American Legion Auxiliary Department Governing Board Roles and Responsibilities
An orientation for corporate directors, commonly referred to as board members, of an American Legion Auxiliary department (state-level corporation) governing board, often known as the Department Executive Committee (DEC)
Nonprofit Corporate Structure of an ALA Department
The American Legion Auxiliary (ALA) is a nonprofit organization classified by the Internal Revenue Service (IRS) as a 501 (C) (19) Veterans Service Organization (VSO). The IRS has classified the American Legion Auxiliary as a tax exempt 501(c) (19) veterans service organization based on our national purpose to serve a charitable mission that serves the public good primarily benefitting veterans, service members and their families.
All American Legion Auxiliary departments are nonprofit corporations (also known as not-for-profit corporations, both mean the same thing), each incorporated in its respective state (along with the District of Columbia and Puerto Rico). Each Department’s state corporation bears the name “American Legion Auxiliary Department of ABC”, as granted or “chartered” by the American Legion Auxiliary National Corporation. Therefore, each Department is incorporated as a501 (c) (19) corporation, is permitted to be incorporated using the name American Legion Auxiliary by virtue of being chartered by the American Legion Auxiliary National organization, and is tax exempt by virtue of being part of the American Legion Auxiliary’s Group Exemption, as determined and granted to the ALA National organization by the Internal Revenue Service via the ALA National organization’s IRS Letter of Determination.
As a state corporation, the Department exists because it has been chartered by the ALA National organization which permits the Department to use the name and trademarks of the American Legion Auxiliary, as long as the department honorably fulfills its incorporated purpose. As a state corporation, the Department must comply with all Federal, State, and local laws and regulations, including the requirements to file all appropriate federal and state tax returns and corporation reports as required by federal, state, and local governmental agencies.
Income generated by a not-for-profit (nonprofit) corporation must be used for its “public good” purpose – the reason the organization exists – which is the organization’s mission, its programs and services, along with its operations that support its mission.
Governance and Leadership Roles in Nonprofit Corporations
All nonprofit corporations are governed by corporate governing officers and a board of directors. The department board of directors is comprised of its officers and directors (board members). All corporations are managed by corporate executives. Corporate governance and corporate management are separate functions that work together via established practices that provide checks and balances for optimal organizational effectiveness.
In the American Legion Auxiliary, directors of the corporation are the members of the entity’s governing board. At the ALA Department level, the governing board is defined in the ALA Department’s Constitution, Bylaws, and Standing Rules (C&B and SR’s). In most Departments, this “governing board” is also known as the “Department Executive Committee” or “DEC”. The C&B and SR’s will define the make-up of the DEC, how often it meets, voting privileges of itsmembers, and other information relevant to the position of a governing board member. Most DEC’s include the Department officers along with some representation by District presidents or Divisions (however your Department is structured). Some Departments include department chairmen on their governing boards. It is important to know how your Department’s governing board, so be sure to read the CBL&SR’s for who serves on the DEC.
The structure of a Department governing board is similar to those of other business and nonprofit corporations, as all incorporated entities are required to have a corporate structure identified in its Articles of Incorporation to fulfill the purpose of the corporation.
ALA Department Governing Board (DEC) Role and Responsibilities
The Department governing board (hereafter referred to in this document as the Department Executive Committee or DEC) is entrusted with adopting sound corporate policy, ensuring fiduciary standards and fiscal health of the organization, and bears responsibility for the strategic direction of the organization.
The Department Executive Committee serves as the governing body of the organization between Department Conventions with fiduciary, policy, and strategic responsibility for the organization.
The duty of the Department Executive Committee, as corporate directors for the American Legion Auxiliary Department, is to ensure that the organization has adequate resources to fulfill its mission.
The Department Executive Committee is responsible for the organization’s adherence to legal standards and ethical norms.
Overall, the Department Executive Committee is responsible for:
The DEC has other duties and responsibilities that are the normal function of a corporate board of directors.
Any intermediate body established by Department is subordinate to the Department, must report to the DEC, and is accountable to the DEC which ratifies the intermediate body’s actions. EVERY ALA Girls State program that is incorporated is a subsidiary corporation of the department and is wholly accountable to the department, as stated in the ALA National Constitution, Bylaws & Standing Rules, and as explained in the ALA DE-partment Operations Guide and the ALA Girls State Program Operations Guide. Both Guides have been adopted by the National Executive Committee (NEC).
The DEC is responsible for determining all questions affecting the election, eligibility, conduct, and capacity of Department officers.
The DEC is responsible for establishing the process and procedure for making the determination that a Department officer or a Department committee member serving a single or multiple-year term is incompetent, incapacitated, or otherwise unable to discharge the duties of the Department office. The National Standing Rules provide guidance for how the DEC must fulfill this purpose.
The Department governing board, DEC, is responsible to:
Review, Adopt, and Adapt Measures to Ensure Effective Governance
Ensure Financial Stability and Oversight
Ensure Legal Compliance and Appropriate Public Disclosure
Responsibilities and Legal Obligations of a DEC Member
As a member of the governing board of the American Legion Auxiliary Department, you are a corporate director. Corporate officers and directors, collectively and individually, are accountable and liable for the safekeeping, wellbeing, and actions of the corporation.
As a corporate director, your primary role as a member of the organization’s governing body is to protect the organization.
Your primary responsibility as a DEC member is to serve as a forward-thinking fiduciary steward of the organization to ensure its financial sufficiency and organizational integrity through strategy and policy that afford future generations the opportunity to participate in our mission.
Your primary duty is to ensure that the organization has adequate resources to fulfill its mission. The National Executive Committee is responsible for the organization’s adherence to legal standards and ethical norms, and to articulate the organization’s mission, accomplishments, and goals to the public and to your Department.
The role and responsibility of the DEC should be clearly specified in the ALA Department Constitution, Bylaws, and Standing Rules.
All ALA Department leaders and its governing body and board are obligated to:
Members of the DEC have serious legal, ethical and fiduciary responsibilities which may include making decisions regarding the organization’s vision, strategic direction, financial resources, fundraising, and compliance with all regulations and laws.
No single member is solely responsible for any of these things alone; this structure depends upon the collective decision-making of a group of people serving together. The DEC is collectively responsible for acting in the best interest of the organization to further its mission.
Members of the DEC are individually and collectively liable for the committee’s actions.
Any DEC member who neglects these duties could be held personally accountable, particularly if something were to go wrong and there was a lawsuit.
Each DEC member is afforded limited liability, which shields her from personal debts and damages only as long as she is meeting established standards of responsible behavior. Many Departments purchase an Officers & Directors Omissions Insurance policy that affords limited liability coverage.
Limited liability may not protect a DEC member who fails to meet these basic responsibilities or who is negligent. If there is ever a lawsuit or dispute that questions the committee’s conduct, courts will look for committee members to have met reasonable standards of conduct.
DEC Members Must Meet the Standards of Care and Responsibility
DEC members serve in a position of trust. They have been selected to lead an organization that is performing a service for the public good.
In the ALA, DEC members are entrusted to set the direction of the organization and to ensure that the organization has sufficient resources to carry out its purpose and fulfill its mission.
DEC members are not expected to be perfect or know everything; however, it is very important that members fully understand their responsibilities, take them seriously, and take reasonable care and effort individually and as a group to meet their obligations.
Fulfilling fiduciary responsibility requires DEC members to be knowledgeable, present, and actively engaged in financial oversight matters of the Department, and ensuring that the Department’s finance committee is comprised of members with professional expertise in finance and accounting.
DEC members are entrusted to ensure that the organization is in a healthy financial position, its funds are properly managed, and responsible policies are established regarding spending, fundraising, budgeting, and accountability standards for management of the Department.
A Department DEC is strongly encouraged to adopt a “Code of Ethics”, and policies and procedures for Whistleblowers, Conflict of Interest and conflict disclosure, and Confidentiality, and to ensure that compliance forms are completed annually and maintained on file for all Department officers, directors (DEC members) and committee chairmen. The ALA NEC adopted the ALA National Code of Ethics, included as the preface to the ALA National Standing Rules.
For the organization to thrive, the ALA needs to invest in itself; adopt and adhere to best practices in nonprofit governance.
Members of the DEC are to serve according to the best-practice standards, well established principles, and obligations of nonprofit leaders. The following is expected of DEC members:
Important Resources
Acknowledgment: This document is the outcome of an initiative by American Legion Auxiliary Centennial Strategic plan Goal 4, Strategy A. Goal 4A team members and National Headquarters staff contributed to this initiative. DEC 101 may be used by a department for orientation and training of the department governing board, commonly known as the department executive committee or “DEC”.
