A.G. Schneiderman Announces Bold Plan To Revitalize And Reform New York's Nonprofit Sector

A.G.’s Plan Will Cut Red Tape, Reduce Costs For Nonprofits And Taxpayers & Strengthen Accountability

New Partnerships With Business And Academic Communities Will Improve Nonprofit Governance And Encourage Volunteerism

 

NEW YORK – Attorney General Eric T. Schneiderman today unveiled a bold plan to reform and revitalize New York’s nonprofit sector. Announced before an audience of non-profit and business leaders, Attorney General Schneiderman’s plan includes legislation to eliminate outdated and costly burdens on nonprofits, strengthen oversight and accountability, and reaffirm his office’s commitment to policing fraud and abuse. Acknowledging that organizations throughout New York State face historic financial and strategic challenges, the Attorney General’s plan also includes several new partnerships with the business and academic communities to enhance nonprofit governance.

“New York is the proud home of the world’s most dynamic and vibrant nonprofit sector, but for too long, our state’s regulatory framework has placed unnecessary burdens on these essential organizations. This plan will unlock the full potential of our nonprofit community, and improve the lives of the countless New Yorkers they serve every day,” said Attorney General Schneiderman. “In these difficult economic times, it is more important than ever to make New York a hospitable environment so nonprofits can continue to carry out their vital work. At the same time, we must maintain the public’s trust by ensuring that nonprofits are governed effectively, and with meaningful oversight.”

In 2011, Attorney General Schneiderman convened a Leadership Committee for Nonprofit Revitalization with 32 nonprofit leaders across the state to recommend proposals that would reduce regulatory burdens on nonprofits, while strengthening governance and accountability. Today’s legislative and reform initiatives, announced at a breakfast forum hosted by Crain’s, are responsive to the committee’s recommendations. They include the Nonprofit Revitalization Act, to be proposed by the Attorney General, and two initiatives, “New York on BOARD” and “Directors U,” designed to improve nonprofit governance. The Attorney General’s Charities Bureau, led by Bureau Chief Jason Lilien, will assist in the development and promotion of these initiatives.

A.G. Schneiderman To Introduce The Nonprofit Revitalization Act

The Attorney General’s proposed Nonprofit Revitalization Act represents the most comprehensive reform to New York's nonprofit laws in decades. It would enhance oversight of nonprofits by their boards, provide new tools to the Attorney General to stop fraud and abuse, and reduce unnecessary burdens long-plaguing nonprofits in New York.

Schneiderman’s legislation would enact a number of key reforms, including:

  • Streamlining bureaucratic processes to expedite formation of nonprofits in New York and approval of key nonprofit transactions;
  • Modernizing outdated requirements, such as permitting the use of technology to facilitate more efficient operations and to reduce costs;
  • Requiring that boards provide enhanced and independent oversight of executive compensation;
  • Increasing board responsibilities to oversee financial audits;
  • Enhancing the Attorney General’s tools to police self-dealing and other forms of corruption; and
  • Requiring that nonprofits adopt conflict-of-interest and whistleblower policies.

ABNY and the Attorney General Launch “New York on BOARD”

Attorney General Schneiderman announced today the launch of “New York on BOARD,” a new director recruitment initiative to build stronger and more diverse boards for nonprofits. Throughout New York State, nonprofits are facing increasing challenges in recruiting talented directors needed to ensure proper oversight.

New York on BOARD (“Building Oversight, Awareness, Resources and Depth”) is a groundbreaking partnership through which New York’s business community will expand its already substantial philanthropic leadership. Companies that pledge to get “on board” would agree to create programs that encourage their employees to serve on nonprofit boards and be matched with nonprofits.  It is envisioned that New York on BOARD’s recruitment efforts will be expanded to the state’s academic communities and retiree population. The program will be administered by the Association for a Better New York (ABNY), and developed by a steering committee whose initial membership includes:

  • Bloomberg LP
  • Cushman & Wakefield
  • First Niagara Bank
  • Lazard
  • Loews Hotels

“ABNY is pleased to partner with the Attorney General’s Office to promote nonprofit board service,” Bill Rudin said. “My father envisioned exactly this type of program when he founded ABNY in 1971. He believed, as we at ABNY still do, that New York’s business community should aspire to ‘do well by doing good.’  By encouraging employees to serve New York’s nonprofit community, our members will help employees strengthen their own skills while helping nonprofits improve their governance. This is a win-win.”

New York’s Academic Community and the A.G. Launch “Directors U”

Attorney General Schneiderman also announced today the launch of a second new initiative designed to improve director education. The Attorney General’s Office will facilitate this statewide program called “Directors U” to provide training to nonprofit directors that is free or of minimal cost, and easily accessible. Directors U will create an online library of seminars and materials covering a full range of nonprofit subjects, which will be supplemented by a series of live, in-person trainings.

Dean Harry C. Katz of Cornell University’s School of Industrial & Labor Relations, said, “Cornell University and our academic partners are eager to work on this exciting initiative with the Attorney General. This new and innovative program will help nonprofits educate and train their board members about nuances of sometimes complex nonprofit laws and practices. Directors U will help make sure that directors are comfortable in performing critical oversight.”

Directors U will be administered through a consortium of academic institutions, including:

  •  Adelphi University, Long Island Center for Nonprofit Leadership at Adelphi University
  • Baruch College, School of Public Affairs
  • Binghamton University, College of Community and Public Affairs 
  • Columbia University, the School of International and Public Affairs
  • Cornell University, Institute for Compensation Studies, ILR School of Cornell University
  • The New School, Milano School of International Affairs, Management, and Urban Policy
  • New York University School of Law, National Center on Philanthropy and the Law
  • University at Albany, Rockefeller College of Public Affairs & Policy
  • Yale University, Millstein Center for Corporate Governance and Performance

The Attorney General’s Office will provide support for the consortium’s work and help conduct training programs.

The Attorney General’s Committee for Nonprofit Revitalization

The Attorney General’s reform plan follows a report issued by the Attorney General’s Committee for Nonprofit Revitalization. Just three months into his administration, Attorney General Schneiderman took the unprecedented step of inviting key nonprofit leaders to sit at the same table with the Attorney General’s Office to reassess regulatory frameworks in New York and address longstanding challenges facing the sector.

The Attorney General assembled a committee whose diverse membership includes 32 individuals from organizations large and small, from upstate and downstate, and reflective of the full breadth of New York’s nonprofit sector. The Committee also includes several of the leading nonprofit practitioners in the country.

The Committee held a dozen formal meetings between July and December 2011, as well as numerous additional discussions among members and with key stakeholders. The Attorney General’s office provided substantive and administrative support in facilitating the Committee’s work and drafting its Report.

The Committee developed 38 concrete recommendations, which it presented to the Attorney General in a report entitled “Revitalizing Nonprofits / Renewing New York.”  The Committee’s report formed the basis for today’s announcement.

The Committee’s membership includes:

  • Seema Agnani, Chhaya Community Development Corporation
  • Sharon Ball, Broome County Arts Council
  • Joseph Benincasa, The Actor’s Fund
  • Victoria Bjorklund, Simpson Thacher & Bartlett LLP
  • Cali Brooks, Adirondack Community Trust
  • Ronna Brown, Philanthropy New York
  • Richard Buery, The Children’s Aid Society
  • Michael Clark, Nonprofit Coordinating Committee of New York
  • Cecilia Clarke, Sadie Nash Leadership Project
  • Michael Cooney, Nixon, Peabody LLP
  • Clotilde Perez-Bode Dedecker, Community Foundation for Greater Buffalo
  • Alisa Robbins Doctoroff, UJA-Federation of New York
  • Peter Dunn, Central NY Community Foundation
  • Fatima Goldman, Federation of Protestant Welfare Agencies
  • Robert Greenspan, New York Hotel Trades Council & Hotel Association of NYC
  • Susan Hager, United Way of New York State
  • Rosanne Haggerty, Community Solutions
  • Richard Hobish, Pro Bono Partnership
  • Karen Brooks Hopkins, Brooklyn Academy of Music
  • Michael Kosnitzky, Boies, Schiller & Flexner LLP
  • Jack Krauskopf, Center for Nonprofit Strategy and Management at Baruch College
  • Jennifer Leonard, Rochester Area Community Foundation
  • Elba Montalvo, The Committee for Hispanic Children and Families
  • Gwen O’Shea, Health & Welfare Council of Long Island
  • Lee Perlman, Greater New York Hospital Association
  • William Rapfogel, Metropolitan Council on Jewish Poverty
  • Claire Rosenzweig, Better Business Bureau
  • Doug Sauer, New York Council of Nonprofits
  • Michael Stoller, Human Services Council
  • Monsignor Kevin Sullivan, The Catholic Charities of the Archdiocese of New York
  • Bishop Mitchell Taylor, East River Development Alliance
  • Ann Marie Thigpen, Long Island Center for Nonprofit Leadership, Adelphi University

Michael Clark, President of the Nonprofit Coordinating Committee of New York, said, “We commend Attorney General Schneiderman for focusing attention on how New York can strengthen its nonprofit sector. This report is a blueprint for modernizing a critical sector of our state’s economy.”   

Elba Montalvo, Founder and President of the Committee for Hispanic Children and Families, said, “Those of us who work in the nonprofit sector do it because we believe in the mission of our respective organizations and, because we want to make a difference. Thanks to the leadership of Attorney General Schneiderman, this collective effort has produced smart recommendations that will allow us to dedicate more of our resources on core services by reducing bureaucratic waste and inefficiency.”

Victoria Bjorklund, a Partner and Head of the Exempt Organization’s Group, Simpson Thacher & Bartlett LLP, said, “Compliance procedures for nonprofits can be rigorous without being onerous. We are confident that this committee has provided sound recommendations that will increase confidence in the nonprofit sector while reducing red tape. And we commend Attorney General Schneiderman for taking the unprecedented step of bringing together the sector’s stakeholders to chart a new, bold path to assist New York’s nonprofit community and the millions of people whom it serves.”

The Attorney General’s Committee for Nonprofit Revitalization report is available online  here

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