New York Nonprofit Revitalization Act

New York Nonprofit Revitalization Act

On December 18, 2013 New York Governor, Andrew M. Cuomo, signed into law the, “Non-Profit Revitalization Act of 2013” (“Act”). The Act, which becomes effective on July 1, 2014, was released with the intent to enact changes to the State of New York nonprofit laws enhancing governance and reducing the burdens on the State’s nonprofit organizations.

BACKGROUND

The Leadership Committee on Nonprofit Revitalization (“Committee”) was tasked by New York State Attorney General Eric T. Schneiderman in July of 2011 to “develop proposals for reducing the burdens on the nonprofit sector while strengthening governance and accountability”. The Committee, which consists of 32 nonprofit leaders from across New York State, issued a report dated February 16, 2012 which included 38 recommendations for the State to use to improve its nonprofit laws (“Report”). The Committee stated in a letter to the Attorney General on December 8, 2011 that “significant proposals that are implemented will reduce burdens, save taxpayer and charitable funds, and enhance the public’s trust in the nonprofit sector. The recommendations were used to form the Act which was passed by the Senate and Assembly in June of 2013.

REPORT RECOMMENDATIONS

A copy of the Report can be accessed at the healthcare services section of our firm’s website.

The recommendations included in the Report are broken up into three sections, (1) Reducing Burdens on Nonprofits; (2) Enhancing Governance and Maintaining the Public Trust; and (3) The Path Forward.

Reducing Burdens on Nonprofits

The recommendations in this section are broken down into two chapters:

    1. Building a Better Business Partnership which addresses continued problems associated with the State’s contracting processes and indicates that nonprofits are “essential” business partners for the State and should be treated as such.
  • Creating a More Hospitable Environment for Nonprofits which provides recommendations on modernizing laws and doing away with regulatory burdens.

Enhancing Governance and Maintaining the Public Trust

The recommendations in this section are also broken down into two chapters:

    1. Creating a New Statutory Roadmap for Oversight and Accountability is intended to provide clearer guidance for boards of nonprofit organizations to allow them to carry out their necessary functions and to improve governance on an overall basis.
  • Building Boards of the Future which will enhance board member recruitment practices to produce boards that consist of a more diverse set of individuals and provide a board educational framework which will keep board members fully educated with respect to their duties to enable them to carry out their board obligations more effectively.

The Path Forward

This final section stresses the importance of the Attorney General and the nonprofit community continuing to work together to have a common vision and provide a framework to follow prospectively.

KEY RECOMMENDATIONS

The website of the New York State Attorney General provides a summary of key recommendations included in the Act. These include, but are not limited to, the following:

    • Ensures sound financial management.
  • Prevents conflicts of interest.
  • Strengthens the Attorney General’s power.
  • Ensures board dependency.
  • Promotes good governance.
  • Streamlines and modernizes New York law to remove unnecessary burdens, save taxpayer dollars, and help nonprofits focus resources on providing services by:
  • Streamlining procedures for nonprofit mergers, property sales and corporate dissolutions.
  • Modernizing laws to allow nonprofits to conduct their affairs more efficiently.
  • Eliminating unnecessary and costly requirements for nonprofits forming in New York.

CONCLUSION

The Act includes substantial reforms for the State’s nonprofit sector aimed at streamlining processes and reducing the burden on nonprofits while also enhancing governance and nonprofit organization oversight. The Act makes a number of reforms to the State’s nonprofit laws, the first since the sector’s last overhaul in New York more than 40 years ago.

Questions or comments?
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For more information on the topics discussed or services we can provide, please contact:
Scott Mariani, JD, Partner
Practice Leader
973.898.9494 ? [email protected]

To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

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