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INTERIM BOARD OF DIRECTORS
Pacifica Foundation
2390 Champlain St. NW
Washington, DC 20009

Re: Initial Review of Proposed Amended Bylaws

As you are aware, we have been asked to review, analyze and comment on the current draft of the proposed amended Bylaws for the Pacifica Foundation. We have been advised that in this process we were permitted to make those revisions to the Bylaws that we deemed appropriate. This has been a lofty task, made much more difficult by the very limited time frame we were provided to perform our analysis. We feel it imperative to note that, in our opinion, this short time frame (approximately 2 weeks) has inhibited our ability to do as thorough of an analysis of the "key" bylaws as we would have liked or which may be fully warranted. Therefore, our comments are focused on those major issues that we have been able to quickly identify and analyze.

To facilitate our efforts in this regard, we made a presumption that the version of the Bylaws we received, which were labeled "key," was both the most recent draft of the Bylaws and also represented a general consensus among the interim Board and the local area boards as to the Bylaws' terms. To gain an understanding as to the motivations and concerns resulting in the proposed Bylaw provisions, we also spoke, and/or exchanged emails, with Leslie Cagan, Rob Robinson and Carol Spooner of the interim Board to obtain background information. Attached you will find two versions of the proposed Bylaws revised by our office for your review and comment. The first version "Bylaws KWF 011703 RED" has been red-lined, or marked-up, to show the exact changes between the "key" version of the bylaws and our revised draft. As there has been some shifting of various articles and sections you may find this version difficult at times to read. The second version "Bylaws KWF 011703 CLEAN" shows our revised draft of the bylaws without the markup comparison. We believe the latter version is much easier to read and recommend that you use it as your primary source for reviewing our comments, while utilizing the red-lined version for reference. While we will refrain from itemizing here each of the revisions we have made, we will briefly describe our method for approaching Pacifica's bylaws and the general nature of our comments and revisions. This description is not, and should not be construed as a full statement of all the revisions set forth in our draft and should not be used as a substitute for reviewing our revised draft in full.

Our Method for Analysis
It is our belief that the primary purposes of Pacifica's Bylaws should be to set forth: (1) the general powers of each of its levels of participants (Members, Delegates and Directors); (2) the process/procedures by which representation on the controlling bodies of Pacifica (the Local Station Board and the National Board of Directors) will be effectuated; and (3) the process/procedures by which actions can be taken by the Members, Delegates and Directors, such that a party unfamiliar with Pacifica's bylaws would be able to clearly discern this information from its Bylaws. Keeping these goals in mind, we reviewed and analyzed the "key" Bylaws seeking consistency in terms, clarity with regards to rights and processes and conformity with applicable laws and regulations and uniformity in structure. In reviewing the Bylaws, we also based some of our revisions on our opinion, based on our actual work or experience with other companies and non-profits, that said changes would be more practical, efficient or cost-effective for Pacifica.

The Nature of Our Revisions and Comments
As the draft of the Bylaws we received was a collection of input, and a combination of provisions drafted, from a variety of sources, some inconsistencies existed throughout the documents, for example, in the manner in which items were referenced and the terms used for referencing them. As a result, our initial review sought to remedy any such inconsistency and to develop a greater continuity to the document.

Other changes we have recommended add or revise a provision in the "key" draft to conform with California law. Additions/revisions of this nature include, but are not limited to:

• the inclusion of a member's right to call a special meeting.
• the inclusion of annual reports to be provided to the Secretary of State and Attorney General.
• the clarification of Pacifica's power to indemnify its Directors, Delegates or other agents, and limits on said power.
• the inclusion of the requirement to have a Chairman of the Board or President (Executive Director) Secretary and Chief Financial Officer (Treasurer).
• the raising of the limit on disclosures in an annual statement of indemnifications or advances made to a Director, Officer, or Delegate without Member approval.

The majority of the revisions we have recommended seek to add or clarify a right or process expressed in the "key" draft or to remove ambiguity. Revisions of this nature include, but are not limited to, clarification of:

• membership eligibility.
• membership affiliation with a specific local station board.
• the process for calculating the expiration of a membership term.
• the general rights of members.
• the process for how written ballots to Members will be prepared, solicited and counted.
• the requirements for public participation in meetings and notice requirements.
• the election process, nomination procedures and election time frames associated with the election of the Delegates.
• eligibility for serving as a Delegate.
• the voting and approval processes for amending the bylaws or articles.

A Note About Standing Committees.
Although the "key" bylaws we received contained placeholders for a coordinating (executive?) committee, finance committee, governance committee, programming committee, technology committee, personnel committee and advisory committees, there was no information as to the proposed composition and duties of each committee and it was unclear as to whether a consensus had been reached by the various local area boards and national board members on these descriptions. We have addressed this by providing language which gives the Board the right to create standing and advisory committees by separate Board resolution without specifically addressing each of these committees.

A Note About the Officers.
Similar to the Standing Committees, the "key" bylaws we received contained placeholders for officers, however, there was no information as to the proposed officer positions other than a desire to limit the terms of an officer to two years and to possibly set forth the specific duties of the officers in a later Board resolution. We have, however, included language regarding the requirement for officers pursuant to California law with brief possible descriptions of their duties for your review and comment. This proposed description should be compared against Pacifica's current description of these officers' roles and responsibilities and amended as appropriate. In the alternative, we could revise our language to provide general descriptions with a caveat that more specific duties may or will be set forth in a Board resolution. The benefit to the latter option is that the Board would not have to amend its Bylaws in order to alter the responsibilities of an officer.

A Note About Associate Stations and Affiliate Stations.
There is a reference to associate stations and a reference to affiliate stations in the "key" bylaws and the rights that said stations may have to representation on the local station board level and/or national board level. Although we have revised the provisions relating to these stations, based on our assumption that Pacifica wants said stations to have some involvement in its government role, we do not render an opinion as to the advisability of their involvement in Pacifica's government. We have, however, suggested alternative means for their involvement in Pacifica's corporate structure, which alternatives we believe to be more practical without exposing Pacifica to significant control or input by radio station boards other than its own.

A Note About Single Transferable Voting.
As it is our understanding that Pacifica wants the delegates to the local station boards to be elected using the single transferable voting method, we have researched and prepared provisions in our revised draft providing for such a voting method. We did, however, want to advise you that such a manner of voting is neither required nor prohibited by California law. Furthermore, it is a highly complex system for counting votes which cannot, in our opinion, be reliably performed by hand. As a result, it will likely be a more expensive method of voting as it is our belief that Pacifica will be required to either hire a balloting service with established procedures in place to assist with each election or to acquire a computer software program, (if one is currently available) and invest in additional equipment and training to prepare and count the ballots itself.

A Note About Proxies
Although we agree that directors and delegates should act personally and not via proxy, in light of the very large size of your potential membership, we would recommend that members be permitted to act via proxy to ensure quorum.

A Note About Transitioning the Board and the LSBs
One issue we have not yet addressed is the manner by which the interim board and the local station boards will transition upon the adoption of the new bylaws. It would help us in our analysis of this issue to learn what, if any, proposals have been discussed and the various sizes of the current boards.

The Suggested Substantive Changes

Reduction and Uniformity in the Sizes of the National Board of Directors and the Local Station Boards of Delegates.
In our opinion, a board should be large enough to ensure a diversity of representation, while not being so large as to be unwieldy. In addition, it is our view that optimum board size should take into consideration several factors, predominantly: effectiveness, economics and efficiency.

Pursuant to the "key" draft of the Bylaws, each local station board would be allowed to establish a local station board in a size of each of their choosing ranging from 16 to 36 delegates. In our experience, a board of these proportions is not only unnecessary, but frequently meets with greater than usual challenges in managing board activity and obtaining consensus among its delegates, resulting sometimes in significant delays in board action. In addition, accommodating such a board (considering costs associated with travel, facilities for meetings and telephone conferences, providing requisite notices, and reimbursements) can make having a large board quite expensive. We strongly recommend a smaller board of delegates with a fixed number of delegates, which board size would then be adopted by all of Pacifica's radio stations. In our view, all local station boards should be uniformed in basic structure so that there is a continuity in Pacifica's three-tier (member-delegate-director) system regardless of the local radio station area with which one is affiliated.

Specifically, we recommend a local station board of 13 delegates (assuming that no one is superstitious). Each board would still be able to maintain Pacifica's apparent desire for a ratio of 3 Listener-Sponsor delegates for every Staff delegate for a total of 12 delegates. Further, since we advise against boards of even numbers as they tend to increase the likelihood of a tie vote and a possible stalemate by the board on any given issue, we would recommend that one additional delegate be added who is elected by the listener-sponsor members and the staff members voting together. We are open to suggestions for how the delegate will be elected. We are also in need of recommendations for how to replace an open Delegate seat that is vacated mid-term, preferably (for expense purposes) without the requirement of another election.

The same concerns regarding the expense and practical functioning of large boards also applies to the size of the national board, which board we recommend be reduced from 20 station-elected directors and 3 at-large directors to 15 station-elected directors (3 from each station - 1 Staff Director and 2 Listener-Sponsor Directors) and 2 at-large directors for a total of seventeen directors. Again, we believe the costs of making arrangements for a large board, including traveling, telephone conferences, notices, etc. combined with the efficiency of a smaller board make having a smaller board more practical and cost-effective. Again, we strongly believe that Pacifica, especially since it is a non-profit, should work to minimize the financial/administrative burden of its system of membership and government. Instead, we believe that any savings that could be generated by a reduction in size could be better spent, and frankly should be spent, on Pacifica's programming and other projects. We believe that many of the measures we have recommended, including the reduction in size of the local station boards and the national board, will help to facilitate a cost-effective government.

Removal of Specific Diversity Quotas or Set-Asides
The Board will also observe that we have removed the diversity requirements which established specific race and gender quotas for the selection of Delegates and Directors and replaced them with what we consider to be a strong statement in favor of equal opportunity representation. Although we agree that a policy of inclusion could enhance and further Pacifica's mission, as set forth in its Articles of Incorporation, it is our opinion that affirmative action quotas and set-asides that favor people of color and women, even in the non-profit context, will likely be considered illegal.

There has long existed a tension between affirmative action initiatives and the Fourteenth Amendment of the Constitution and its guarantee of equal treatment to all citizens. The United States Supreme Court noted this tension when it addressed the issue of racial quotas in 1978 in the case of Bakke v. University of California at Davis¹. In said case, the Supreme Court found UC-Davis' racial admissions quotas illegal and declared racial quotas unconstitutional. Later in 1989 in Richmond v. Croson² , the Supreme Court further tightened affirmative-action guidelines by mandating that strict tests for the legality of quotas be implemented (in this case for the awarding of city government contracts to minority- owned businesses.) The Supreme Court required that any affirmative action program be narrowly tailored to remedy the effects of prior discrimination. This finding has been interpreted to permit narrowly tailored racial quotas only where there has been demonstrated a prior pattern of discrimination by the entity seeking to institute said quotas.

Clearly, the battle over the use of affirmative action measures and the promotion of diversity continues to rage at both the legislative level (i.e. 2000's proposition 209) and at the judicial level (see Grutter v. Bollinger³ - a case the Supreme Court has recently agreed to consider regarding quota systems in use by the University of Michigan admissions department). Although the majority of pivotal cases have involved admissions to educational institutions or employment with for-profit companies, this does not completely preclude the application of findings such as these to non-profits, such as Pacifica, especially where the proposed quotas could be interpreted as disqualifying eligible individuals from positions of control and authority in Pacifica solely on the basis of race or gender, which disqualification action may also be viewed as contrary to public policy.

In addition to the growing federal prohibition against what appears to be all but the most narrowly tailored quotas or set asides, we believe that California's Unruh Civil Rights Act⁴ provides an additional restriction against racial or gender based quotas. The Unruh Civil Rights Act specifically provides that:

"[a]ll persons within the jurisdiction of this state are free and equal, and no matter what their sex, race, color, religion, ancestry, national origin, or disability are entitled to the full and equal accommodations, advantages, facilities, privileges or services in all business establishments of every kind whatsoever."

Although we have not had sufficient time to undertake an in-depth review of federal and state law regarding the impact of affirmative action quotas on the business practices of a non-profit, our preliminary findings suggest that, in addition to being potentially violative of federal and state laws and viewed as contrary to public policy, such a quota may also jeopardize a non-profit, such as Pacifica's, eligibility for, and/or continued receipt of, government grants and funding. Pacifica should be mindful that as recipient of federal and state grants and funds, it is also likely that it has been, or will be, asked to certify as part of an application for any such grant that it complies with local, state and/or federal regulations regarding equal opportunity participation in its organization. For example, the Corporation for Public Broadcasting, as part of its funding requirements, requires all broadcasters to certify that they comply with all federal equal employment opportunity regulations. Racial or gendered-based quotas set forth in Pacifica's bylaws, a key charter document which is available to the public, even if unrelated to employment, could be interpreted to contradict any certification that Pacifica may make with regards to its commitment or compliance with equal opportunity laws and regulations. At minimum, the existence of said quotas could create the appearance of impropriety or misconduct by Pacifica raising the possibility of an undesired audit or investigation by an authority which has oversight over it.

In addition, we are not, at this time, sure of the impact that the inclusion of such quotas would have on your current tax exemption status. Although neither the IRS' application for recognition of exemption nor Section 501(c) (3) of the Internal Revenue Code specifically address the issue of equal opportunity as a criteria for exemption status, without further research we are unable to definitively advise that racial or gender-based quotas will jeopardize, or otherwise negatively impact the maintenance of, Pacifica's tax exemption recognition if said quotas are found to violate state or federal law. However, we also cannot advise that such quotas would have no impact on Pacifica's tax exemption status. We do know that the U.S Supreme Court in Bob Jones University v. U.S.⁶ indicated, in its decision to uphold the IRS' determination to revoke the University's 501 (c)(3) status, that both the courts and the IRS have acknowledged that it is the intent that entitlement to tax exemption be based in part on said organization's meeting of certain standards of charity and restraint from purposes that are illegal or contrary to established public policy. We strongly recommend that further research in this area take place, if contrary to our recommendations, the Board decides to further pursue the institution of the proposed racial and gender quotas.

Based on the above, we believe that setting affirmative racial and gender quotas in Pacifica's bylaws potentially exposes it to an unnecessary risk of litigation and/or further scrutiny by governing authorities. As has already been discussed among you, diversity quotas could also expose Pacifica to a lawsuit by an individual claiming that Pacifica's quotas discriminated against him. None of the above, however, means that Pacifica is prohibited from adopting and enforcing policies that promote and encourage the full participation of people of color and women. In our research of this issue, we have reviewed several bylaws, including those for non-profit organizations that have as part of their mission the furtherance of an agenda in favor of people of color. None of the bylaws we reviewed provided for quotas or set-asides. Instead they rely on mission statements indicating their desire to promote diversity. Others establish diversity committees to monitor diversity and promote greater participation by woman and people of color. Indeed, we have suggested the following policy statement for inclusion in Pacifica's Bylaws, which statement, in our opinion, clearly sets forth Pacifica's mission to embrace and actively promote diversity, without specific references to quotas:

The Foundation is enhanced by the full and effective involvement of all Members regardless of race, color, sex, age, religion, national origin, disability or sexual orientation. The Foundation strongly encourages all of its radio stations, staff, Members, Delegates, Directors and Officers to promote diversity among its Members, volunteers, and employees as well as among its Delegates and the Directors to the fullest extent permissible, subject to applicable federal and state laws and regulations.

We have also in the Bylaws retained the ability of a delegate candidate, at his or her discretion, to indicate his/her racial/ethnic heritage and gender which may then be taken into consideration by a member entitled to vote for said candidate. To encourage additional female or minority candidates, local station boards could consider the creation of a diversity or campaign committee, which could have as one of its responsibilities the solicitation of female and minority candidates for consideration by the members as delegates.

Board Review and Comment Again, the attached documents reflect our initial comments and recommendations to the "key" bylaws based on what we understand to be Pacifica's desired structure for management and power and what we consider to be sound, reasonable, cost-effective measures. However, to proceed, we require your input with regards to the proposed revisions, especially considering that some of them reflect more of a policy or business decision rather than a strictly legal determination.

Based on the very short time frame we are working under, we require your collective comments and instructions by no later than Wednesday, January 22, 2003. As this is a work in progress, we reserve the right to continue to make minor revisions to the document pending your January 23rd response. In the absence of your direction, we will default to our recommendations in our preparation of the final version of the bylaws, which we are currently proposing to submit to you for review by Tuesday, January 28, 2003.

Based on my limited dialogue with some of the Directors, I have little doubt that at least one of our proposed revisions and several of our deletions will be controversial. Indeed, it is my understanding that the entire process to date has required substantial effort and compromise by the entire Board. Let me emphasize, however, that the purpose of bylaws is to establish the procedures for governing and operating the Foundation's activities and conduct. Bylaws serve primarily three functions:

1. To provide rules for matters not covered by statute;
2. To alter specific default rules that are controlled by statute in the absence of a contrary bylaw, and;
3. To provide Pacifica's Board of Directors, Officers and advisers with a quick and ready reference of the governing laws and rules for the Pacifica's procedural operation.

By their nature, bylaws are procedural, not substantive. Consequently, I would counsel the Board that careful effort should be given to prevent the current debate from wandering beyond the specific purpose of the assignment. I commend all of you for the efforts made to date and look forward to working with the Board in formulating a final product.

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• The bylaws draft - clean version [ html - 106kb ] [ MS Word version - 235kb ]
• The bylaws draft - red-lined version [ html - 180kb ] [ MS Word version - 293kb ]