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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 email@example.com, H. Sujin Kim at (212) 705 4828 or firstname.lastname@example.org, or any other member of the Frankfurt Kurnit Charitable Organizations Group.
Other Estate Planning Law Alerts
Is Now the Time to Revisit Your Estate Plan?
On December 22, 2017, the Tax Cuts and Jobs Act (the "Act") was signed into law. The Act temporarily doubles the estate, gift and generation-skipping transfer ("GST") tax exemption amount.
January 4 2018
New Jersey Proposes Estate Tax Repeal
In a joint appearance on September 30, 2016, Governor Chris Christie and legislative leaders announced a bipartisan agreement to repeal the New Jersey Estate Tax.
October 17 2016
IRS Proposes Rules to Deny Estate and Gift Tax Discounts for Family Businesses
There's important news for family business owners and their heirs.
August 23 2016