Overview:
Members of the Harvard-Radcliffe Class of 1971 have been discussing sponsoring a project or projects ranging from environmental action to children’s education to social justice and reconciliation programs. Some are merely ideas while others are existing programs or extensions of programs already underway. One that has attracted particular interest is the “Green Vietnam” project proposed by classmate John Berlow. John’s goal with Green Vietnam is to plant 3 million trees in de-forested areas of Vietnam to replace valuable rainforest and commemorate the 3 million people who were killed during the Vietnam War. It’s also an offshoot of work he has done in establishing an organic farm at Friendship Village, which was started by several Vietnam Veterans. A significant number of HR71 classmates have indicated strong interest in Green Vietnam, both for its environmental and social benefits and as a gesture of peace and reconciliation towards the people who suffered the most in the War. An additional “plus” is that John is already in Vietnam working on various elements of his proposal (including cultivating a 5-acre fruit tree orchard in Tuyen Quang Province, about 2 hours north of Hanoi). Therefore, it provides a good model for organizing and sponsoring the first HR71 project, although it is by no means the only project that we could or should consider sponsoring.
Organization and Funding Mechanism
There are various options for sponsoring projects, including:
• Working with an established organization such as Oxfam, UNICEF, etc. This has the advantages of using existing management and fundraising infrastructure and providing oversight and reporting required by tax and other authorities. The major disadvantage is the lack of control we would have over the type of projects that are funded. WCE just becomes another “donor”.
• Forming a non-profit organization (e.g. 501(c)(3)). The major advantages here are control, ability to select specific projects, tax deductibility, and greater involvement by classmates. The disadvantages are the initial time and organizational and legal costs, ongoing reporting requirements, obtaining consensus on structure and bylaws, election of officers, project oversight, annual meetings and similar operational issues.
• Making donations to specific projects. The advantages here are little or no overhead costs, the ability to select and fund a number of projects, and the potential opportunity for direct classmate involvement. The disadvantages are lack of control once funding occurs, lack of a mechanism to ensure accountability, unclear (or no) tax deductibility, and the inability to solicit donations directly (rather than merely “recommending”)
• Working with Harvard to set up Charitable Remainder Trusts or the like to have classmate donations go to Harvard with the earnings going to specific projects or organizations selected by HR71 classmates during their lifetime, and the principal kept by Harvard. The advantages are a strong tie-in with the University, the historical success of the Harvard Investment Corporation (which invests Harvard’s endowment), and lack of the hassles listed above. The disadvantages are that only the earnings on donations could be used to fund projects, lack of project control, lack of accountability, and the unknowns of working with Harvard in reaching agreement on the mechanics of the funding process.
In reviewing these options, it seems that either working with an existing organization or forming an HR71 non-profit offer the best advantages for funding tax-deductible projects and having mechanisms for oversight and control. However, initial attempts to identify existing charitable organizations or NGO’s that would allow us to specify which projects to fund have not been successful. Moreover, unless WCE could provide a substantial endowment (initially probably $100,000 or more) it is unlikely that we would have much control over where or how our donations are spent. Thus, forming a non-profit structure for funding projects is perhaps the only way WCE can ensure that selected projects are funded with tax-deductible donations and provides the appropriate accountability, oversight and mechanism for participation.
Requirements for Green Vietnam Project Non-Profit Organization
• Incorporation as a legal entity that qualifies for non-profit status under IRS Section 501(c)(3) or other appropriate section (e.g. Section 501(c)(4) “Social Welfare Organization”)
• Organization is intended to qualify as non-profit under
• Development of necessary incorporation and by-laws documentation
• Need legal name (e.g. “HR71 Charitable Foundation, Inc.”) and tax ID number (EID)
• Determine if it is a membership or non-membership organization
• Establish written Purpose of the Organization (part of incorporation and non-profit registration documentation)
• Determine initial address of organization (i.e., headquartered in )
• Decide whether all members of HR71 (as determined by alumni records) automatically eligible for membership (may want to expand this later to include all or other H class alumni) and can vote in annual elections, or establish membership requirements (e.g. dues)
• Who (e.g. Secretary) determines official “membership” roll for voting purposes
• Procedure for members to resign, e.g. by submitting written request to any officer or Board member
• Requirements for voting (what requires membership approval, amount of majority, etc.)
• Establish membership dues (if necessary) Question: What if someone doesn’t pay?
• Date and procedure for holding annual meeting when officers and Board of Directors are elected and other decisions requiring votes
• Determine number of and eligibility for becoming Directors (suggestion: initially should have at least 5 Directors)
• Determine selection and approval process for projects, e.g. must receive majority vote of members (200 people minimum?)
• Must have quorum for annual meeting
• Officers will be a President, Vice President, Treasurer and Secretary, and others (if agreed) elected at annual meeting (serving 2-3 year terms for convenience?)
• Neither Officers nor Directors will receive compensation
• Directors and Officers shall be indemnified for serving in those capacities (except for criminal acts and acts of malfeasance )
• Suggestion: any member can submit project proposal for approval and funding if it meets specified criteria:
- must serve charitable purpose and meet IRS definition for charitable tax exemption
- must have defined goals & measurable benefits
- must submit annual report on progress in meeting goals & monies spent
- must have on-site management
- must submit an initial funding request and operating budget
- must sign agreement to use funds and manage project according to agreed to guidelines
- must not be directly involved in any political, religious, or for-profit activities
• Suggestion: can terminate sponsorship if project fails to fulfill purpose, submit reports or violates agreement (as determined by Directors or authorized oversight group)
• special meetings of organization can be called by President, 2 members of Board or written request of minimum ___ of members
• A Project Review Committee shall be established by Board and be responsible for reviewing and recommending new project proposals and reviewing and reporting on existing funded projects at the annual meeting
• An Audit Committee shall be responsible for overseeing all fundraising and expenditures and report on same to annual meeting
• The Treasurer shall have authority to file necessary non-profit applications, obtain tax ID, set up bank accounts, receive and dispense funds to pay general operating and legal costs and to fund approved projects, pay required fees and file annual tax returns
• Organization may solicit donations, grants, etc. to fund approved projects
• Organization is intended to exist in perpetuity or might automatically dissolve with all assets going to Harvard once membership falls below a specified number (since we won’t live forever)
• Organization may be dissolved by 2/3 vote of members (and any remaining assets shall be given to Harvard or …?)
• Any vacancies on Board may be filled temporarily by majority vote of Board (until next annual meeting)
• Any officer may be removed by majority vote of Board
• By-laws may be amended by majority vote of members
Proposed Action Plan
Establishing a non-profit organization will cost an estimated $5-8,000, primarily for legal advice and filing fees. To obtain exemption from taxation, the organization will need to file an application with the IRS (Form 1023). If we intend to solicit donations in more than one state (i.e. where the organization is incorporated) we should file a Unified Registration Statement (URS), rather than register as a non-profit in a single state. The process is essentially the same for either registration. Assuming all decisions on incorporation, by-laws, election of officers & directors, etc. are completed, the filing and approval process may take from 6-12 months. In the meantime, while the application is being reviewed, the organization can fully operate, solicit donations, select/approve projects, disburse funds, etc. with the caveat that if the IRS rejects the application donations may not be tax deductible and the organization may not be exempt from income taxes. This is, however, a low risk.
To move ahead expeditiously, it’s suggested that we follow the following tentative action plan over the next 3 months:
1. Send this Summary to the Core Group of 10 HR71 classmates who’ve indicated a desire to be involved in organizing and funding Green Vietnam;
2. Send this Summary (after revisions from the Core Group) to the Larger Group of 30.
3. Obtain consensus on the organization and form a sub-committee to draft the bylaws and incorporation documentation;
4. Review and revise Green Vietnam proposal with John Berlow and agree on proposed initial budget and funding targets;
5. File request for tax ID (EID) and then solicit initial donations from Core Group (and others) to hire attorney and fund application and incorporation process ($8,000);
6. Circulate drafts to Larger Group of 30 for feedback and revision;
7. Edit and prepare final documents and application for tax-exempt status;
8. Have Larger Group of 30 nominate and elect acting officers and directors (until annual meeting);
9. Notify all class members about pending non-profit organization and Green Vietnam Project funding proposal;
10. Schedule initial members meeting to elect officers, directors and approve project funding. This could be done both physically and electronically, for those who could not attend in person.
