Local Regulation of Nonprofits

First things first: this story is a little frustrating. Apparently a bill has been introduced in Suffolk County, NY, that would attempt to cap nonprofit pay, but Newsday, which reported the bill, doesn't link to it. And, after spending a little time on the Suffolk County legislative website, I gave up all hope of finding it there. So this is all based off of the news story. (For real, journalists: if you write about a bill, a law, a legal filing, or other public legal documents, please please please link to or embed them!)

According to the Newsday story, Suffolk County is skeptical of nonprofits that pay their employees more than the governor of New York earns (which is currently $250,000). Naturally, the county can't actually cap the salaries of nonprofit employees, but the bill's sponsors "find it unfair" for "Suffolk County taxpayers to fund these exorbitant salaries."

This is where I'd like to see the bill. My impression is that the when bill's sponsors say Suffolk County is "funding" their salaries, it means Suffolk County is contracting with the nonprofits to provide services, not that Suffolk County is making charitable donations.

Why the concern about nonprofit salaries? It is, in my reading, a misunderstanding of what it means to be a nonprofit. Legislator Rob Trotta said, "The whole idea of not-for-profits are these people who are supposedly doing good for the community, they’re supposedly not making a profit, right? But they're profiting themselves." 

He's not wrong that nonprofits aren't supposed to share their profits with insiders. And he's not wrong that overpaying insiders is a way of attempting to distribute those profits. But high salaries, standing alone, aren't necessarily indicative of profit-sharing, a fact that he appears to be aware of: the bill carves nonprofit hospitals out of its scope.

Will this go anywhere? I mean, I don't follow Suffolk County politics, so I really don't have any idea--it hasn't yet gone by even the full body of the county' legislature. And it's worth noting that former Governor Andrew Cuomo attempted something similar, and his proposal ended up getting largely rolled back by the courts. 

But it's something to watch.

Samuel D. Brunson