The Nonprofit Revitalization Act of 2013 significantly reforms New York not-for-profit law.  This new legislation is the strictest in the nation and is likely the beginning of a wave of similar laws in other states and in Congress.  Most of the new law goes into effect on July 1, 2014, requiring nonprofit organizations to adopt mandatory policies and procedures in order to keep their tax exempt status.

While some of the provisions of the act impose restrictions on larger organizations, there are some provisions that apply to all nonprofits regardless of size, such as a mandatory Conflict of Interest Policy.  Depending on size, other requirements such as  Whistleblower Policy, Related Party Transactions Safeguards and Audit Oversight Responsibilities among several other governance documents will be mandatory.  Many of these policies and procedures are already nonprofit best practices. However, many smaller mission-based organizations do not always adopt governance policies that they believe only apply to larger national nonprofits.  This legislation represents a significant change.

While NY is the first to adopt such stringent requirements, I believe that this trend  will continue.  I urge all nonprofits to speak with council, and/or your accountants to make sure you are in full compliance and not to risk your tax exempt status.  If you need assistance drafting other governance documents and board manuals, please contact me for assistance.