* New York nonprofits employ 500,000, more than finance
* Tough policing doesn't mean extra burdens for charities
By Michelle Nichols
NEW YORK, April 26 New York Attorney General
Eric Schneiderman announced plans on Tuesday to reform
cumbersome laws and regulations burdening the state's charities
in a bid to ease what he called a looming funding crisis.
Schneiderman said he would form a working group of
nonprofit, government and labor representatives to develop
proposals and recommend reforms. He also appealed to New York
City's corporate leaders to take a role.
New York's nonprofits employ 500,000 people -- up to 18
percent of the state's workforce -- while finance and insurance
companies in New York City employ about 341,000 people.
"New York's statutory requirements governing charities are
so burdensome that one leading not-for-profit lawyer has stated
that it is essentially malpractice to advise a not-for-profit
client to incorporate in New York," Schneiderman told the
nonprofit Association for a Better New York.
There are about 2 million nonprofits in the United States.
Of that number, just 20,000 receive about 85 percent of the
$300 billion in U.S. donations made annually, experts said,
while many smaller charities rely on city or state funding.
"The economy may have bottomed out in many areas, but for
New York's not-for-profits, the effects of cuts at every level
of government have yet to be felt," Schneiderman said.
Schneiderman told members of ABNY that tight federal and
state budgets could mean "a looming crisis in this incredibly
Many U.S. states are facing financial hardships stemming
from the U.S. recession of 2007-2009, which has limited their
budgets for law enforcement and other services.
U.S. tax authorities grant groups charitable status,
exempting them from taxes, but most laws governing nonprofits
are at state level from the attorney-general.
Schneiderman said that if a charity received funding from
six city or state agencies it could be subject to six separate
audits. Nonprofits in New York with revenues of more than
$250,000 also have to conduct annual audits, while in other
states such as California the threshold is $2 million.
"We can be as tough or tougher on policing fraud without
imposing unnecessary burdens," Schneiderman said. "But in hard
economic times, we can't afford to force (charities) to spend
15 or 20 percent of their resources on compliance costs."
Experts said last week that U.S. authorities, particularly
in cash-strapped states, have not devoted enough resources to
policing nonprofit groups. High-profile charities run by U.S.
singer Madonna and best-selling author Greg Mortenson have this
year been involved in controversies. [ID:nN20179668]
The Human Services Council, which represents human service
nonprofit groups in New York, said it was pleased that
Schneiderman had recognized the economic contribution of the
state's nonprofit sector.
"We are looking forward to partnering with him on efforts
to strengthen these critical organizations," the council said.
Doug White, of New York University's Heyman Center for
Philanthropy and Fundraising, said the proposals by
Schneiderman were "a start" as "the reporting requirements are
far too onerous and we should have a higher ceiling."
(Editing by Mark Egan and Eric Walsh)