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Nonprofits seek easing of regulations

Private business owners have long told state legislators — in words and, by leaving New York, in deeds — that the laundry list of regulations has created unnecessary burdens on them and hurt their bottom line.

The same is true for nonprofit organizations, who say bureaucratic red tape is hurting their ability to provide services to those who need them, according to testimony from a series of hearings before the Senate Standing Committee on Corporations, Authorities and Commissions.

In some cases, nonprofits looking to incorporate are encouraged to do so out of state, such as in Delaware, to speed the process, according to Jason Lilien, chief of the state Attorney General’s Charities Bureau.

State legislators are seeking testimony to bolster a bill that would reduce unnecessary burdens on nonprofits while at the same time improving governance and oversight. It is an attempt to overhaul a law enacted in 1969, but which has seen a series of piece-meal amendments over time.

“We have the opportunity now to get something done,” Lilien said.

Peter Carpino

Peter Carpino, president of the United Way of Greater Rochester, said many nonprofits are faced with unprecedented challenges from declining funds and increased demand for services.

One way to help is for smaller, struggling nonprofits to merge with other organizations in order to meet the demand.

However, final approval for one such merger took three years because of paperwork errors caused by unclear regulations, Carpino testified Tuesday before the chair of the committee, state Sen. Michael H. Ranzenhofer, R-Amherst, Erie County.

“We support these changes,” Carpino said. “We believe they are critical.”

A hearing on Senate Bill S.2755-A on Tuesday at the Monroe County Office Building was the last of three scheduled hearings. A similar bill also is before the state Assembly.

The proposed legislation is an attempt to ease regulations and bureaucratic delays.

Testimony downstate had centered on limiting or perhaps eliminating the need for organizations to seek pre-approvals from state agencies, such as the state Education Department, which now could be required of a nonprofit that has little, if any, ties to education.

Smaller nonprofits could benefit from an aspect of the legislation that would raise the dollar threshold before an audit of the organization is required.

The legislation also proposes to tighten conflict of interest and whistleblower policies while handing more oversight control to the attorney general’s office.

Generally speaking, the bills make good strides in easing burdens, but Michael De Freitas, a representative of the New York State Bar Association’s Business Law Section, cautioned against “the chilling effect” of the attorney general’s expanded powers, particularly when adequate oversight of organizations already exists.

Ranzenhofer, who represents a portion of Rochester and the towns of Chili and Riga in the 61st District, said he hopes language can be worked out in the next few weeks and a bill voted on before the end of the session in June.

“We want to get it right, or get it as right as we can,” Ranzenhofer said.

Jennifer Leonard, president and CEO of the Rochester Area Community Foundation, said the timing is right for legislation that addresses the critical issues facing nonprofits.

“Most nonprofits are small and struggle to carry out their mission,” Leonard said.

The intent of a final bill would be to better direct where the donated money is spent, said state Sen. Joe Robach, R-Greece.

“What we don’t want to do is spend money on administration when we want the money to get to the people,” Robach said.