Summary of the Nonprofit Revitalization Act of 2013
The Nonprofit Revitalization Act brings reform in two main areas:
Enhancing nonprofit governance and oversight to prevent fraud and improve public trust; and Reducing unnecessary and outdated burdens on nonprofits.
The Nonprofit Revitalization Act gives New York the strongest nonprofit governance regime in the country. The law:
Ensures sound financial management by requiring that charities’ boards perform active oversight over financial audits. Boards will be responsible for retaining independent auditors and reviewing results of the audit. At larger charities (over $1 million in annual revenue), the board or audit committee will be required to follow additional oversight procedures.
Prevents conflicts of interestby requiring that transactions between a nonprofit and insiders who stand to benefit be fully disclosed and that nonprofit boards determine they are fair, reasonable, and in organizations’ best interests. When a charity engages in a substantial transaction with an insider, the board will have to consider alternatives and document its basis for choosing the insider transaction.
Strengthens the Attorney General’s power to police fraud and abuse by granting clear power to bring judicial proceedings to unwind interested-party transactions.
Ensures board independenceby prohibiting any employee of a nonprofit from also serving as chair of its board.
Promotes good governance by requiring all nonprofits to adopt conflict of interest policies and those with over $1 million in annual revenue and 20 or more employees to adopt whistleblower policies.
Attorney General Schneiderman’s Nonprofit Revitalization Act also streamlines and modernizes New York law to remove unnecessary burdens, save taxpayer dollars, and help nonprofits focus resources on providing services by:
Streamlining procedures for nonprofit mergers, property sales and corporate dissolutions, so that funds needed for ongoing charitable programs are not wasted on unnecessary red tape;
Modernizing laws to allow nonprofits to conduct their affairs more efficiently,such as permitting nonprofits to use email and video technology for meetings and allowing boards to delegate the approval of small transactions to committees; and
Eliminating unnecessary and costly requirements for nonprofits forming in New York,saving nonprofits money and time and allowing them to commence charitable programs more quickly.
A link to the article: https://ag.ny.gov/press-release/ag-schneidermans-nonprofit-revitalization-act-signed-law
NonProfit Conflicts Of Interest, Governance and Fraud Slideplayer Slide Deck.