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December 20th, 2013
Governor Cuomo Signs New York State Nonprofit Revitalization Act of 2013
On December 18, 2013, the "Nonprofit Revitalization Act of 2013" (the "Act") was signed into law by Governor Cuomo. The Act represents a major overhaul to New York's Not-for-Profit Corporation Law, the first of its kind in over 40 years.
The Act will apply to all nonprofit corporations incorporated in New York State. Some provisions of the Act will apply to nonprofit corporations that are registered to solicit charitable funds in New York State (even if they are not incorporated in NYS), as well as wholly charitable trusts. Most provisions are effective July 1, 2014.
Some of the major changes to New York's Not-for-Profit Corporation Law are:
- Financial Reporting and Audit Procedures - The Act includes a sliding scale for financial reporting and audit requirements based on gross revenues and support. With respect to nonprofits that are required to register to solicit charitable contributions in New York and have revenues in excess of $500,000, the Act creates enhanced oversight responsibilities to ensure that boards are aware of, and respond to, issues identified by auditors. Additional responsibilities are imposed on organizations with revenues in excess of $1M.
- Mandatory Conflict of Interest Policy - Every nonprofit incorporated in New York must adopt a conflict of interest policy.
- Mandatory Whistleblower Policy - Nonprofits with 20 or more employees and annual revenues in excess of $1M must adopt a whistleblower policy.
- Related Party Transactions - Nonprofits are prohibited from entering into transactions with related parties (including directors, officers and key employees, as well as their relatives) unless it can be determined that the transactions are fair, reasonable and in the best interests of the nonprofit.
- Board Composition and Compensation - Employees, officers and directors may not participate in decisions concerning their compensation. Additionally, effective January 1, 2015, employees will be prohibited from serving as board chairs.
- Elimination of Letter Types - Letter designations (Types A, B, C and D) are eliminated, so that each nonprofit will now be designated as either a "charitable corporation" or a "non-charitable corporation." Nonprofits with existing letter designations will not be required to make any new filings.
- Electronic Participation/Communication - In order to modernize board procedures and meetings, the Act authorizes electronic participation by directors who are unable to attend meetings in person (e.g., video conference, Skype, etc.). Nonprofits may use e-mail to transmit board and membership meeting notices and waivers of notice, and to enter into unanimous written consents.
While the Act provides much-needed modernization and updating of New York's statutes related to nonprofit corporations, it adds an entirely new set of rules which will need to be analyzed.
If you would like to discuss the Act and how it affects your organization, please contact Barbara E. Shiers at (212) 826 5526 or firstname.lastname@example.org, or any other member of the Frankfurt Kurnit Charitable Organizations Group.
Other Estate Planning Law Alerts
New York Extends Remote Notarization and Document Execution to January 29, 2021
By Executive Order 202.87 issued December 30, 2020, New York’s remote notarization and document execution procedures are extended through January 29, 2021. Read more.
January 12 2021
New York Implements Substantial Changes to Power of Attorney Law
On December 15, 2020, Governor Cuomo signed into law a long-awaited bill regarding New York’s Power of Attorney form, which will take effect in the summer of 2021. Read more.
January 6 2021
New York Extends Remote Notarization and Document Execution to January 1, 2021
By Executive Order 202.79 issued December 2, 2020, New York’s remote notarization and document execution procedures are extended through January 1, 2021. Read more.
December 16 2020