Practice Directorate Executive Office
April 2000

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At its February 2000 meeting, the Council of Representatives authorized APA to take action to incorporate a companion organization that will be exempt from federal taxation under section 501(c)(6) of the Internal Revenue Code. The purpose of this action is to create a companion organization which will be able to engage in additional functions and activities which APA, because of its tax status, is prevented from doing. APA is exempt from tax under Section 501(c)(3) of the Internal Revenue Code. Because of this it operates under two areas of limitation. First, it may not expend more than one million dollars on lobbying expenses in any one year. Second, it must limit its activities to those that the IRS considers to be charitable, educational and scientific and may engage in only an insubstantial amount of other types of activities, such as promoting the mutual professional interests of its practitioner members.

The companion organization will be organized as a Section 501(c)(6) organization. Such organizations are not limited in the amount of lobbying they can undertake nor in their ability to address professional issues. Having this companion organization will enable the combined organizations to have substantially more ability to meet future challenges. Such companion organizations have been created by numerous other entities that are similar to APA and it is a well recognized method of addressing the needs of a profession while insuring that all operations are in full compliance with all applicable laws. Several other alternative structures were considered but were found to be financially more complicated and disruptive of APA's present structure and activities.

Because much advocacy work is now done within the Practice Directorate, the new organization will focus primarily on practice issues and will be supported by monies from the existing special assessment of licensed healthcare practitioners. The annual budget for the new organization is forecast to be approximately $5 million. The special assessment funds collected at the end of this year for the year 2001 will be directed to the companion organization and it will begin operating on January 1, 2001.

The companion organization will have shared leadership with APA and will involve the most minimal possible changes from the current organizational structure. Services for members will be enhanced and not reduced in any way. There will be virtually no financial impact on members and the other Central Office Directorates will in no way suffer decreased effectiveness or loss of ability to further their missions and goals.

CAPP will be the day-to-day overseer of the companion organization's activities and will report to a companion organization Board of Directors that will consist of the same members who constitute the Board of Directors of APA. CAPP will also continue to oversee those activities that are in its present scope but which continue to be located in APA rather than the companion organization. The Board of Directors will, in its companion organization role, regularly report to Council on the activities, decisions, etc. of the companion organization. Council will be free to advise the Board on any matter that it deems necessary.

The mission of the companion organization will be to promote the mutual professional interests of practicing psychologists in all settings through a wide range of advocacy activities focusing on policy makers, and consumers of services, and the overall healthcare marketplace. The bylaws of the companion organization will forbid its undertaking any activities that may adversely affect APA. Moving practice-lobbying activities into the companion organization will also permit other APA Directorates to engage in additional lobbying without exceeding the IRS cap on such activity. Further, if in the future, it is deemed necessary and appropriate to engage in similar professional interest activities for other APA constituencies, in addition to practicing psychologists, those activities could also be performed by a parallel companion organization.

It has not yet been determined what the name of the companion organization will be. Possible names will be considered and it is expected that recommendations will be considered by the Board of Directors in June and by Council in August.

All staff who provide services to the companion organization will be employees of APA and APA will be reimbursed for their services by the companion organization. APA will also provide office space, furniture and equipment and other services to the companion organization, for which it will be reimbursed at fair market value.