Nonprofit Revitalization Act Compliance Plan Available

New York State Nonprofit Revitalization Act:  Remedial Action Plan for Compliance  [Updated] $300 for Nonprofit Members of NYCON.  Purchase includes one hour of implementation assistance. In December 2014, the Governor signed the Nonprofit Revitalization Actinto law. It is the first major revision of New York State Not-for-Profit Corporation Law (NFPCL) in over 40 years and most of its provisions took effect July 1, 2014. The Act comprehensively reformed the NFPCL and had a significant impact on the governance policies and practices of the state's nonprofits. In order to comply with the new laws, the vast majority of nonprofits still need to amend their bylaws and/or revise or adopt new policies. What is Included in the Remedial Action Plan for Compliance and How Can it Help Our Nonprofit? In order to help ensure that member nonprofits are in statutory compliance in an expedient way, NYCON prepared the Remedial Action Plan for Corporate Compliance. The Plan provides a Resolution for the Board of Directors to adopt a "Statutory Compliance Article" as a bylaw amendment along with five accompanying policy documents to be attached as Appendices to the Bylaws. The Action Plan purchase also comes with one (1) free hour of implementation assistance (via phone) with a NYCON staff member. Appendices Included in the Plan: Bylaws and Corporate Policy Definitions Board of Directors Conflict of Interest Policy Code of Ethical Conduct and Annual Potential Conflicts Disclosure Statement Whistleblower Protection Policy Audit Oversight Policy This resource is available to current nonprofit members of NYCON. If you would like to renew your membership, please click here. If you are unsure of your membership status, please contact us.  Update on Bylaw Review Services: NYCON Members can now have their bylaws reviewed and revised for compliance with the new Nonprofit Revitalization Act as well as for other areas of improvement, including best practices. Learn More.   If you are interested in receiving a bylaw review, we encourage you to please inquire soon as our volume of requests is very high. We will prepare a quote at no charge. To do so, we will need to ask you a few questions about your existing policies and procedures -- as well as take a look at your current set of bylaws.To receive a quote for a Bylaw Review please click here and fill out our questionnaire. Legal Reminder and Disclaimer:   The documents provided in the Remedial Action Plan for Corporate Compliance are aimed at assisting not-for-profits to be minimally compliant to the Act in bylaw and policy statements. Please be reminded that every Board of Directors has a fiduciary obligation to ensure that bylaw and policy statements are properly and consistently carried out in practice.  We encourage all users of this material to obtain qualified legal counsel and, where appropriate, guidance from a Certified Public Accountant (CPA) to advise in any modification and to specifically identify what other provisions in the Act may mean for your organization.   Please read the NYCONEnd User License Agreement before completing your purchase.

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Nonprofit Knowledge Matters | The Compensati​on, Benefits, and Employment Issue

View this email in your browser              The common sense of compen$ation When questions about a nonprofit leader’s exceptionally high salary make the front page of the paper, we wince. A single nonprofit is being criticized for being an outlier, but it feels as if all charitable nonprofits and their values are being questioned. At the National Council of Nonprofits we are frequently asked, whether by the media, curious nonprofit staff members, or well-intentioned board members, how to determine what the appropriate compensation is for nonprofit staff.   The answer is, “it depends.” The legal process, promoted by the IRS, is to task the board or convene a group of board members (but not anyone employed by the nonprofit) to compare the salary and benefits of similar positions at similarly-sized organizations in your nonprofit’s geographic area, serving a similar mission. The process should be documented. A written description (such as in the minutes of a meeting) of what data was reviewed, and who was involved in the process, can protect the nonprofit and its board of directors from IRS penalties, in the unlikely situation that the IRS would find that the nonprofit approved compensation that was “excessive.” (Our website resources go into more detail about the process recommended by the IRS.) Of course, nothing can completely insulate a nonprofit from media scrutiny, but following the IRS “comparability” process, and taking pains to document all the research that went into approving compensation levels, offers protection against allegations of unreasonable conduct.   Comparing apples to apples, and proving that you did, is common sense, but it’s often hard to nail down data to use for the comparison. And the more practical question that comes up whenever a nonprofit is attempting to fill a position is: what salary level is attractive to candidates, but simultaneously won’t derail the nonprofit’s budget? Determining the appropriate salary and benefits for staff leaders is time consuming, but taking the time to “get it right” will make the hiring process more efficient and ensure that your nonprofit is attracting and retaining the talent it needs to advance its mission.   Read on for some ideas that may help     How many people work for nonprofits in the United States? Here’s a conundrum: As we often point out, the federal government can tell us how many heads of lettuce were grown in the US in a given year, but not how many heads of people were employed by charitable nonprofits! However, the charitable nonprofit community is a bit closer to having the data we need to show our clout and significance as an economic force in the workplace. According to recently released data from the U.S. Bureau of Labor Statistics (“BLS”) covering years from 2007-2012, there were at least 11.4 million people employed by nonprofits in 2012, which amounts to 10.3 percent of all private sector employment. (The actual number is higher since the data were based only on employer-units that participate in state unemployment programs, and many nonprofits opt-out of government programs, preferring to follow a private insurance route.) This BLS data revealed that of the nonprofit employees identified, their wages amounted to $532 billion, or 9.8 percent of total private sector wages! BLS made this data available in response to repeated requests from the nonprofit community. The BLS is now seeking input from nonprofits on the methodology of the research, the usefulness of the data, suggestions for future data products, and – most importantly – whether it should continue to release this information, so that the public can benefit from it. The National Council of Nonprofits believes this information is vitally important to nonprofits (which is why we have long included this provision in our annual Public Policy Agenda: “… governments have a responsibility to collect and disseminate nonprofit employment and economic data that identify the impact of nonprofit organizations in their jurisdictions”). Please join us by contacting BLS officials to thank the government workers who rolled up their sleeves to make this data available, and tell them how important it is to your nonprofit so they will continue to release this public information that the federal government already collects. If you have questions about the data, or suggestions on how to improve the usefulness of the data, or the process of obtaining datasets, please also let BLS know.     What’s new in health insurance benefits? Nonprofits that utilize the small-employer health credit to help pay for employee health insurance coverage will see a 7.3 percent reduction next year as the result of the automatic, across-the-board spending cuts known as “sequestration” that were enacted in 2011. The shrinking health credit is only one of thousands of arbitrary cuts that can adversely affect the work of charitable nonprofits. According to the IRS, these and other cuts will occur “unless and until a law is enacted that cancels or otherwise impacts the sequester.” In December 2013, House and Senate budget negotiators reached an agreement to avert another round of sequestration cuts, but that deal expires in 2015. White House officials revealed in October 2014 that President Obama will propose sequester relief in his fiscal 2016 budget due to be released in February 2015. That’s a long time to wait! Please help us help you by sharing your story about the small business health care tax credit with us. Thank you!   For information and special access to health and other types of insurance coverage tailored for nonprofits, such as Directors’ and Officers’ insurance, connect with your state association of nonprofits.     Before your nonprofit hires a professional fundraising firm – CAUTION! $1 million+ in penalties was assessed against a Minnesota fundraising solicitation firm that contacted potential donors in South Carolina with “robo” calls, without registering with the state. Did you know that the majority of states require nonprofits to register BEFORE soliciting a single contribution? Your nonprofit is not off the hook for registration if it is not the one making calls to prospective donors directly or sending out direct mail pieces. Moreover, if your nonprofit is directing potential donors to an online portal (such as Paypal or others) that processes donations, your nonprofit may still be required to register in various states. We recommend that you know your state’s charitable solicitation law and are also aware of state laws in other states where your nonprofit is soliciting contributions. Here is a 50-state fundraising compliance guide. (This guide is not legal advice and was created by Harbor Compliance.)   The “lesson learned” is that nonprofits can be responsible for the actions of their employees, and also of independent contractors they hire. As a result, it’s a good idea to set the limits of authority and define responsibilities for independent contractors in a written agreement with them. See our resources about independent contractors.     Q: Where can I find comparability information about salaries and benefits for nonprofits in my area? A: Many state associations of nonprofits offer salary and benefits reports that are state-specific. Related resources are available on our website.   Q: May interns receive a stipend? A.  If you are not careful, that stipend can turn a volunteer intern into an employee who is owed minimum wage. Read about compensation for interns.   Q: We need to downsize a program and thought that one solution would be to make one of our employees a consultant instead. Any risks? A. It will be important to analyze whether the employee you are downsizing truly meets the definition of a consultant, otherwise your nonprofit could face penalties and back wages. Blue Avocado explains this issue.   Top 10 Nonprofit Employment Mistakes  (Siobhan Kelley, J.D, NonProfit Times)   5 steps to help you decide what salary to pay your employees (Small Business Administration)   Who’s an employee and who’s an independent contractor – and why it matters (National Council of Nonprofits)   Your Voices Last month, we asked if your board monitors the impact of public policies on mission delivery and resources? Here's what you said:       New Resources from the National Council of Nonprofits What does it cost to deliver a nonprofit’s mission? #OwnYourOwnCosts   Worth Reading Two words that change how people think of you: “Thank you” With thanks – Gratitude can win you new friends. (UNSW Australia)   The Paradox of Generosity (Smith and Davidson, Oxford University Press 2014)   Overcoming the nonprofit starvation cycle – A conversation with Ann Goggins Gregory, interviewed by Nell Edgington (Social Velocity blog)   The Sustainability Mindset: Using the Matrix Map to Make Strategic Decisions By Steve Zimmerman and Jeanne Bell (Jossey-Bass 2014)     Share this newsletter with your staff, board, and nonprofit colleagues         Did you receive this email from a friend? Sign up now to receive this free e-newsletter each month. © Copyright 2014 National Council of Nonprofits. All rights reserved  1200 New York Avenue, NW | Suite 700 | Washington, DC 20005 | www.councilofnonprofits.org

 

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IRS Reports 10,000 Fewer Nonprofits In 2012

There were 10,000 fewer registered tax-exempt organizations in 2012 than in 2011. According to the Internal Revenue Service (IRS) Data Book for 2012, which was released Monday, there were 1,484,818 501(c) organizations for the fiscal year ending in September, compared with 1,494,882 in 2011 – a decrease of 10,064, or about 0.68 percent.Read more... Professional Development... 5 principles for ethical mentoring “I never meant for that to happen.” Just as the above lament can be the swan song for a nonprofit that doesn't follow good organizational practices, it can also be the epitaph for a mentoring partnership gone wrong. Read more... Human Resources... 15 interview questions you can legally ask There are a lot of laws these days that restrict the kind of information you can request from candidates during job interviews. Since you probably don't want to get in trouble with the law, it's important to know the questions that you can and should ask. Read more... Management... 6 reasons change is good It's usual to resist change. Those who aren't pulling their own (or any) weight know that their gigs can be threatened if they don't do a whirlwind job of convincing change agents just how essential they are. Those who are pulling their own weight (or more) know that their livelihoods are threatened because they are too busy working to prove how essential they are to the operation. Read more... To Read More Click Here

NYS employee fee to impact nonprofits

Read below about the recent news about a new fee per employee for employers related to NYS Unemployment Insurance borrowing. As a nonprofit, there is another alternative, which you can learn about from NYCON:

Find Out if the Unemployment Savings Program for NYCON Members through First Nonprofits Companies can Save You Money.

Why pay a tax if you don’t have to? Many NYCON Members have switched from paying the state unemployment tax rates to First Nonprofit Unemployment Savings Program saving up to 60% of their unemployment costs annually. Find out if you can too. Take NYCON's FREE upcoming Beneft Spotlight: Unemployment Savings Program on August 23rd from 10 am to 11am. REGISTER HERE

A Big Bill for Employers
The Albany Times Union reported that Gov. Andrew Cuomo on Tuesday rolled out a sweeping plan to help revitalize the state's economy, complete with an ad campaign and competitive grant program designed to spark innovation.

But businesses have a more immediate concern: The bill is coming due for New York's unemployment insurance.

Citing the need to borrow more than $3 billion from the federal government to prop up its chronically empty account, the state faces a whopping $95 million interest payment on loans for the fund due Sept. 30.

As a result, the state Department of Labor is assessing businesses up to $21.25 per employee to cover the cost. That payment is due Aug. 15.

Complaints about what businesses describe as a hidden tax were rolling in Tuesday after numerous employers received the notices and as Cuomo expounded on his plans for the economy.

"This is something that could -- depending on the number of employees -- be a pretty hefty cost in this economy," said Mike Durant, New York state director for the National Federation of Independent Businesses.

When asked about the surcharge during a news conference outlining his revitalization plans, Cuomo stressed that the bill for interest is ultimately coming from Washington, D.C.

"It's a federal decision whether or not they'll waive the interest payments. I hope that they do," he said, adding that his office was pushing the state's congressional delegation on the issue.

The hefty tab illustrates what can happen as the federal stimulus program, enacted shortly after the recession started in 2008, runs out.

The Department of Labor noted that the stimulus program provided no-interest loans to the states in 2009 and 2010, but not this year.

Read more: http://www.timesunion.com/local/article/A-big-bill-for-your-boss-1472786.php#ixzz1SetH4Zip

Nonprofit Knowledge You Need: Independent Contractors and Consultants

NYCON's national association, The National Council of Nonprofits, offers Nonprofit Knowledge Matters and a look at Contractors and Consultants:

You’ve just hired an independent contractor or consultant to work on a special project. Did you first evaluate whether the worker should be treated as an employee instead? Does it matter?

Yes, it matters because the government makes a distinction between the two classifications of workers (independent contractor/consultant versus employee) and requires nonprofits to treat them differently for payroll and withholding purposes. Also, insurance issues will surface when the consultant is injured and tries to file a claim for workers’ compensation. Is she covered? It depends on whether she is a consultant – or not.

Federal and state governments have regulations that define who is an independent contractor/consultant and who is an employee. If a nonprofit misclassifies a worker, the nonprofit is at significant risk. There are serious penalties and back taxes owed when a nonprofit incorrectly treats someone as an independent contractor/ consultant, when in fact the worker should have been classified and treated as an employee.

Additionally there are risks to misclassifying a worker as an exempt employee, when s/he should be classified as non-exempt. For tips and tools for avoiding misclassifying workers, read more about this topic from the resources available on the National Council’s website.

IRS guidance provides that someone is properly classified as an independent contractor/consultant “when the nonprofit has the right to control or direct only the result of the work done by an independent contractor, and not the means and methods of accomplishing the result.” We hope you feel comfortable with the distinction between independent contractors/consultants and employees. If you are not sure, here are some resources to help you classify workers correctly and avoid associated risks:

• Guidance from the IRS on everything you’ve always wanted to know about how to pay independent contractors correctly.
• Distinguishing between employees and independent contractors (written by the IRS for small business owners, but equally applicable to nonprofits.)
• IRS Publication 15-A (2010) provides guidance on classifying workers and includes a special section on tax issues relating to employees in exempt organizations.
• IRS Ministers’ Audit Guide (highlights special rules for religious organizations)
  

Spread the word: Deadline extended to October 15th for nonprofits to file their 990s.
Please join the State Association network of the National Council of Nonprofits, the IRS, and others to spread the word – to small nonprofits in particular – that they need to file with the IRS annually. Most urgently, many small nonprofits will lose their tax-exempt status if they have not filed in the past 3 years and fail to file by October 15th of this year. The IRS has announced a one-time relief program for nonprofits required to file the 990-N or 990-EZ that missed their deadline earlier this year.

• This short video from the IRS explains the filing deadline.
• The one-time relief program will not help organizations required to file the Form 990 or Form 990-PF. Their tax-exempt status will be automatically revoked if they fail to file for three consecutive years.
• Guidance from Guidestar.org explaining what you need to know about revocation of tax-exempt status.
• Electronic Filing Tool: Organizations with gross revenue under $100,000 may file their IRS Form 990-EZ electronically at no charge through the Urban Institute’s eFile program.