The Soapbox and Toolbox for New York State's Nonprofits

June 25, 2014

Isn't Revitalization Grand? [June 25th, 2014]

On Monday, the head of the Attorney General’s Charities Bureau, James Sheehan, acknowledged in a speech to an association executives group that he knows many nonprofits will not be in compliance with the Nonprofit Revitalization Act for some time.  In recognition of this, they are preparing guidebooks in the “coming weeks” designed to educate and assist nonprofits. He spoke of a “Glide Path” to compliance – slow and steady. He said this year will be about education, not enforcement.

He assured the group that nonprofits will only be asked two questions:

    • Do you know about the Nonprofit Revitalization Act?
    • Do you have a plan to comply?

It’s good to hear the AG publicly state what they quietly were telling legislators all along, that they are not looking to enforce the law because they know there wasn’t enough time given for nonprofits to fully comply.

Frankly, to me, this position defies logic as to why a reasonable delay – as we proposed – was adamantly opposed by the AG’s office. Why fast track a law that you know – and state publicly, you are not going to enforce?  

Regardless of what the AG does or does not do regarding enforcement, tens of thousands of nonprofits as of July 1st will be:

    • In violation of statute and thus in violation of every local, state and federal government contract that they have
    • Vulnerable to error and omission suits against their boards filed by disgruntled individuals including current and former board directors and employees, "members" (if they have a voting membership), constituents, donors, and the list goes on
    • Exposed to a significant finding in the auditor's management letter

In our legislative battle for a reasonable extension we heard four primary reasons against it:

    • "Don't worry" - the AG said he wasn't going to enforce it right away with a few possible exceptions. 
    • "No biggie" - compliance is easy, just Google templates and download them. 
    • "Tough beans.” Nonprofits should have been doing these things all along, have had plenty of time to comply and should be towing the line.  
    • "We will fix it next time" - the law is admittedly flawed but let’s roll it out, see what the problems are, and fix it next session. Those flaws I might add have been well pointed out by the NYS Bar Association (who stated in writing that they did not oppose the extension), the NYC Bar Association (who supported the extension), and the NYS Law Revision Commission.

The point seems to have been missed that nonprofits are the consumers of this law.  We are the ones that have to live with it, warts and all.  And, we are the ones risking our fiduciary obligations. 

The AG has blinders on if he thinks that giving a free temporary pass solves our compliance problem with the new law.  Yes, it helps provides some reassurance to volunteer board members but does not justify the rush. 

Isn't Revitalization grand?  

 

Doug Sauer, CEO
New York Council of Nonprofits, Inc.

 

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