Requirements of the Nonprofit Revitalization Act
On June 21, the New York State Assembly and the Senate passed the "Nonprofit Revitalization Act." The Act is expected to be signed into law by Governor Cuomo, with most provisions taking effect on July 1, 2014. Some of the more significant provisions are as follows:
- Threshold for audit increased to $500K with a phase-in to $1M threshold by 2021.
- Requirement for establishment of audit committee consisting of independent directors (or the independent directors of the board must function as the audit committee) to:
- oversee audit process,
- communicate with auditor,
- retain auditor, and
- implement and oversee governance policies.
- For organizations with greater than $1M annual revenue; the audit committee is also responsible for:
- reviewing the scope and planning of audit with the auditor;
- discussing the audit findings, including internal control concerns with auditor; and
- reviewing performance and independence of auditor (annually).
- Electronic and videoconferencing communications permitted, including conduct of board meetings.
- Elimination of board approval requirement for entering into ordinary leasing transactions.
- Permit majority of committee approval (rather than full board) for non-substantial property transactions.
- Prohibit employees from serving as chair of board.
- Eliminate the public notice requirement for private foundations.
- Mandate requirements for conflict of interest policies for all organizations to be affirmed annually
- Determination by board that related-party transactions are reasonable (in certain circumstances, enhanced procedures and documentation required).
- Related party cannot be present during board deliberations regarding potential transactions.
- Mandate whistleblower policy for certain sized organizations.
- Deliberations of compensation arrangements must be made without party in question present.
We will continue to monitor the status of this Act. For more information about other provisions in this Act and a complete copy, please click here.