You Gotta Have Tips: Complying with the 2013 NYS Not-For-Profit Revitalization Act

MeetingFor the first time in over 40 years, New York has enacted major revisions to the state’s nonprofit laws. The reforms are aimed at ensuring greater oversight and governance as well as streamlining and modernizing certain processes.

The Nonprofit Revitalization Act, signed into law by Governor Cuomo late last year, applies to all nonprofits incorporated in New York. Most provisions of the new Act will take effect on July 1, 2014.

As a result of the Act, nonprofit organizations will now be able to incorporate, dissolve and merge more easily; communicate and hold meetings using modern technology like Skype; and enter transactions without having to go to court. At the same time, nonprofit boards will have to perform stricter oversight of insider deals, and adopt more robust financial oversight requirements, conflict of interest policies, and whistleblower policies.

Below are some of the Act’s provisions related to governance and financial oversight that are likely to affect Friends groups:

  • As a result of the Act, all nonprofit corporations:
    • Must have an adopted Conflict of Interest Policy that includes certain minimum elements.
    • Are prohibited from having any employee also serve as chair of its board.
    • Must adhere to certain guidelines for deliberations and voting on board or committee discussions concerning compensation.
    • Must adhere to certain guidelines before entering into a transaction with a related party.
  • The Act increases the threshold for audits while enhancing board oversight of financials.
  • The Act also modernizes New York law by permitting nonprofits to conduct certain activities electronically:
    • Email and fax notice and waiver of notice of member meetings;
    • Email waiver of notice of board meetings;
    • Notice of member meetings by website posting, in addition to publication in a newspaper, if a corporation has more than 500 members;
    • Email proxy voting for members and unanimous written consent via email for member, board and committee actions; and
    • Videoconferencing for board and committee meetings.

For groups not yet incorporated, the Act eliminates unnecessary and costly requirements for nonprofits forming in New York.

For more details, see the Attorney General’s website and this summary.

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