Letter from SOA President about Proposed Bylaws Changes
The SOA has historically operated as a non-profit organization under Section 501(c)(3) of the Internal Revenue Code, because of its mission and long history of advancing actuarial science through education and research. Many other professional membership societies are organized as 501(c)(6) entities.
During our discussions last year regarding a potential association combination, we recognized that it would be advantageous to have a legal structure combining both types of entities under the control of a common board and management framework. This structure (of having 501(c)(3) and 501(c)(6) entities working under unified management to achieve unique purposes) is very common among U.S. professional membership associations.
After carefully reviewing this issue, the SOA Board of Directors will be asking Fellows to approve an amendment to the SOA bylaws to create this legal structure, which I’ll address in more detail below. This amendment will be offered for consideration by the Fellows during this year’s SOA elections and voting.
First, let me provide some background about non-profit organizations as defined in the Internal Revenue Code. Both “501(c)(3),” which is the SOA’s current designation, and “501(c)(6),” which is the designation of many other professional membership societies (including all other US-based actuarial organizations), refer to sections of the Internal Revenue Code that allow federal income tax exemptions for types of nonprofit organizations.
The 501(c)(3) exemption is intended to be used by educational, scientific and research organizations that provide a public benefit through advancing knowledge and public awareness of a particular field. The 501(c)(6) exemption is intended to be used by professional or industry associations, which may do all of the above, but which also serve to advance the common professional interests of their individual or institutional members.
The SOA is committed to advancing actuaries as leaders and to promoting the profession. It is an increasingly important part of our mission to ensure the public understands the value that actuaries bring to markets and the public. Our members have repeatedly emphasized to us the importance of this goal. We believe the IRS regards these activities as most appropriate to be carried out by a 501(c)(6) qualified entity. On the other hand, our commitment to the advancement of actuarial knowledge through education and research and to benefit the public are still very appropriate purposes for a 501(c)(3). Thus, after completing additional research, it has become clear to the Board of Directors that a better governance approach to support our future mission and activities is to restructure the SOA as a 501(c)(6) organization, with a controlled affiliate organization committed to research and education and remaining a 501(c)(3).
The SOA Board of Directors has recently decided to propose a change to our organization’s legal structure and tax-exempt status to accomplish this. We will be asking all Fellows of the SOA to approve the plan and the necessary Bylaw amendments that will create a new 501(c)(6) not-for-profit corporation, which will adopt the current Society of Actuaries name. Our existing 501(c)(3) not-for-profit entity will then be renamed the Society of Actuaries Research Institute and will be a controlled affiliate of the new SOA.
What Does This Mean for You?
These changes will not have any impact on you, as your designations, membership status, and access to SOA resources will all remain the same. Your membership status will be maintained under the 501(c)(6) organization, and the Bylaws of this new “SOA” entity will be identical to the current ones under which we operate today. We will continue to operate as a single enterprise under wholly common governance (same board for both) and management to advance our mission to promote actuaries and the actuarial profession.
To modify the legal structure, the SOA Bylaws require a vote of the Fellows to approve certain changes:
- Approve an amendment to our existing Articles of Incorporation, restating its purpose and changing its name to the Society of Actuaries Research Institute.
- Adopt new Bylaws for the renamed 501(c)(3) entity.
- The newly formed 501(c)(6) entity will then simultaneously adopt the Society of Actuaries name and the same Bylaws under which we operate today.
The SOA Bylaws require approval of these changes by a two-thirds majority of voting Fellows, or by at least 10% of all Fellows, whichever is greater. This process also requires IRS approval of 501(c)(6) tax-exempt status for the newly-created entity. Once approved, we plan to have the changes take effect on or before January 1, 2020.
As a next step, we encourage you to review an initial set of FAQs and to send any questions you may have to email@example.com. I hope you will participate in upcoming informational webinars we will be holding on the proposed changes – stay tuned for an email invitation. During the 2019 election Aug. 19 - Sept. 6, we need Fellows’ help in voting for these changes and amendments to the SOA Bylaws. We thank you in advance for your participation!
James M. Glickman