The New York State Bar Association is proposing sweeping changes to the Not-for-Profit Corporation Law in New York State that if enacted, would overhaul the current system, bringing New York more in line with neighboring states, and encourage additional not-for-profit organizations to incorporate in New York State.
The changes, which focus on simplifying the regulatory approval process for forming a nonprofit corporation, would remove undue burdens placed upon New York nonprofits and strengthen provisions to prevent the misuse of charitable funds and assets. In addition, it would change the title of the law and entities formed under the law from “Not-for-Profit” to “Nonprofit.”
“These improvements are designed to make New York’s law compare favorably with other jurisdictions and encourage nonprofit organizations to incorporate in New York,” State Bar Association President Mark H. Alcott (Paul, Weiss, Rifkind, Wharton and Garrison) said. “New York is the nonprofit center of the world, and, by modernizing the statutes relating to nonprofit corporations, we can ensure that the state will retain that designation well into the future.”
In addition, the new legislation creates more scrutiny of charitable funds and assets donated for specific causes. Under the new law, the governing body of a nonprofit corporation would be required to apply all assets received to the purposes specified, administrative costs notwithstanding. Nonprofit corporations would be required to keep accurate accounts of such assets separate from other accounts. An annual report to the members and/or the governing board of the corporation would become mandatory.
Mr. Alcott said. “In the coming months, the Association’s leadership and members of our Business Law Section, who have worked extensively on these improvements, will contact members of the Senate, Assembly and the Governor’s office to gain support. Our members will continue to serve as resources for elected officials on Nonprofit Corporation Law - and other issues - to improve New York State for the benefit of the people who live and work here. I want to commend the fine work of our members, in particular, past Corporation Law Committee Chairman Frederick Attea of Buffalo (Phillips Lytle LLP), who worked tirelessly on this complex proposal.”
A Bar Association report issued by the Business Law Section, upon which this proposed legislation is based, has been approved by the Association’s Executive Committee, making it a part of the Association’s legislative program. A copy of the proposed legislation has been delivered to the Governor as well as the leaders and rank and file members of the legislature with regard to sponsorship and support. A copy of the proposed legislation is available at www.nysba.org.
The 72,000-member New York State Bar Association, founded in 1876, is the official statewide organization of lawyers in New York and the largest voluntary state bar association in the nation. NYSBA programs and activities have continuously served the public and improved the justice system for more than 130 years.
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