Non-Profit Revitalization Act of 2013

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Proskauer’s 20th Annual Trick or Treat Seminar was held on Friday, October 30.

The Seminar discussed:

  • Non-Profit Revitalization Act of 2013: Recent Developments and Outstanding Issues
  • Recent Developments in Independent Contractor Misclassification
  • Purpose Investing for Charities
  • Benefits Update

Amanda Nussbaum welcomed everyone to the 20th Annual Trick or Treat Seminar, commented on some of the trends in nonprofit law over the last twenty years, and introduced the presenters.

In April, the New York State Attorney General’s office released guidance addressing key provisions of the New York Not-for-Profit Corporation Law.   For in-depth analysis of the Attorney General’s guidance, click here for an article by Proskauer attorneys Roger Cohen and Ellen Moskowitz.  For this blog’s coverage of the New York…

Under the Not-for-Profit Corporation Law (“NPCL”) it is relatively clear that (i) any committee with corporate authority must be comprised only of trustees, and (ii) committees must be appointed by the board, and not, for example, by the chair (other than special committees).  (The foregoing may not apply if otherwise provided by the certificate of incorporation.)

The NPCL currently distinguishes between (i) the executive committee and other standing committees, on one hand, and (ii) special committees, on the other hand.

Executive and standing committees must be appointed by a majority of the entire board pursuant to Section 712(a) which provides, in part, that “the board, by resolution adopted by a majority of the entire board, may designate from among its members an executive committee and other standing committees, each consisting of three or more directors, and each of which, to the extent provided in the resolution . . . shall have all the authority of the board, except . . . .”  (Emphasis added.)

The New York Non-Profit Revitalization Act of 2013 (the “Act”), which was passed by the New York State legislature in June, was signed into law by Governor Andrew Cuomo last week. The Act seeks to modernize the New York Not-For-Profit Corporation Law (the “NPCL”), and is the first major overhaul of the NPCL in four decades.

The Act goes into effect on July 1, 2014.

Details of some of the changes to the NPCL include:

• In a critically important victory for common-sense corporate governance, notices and consents under the NPCL may be sent via e-mail and fax.

• Instead of defining not-for-profit corporations as Type A, B, C, or D (a classification system that has bedeviled New York lawyers for years), such entities will be simply “charitable” or “non-charitable.” Former Type-A corporations will be non-charitable, while all others will be charitable. Charitable purposes are defined as “charitable, educational, religious, scientific, literary, cultural or for the prevention of cruelty to children or animals.”

• The New York Executive Law requires submission of audit reports to the Attorney General for entities registered to solicit and collect funds for charitable purposes. The new law raises the gross revenue thresholds for such audits over time. Starting on July 1, 2014, certified audits will be required for those entities with revenue and support in excess of $500,000. The threshold will be raised to $750,000 as of July 1, 2017 and $1 million as of July 1, 2021.

Proskauer’s 18th Annual Trick or Treat Seminar was held on Thursday, October 31.

The Seminar discussed:

  • Statutory Authority of New York Attorney General’s Charities Bureau
  • Proposed Revisions to New York’s’ Not-for-Profit Corporation Law
  • Impact of United States v. Windsor on Health Insurance and Retirement Plans and Key Provisions of the Affordable Care Act

In her introductory remarks, Amanda Nussbaum provided a summary of recent Internal Revenue Service developments and introduced the presenters.