Open meetings for Iowa nonprofits

							                                Larned A. Waterman
                           Iowa Nonprofit Resource Center
                130 Grand Avenue Court, Iowa City, Iowa, 866-500-8980

              Open Meetings Law and Disclosure Law and Iowa Nonprofits


The laws of open meetings and public disclosures in many cases apply to nonprofit
organizations as well as government agencies and for-profit organizations. The following
is a cursory discussion of these laws. Part I provides an overview of the law of open
meetings including applicable statutes and definitions. After a discussion of privacy and
confidentiality in Part II, Part III sets forth some public disclosure and access to records
rules. Part IV analyses a recent Iowa Supreme Court opinion regarding disclosure laws
applicability to private organizations. Part V concludes the discussion with a list of public
trust and ethical considerations relevant to public disclosure. This report is not intended
to be a complete representation of all the laws and regulations concerning disclosure.


I. THE LAW OF OPEN MEETINGS FOR IOWA NONPROFIT ORGANIZATIONS

Nonprofit corporations under Iowa law are private entities. Therefore, the primary rule is
that board meetings are for the board of directors and not others, unless the board wishes
to open them to others. There are, however, a number of factors that impact whether a
nonprofit is required to have more persons at the board of directors’ meetings than the
directors. These are:
     There is a voting membership in the nonprofit corporation;
     The nonprofit gets some of its funding from property tax revenues and pari-
        mutuel betting, or other gambling revenues and so is a “governmental body.”

Revised model nonprofit corporation act and voting members in Iowa

The primary provisions regarding nonprofit corporation’s voting members’ meetings and
rights are set forth in Iowa Code 504.601 - .641 and 504.701 - .721. The act does not
require that members be allowed to attend board of directors’ meetings. Rather, it states
that the rights of the members must be spelled out in the articles of incorporation or
bylaws, Iowa Code 504.611.When the corporation has voting members, the role of the
members is raised with respect to a great number of issues, and if the articles of
incorporation or bylaws are silent on the matter, the Iowa Code provides default
provisions on such issues as amendment of articles of incorporation by the members,
Iowa Code 504.1003, and of bylaws, Iowa Code 504.1022; inspection of records by
members, Iowa Code 504.1602; and financial statements for members, Iowa Code
504.1611. While board meeting attendance is not required by the statute for voting
members, a strong plan of interaction of the board and membership is necessary.




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Open meetings and governmental bodies

The law of open meetings is governed by Iowa Code 21, which applies to “governmental
bodies.” “Governmental body” is broadly defined, and sometimes includes private
nonprofits, if the nonprofit has gambling or property tax revenues (see subsections f and
g):

       1. "Governmental body" means:

       f. A nonprofit corporation other than a county or district fair or agricultural
       society, whose facilities or indebtedness are supported in whole or in part with
       property tax revenue and which is licensed to conduct pari-mutuel wagering
       pursuant to chapter 99D or a nonprofit corporation which is a successor to the
       nonprofit corporation which built the facility.

       g. A nonprofit corporation licensed to conduct gambling games pursuant to
       chapter 99F.

Iowa Code 21.2 (Emphasis added).


The kind of activity for which open meetings are required is limited somewhat in Iowa
Code section 21. 11:

       Applicability to nonprofit corporations.

       This chapter applies to nonprofit corporations which are defined as governmental
       bodies subject to section 21.2, subsection 1, paragraph "f", only when the
       meetings conducted by the nonprofit corporations relate to the conduct of pari-
       mutuel racing and wagering pursuant to chapter 99D.

Federal open meeting law for “advisory committees” (entities created by statute, the
president or federal agencies) under 5 U.S. Code App. 2, section 10 and federal law under
5 U.S. Code 552b is not applicable to private nonprofits.


II. PRIVACY AND CONFIDENTIALITY

Despite rules regarding open meetings, there may be information that should not be
discussed at board meetings because it is confidential. Confidential information includes
both personnel records and client records. It may be necessary to limit discussion of these
matters at the board during an open meeting.
There are some laws concerning confidentiality in specific areas of activity (see, e.g.,
Health Information Portability and Accountability Act (HIPAA), P.L. 104-191, setting
forth confidentiality standards with regards to medical patient information). If a nonprofit




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organization is uncertain about specific legal confidentiality requirements that might
apply to their organization an attorney should be consulted.


III. PUBLIC DISCLOSURE AND ACCESS TO RECORDS RULES

Public disclosure rules on forms 1023 and 990

An issue related to open meetings for nonprofits is access to the nonprofits records. The
laws affecting disclosure of the tax filings are form 990 and form 1023. Federal grants
require reporting of certain types that are open to public inspection. An Iowa nonprofit
corporation files a biennial report which is available for review on the Secretary of
State’s web site.

To qualify for, and maintain, tax-exempt status an organization must comply with the
following basic rules of disclosure:

IRC 6104(d) and IRC 6104(e) “required that all tax-exempt organizations described in
IRC 501(c) or 501(d) allow public inspection of their exemption applications, any letter
or other document issued by the Service concerning such applications, and annual
information returns.”
      - “The covered documents are subject to public inspection at the tax-exempt
      organization's principal office (and certain regional or district offices).”
      - Applications (Form 1023 and Form 1024) which include:
            1. “all documents and statements the Service requires an applicant to file
               with the form;”
            2. “any statement or other supporting document submitted by an organization
               in support of its application (for example, a legal brief supporting an
               application, or a response to questions from the Service during the
               application process); and”
            3. “any letter or other document issued by the Service concerning the
               exemption application (such as a favorable determination letter or a list of
               questions from the Service about the application).”
      - Annual information return includes:
            1. Form 990 and Form 990-EZ, “all information furnished the Service in
               Form 1065, as well as all schedules, attachments and supporting
               documents (Examples of schedules, attachments and supporting
               documents include Schedule A of Form 990, Part V of Form 990, and
               Parts I and II of Schedule A of Form 990)”
            2. “any amended return filed with the Service after the date the original
               return is filed”
      - Not required to disclose the name or address of any contributor to the
      organization.

Source: Michael Seto and Toussaint Tyson, UPDATE: THE FINAL REGULATIONS
ON THE DISCLOSURE REQUIREMENTS FOR ANNUAL INFORMATION



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RETURNS AND APPLICATIONS FOR EXEMPTION (2000 EO CPE Text), available
at http://www.irs.gov/pub/irs-tege/eotopico00.pdf (June 8, 2005).

In addition to the disclosures required for tax-exempt status, each nonprofit organization
is required to submit biennial reports to office of the Iowa Secretary of State which are
made publicly available. Information included in the biennial reports includes a list of
branch offices, registered office, registered agent, etc. See
http://www.legis.state.ia.us/GA/80GA/Legislation/SF/02200/SF02274/Current.html,
specifically section 504.1613, for the law regarding filing of biennial reports. No
financial information is included in the biennial report.

Access to records

With respect to the public access to records statute, Iowa Code 22, the definitions of
what kind of private nonprofit is covered by the statue are comparable to those in Iowa
Code 21:

       1. The term "government body" means this state, or any county, city, township,
       school corporation, political subdivision, tax-supported district, nonprofit
       corporation other than a fair conducting a fair event as provided in chapter 174,
       whose facilities or indebtedness are supported in whole or in part with property
       tax revenue and which is licensed to conduct pari-mutuel wagering pursuant to
       Chapter 99D, or other entity of this state, or any branch, department, board,
       bureau, commission, council, committee, official or officer, of any of the
       foregoing or any employee delegated the responsibility for implementing the
       requirements of this chapter.

       3. As used in this chapter, "public records" includes all records, documents, tape,
       or other information, stored or preserved in any medium, of or belonging to this
       state or any county, city, township, school corporation, political subdivision,
       nonprofit corporation other than a fair conducting a fair event as provided in
       chapter 174, whose facilities or indebtedness are supported in whole or in part
       with property tax revenue and which is licensed to conduct pari-mutuel wagering
       pursuant to chapter 99D, or tax-supported district in this state, or any branch,
       department, board, bureau, commission, council, or committee of any of the
       foregoing. Iowa Code 22.1 (Emphasis added)


IV. RECENT IOWA SUPREME COURT DECISION’S IMPACT ON DISCLOSURE LAW

Iowa Supreme Court Decision Interpreting the Iowa Freedom of Information Act
(Gannon v. Board of Regents, 692 N.W.2d 31 (Iowa 2005))

Gannon v. Board of Regents is a case in which a private nonprofit organization, the Iowa
State University Foundation (“ISUF”), was required to publicly disclose its records in
accordance with the Iowa Freedom of Information Act, Iowa Code § 22.2(2).



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The rule in Gannon is very narrow and applies only to certain types of nonprofit
organizations. Specifically, Gannon applies to governmental organizations and private
nonprofit organizations that perform a governmental duty or function. Gannon at 40.
Although many, and perhaps most, nonprofit organizations’ activities might be broadly
considered a governmental duty (i.e., providing any type of social service), the Court
limits its holding saying:

     “This is not to say the Iowa Freedom of Information Act mandates
     disclosure whenever a private organization happens to perform a
     duty or function of a government body. Not every private entity
     performing an activity that may be characterized as a government
     function in theory must open its doors to public scrutiny.”

Gannon at 43.

The court did not clearly explain when the Gannon rule applies and when it does not.
However, a reasonable interpretation might be that the rule applies when a private
nonprofit organization (1) is expressly contracted for the purpose of performing a
governmental duty; (2) is controlled, at least to some degree, by the government; and (3)
is otherwise required to disclose information by statute. Although the Court required
ISUF to disclose its records, this case probably does not require most nonprofit
organizations to change their disclosure policies.


V. PUBLIC TRUST AND ETHICAL CONSIDERATIONS

Even when not required by law to disclose information, disclosure can increase public
trust and confidence in the organization. Of course, no organization should disclose
confidential material. Various ethics codes and practices that are helpful in establishing a
disclosure policy are mentioned below.

The Iowa Principles and Practices sets forth the following guidelines:

     1. A nonprofit should prepare and make available annually to the public
     information about the organization’s
     mission, service activities, and basic financial data. The report also should
     identify the names of the
     organization’s board of directors and management staff.
     2. A nonprofit should ensure that donors, funders, clients, volunteers, and the
     general public have access to
     appropriate financial records and records of organizational activity and
     effectiveness measures in fulfillment of
     the public trust.
     3. A nonprofit should ensure that personal information on individual clients,
     employees, and others is confidential
     unless permission to release information has been obtained.



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     http://www.sos.state.ia.us/pdfs/buspdfs/nonprofits/AcctComm.pdf

The Council on Foundations Recommended Principles and Practices for Effective Grant
Making provides:

     All forms required by government are completed accurately and filed in a
     timely manner. In addition, we inform the public about our activities through
     various means such as publication of periodic reports (including annual
     reports, newsletters and reports to national and local organizations that publish
     information on grant making) and through electronic and other
     communications channels. Available at
     http://www.cof.org/Content/General/Display.cfm?contentID=156&

Having a written confidentiality policy is a good idea because it guarantees donors that
their identity will be protected. A confidentiality policy might look like this:

     It is the policy of [nonprofit name] to maintain the highest level of
     confidentiality with respect to donor information. Donor names, addresses or
     fund-related information will not be shared without express written
     permission from donors. Under no circumstances will we sell donor or
     prospect information to third parties. If an outside organization or individual
     asks to communicate with our donors, we may offer to send their written
     communication to our donors.

The Association of Fundraising Professionals has posted a code of ethics to their website
at: http://www.afpnet.org/tier3_cd.cfm?folder_id=897&content_item_id=1068

Adopting a policy of liberally disclosing non-confidential information to the public can
strengthen an organization’s effectiveness and can lead to greater public confidence in the
organization.




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