Nonprofit Revitalization Act of 2013 signed into law
First comprehensive update in over 40 years
State Senator Michael H. Ranzenhofer has announced today that Governor Andrew M. Cuomo has signed the Nonprofit Revitalization Act of 2013 into law.
Senator Ranzenhofer helped to develop the Nonprofit Revitalization Act after extensive meetings with stakeholders and the convening of multiple public hearings to examine comprehensive amendments to the state’s Not-For-Profit Corporation Law.
“I am extremely pleased that the Not- for-Profit Revitalization Act has been signed into law. Millions of New Yorkers depend on not-for-profits to respond in times of emergency, provide health care, and offer vital community assistance, among many other services. Despite the critical role not-for-profits play in our lives, the state laws that govern them had not been updated in over 40 years,” said Ranzenhofer.
“As Chairman of the Senate Committee on Corporations, Authorities and Commissions, it was a privilege to work with my partners in government and most importantly, the not-for-profit community to sponsor this legislation that will help the not-for-profit sector to fulfill their essential mission in a streamlined and cost-effective way, while also reducing the opportunities for fraud and financial abuse,” said Ranzenhofer.
The Nonprofit Revitalization Act reduces unnecessary, outdated, and costly burdens to help not-for-profit organizations focus resources on providing services. It will improve oversight of operations which will have the dual role of providing organizations with better financial management and increasing the public trust that donations and taxpayer funds are being put to proper use.
Key provisions of the Act include:
• Reducing bureaucracy and costly requirements by amending rules governing not-for-profit property sales, mergers, corporate formations, and dissolutions to create a more welcoming environment for new not-for-profits and a more business-friendly environment for existing ones. It will also increase efficiency by modernizing board procedures, such as enabling not-for-profits to use email and video technology for meetings, and allow boards to delegate the approval of small transactions to committees.
• Strengthening accountability and enhancing charitable governance by setting forth clearer expectations of board duties in key areas, such as providing better financial management and oversight over financial audits. It includes new provisions to limit and, when necessary, remedy self-dealing to prevent conflicts of interest and ensure transactions are performed in the organization’s best interest. Employees of a nonprofit will also be prohibited from serving as chair of the board to help promote clear lines of accountability between management and the board and ensure independent board leadership.
The Law covers a diverse array of entities, including membership corporations, cemetery corporations, fire corporations, religious societies, medical societies, alumni corporations, historical societies, agricultural societies, trade organizations, as well as charitable organizations, hospitals and not-for-profit nursing homes.
Not-for-profit organizations play a critical role in New York’s economy and account for one in every seven jobs in the State. There are more than 103,000 nonprofits in New York that employ 1.25 million people and generate billions of dollars in annual revenue.