By Catherine K. Draper, RDH, MS
In the recent announcement regarding the board of trustees’ decision to terminate the California Dental Hygienists’ Association (CDHA) charter relationship with the American Dental Hygienists’ Association (ADHA), the CDHA president states that "CDHA did not arrive at this decision quickly or easily. Like many of you, CDHA has for some time questioned whether the benefits provided by ADHA justify the dues ADHA imposes.” For many people first reading about the vote, made by the CDHA board in an executive session discussion held with the association’s legal counsel and executive administrator, they are left with many questions regarding the process and the ultimate outcome.
What appears to be missing from the communication is the full background information and the rationale for the new charter. The announcement leads the reader into thinking that the document arrived without any prior discussion on the charter’s background and provisions with the following sentence: "ADHA put this issue into sharp focus on October 30, 2015, when, it presented CDHA with a new written charter agreement—drafted by ADHA without any consultation with CDHA—and insisted that CDHA sign it by April 1, 2016."
The reality is that our elected, national leaders had full participation in the process by which the charter agreements were drafted. Also, the reasoning behind all aspects of the charter were discussed, section by section, with ADHA’s legal counsel at the ADHA annual session last June in Nashville.
This session was recorded and continues to be available for viewing on the ADHA YouTube Channel. ADHA also created an extensive tool kit with charter FAQs and timelines, and held webinars to address the questions regarding the implementation process. Most recently, ADHA has drafted a detailed FAQ for California members in response to the many questions that they have received since the announcement of the termination.
Why the ADHA charters have evolved
The ADHA charters are essentially a "governance agreement or contract," clearly spelling out the roles and responsibilities of the respective organizations in the the tripartite structure. As a 501(c)6 not-for profit organization, there are very specific rules, regulations, and guidelines that need to be followed by the chartering body and its affiliates. Many older organizations have found that their original charters were more like verbal agreements with their affiliates and no longer meet the legal needs of today’s not-for-profit, 501(c)6 associations, such as the ADHA and the CDHA.
Reforms stemming from Sarbanes-Oxley federal legislation have led the IRS and many individual states to add specific questions regarding governance policies and procedures to the tax reporting forms (IRS Form 990). While these items appear as checkboxes requiring "yes/no" answers, well-run organizations need to provide evidence that they have practices and policies in place to guarantee accountability, transparency, and protection of the tax exemption status at all levels of the organization. In today’s litigious society, there is also an increased need for liability protection for volunteer leaders.
As these new reporting requirements were made back in 2009, ADHA hired a consultant to examine its current national, state, and local structure (tripartite). The consultant identified a number of areas of variation and concern across the 50 states and over 350 components, leaving the the entire association and its volunteer leaders vulnerable in a number of areas.
While CDHA, along with many other state organizations, regularly file all the appropriate taxes and has added the required conflict of interest and whistleblower policies, there other key areas addressed in the ADHA charter agreements. Considering that the existing ADHA charters date back over 90 years, ADHA worked with their legal counsel to create uniform charter agreements designed to ensure legal, fiduciary, and ethical compliance as well as best practices designed to strengthen the brand and overall image of the association across the country.
A key issue in the new charter agreement relates to the component structure. The charter requires that components must be either “incorporated” or “unincorporated.” California is a large state with 25 components of varying sizes, activities, and administrative needs. Membership numbers in some of our larger components are equal to that of some entire state organizations. Many of California’s larger components already operate to the standards of an incorporated component. One of the issues in the current dispute over the signing the new charter hinges on the overall costs of implementation of the new component structure. The actual cost of incorporation varies greatly depending on who is providing the information. However, it appears that the basic governmental filing costs along with the supplemental liability insurance policies is around $800.
For the mid-size or smaller components choosing not to incorporate, the main changes are in the areas of fiduciary responsibility and liability. Unincorporated components are fully chartered by the state and are subject to the state’s bylaws. From a governance standpoint, these components are considered to be a committee of the state association. As such, an unincorporated component may not maintain a separate bank account, nor are they able to sign contracts. In this arrangement, the state association would need to mange the unincorporated component’s funds (sign and disperse checks) and provide the signature for any component related contracts.
Incorporated components would have their own bylaws and would be able to operate as a standalone entity, chartered by the state. The terms of their relationship with the state would be determined by their charter. Incorporation serves as a way to solidify the ultimate liability for any debts or legal obligations of the component.
While CDHA components all have "separate legal status," as they all file individual taxes to the IRS and California, have liability coverage under CDHA, separate legal status alone does not give the same protection as incorporation provides in a court of law.
While this hybrid component structure presents some challenges to the current method of electing representatives to the annual House of Delegates, the ADHA charter clearly stipulates that the state's governance structure, house of delegates, general assembly, or some other representative governance model, is up to the state to determine.
Understanding the costs and responsibilities
Yes, there will be increased administrative and accounting and legal costs to create and maintain this dual component structure within CDHA. As there have been multiple interpretations regarding the unincorporated component's changed status and how these changes will impact the components ability to provide services to their members, the actual administrative costs have been difficult to determine. However, it is important to keep in mind the ultimate goal of best practices, fiduciary responsibility, and overall protection of all of our volunteer leaders when looking at any sort of restructuring. If CDHA truly becomes a separate entity, as the chartering body for its 25 component organization, they will also need to consider drafting a charter detailing all of the obligations of the affiliated components.
Does the new charter require state organizations to make changes in how they are structured and governed? Yes. However, once you sit back and look at all of the aspects both internally (small states/large states/ small components/large components) and externally (tax reporting, exemption status, governance disclosure requirements, and liability protection), you can better understand the guiding principles of the charters. They were drafted to make the organization better, not fragmented.
Will there be administrative expense in implementing the provisions? Yes. However, there has been a wide range of cost estimates for both incorporation and management of unincorporated accounts and contracts. Yes, incorporation will require greater individual accountability on the part of this particular legal status but it also brings more protection for the entire organization. As an unincorporated component, the same level of accountability and transparency is required except the state, in this case CDHA, assumes the liability for all of the actions and activities of the component and its members.
Will there be a loss of representation for components who do not incorporate? Not necessarily. The charter clearly states that the governance model for the state organization is entirely at their discretion. That means that CDHA can decide how it wants to blend representation and governance from both types of components.
The bottom line, in my opinion, is that there is a fundamental misunderstanding of the purposes of the charter agreements that has been shared with the dental hygiene community at large. Sadly, this has become an opportunity for many people to vent about their personal experiences and frustrations within the associations whose core ideologies are identical: “Lead the transformation of the dental hygiene profession to improve the public’s oral and overall health.” Currently, significant financial resources and time away from actually providing member services and advancing oral health care are being channeled from both CDHA and ADHA into what has become an internal, but very public struggle between the national organization and one of its constituents.
Catherine K. Draper, RDH, MS, is an adjunct faculty member in the Biological and Health Sciences Division at Foothill College in Los Altos Hills, California, and is the editor of the Journal of the California Dental Hygienists' Association. The opinions expressed here are those of the author and do not represent the California Dental Hygienists’ Association.