Inaugural Edition

We are very pleased to launch “Our 2 Sense”, a quarterly platform to share valuable information affecting the not-for-profit community. Every issue will have a theme. Our focus this time is the importance of a regular review of compliance practices. 

Welcome back Daniel R. Alcott as Partner and Chair of the Not-For-Profit Department at Dorf & Nelson, LLP! We are delighted to have teamed up to work on many interesting projects.

News from the Charities Bureau

At a recent presentation before the Government Relations Council of the Nonprofit Coordinating Committee of New York (now Nonprofit New York), James Sheehan, Chief of the-Charities Bureau at the New York State Department of Law (Attorney General) shared that the Charities Bureau no longer accepts paper registrations but rather there is a requirement that registrations must now be filed electronically. Karin Kunstler Goldman, who also attended the meeting, stated that this electronic filing requirement for registration has sped up the review process from a 2-month delay to now a quick 5 to 6 day turn around. The trend is to extend this electronic filing requirement to IRS Form 990s as well.

Interestingly, charities that register in New York State are no longer required to file an IRS determination letter or Form 1023 in order to register. The electronic filing has proven to be very useful for organizations that are amending their By-laws or Certificates of Incorporation. An additional take away for us was that the Charities Bureau is taking aim at conflicts of interest. Therefore, organizations should be vigilant in enforcing their Conflict of Interest Policies. Sheehan and Kunstler Goldman indicated that there will be greater oversight by the Charities Bureau with regard to conflicts of interest, for the purpose of curbing any violations.

Importance of Yearly Review of Corporate Governance

Enforcement Procedures 

Upon the formation of a new not-for-profit/501(c)(3) organization, much care is taken to the selection of board members and attention is given to corporate governance compliance. However, best practices should be exercised throughout the entire life cycle of an operating organization, not just in the beginning. For example, often an organization will rely on an automated system to detect whether its conflict of interest policy has been violated by existing or new board members. However, as we see from the breaches that have been the subject of embarrassing news articles, reliance on such automation programs can hinder an organization’s ability to further its charitable purposes. Click on the link for additional commentary Automating your conflict of interest programme

With a new Attorney General in place, the Charities Bureau is stepping up its oversight responsibilities. In fact, it will be scrutinizing with greater care the information provided in New York by not-for profits to detect such violations. Accordingly, what we have done for our clients is to undertake a yearly “legal audit” which is a check-up of compliance procedures to assure that there are adequate safeguards in place to avert such violations. This is especially true in the area of conflicts of interest. When a director, officer, or key person has a conflict of interest in an issue before the board, that individual must (i) disclose the circumstances giving rise to the conflict; and (ii) recuse him or herself from any discussion or vote. The nonprofit organization has an obligation to make a contemporaneous record of the existence of the conflict and how it was addressed, both with respect to that individual and with respect to the transaction.

An organization’s legal counsel should be consulted to assure that existing enforcement procedures meet the changing regulatory requirements. Counsel, annually, should take a fresh look at the organizational documents, minutes, contracts, employment policies, insurance coverage, and similar legal issues.

Story- Telling About The Qualitative And Quantitative Approaches To Sustainability As An Authentic Means to Engage Internal Employees and External Partners 

We attended the June 11th Better Business Bureau Forum on Corporate Responsibility XII entitled Megatrends: Shaping the CSR Agenda. The speakers were extremely knowledgeable and covered a lot of ground. The overarching theme was the importance of authenticity in telling the sustainability story to both a company’s internal and external parties. For example, a company can encourage employee engagement and retention by offering time off to its employees to volunteer in causes that make a difference in the world. Additionally, a company can provide transparency throughout the supply chain, thus bolstering the collaboration with partners on sustainability goals negotiated in contracts and also building its brand with sustainability-conscious consumers. There were also special reports on green initiatives including waste management of plastics, as wells as human rights principles and trends in the supply chains. In sum, the Forum brought together the voices of many experts to elucidate that sustainability is a multifaceted journey.


All material presented in this newsletter, is for general informational purposes only, and does not constitute legal advice. Receiving this written material does not create a lawyer-client relationship. All responsibility and liability for any actions taken or not taken on the basis of any of the information offered in this newsletter is expressly disclaimed.

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