On December 18, 2013, New York Governor Andrew M. Cuomo signed the Nonprofit Revitalization Act of 2013 into law. The Act, which is an overhaul of New York’s antiquated and burdensome nonprofit law, became effective as of July 1, 2014.
The general purposes of the Act are to:
- eliminate unnecessary administrative and procedural burdens;
- modernize the New York nonprofit law; and
- strengthen governance through compliance with certain best practices.
Some features of the new law are as follows:
- It abandons the four types of nonprofit corporations (Types A, B, C, and D), and replaces them with two types – “charitable” and “non-charitable”. All Type B, C, and Type D entities formed for a charitable purpose will now be designated “charitable” and all Type A, and all other Type D entities will now be designated “non-charitable”.
- It allows use of electronic mail to transmit board and membership meeting notices and other communications, and permits board members to attend meetings via Skype and video conference;
- It provides for a one-step approval process (e.g. Attorney General review) for any charitable corporation seeking to sell, lease, exchange, or dispose of all or substantially all of its assets, merge, consolidate, or change its purpose. Formerly, approval was a lengthy and costly two-step process which consisted of Attorney General review followed by court approval.
- Entities with 20 or more employees and annual revenue in excess of $1M must adopt a whistleblower policy, protecting directors, officers, employees and volunteers who report suspected improper conduct from retaliation.
- Every nonprofit must adopt a conflict of interest policy, ensuring that directors, officers and key employees act in the nonprofit’s best interest.
- For nonprofits with fewer than 21 directors, approval of non-substantial real estate transactions requires the vote of a majority of the directors (formerly required vote of two-thirds of the directors), and approval of transactions involving property that constitutes all or substantially all of the nonprofit’s assets will require the vote of two-thirds of the directors.
Read the text of the Nonprofit Revitalization Act of 2013.