What you need to know about the Nonprofit Revitalization Act of 2013

Regulations governing New York’s nonprofit sector has been overhauled for the first time in over forty years as a result of the Governor signing into law the Nonprofit Revitalization Act of 2013.  It becomes effective July 1, 2014.

The Act will remove some burdens that have plagued the nonprofit community and at the same time will require oversight and governance reforms that will help protect taxpayer dollars, help to prevent fraud and preserve public trust.   

Some of the new provisions are as follows:

  • Boards will need to perform active oversight over financial audits including retaining the independent auditors and reviewing results of the audit.  Charities over $1 million in annual revenue will be required to follow additional oversight procedures.
  • Related party transactions will need to be fully disclosed, determined to be fair, reasonable, and in the organization’s best interest and a determination whether substantial transactions need alternative solutions or documentation supporting engaging in the insider transaction.
  • Employees of the nonprofit organization cannot serve as Chair of the Board.
  • A Conflict of Interest Policy will be mandated, and a whistleblower policy will need to be adopted for those organizations with over $1 million in annual revenue and 20 or more employees.
  • E-mail and video technology will be allowed for meetings and approval for small transactions can be delegated to a committee.
  • Financial reporting and audit procedures for charitable organizations registered with the New York State Attorney General will have new filing thresholds instituted effective July 1, 2014 to June 30, 2017  with modifications beyond that date as follows:

 

 

 

Annual Gross Revenue & Support

         

Reporting Requirements

$0-$250,000

        

File unaudited financial report on forms prescribed by the attorney general.

$250,000-$500,000*

          

File a review report issued by an independent CPA.

$500,000 or more*

          

File an audited report issued by an independent CPA in accordance with GAAP.

* To reduce the burden on smaller not-for-profits, the revenue and support levels increase on July 1, 2017 from $500,000 to $750,000 and again on July 1, 2021 from $750,000 to $1 million.

 A review of current practices may need to be undertaken to ensure these new provisions are implemented.