Is Your NY Nonprofit Ready for the Nonprofit Revitalization Act?
Is your New York nonprofit ready for the new Nonprofit Revitalization Act? Are you familiar with the requirements of the new Act? To help nonprofits across the State get ready, we turned to finance expert Paul Konigstein for this terrific checklist on how to be in compliance. Thanks for the great advice in this guest post Paul!
NONPROFIT REVITALIZATION ACT COMPLIANCE CHECKLIST
The New York Nonprofit Revitalization Act became effective on July 1, so sharpen your pencils and see how many boxes you can check on this compliance list.
Conflict of interest policy – My New York nonprofit has a Conflict of Interest policy which:
- Includes both a definition of conflict of interest and procedures for disclosing, addressing, and documenting conflicts and their resolution.
- Requires Board members to submit a conflict disclosure statement prior to election and annually thereafter.
- Requires any Board member or key employee who may benefit from a related party transaction to disclose the interest in the transaction before it is approved.
- States that transactions with potential conflicts of interest must be approved by majority vote of the audit committee (or the full Board if there is no audit committee).
- Prohibits the person with the conflict from attending or influencing deliberations and from voting on the transaction.
- Requires recording in the committee or Board minutes the deliberations and the basis for the decision.
- Requires that the audit committee consider alternative transactions and determine that the transaction is fair, reasonable, and in the best interest of the nonprofit as a prerequisite for approval.
Whistleblower policy – My New York nonprofit has 20 or more employees (including part-time and seasonal) AND annual revenue greater than $1 million (if not, skip this section). My nonprofit has a whistleblower policy which:
- States that the person designated to administer the policy reports to the audit committee of the Board.
- Is distributed to all directors, officers, employees and volunteers that provide significant or substantial services.
- Contains procedures for reporting violations or suspected violations of laws and organizational policies.
- Protects the confidentiality of the person making the report.
- Protects Board members, employees, and volunteers from adverse consequences of making a report such as retaliation, intimidation, harassment, and discrimination.
- If my New York nonprofit has annual revenue greater than $500,000 (this amount increases in 2017 and again in 2021), I have an annual independent audit performed by a CPA firm.
- If my nonprofit has annual revenue between $250,000 and $500,000, I have an annual review performed by a CPA firm.
- Only independent directors serve as voting members on my audit committee. In order to be independent, a director must be neither an employee, a relative of a key employee, nor a consultant, donor, or vendor with a substantial financial interest in the organization.
- If I have an annual audit, my audit committee retains the audit firm and reviews with the auditor the audit results, auditor communication letter, and management letter.
- If my nonprofit has annual revenue greater than $1 million, my audit committee reviews the scope and planning of the audit before it begins and evaluates the performance of the auditor.
- If my nonprofit has no audit committee, its responsibilities are discharged by the full Board.
- If an employee such as the Executive Director serves as Board chair of my nonprofit, I have developed a plan to appoint a different Board chair by January 1, 2016.
- My nonprofit’s bylaws permit fax or email for meeting notices but not for voting.
- Board members may participate in a meeting by video or audio conference.
Nonprofit Coordinating Committee of New York (members only)
This post is being shared for general information only and should not be relied on as legal advice. Board members and nonprofits should always consult their own lawyers on legal questions.
Paul Konigstein is a Senior Consultant at Accounting Management Solutions, helping nonprofits improve their finance, accounting, and governance. Paul is equally comfortable as an interim Chief Financial Officer or as an adviser for a specific project. Before joining AMS, Paul spent over twenty years as a nonprofit financial executive with arts and culture, education, and international development organizations including Helen Keller International, the New York Hall of Science, and the Metropolitan Opera. Outside the office, Paul is the Board Treasurer for The Animation Project, which transforms the lives of at risk youth using digital art technology as a therapeutic medium and a workforce development tool. BoardAssist brought Paul and The Animation Project together.