On February 16, 2012, New York Attorney General Eric
Schneiderman launched a comprehensive plan to reform and revitalize
New York's nonprofit sector, which, according to Schneiderman,
has been saddled with too much red tape, convoluted statutory
requirements, and fraud and abuse. Attorney General
Schneiderman described this initiative as the "most
significant reform effort in decades," which will include
legislation to eliminate outdated and costly regulatory burdens on
nonprofits; strengthen oversight and accountability; and grant the
New York Attorney General's office specific authority to
challenge improper self-dealing at nonprofits. In addition,
Attorney General Schneiderman's plan includes partnerships with
business and academic communities to enhance nonprofit
In launching this reform effort, Attorney General Schneiderman
stated that "[f]or too long, New York's regulatory
framework has placed unnecessary burdens on nonprofits, which are
simply untenable during these challenging financial times. We
can be tougher on policing fraud without imposing needless burdens
and costs on this vital sector of New York's economy."
Attorney General Schneiderman's plan to overhaul nonprofit
laws stems from a recent report issued by the Leadership Committee
for Nonprofit Revitalization. In 2011, Schneiderman tasked
the committee, consisting of key nonprofit leaders from across the
state, to recommend proposals to reduce nonprofits' regulatory
burdens, while strengthening nonprofit governance and
accountability. The initiatives proposed by Attorney General
Schneiderman are a direct result of the committee's
recommendations and are outlined below.
The Nonprofit Revitalization Act
The Nonprofit Revitalization Act is the most comprehensive
reform to New York's nonprofit laws in several decades and
would adopt a number of key reforms, including:
Reducing red tape to expedite the creation of nonprofits in New
York and the approval of certain nonprofit transactions;
Using technology to streamline operations and reduce
Ensuring board independence by prohibiting chief executives and
other paid nonprofit employees from serving as board chairmen;
Increasing oversight of compensation provided to chief
executives and other key nonprofit employees;
Increasing board responsibility to oversee financial audits;
Mandating that nonprofits adopt conflict-of-interest and
New York On BOARD
Teaming with the Association for a Better New York
("ABNY"), Attorney General Schneiderman launched New York
on BOARD ("Building Oversight, Awareness, Resources and
Depth"), an initiative which seeks to strengthen partnerships
between New York's business community and the nonprofit
sector. New York on BOARD will help nonprofits recruit
talented and diverse directors needed to ensure proper
governance. Companies that pledge to get "on board"
would agree to create programs that encourage their employees to
serve on nonprofit boards and be matched with nonprofits.
Directors U, an initiative designed to improve director
education, will provide free or minimal-cost training to nonprofit
directors and create an online library of seminars and materials
covering a wide range of nonprofit subjects. The program will
be administered in conjunction with a bevy of well-respected
academic institutions, including: Adelphi University, Baruch
College, Binghamton University, Columbia University, Cornell
University, the New School, New York University School of Law, the
University at Albany, and Yale University.
* * * * * * * * * *
Attorney General Schneiderman is clearly attempting to make good
on his promise to make New York a more hospitable environment in
which nonprofits can thrive. If your nonprofit is
incorporated in or operates in New York, you should pay close
attention to these new initiatives.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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