The Nonprofit Revitalization Act, NY A8072 (the “Act”), a bill that makes comprehensive updates to the New York Not-for-Profit Corporation Law, as well as several other statutes related to nonprofits, recently passed both houses of New York’s legislature unanimously. The Act is awaiting delivery to the Governor’s office, at which time the Governor would have 10 days to take action or the bill would automatically become law, provided it is delivered before the end of the legislative session on December 31, 2013. The Act would be the first major revision to New York’s nonprofit laws in over 40 years. Its provisions apply to nonprofits that are incorporated in New York, but one significant section – related to financial audits and financial reporting to the state – applies to all nonprofits that are registered in New York for charitable solicitation purposes.
If signed into law, the new Act would be effective on January 1, 2014. The Act modernizes aspects of the current laws, including the incorporation of new technology options for holding meetings and taking action. The law also imposes standards for executive compensation and enhanced governance processes such as mandating that nonprofits of a certain size adopt conflict of interest and whistleblower policies, and it contains a new definition and approval process for related-party transactions. In addition, the law imposes new limitations and prohibitions on certain governance structures and practices, which may create significant challenges for particular organizations. Many nonprofits will find that they need to amend their governance documents, policies, and procedures – and, in some cases, significantly overhaul their governance structure – to comply with some of the detailed requirements of the Act.
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