer assets to another non-profit corporation of the
501(c)3 type.  While I am far from an expert on the topic, I doubt
that any tax liability arises under Federal law.  I am clueless about
California Law, but I doubt there would be a tax liability there.
But I haven't checked.

  KTI probably has either a board or a president and trustee group. Is
  there any cross pollenization between KTI and SCA, Inc, i.e. one
  director on both corporations' "boards?"

See my previous comments on interlocking directorates.

  This seems like it could go either way as problems occur. With the
  Barony of Caerthe active in their Land fund work, the experiment in the
  West is of importance and knowing the reasons for the direction taken
  could be of great benefit.

  The biggest question, thus, is why the West and the Board chose this
  direction? 

You've gotta ask them exactly why.  I think the behavior is obvious.
If the "s" hits the "f" for the West Kingdom, this way it won't shut
down the SCA.  Additionally, if it is purely a West Kingdom matter,
why should the national membership have any say in it?

I do admit, I hope that the Articles of Incorporation for KTI allow
for the return of all assets to the control of the SCA if KTI fails
for some reason.  But I'm not sure why I want this.

The SCA ought to get some expertise in handling assets and property
PDQ.  As the organization get's older, the SCA could easily be named
in Wills and Bequests as a benficiary, and right now we have no
capability to handle property and assets that are of significant
value.  For that matter, like most non-profits, we could be soliciting
members to leave money in their wills to the SCA: we aren't doing that
either so far as I know.

	Tibor
--
Mark Schuldenfrei (schuldy@progress.com)
[I'm just showin' you my opinions: this ain't a gift]

In article <1993Jan26.175107.27795@progress.com> schuldy@progress.COM (Mark Schuldenfrei) writes:
>Jalut asked some good questions about KTI, and it's relationship to
>the SCA.  I'm no board member, (and may the universe protect me from
>such folly) but I'll add my conjecture to the mix.
>
>  What legal actions was the board or the West worried about? Was it
>  mostly insurance concerns? With a seperate incorporation, how can
>  Kingdom Trust take advantage of any non-profit rules that are used by
>  the SCA, Inc? Does an inter-corporation agreement exist that bind both
>  parties?

Not being on either Board, but being acquainted by floks on both...
The SCA Board is concerned about legal actions being taken against the
SCA because of the sorts of things that happen on land.  There is, for
instance, a creek.  I would imagine all the possibel 'attractive
nuisance' scenarios flashed through a few minds.  The KTI Board is
concerned that--in the case of a legal action against the SCA, Inc.,
the land would be seen as the only tangible asset worth going after.
If there were inter-corporation agreements, then the 'wall of
separation' between teh two corporations would be breached--or at
least, thinned considerably.

>If the SCA is required to pay a fine, by the court, the money to do
>so can come from two places.  From the insurance policy, if the policy
>covers that amount, and from funds held in SCA bank accounts.  If
>the funds are held by another corporation, those funds are separate.

Right.  But only to the extent that the other corporation is separate
and not a creature of the first one.

>By the same token, if KTI buys land and property, and some legal
>judgement comes out of that, it's insurance and funds would pay
>those liabilities.

Right again.  With the same argument.

>It seems remarkably clear to me that the international membership of
>the SCA should be fiscally separate from a piece of property that
>was funded purely by members of the West, and vice versa, and if
>I were a Board member, that's how I would treat it.  Of course, there
>is room for opinion on both sides.

There's certainly no *requirement* for such a separation on those
grounds.  The Land Fund moneys have been held for many years in such a
way that they could have been a target in a legal action as teh Land
Fund was part of the SCA, Inc.

>As for the second question, any Corporation which incorporates under
>California and Federal Law as a non-profit, get's the same rights and
>privileges as the SCA has.  I have no idea how KTI and SCA Inc, inter-
>relate.  I believe that the West Kingdom Land Fund was a separate
>trustee account, belonging to the SCA but administered by citizens
>of the West, and that Trustees had to be approved by a vote of the
>SCA Incorporated's Board of Trustees.  Once the funds belong to an
>independent Corporation, I doubt the SCA will have any responsibility
>whatsoever.

Correct.  Nor any liability.

>As to whether there will be an interlocking directorate, I have no idea.

There isn't now and I know of no plans for there to be one.  In any
case, such an arrangement would defeat much of the purpose of separate
incorporation.

>I'm of two minds as to whether it would be a good thing or not.  I
>suspect not, but I'd love to hear arguments both ways.

The argument against is above.  The argument for is to keep
'outsiders' from taking over the Land Fund board and removing SCA
members access and control of over it.

>  When acquiring land, how will KTI represent itself to state and local
>  government, especially with regards to property tax liabilities?

Beats me.  It's another non-profit.  Since the land is to be purchased
for the specific use as an SCA site, that's within the stated purpose
of the money.

>  KTI probably has either a board or a president and trustee group. Is
>  there any cross pollenization between KTI and SCA, Inc, i.e. one
>  director on both corporations' "boards?"
>
>See my previous comments on interlocking directorates.

And mine.  There is no present crossover.

>  This seems like it could go either way as problems occur. With the
>  Barony of Caerthe active in their Land fund work, the experiment in the
>  West is of importance and knowing the reasons for the direction taken
>  could be of great benefit.

A Barony seems a bit on the small side to start such an effort....

>  The biggest question, thus, is why the West and the Board chose this
>  direction? 

Aside from the liability issues, the Land Fund needs to move faster
than quarterly board meetings seem to permit the SCA to move.

>You've gotta ask them exactly why.  I think the behavior is obvious.
>If the "s" hits the "f" for the West Kingdom, this way it won't shut
>down the SCA.  Additionally, if it is purely a West Kingdom matter,
>why should the national membership have any say in it?
>
>I do admit, I hope that the Articles of Incorporation for KTI allow
>for the return of all assets to the control of the SCA if KTI fails
>for some reason.  But I'm not sure why I want this.

Since a non-profit can only give assets to another non-profit....  The
resources have to stay in that loop.

>The SCA ought to get some expertise in handling assets and property
>PDQ.  As the organization get's older, the SCA could easily be named
>in Wills and Bequests as a benficiary, and right now we have no
>capability to handle property and assets that are of significant
>value.  For that matter, like most non-profits, we could be soliciting
>members to leave money in their wills to the SCA: we aren't doing that
>either so far as I know.

Interesting point.  I suspect that any real assets willed to the SCA
would either be placed in trust with an outside agency or liquidated
and the funds invested.

	--Hal

        Hal Ravn, West Kingdom
        Wilson H. Heydt, Jr.,  Albany, CA 94706,  510/524-8321 (home)

Nothing in this missive constitutes an act or opinion of the Lord High
Constable of the Kingdom of the West unless otherwise explicitly stated.
-- 
Hal Heydt                    |    
Analyst, Pacific*Bell        |            You!
510-823-5447                 |    Out of the Gene Pool!
whheydt@pbhya.PacBell.COM    |

>If you read the Articles of Incorporation, you will discover that the
>SCA can only transfer assets to another non-profit corporation of the
>501(c)3 type.  While I am far from an expert on the topic, I doubt
>that any tax liability arises under Federal law.  

I don't have the wording to hand, but the Articles of Incorporation state
that the SCA can transfer assets only to other 501(c)(3) organizations
*with compatible goals* to those of the SCA.  (In other words, SCA Inc. 
can't donate money to, say, Greenpeace even if the latter is 501(c)(3),
and it can't donate to organizations that are not 501(c)(3) no matter who
they are and what they do.)

What will happen now, according to my memory of informal notes from the 
Board meeting written by Hilary, is that KTI will incorporate as a 501(c)(3)
corporation and once they have done that, the SCA will transfer the funds.
This keeps it legal and there is no federal tax liability.  I presume that
the Board has a reasonable basis for believing that KTI can actually obtain
this status.

And now a question: is KTI planning to be a resource for *any* SCA group
that wants to acquire land in a similar manner?  If they're intended to be
strictly a West Kingdom organization, isn't the name a bit misleading?

Ellisif

Discussing KTI, and SCA, Inc.

Hal Ravn wrote:
  If there were inter-corporation agreements, then the 'wall of
  separation' between teh two corporations would be breached--or at
  least, thinned considerably.

I'm not sure this is the case, Hal.  Many corporations (although I'm
thinking of regular businesses) allow other corporations to name a
Board Member, or seat one of their own Board Members on each other's
Board of Directors.  Either as a non-voting presence, or as a full
member.  This does not automatically "breach the separation" of the
two corporations, or even weaken it.

He also provided me a reason against separating the two groups:
  The argument against is above.  The argument for is to keep
  'outsiders' from taking over the Land Fund board and removing SCA
  members access and control of over it.

Right enough.  Thanks Hal.

	Tibor
--
Mark Schuldenfrei (schuldy@progress.com)
[I'm just showin' you my opinions: this ain't a gift]

Ellisif Flakkari wrote:
  I don't have the wording to hand, but the Articles of Incorporation state
  that the SCA can transfer assets only to other 501(c)(3) organizations
  *with compatible goals* to those of the SCA.  (In other words, SCA Inc. 
  can't donate money to, say, Greenpeace even if the latter is 501(c)(3),
  and it can't donate to organizations that are not 501(c)(3) no matter who
  they are and what they do.)

Not exactly.  The closest the Articles of Incorporation come to this is in
section V, where it talks about what happens to the SCA's assets should the
SCA close up shop:

    The property of this corporation is irrevocably dedicated to
  charitable purposes and no part of the net income or assets of this
  corporation shall ever inure to the benefit of any director, officer
  or member thereof or to the benefit of any private person.  Upon the
  dissolution or winding up of the corporation, its assets remaining
  after payment, or provision for payment, of all debts and liabilities
  of this corporation shall be distributed to a nonprofit fund,
  foundation or corporation which is organized and operated exclusively
  for charitable purposes and which has established its tax exempt
  status under Section 501(c)(3) of the Internal Revenue Code.

The By-laws repeat this, in slightly different wording:

  IV.  DEDICATION OF ASSETS 

  The properties and assets of the Society are irrevocably dedicated
  to charitable purposes.  No part of the net earnings, properties, or
  assets of this corporation, on dissolution or otherwise, shall inure
  to the benefit of any private person or individual, or any member,
  Director or officer of the Society.  On liquidation or dissolution,
  all properties and assets and obligations shall be distributed and
  paid over to an organization dedicated to charitable purposes which
  has established its tax-exempt status under Internal Revenue Service
  Code Section 501(c)(3).

A keyword search of all the governing documents does not show the word
"goal" or "compatible" anywhere.  This doesn't mean you are wrong,
Ellisif.  I have no idea what California Law says.  We are prohibited
from political action, though.  I have no idea if this means we
cannot contribute to Greenpeace and the like.

	Tibor
--
Mark Schuldenfrei (schuldy@progress.com)
[I'm just showin' you my opinions: this ain't a gift]