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DMCNY President: Membership Would Get Final Say

Though it may not be required by law, the Direct Marketing Club of New York's president wants the full membership to vote on whether to become a chapter of the Direct Marketing Association, if it reaches that point.

Labeling the law issue a “gray area,” Vito Fortuna said, “the intention was to let the board come up with a decision and then present it to the membership. The membership will have the final vote.”

The board voted 7-6 March 26 to continue to “explore” the notion of becoming a DMA chapter. The board's next meeting is April 22.

Meanwhile, several past presidents of the club have formed a coalition to drum up ideas on how to keep the club — which suffers from declining membership — afloat and unaffiliated.

Earlier this month, DM News reported that under Section 903 of New York State Not-For-Profit Corporation law, if the DMCNY board approves a plan for merging or consolidating with the DMA, it and the DMA must first provide notice of a meeting about the plan to their respective members along with a copy of the plan of merger or consolidation. The plan then needs to be approved by two-thirds vote of the members of both organizations.

However, the transaction between the DMCNY and the DMA, as described in a proposed “affiliation agreement” obtained by DM News outlining the status of the DMCNY as a DMA chapter, may not qualify as a merger or consolidation under Article 9 of the law.

For two nonprofits to be considered as having merged or consolidated, one or both of them must cease to exist, said David Shevlin, a New York-based attorney and expert on the state's nonprofit law. In a merger, one organization is absorbed into another, while in a consolidation, two organizations combine to form a new entity.

While not commenting specifically on the DMCNY's relationship with the DMA, Shevlin said that as long as two organizations maintain separate certificates of corporation, bank accounts, assets and boards of directors, as well as file taxes separately, they would not be considered to have merged or consolidated.

According to the proposed affiliation agreement, the DMA would provide the club with administrative services in exchange for 47 percent of the revenue generated by club membership dues. The split on revenue is described as a fee for services provided by the DMA.

Services described by the proposed agreement include banking and financial services; granting its members certain benefits available to full DMA members; holding one DMA event in the club's area annually; undertaking membership renewal and invoicing; creation of a newsletter; listing of DMCNY members in the DMA roster and DMCNY events in the DMA calendar; development of an operations manual; and government affairs briefings.

In addition, the DMA and DMCNY would split costs on “general services,” including programming, logistics, promotions and marketing, budgeting, roster maintenance and legislative and regulatory lobbying.

Even so, the DMCNY would retain its board of directors, according to a DMA spokeswoman. The proposed agreement explicitly states that the DMA and the club “are and intend to remain independent parties” and that neither can act as legal representative of the other.

The DMA spokeswoman also said the club becoming a chapter of the DMA would not represent a merger or consolidation. However, she said she didn't know whether Article 9 applied or whether a membership vote would be required for the club to become a DMA chapter.

Amid the ongoing debate, the club leadership is working to revitalize its flagging membership. A coalition of former presidents, dubbed the “Council of Past Presidents,” will present itself to the DMCNY board at its April 22 meeting, said Ralph Stevens, a past club president.

“This whole group has run the club before,” said JoAnne Dunn, another past club president. “We've been through challenges and good times. We're pooling our experience to create a task force to help the club move forward.”

Long-standing club members have said they favor the club staying unaffiliated and have pledged to work to keep it viable. One former member said he is considering renewing his membership even though he has retired and moved away from the New York area.

“They need the membership right now,” said Tony Ambrose, who now lives in New Hampshire.

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