Friday, May 24, 2013
New York lawmakers are currently in the process of reforming the state’s Not-For-Profit Corporation Law. Key players in the reformation process explain that they are trying to reconcile the differences in S3755 and S5198.
The current New York Not-For-Profit Corporation Law has not experienced significant changes since 1969. The law’s contemporary critics claim that its regulatory scheme is overly intrusive and has ultimately caused nonprofit organizations to incorporate outside of the state of New York.
New York is home to about 103,000 nonprofit organizations that employ somewhere around 1.25 million people. These numbers clearly indicate that New York nonprofits do a lot of good for the state in terms of providing public benefits and employment opportunities for New Yorkers. However, each year New York also loses millions of dollars in property taxes due to nonprofit tax exemptions. Is the state in which a nonprofit is incorporated a valid consideration when weighing the benefits and burdens associated with tax-exempt organizations? If a nonprofit organization chooses to be present and operate in New York, but simply elects to incorporate outside of the state, in what way is the state of New York affected?