Attorney General Eric Schneiderman Launches Non-Profit Reform ...

Attorney General Eric Schneiderman launched today what he described as the ?most significant reform effort in decades? aimed at cleaning up and streamlining New York?s convoluted non-profit sector.

Speaking at a Crain?s breakfast forum in Midtown Manhattan, Schneiderman said the goal was to root out waste and fraud in non-profits, restore New Yorkers? confidence in the sector, and reduce the regulatory burden for non-profits.

?My state role as a regulator ? allows me to catch bad guys,? Schneiderman said. ?But it?s also very important I use it as a platform to make it easier for the good guys to do business.?

Recently, Gov. Andrew Cuomo has sought to rein in executive compensation at non-profits receiving state funds by issuing an executive order capping executive salaries at $199,000. The move was prompted by a New York Times expose?of one non-profit executive?s $1 million salary.

The attorney general?s effort to tighten non-profit oversight can be seen as a move to reclaim jurisdiction over the sector from his predecessor. Several recent stories have focused on the tense relationship between Cuomo and Schneiderman, especially as the governor has attempted to encroach on the turf of his former office.

?One could say that it?s only because Cuomo has reached into segments and claimed them as his own that this may appear as an encroachment, but could fit under what is a traditional jurisdiction for the AG,? said one person in attendance.

Responding to a question from Crain?s reporter Erik Engquist about Cuomo?s proposed compensation cap, Schneiderman was non-committal.

?The governor issued an executive order and they?re now drafting regulations, so we?ll see what happens,? he said.

Schneiderman said he spoke yesterday with State Sen. Carl Marcellino, who has said he would introduce a bill that would allow some non-profits to circumvent the cap.

?I think they?re working on coming up with a best possible solution to this,? Schneiderman said.

The attorney general said that his report, put together by his office?s Leadership Committee for Nonprofit Revitalization, takes a ?much more comprehensive view? than just focusing on executive compensation.

?The issue isn?t just he compensation of top executives,? he said. ?You have to have the directors and functioning audit committees to make sure every dollar is well spent. If you have a bunch of people making $40,000 a year, but they?re not doing anything, that?s not so good either.?

Here?s the attorney general?s full statement on the reform effort:

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A.G. SCHNEIDERMAN ANNOUNCES BOLD PLAN TO REVITALIZE AND REFORM NEW YORK?S NONPROFIT SECTOR

A.G.?s Plan Will Cut Red Tape, Reduce Costs For Nonprofits And Taxpayers & Strengthen Accountability?

New Partnerships With Business And Academic Communities Will Improve Nonprofit Governance And Encourage Volunteerism?

NEW YORK ? Attorney General Eric T. Schneiderman today unveiled a bold plan to reform and revitalize New York?s nonprofit sector. Announced before an audience of non-profit and business leaders, Attorney General Schneiderman?s plan includes legislation to eliminate outdated and costly burdens on nonprofits, strengthen oversight and accountability, and reaffirm his office?s commitment to policing fraud and abuse. Acknowledging that organizations throughout New York State face historic financial and strategic challenges, the Attorney General?s plan also includes several new partnerships with the business and academic communities to enhance nonprofit governance.

?New York is the proud home of the world?s most dynamic and vibrant nonprofit sector, but for too long, our state?s regulatory framework has placed unnecessary burdens on these essential organizations. This plan will unlock the full potential of our nonprofit community, and improve the lives of the countless New Yorkers they serve every day,? said Attorney General Schneiderman. ?In these difficult economic times, it is more important than ever to make New York a hospitable environment so nonprofits can continue to carry out their vital work. At the same time, we must maintain the public?s trust by ensuring that nonprofits are governed effectively, and with meaningful oversight.?

In 2011, Attorney General Schneiderman convened a Leadership Committee for Nonprofit Revitalization with 32 nonprofit leaders across the state to recommend proposals that would reduce regulatory burdens on nonprofits, while strengthening governance and accountability. Today?s legislative and reform initiatives, announced at a breakfast forum hosted by Crain?s, are responsive to the committee?s recommendations. They include the Nonprofit Revitalization Act, to be proposed by the Attorney General, and two initiatives, ?New York on BOARD? and ?Directors U,? designed to improve nonprofit governance.?The Attorney General?s Charities Bureau, led by Bureau Chief Jason Lilien, will assist in the development and promotion of these initiatives.

A.G. Schneiderman To Introduce The Nonprofit Revitalization Act

The Attorney General?s proposed Nonprofit Revitalization Act represents the most comprehensive reform to New York?s nonprofit laws in decades. It would enhance oversight of nonprofits by their boards, provide new tools to the Attorney General to stop fraud and abuse, and reduce unnecessary burdens long-plaguing nonprofits in New York.

Schneiderman?s legislation would enact a number of key reforms, including:

????? Streamlining bureaucratic processes to expedite formation of nonprofits in New York and approval of key nonprofit transactions;

????? Modernizing outdated requirements, such as permitting the use of technology to facilitate more efficient operations and to reduce costs;

????? Requiring that boards provide enhanced and independent oversight of executive compensation;

????? Increasing board responsibilities to oversee financial audits;

????? Enhancing the Attorney General?s tools to police self-dealing and other forms of corruption; and

????? Requiring that nonprofits adopt conflict-of-interest and whistleblower policies.?

ABNY and the Attorney General Launch ?New York on BOARD?

Attorney General Schneiderman announced today the launch of ?New York on BOARD,? a new director recruitment initiative to build stronger and more diverse boards for nonprofits. Throughout New York State, nonprofits are facing increasing challenges in recruiting talented directors needed to ensure proper oversight.

New York on BOARD (?Building Oversight, Awareness, Resources and Depth?) is a groundbreaking partnership through which New York?s business community will expand its already substantial philanthropic leadership. Companies that pledge to get ?on board? would agree to create programs that encourage their employees to serve on nonprofit boards and be matched with nonprofits. ?It is envisioned that New York on BOARD?s recruitment efforts will be expanded to the state?s academic communities and retiree population. The program will be administered by the Association for a Better New York (ABNY), and developed by a steering committee whose initial membership includes:

• Bloomberg LP
• Cushman & Wakefield
• First Niagara Bank
• Lazard
• Loews Hotels

?ABNY is pleased to partner with the Attorney General?s Office to promote nonprofit board service,? Bill Rudin said. ?My father envisioned exactly this type of program when he founded ABNY in 1971. He believed, as we at ABNY still do, that New York?s business community should aspire to ?do well by doing good.?? By encouraging employees to serve New York?s nonprofit community, our members will help employees strengthen their own skills while helping nonprofits improve their governance. This is a win-win.?

New York?s Academic Community and the A.G. Launch ?Directors U?

Attorney General Schneiderman also announced today the launch of a second new initiative designed to improve director education. The Attorney General?s Office will facilitate this statewide program called ?Directors U? to provide training to nonprofit directors that is free or of minimal cost, and easily accessible. Directors U will create an online library of seminars and materials covering a full range of nonprofit subjects, which will be supplemented by a series of live, in-person trainings.

Dean Harry C. Katz of Cornell University?s School of Industrial & Labor Relations, said, ?Cornell University and our academic partners are eager to work on this exciting initiative with the Attorney General. This new and innovative program will help nonprofits educate and train their board members about nuances of sometimes complex nonprofit laws and practices. Directors U will help make sure that directors are comfortable in performing critical oversight.?

Directors U will be administered through a consortium of academic institutions, including:

• ?Adelphi University, Long Island Center for Nonprofit Leadership at Adelphi University
• Baruch College, School of Public Affairs
• Binghamton University, College of Community and Public Affairs
• Columbia University, the School of International and Public Affairs
• Cornell University, Institute for Compensation Studies, ILR School of Cornell University
• The New School, Milano School of International Affairs, Management, and Urban Policy
• New York University School of Law, National Center on Philanthropy and the Law
• University at Albany, Rockefeller College of Public Affairs & Policy
• Yale University, Millstein Center for Corporate Governance and Performance

The Attorney General?s Office will provide support for the consortium?s work and help conduct training programs.

The Attorney General?s Committee for Nonprofit Revitalization

The Attorney General?s reform plan follows a report issued by the Attorney General?s Committee for Nonprofit Revitalization. Just three months into his administration, Attorney General Schneiderman took the unprecedented step of inviting key nonprofit leaders to sit at the same table with the Attorney General?s Office to reassess regulatory frameworks in New York and address longstanding challenges facing the sector.

The Attorney General assembled a committee whose diverse membership includes 32 individuals from organizations large and small, from upstate and downstate, and reflective of the full breadth of New York?s nonprofit sector. The Committee also includes several of the leading nonprofit practitioners in the country.

The Committee held a dozen formal meetings between July and December 2011, as well as numerous additional discussions among members and with key stakeholders. The Attorney General?s office provided substantive and administrative support in facilitating the Committee?s work and drafting its Report.

The Committee developed 38 concrete recommendations, which it presented to the Attorney General in a report entitled ?Revitalizing Nonprofits / Renewing New York.?? The Committee?s report formed the basis for today?s announcement.

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Source: http://www.cityandstateny.com/schneiderman-launches-non-profit-reform-effort/

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