The New York Non-Profit Revitalization Act of 2013
The Act contains significant updates to
the existing New York State laws, which
govern nonprofit organizations within
the state, “requiring that nonprofits
enhance their oversight efforts and
tighten governance measures.” (Root,
Cooney, Pelletier)
According to experts, one of the major purposes
of the Act is to revitalize the not-for-profit
industry within New York State. It does this by
simplifying, modernizing and more clearly and
succinctly defining internal procedures with regard
to nonprofit organizations.”
According to experts, one of the major
purposes of the Act is to revitalize the
not-for-profit industry within New
York State. (Carter, Fortgang) It does
this by simplifying, modernizing and
more clearly and succinctly defining
internal procedures with regard to
nonprofit organizations. (Carter, Fortgang)
The end goal is to make nonprofit
organizations existing within New
York State more accountable and their
procedures ultimately more transparent.
Some of the highlights of the Act
include:
•
The Act will require every
nonprofit to adopt a conflict
of interest policy.
•
The Act will require nonprofits
with 20 or more employees
and more than $1 million in
annual revenues to adopt a
whistleblower policy.
•
•
The Act will raise the gross
revenue thresholds that trigger
both an independent CPA audit
and an independent CPA’s
review of a nonprofit’s financial
statements.
While significant corporate
events (such as exchanges,
mergers and changes of
purpose) currently require
court approval followed by
attorney general review, under
the Act these events will require
only attorney general review.
•
•
•
Depending on the number
of directors in the nonprofit,
the Act may change the vote
required to approve certain real
estate transactions from a twothirds vote to a majority vote.
The Act will expand the
disclosure requirement in
related-party transactions
to include “key employees”
in addition to officers and
directors. In addition, the
Act will require the board to
consider alternatives to any
related-party transaction.
The Act will prohibit employees
from serving as chair of the
board of directors (or in any
officer position with similar
authority, regardless of title).
This provision will not take
effect until July 1, 2015.
•
The Act will allow board
members to meet board
procedures via electronic means
such as facsimile or e-mail, and
for board members to attend
meetings via videoconference
or Skype.
•
The Act will prohibit an
employee from being present
during the discussion and
decision-making process
concerning his or her own
compensation. (Pollak)
Another goal of the legislation is
to help Board members of nonprofit
organizations to act more responsibly
and more efficiently while furthering the
principles of their organizations. Careful
consideration and implementation of the
provisions of the Act need to be made
by nonprofit organizations, in order to
be compliant by the effective date of
July 1, 2014. n
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