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AAMFT Corporate Structure and Salary Allocations

 

AAMFT is three legal entities, plus the AAMFT PAC.  The AAMFT, Inc., is a 501 (c) 6 organization. It is the entity to which members belong and pay dues, and as a (c) 6 organization, can spend on lobbying without running afoul of IRS rules.
 
The AAMFT Research and Education Foundation is a 501(c) 3 organization, which classifies it as a charitable entity.  Members (or others) can give tax deductible contributions to the Foundation, and this is the entity that has received grants in the past, such as for the Headstart Project from the Prudential Foundation, as well as some federal and other grant monies.
 
The AAMFT Property Corporation is a 501(c) 2 corporation. This is a type of entity recognized by the IRS as a holding company for real estate owned by non-profit entities. When AAMFT began a search to purchase a headquarters building, our attorneys and accountants advised us to set up an entity like this to hold and own the property for AAMFT.  
 
The underlying rationale for creating the Property Corporation was that AAMFT has cash reserves and investments, and there was a need to create a barrier between AAMFT’s reserves and any liabilities that come from owning property. This is done by putting the title to the building under the Property Corporation.  Such things as an elevator accident, someone jumping or falling off the roof, etc., could expose not only the building itself as an asset, but also any other asset of AAMFT—without having a Property Corporation.
 
AAMFT “owns” the Property Corporation.  The Property Corporation “owns” the building. This structure creates a liability shelter so that someone cannot reach beyond the Property Corporation and the assets and insurance that it holds to claim assets of the AAMFT, Inc.
 
AAMFT accountants and auditors set up a system whereby all employees, including the Executive Director, code their time to the various entities for which they are doing work.  Therefore, when a major renovation or lease negotiation, routine maintenance, or some other matter for the Property Corporation demands staff time, they record on their time sheet that amount of time to the Property Corporation, or alternatively, to the Foundation, or to AAMFT, respectively.  Since AAMFT has purchased the headquarters building we have had to repair or replace systems that had reached their useful life (the roof, the HVAC systems, etc.), that have directly involved the Executive Director in contract negotiation, review, and monitoring.   Salary costs are then allocated consistently with how they are coded in the timesheets, and as an accounting matter, that portion of salaries are then charged appropriately to the AAMFT, the Foundation, or the Property Corporation.  

All staff code time this way, but not all individual salaries for staff are reported on the 990.  Therefore, the only individuals for whom one can see this kind of breakout on the 990s are those whose salaries are listed there. This is a normal and customary business practice for any organization with a structure similar to ours, and was recommended to AAMFT by external auditors and attorneys.

 

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