The New York Nonprofit Revitalization Act was amended in 2016 to clarify and simplify some of the provisions that apply to New York State nonprofit organizations. The revisions, which reduce some of the burden for nonprofits, include modifications to key definitions and changes to some rules. These changes go into effect May 27, 2017, except for one amendment relating to the chair of the board, which has been in effect since January 1, 2017. The following are the most notable changes:

  • The related party transaction definition now excludes certain transactions considered de minimis or available to others on similar terms.
  • The independent director definition has been broadened to incorporate a sliding scale and remove some payments from consideration, allowing some who otherwise would not have qualified to now be eligible to serve on boards of nonprofits.
  • The provision barring an employee from being the board chair has been revised to allow an employee (e.g., executive director) to serve as chair provided the board approves the election by 2/3 majority vote of the entire board and maintains contemporaneous documents, in writing, supporting the decision. This change took effect on January 1, 2017.

Nonprofits should familiarize themselves with the changes and re-examine their bylaws and policies. If you have any questions about the amendments to the Act, please reach out to us.