Cloud Security Alliance

Chapter SOP—Standard Operating Procedures and Best Practices

Rev.: 10-April-2018

Legal Formation for Your CSA Chapter

Chapters legally form for one of three reasons:

  • To open a bank account to accept and process monies. A bank may require legal formation. Individual banks and countries requirements differ, for what is required to open a chapter bank account.
  • To contract as a legal entity: For instance, to contract with CSA to allow the chapter to bring in Its own CCSK certified (by CSA) trainer.
  • To gain creditability with partners, sponsors and members.

Legal formation is not required by CSA.

Bank accounts are covered first since the question comes up so often.

Note: In the U.S., chapters can obtain an FEIN (Federal Employer Identification Number, also called an EIN) through the Internal Revenue Service (IRS) without filing for an independent 501C6.

The Cloud Security Alliance does not require chapters to legally form. However, legal formation is covered below for the Cloud Security Alliance, including the 501(c)6, for US tax exempt status.

Your chapter will need by-laws even if you are not a legal entity, and a sample of the CSA New York Metro’s by-laws are included at the end(Starting on Page 7).

1.Bank Accounts

  • Decide on the need for a bank account:

If your chapter is going to accept or pay out funds, a bank account will be required. Banking requirements vary by country and financial institution,on what is required to open a bank account for an association. If the Board of Directors decides that a bank account is the right strategy, then the Board can decide which bank to approach, and determine requirements to setup the account.

Individual personal bank accounts can possibly also be established with a primary and secondary owner within the board officers. This would be an alternative to opening it in the chapter’s name.

  • Establish more than one authorized signer:

Include a minimum of two signers on the bank authorization, so the bank account is not linked to only a single board member. Suggested signers: Treasurer/Finance board role, and the Secretary or President.

  • Reporting:

When a bank account is involved, establish regular financial reporting at board meetings.

  • Alternative: Avoid Handling Funds

Chapters may also decide not to have a bank account or to have money directly change hands. In this case, a sponsor is obtained for reciprocal free facilities, and any catering or other incurred expenses are also paid directly by a sponsor. The chapter would not charge for events or membership, so no monies would be collected.

This option can be applied for a startup chapter.

2.Legal Formation Across Countries

Countries and states within will each have unique requirements. A chapter will need to determine what their chapter and region requires to operate.

2.1.The Cloud Security AllianceLegal Formation

CSA Global is legally formed as a not-for-profit, under U.S. incorporation as a 501(c)6 . This is a US government tax entity, which is typical for professional associations such as CSA.

2.2.Chapter Legal Formation

CSA chapters are affiliated under the CSA Global umbrella, and independent legal formation is not required by CSA. US Chapters can file under the Cloud Security Alliance umbrella.

If a chapter does form legally

  • Chapter becomes an independent legal entity(but still chartered under CSA Global)
  • Chapter board notifies the CSA Chapter Coordinator of legal formation details

3.Chapter Bylaws

Bylaws define the procedures of the organization and are approved by the directors of board.

They typically include how the chapter is organized, the power and election of the board’s directors and officers, how vacancies will be filled, how meetings will be held for members and the board, and what fiscal period is set.

  • Chapters will adapt bylaws to their individual needs. They should be specific enough to guide the chapter, and simple enough to meet chapter needs.
  • All chapters should have bylaws documented and available online to the chapter’s member community. Bylaws are reviewed annually for changes.
  • A bylaws template is provided based on the CSA NY Metro Chapter. (At the end of this document)

4.Articles of Incorporation

Articles of Incorporation define the legal identity of the organization—when a new legal entity is formed. .

In the U.S., they are governed by, and filed under the Secretary of State, under the Corporations division, for the state in which that non-profit is incorporated.

These are required for chapters ONLY if forming a separate legal entity (refer to the last section in this guide if that is the case).

Different countries will follow different procedures and legal requirement if the chapter creates their own legal entity.

5.US 501(c)6 Tax Exemption Umbrella under the Cloud Security Alliance

US Chapters can gain tax-exempt status under the Cloud Security Alliance’ 501(c)6 group exemption umbrella, when these conditions are met:

The US Chapter must

  1. Authorize the Cloud Security Alliance in writing to include it in the group exemption
  2. Place itself under the general control and supervision of the Cloud Security Alliance which requires the US Chapter to
  3. Submit an annual report, and
  4. Adopt a by-law that allows the Cloud Security Alliance to remove its board or force its dissolution for non-compliance with general requirements of chapters or unsatisfactory performance or activities inconsistent with the goals and principles of the Cloud Security Alliance.
  5. NOT be organized as a Private Foundation
  6. Adopt a fiscal year of January 1st – December 31st
  7. Organized in the United States
  8. NOT permitted to engage in activities in any foreign country
  9. Submit organizing documents to the Cloud Security Alliance for review and approval
  10. File for and obtain its own Federal Employer Identification Number (FEIN) and use the FEIN in all filings
  11. NOT file for tax exemption

The chapter will receive the Cloud Security Alliance’s tax-exempt status when these requirements are met.

Note: Donations made to a 501(c)6 organization are not deductible.

6.US IRS Guidelines to Form a 501C6 Organization

Chapters who wish to form their own legal organization may do so.

Requirements vary by State

If a chapter forms their own, there is a Corporation commission under each State’s Secretary of State, for doing so. Requirements differ by state, but need to have by-laws and articles of incorporation. It involves a bit of work, and fees paid to the State for the filing.

6.1 Start-up Chapters

CSA advises not to do this for start-up chapters. The chapter is responsible for their own filing and fees.

6.2 FEIN Filing

Before or after the chapter has completed the 501C6 process for the state where they reside, they can file with the IRS for the FEIN—the business equivalent of a US Social Security Number (SSN).

You can apply for a FEIN from here: You can also call the IRS and get the number over the phone.

6.3. Form 1024 Filing

Apply usinga form 1024 that is available online at your local Corporation Commission (the State agency operating through the Secretary of State).

Basic instructions follow, separate from the Corporation Commission under the Secretary of State filing in your state.These can be easily found online.

6.4. A 501C6 as primary category for associations

IRS calls them “business leagues”. It allows organizations to operate as a not-for-profit, without paying taxes on revenue, up to a set amount. An annual tax filing is required.

A 501C3 is a charity organization or foundation

It carries different requirements and not applicable to CSA chapters.

6.5 Following Section 501(c)(6) of the Internal Revenue Code

Provides a federal tax exemption for business leagues, chambers of commerce and other professional leagues that are not organized for profit. To fall under this exemption, your organization's mission must be to promote the common interest of the organization, and not benefit any particular member. Several steps that must be completed to acquire 501(c)(6) status:

Step 1

Draft Articles of Incorporation for the organization. Include the purpose of your organization, and specify how the assets of the organization will be distributed if the organization dissolves. In order to comply with Internal Revenue Service regulations, state that the assets will be distributed to another 501(c)(6) organization if your organization closes.

Step 2

File the Articles of Incorporation in the state where your organization is located. Visit the website for the Secretary of State and you will likely find the appropriate forms, filing fees and directions for filing. Articles of Incorporation may also be known as a "certificate of incorporation," "charter document" or "articles of organization." Keep a copy of the articles for your records.

Step 3

Download Form 1024 for recognition of exemption from the IRS website. Click on "Charities & Non-Profits," then "Other Non-Profits." From there, click on "Application for Recognition of Exemption," and then "Form 1024." Also download the instructions for the application from the same page.

Step 4

Prepare Form 1024. Select "501(c)(6)" on the first page, and then follow the IRS instructions that you downloaded. Provide as much information as possible about your organization's activities, board members and budget. Be as detailed and clear as possible. Check the "Procedural Checklist" to ensure that you have complied with all filing requirements and have included the appropriate attachments.

Step 5

Submit the application to the IRS. Download Form 8718, User Fee for Exempt Organization Determination Letter Request, to determine the fee and where to file the documents. On the IRS website, type "Form 8718" in the search box and click on the first result. Download the form, and mail Form 1024 to the address listed, along with the required fee.

Step 6

File Form 990 on an annual basis with the IRS. Failure to do so may result in fees or loss of exemption. Include financial information and updates to your organization's activities on the form. Further, check with your state treasurer to find out if there are any filings or taxes that must be made within your state.

6.6. US References & Resources

LegalZoom at

  • LegalZoom is included only as a reference for the instructions in Step 1-6 that are included above. They offer this service for a fee, but this is not a recommendation or endorsement.

The U.S. Internal Revenue Service (IRS)

  • IRS: Business Leagues
  • IRS: Publication 557

“Tax-Exempt Status for Your Organization” The 501C6 is covered on page 48.

**END**

SAMPLE BY-LAWS FOLLOW ON THE NEXT PAGE

Cloud Security Alliance Chapter SOPFor inputs, email us at Page 1

CSA Metro New York Inc.

a New Jersey nonprofit corporation

BYLAWS

ARTICLE I

NAME AND OFFICES

1.1 Name. The name of the corporation shall be CSA Metro New York Inc., a New Jersey non-profit corporation, formed on July 24, 2011 under and by virtue of Title 15A:2-8, the New Jersey Domestic Nonprofit Corporation Act (the “Act”), of the laws of the State of New Jersey (hereinafter called the “Corporation”).

1.2 Principal Office. The location of the principal office of the Corporation shall be c/o Metrosite Group, 450 Seventh Avenue, Suite 2100, New York, NY 10123, or such other place as the Corporation’s Board of Directors may from time to time determine.

ARTICLE II

PURPOSE

2.1 Purpose.

  1. The Corporation is not, as of the date of its formation, subject to the provisions of Section 501(c) of the Internal Revenue Code of 1986, but may, at a later date, with the approval of the Board, seek to have such Section apply to the Corporation.

b. The Corporation is organized and shall be operated to promote the use of best practices for providing security assurance in reducing and identifying threats within cloud computing and the Corporation may do and engage in any and all lawful activities that may be incidental or reasonably necessary to any of these purposes, and it shall have and may exercise all other powers and authority now or hereafter conferred upon non-stock corporations in the State of New Jersey, including, but not limited to, the following:

(i)to distribute funds and make contributions to other organizations and individuals as part of its role in supporting the purposes outlined in Section 2.1(b);

(ii)to take by bequest, devise, gift, grant, purchase, lease or otherwise and to hold, manage and use for the purposes herein set forth, any property, real or personal, tangible or intangible, or any undivided interest therein; and to convey, sell or otherwise dispose of such property and to invest, reinvest and manage the same, including, but not limited to, the right to vote any stocks so held, in such manner as in the judgment of the Board of Directors of the Corporation will best promote the Corporation’s purposes;

(iii)to engage in related social, literary, or educational activity; and

(iv) to do and perform all acts and things which are legitimate and are reasonably calculated to carry out the purposes of the Corporation.

If the Corporation becomes subject to the provisions of Section 501(c)(3), then, notwithstanding any other provision of these Bylaws, the Corporation shall not carry on any other activities not permitted to be carried on: (i) by a corporation exempt from Federal income tax under Section 501(c)(3) of the Code; or (ii) by a corporation, contributions to which are deductible under Section 170(c) of the Code.

2.2 Matters Relating to Charter from Cloud Security Alliance.

The Corporation is chartered and shall operate as an authorized affiliate of Cloud Security Alliance (“CSA Global”) and shall operate in accordance with the CSA Global bylaws and regulations of CSA Global and shall otherwise undertake to remain in good standing as a chapter of CSA Global. Under its charter with CSA Global, the Corporation has a geographic territory consisting of: the five boroughs of New York City, Long Island and Westchester County and Rockland County, New York, the State of New Jersey (other than Atlantic City and the New Jersey shoreline regions) and all of the State of Connecticut.

2.3 Voting Members of the Corporation.

a.The Corporation shall have members (“Voting Members”) who satisfy the conditions and qualifications set forth in this Section 2.3. Voting Members shall not be owners, but shall in the aggregate constitute the body which elects directors of the Corporation. As used herein, a “Voting Member” is a registered individual member of the Corporation who possesses a member identification number and who has been a member in good standing (including as to the payment of dues, if applicable) for at least six (6) months.

b.To the extent practicable, meetings of the Voting Members shall be called, noticed, convened and conducted as a meeting of stockholders of a New Jersey stock corporation.

c.The Directors shall be elected by the vote of the Voting Members of the Corporation at a bona fide meeting of the Voting Members. In the event there are multiple candidates or multiple offices to fill, those candidates receiving the most votes will be elected to the respective positions open on the Board.

ARTICLE III

BOARD OF DIRECTORS

3.1 Responsibility of Directors. The business, affairs and property ofthe Corporation shall be managed by the Directors of the Corporation (hereinafter sometimes collectively called the “Board” or the “Directors”). (The “Directors contemplated in these Bylaws and in the operation of the Corporation are the “Trustees” contemplated the Act.) The Directors shall have authority to make the final determination on all policies, budgetary matters and other significant activities related to the management of and operations of the Corporation. The Directors shall, in addition to, and not in limitation of all of the general powers conferred upon them by law and necessary for or incidental to the management of the business, property and affairs of the Corporation, have the following powers:

(i)To select and remove any of the officers, agents or employees of the

Corporation and to determine their respective duties, and to employ such persons for such duties as the Corporation may require;

(ii)To create and/or appoint standing Committees and to determine their respective duties, subject to the provisions of these Bylaws; and

(iii)To conduct, manage and control the affairs and business of the Corporation; and to make rules and regulations not inconsistent with law, with the Certificate of Incorporation, or with any other provision of these Bylaws.

3.2 Number and Qualification of Directors.

a.Number. The Board shall at all times consist of at least 5 members and not more than 15 members. Board Members shall be selected individually and not by organization or pursuant to any guarantee, assurance or sponsorship.

b.Qualifications. Each Director shall meet the qualifications as determined by the Board from time to time. Board members are selected individually and not as representatives of their employer or affiliate. Board positions are not granted or guaranteed on account of sponsorship or contributions.

3.3 Term and Appointment of Directors.

a.Term of Directors. Subject to the other provisions of Section 3.3(f), the initial Directors shall hold office for two (2) years or until their successors have been appointed and qualified. At each annual meeting thereafter, with respect to any vacancies in the Board, the Board shall appoint Directors to hold office for staggered terms of two (2) calendar years or until their successors have been appointed and qualified. A Director may resign by written notice to the Board. Such resignation shall be effective upon receipt thereof by the Corporation or at such subsequent time as shall be specified by the Director in the notice of resignation. The written acceptance of a resignation by the Board shall not be necessary to make it effective.

b.Vacancies. Any vacancy, however caused, occurring in the Board shall be filled by the majority vote of the remaining Directors of the Board. A Director so appointed shall hold office for the balance of the unexpired term he or she has been appointed to fill, or until his or her successor shall have been appointed and qualified.