THE NONPROFIT
REVITALIZATION ACT:
NEXT STEPS FOR NY
NOT-FOR-PROFITS
MICHAEL J. COONEY, PARTNER
ANITA L. PELLETIER, COUNSEL...
SPEAKERS

Michael J. Cooney

Anita L. Pelletier

Partner, Exempt Organizations
New York, NY
Rochester

Counsel, Exempt Org...
OUTLINE
Perspectives on the new statute

Specific requirements of the law
What next?
NPRevitalization@nixonpeabody.com
SOME PERSPECTIVE
Membership Corporations Law 1895

Not-for-Profit Corporation Law 1970
NYSBA Proposal May 2007
AG’s Leader...
THE NONPROFIT CONTINUUM
Federal Government
State and Local
Quasigovernmental

Charities

Social Clubs
Unions

Trade
Associ...
OUTLINE
Perspectives on the new statute

Specific requirements of the law
What next?
TWO GENERAL PURPOSES
Reducing unnecessary and outdated burdens on
nonprofits
Enhancing nonprofit oversight and governance ...
THE DEMISE OF “TYPES”
Type A
civic, patriotic, political, social,
fraternal, athletic, agricultural,
horticultural, animal...
THE DEMISE OF “TYPES”

Charitable

Non-charitable
GENERAL GOVERNANCE
Definition of “entire Board”
Committee practice
— Committees of the Board
— Committees of the corporati...
AUDIT OVERSIGHT
Trigger for specific audit oversight requirements
— Tied to charitable solicitation registration
— $500,00...
RELATED PARTY TRANSACTIONS
Definition of related party
Process
— Disclose material facts of relationship
— Absent from dis...
CONFLICTS OF INTEREST
All nonprofits affected
No particular form of policy
Impacts directors/trustees, officers, and key e...
WHISTLEBLOWERS
Nonprofits affected
—twenty or more employees
—annual revenue in excess of $1 million in prior fiscal year
...
OUTLINE
Perspectives on the new statute

Specific requirements of the law
What next?
TAKING CHARGE
Review and amend

—Certificate of Incorporation/Trust Agreement
—By-laws

—Board policies
Watch for further ...
Michael J. Cooney
Partner

QUESTIONS?

New York
212-224-7343
Rochester
585-263-1534

mcooney@nixonpeabody.com

Anita L. Pe...
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New York's Nonprofit Revitalization Act: What changed & what you need to do

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The Nonprofit Revitalization Act affects nonprofit organizations incorporated or doing business in New York State, including both charitable and non-charitable entities. Leaders of these organizations have important decisions to make about the opportunities—and burdens—imposed by the new law.

Nixon Peabody provides this presentation to highlight the changes and offer assistance. Our lead exempt organizations attorney, Michael J. Cooney, offers a unique perspective, having participated on the Attorney General’s Leadership Committee for Nonprofit Revitalization, which was instrumental in shaping this legislation.

To listen to a recording of the webinar that goes along with this presentation, please visit http://www.nixonpeabody.com/Nonprofit_Revitalization_Act_Webinar_Recording_January_2014

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New York's Nonprofit Revitalization Act: What changed & what you need to do

  1. 1. THE NONPROFIT REVITALIZATION ACT: NEXT STEPS FOR NY NOT-FOR-PROFITS MICHAEL J. COONEY, PARTNER ANITA L. PELLETIER, COUNSEL JANUARY 7, 2014
  2. 2. SPEAKERS Michael J. Cooney Anita L. Pelletier Partner, Exempt Organizations New York, NY Rochester Counsel, Exempt Organizations Rochester, NY mcooney@nixonpeabody.com apelletier@nixonpeabody.com (585) 263-1164 (212) 224-7343 (585) 263-1534 2
  3. 3. OUTLINE Perspectives on the new statute Specific requirements of the law What next? NPRevitalization@nixonpeabody.com
  4. 4. SOME PERSPECTIVE Membership Corporations Law 1895 Not-for-Profit Corporation Law 1970 NYSBA Proposal May 2007 AG’s Leadership Committee on Nonprofit Revitalization February 2012 Nonprofit Revitalization Act /Executive Compensation Reform Act
  5. 5. THE NONPROFIT CONTINUUM Federal Government State and Local Quasigovernmental Charities Social Clubs Unions Trade Associations Business Corporation, Partnership, Limited Liability Company
  6. 6. OUTLINE Perspectives on the new statute Specific requirements of the law What next?
  7. 7. TWO GENERAL PURPOSES Reducing unnecessary and outdated burdens on nonprofits Enhancing nonprofit oversight and governance to prevent fraud and improve public trust Generally effective July 1, 2014, but check individual requirements on their application
  8. 8. THE DEMISE OF “TYPES” Type A civic, patriotic, political, social, fraternal, athletic, agricultural, horticultural, animal husbandry, association (professional, commercial, industrial, trade or service) Type C any lawful business purpose to achieve a lawful public or quasipublic objective Type B charitable, educational, religious, scientific, literary, cultural, prevention of cruelty to children or animals Type D formation is authorized by any other corporate law for any purpose, business or non-business, pecuniary or non-pecuniary
  9. 9. THE DEMISE OF “TYPES” Charitable Non-charitable
  10. 10. GENERAL GOVERNANCE Definition of “entire Board” Committee practice — Committees of the Board — Committees of the corporation CEO and other employees prohibited from also serving as Board chair Electronic communication and meeting options Dealing with real estate
  11. 11. AUDIT OVERSIGHT Trigger for specific audit oversight requirements — Tied to charitable solicitation registration — $500,000 in gross revenue and support Performed by Board or an audit committee — Definition of independence Specific tasks, such as . . . — Retain outside auditor annually — Review audit and management letter — $1M threshold—additional requirements
  12. 12. RELATED PARTY TRANSACTIONS Definition of related party Process — Disclose material facts of relationship — Absent from discussions and vote — Board approval Standard — Transaction fair, reasonable and in best interests — Additional, higher standard for charities AG power to bring action to enjoin or rescind
  13. 13. CONFLICTS OF INTEREST All nonprofits affected No particular form of policy Impacts directors/trustees, officers, and key employees Annual statements required Required provisions — Define conflict of interest — Disclosure procedures — Not present for deliberation or vote; no improper influence — Documentation
  14. 14. WHISTLEBLOWERS Nonprofits affected —twenty or more employees —annual revenue in excess of $1 million in prior fiscal year Contents — System to report potential illegality, fraud or violation of any adopted policy of the corporation — Prohibit retaliation Distribution to all directors/trustees, officers, employees and volunteers who provide substantial services to the corporation Compliance with other standards will suffice
  15. 15. OUTLINE Perspectives on the new statute Specific requirements of the law What next?
  16. 16. TAKING CHARGE Review and amend —Certificate of Incorporation/Trust Agreement —By-laws —Board policies Watch for further legislative changes Contact us at NPRevitalization@nixonpeabody.com
  17. 17. Michael J. Cooney Partner QUESTIONS? New York 212-224-7343 Rochester 585-263-1534 mcooney@nixonpeabody.com Anita L. Pelletier Counsel Rochester 585-263-1164 apelletier@nixonpeabody.com NPRevitalization@nixonpeabody.com This presentation contains images used under license. Retransmission, republication, redistribution, and downloading of this presentation, including any of the images as stand-alone files, is prohibited. This presentation may be considered advertising under certain rules of professional conduct. The content should not be construed as legal advice, and readers should not act upon information in this publication without professional counsel. ©2014. Nixon Peabody LLP. All rights reserved.

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