Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Is Your New York Nonprofit Ready for the State’s New Disclosure Reporting Requirements?

Author: Dan Brecher

Date: June 16, 2021

Key Contacts

Back
Is Your New York Nonprofit Ready for the State’s New Disclosure Reporting Requirements?

Certain New York nonprofits must file an annual financial report, a funding disclosure report, and/or a financial disclosure report...

In the height of the COVID-19 pandemic, the State of New York quietly amended Sections 172-B, 172-E, and 172-F of the state’s Executive Law to establish heightened reporting requirements for charitable tax-exempt organizations. Effective January 1, 2021, certain New York nonprofits must file an annual financial report, a funding disclosure report, and/or a financial disclosure report.

Summary of New Disclosure Reports

To implement the amended laws, the Department of State issued a notice of proposed rulemaking on February 3, 2021. Below is a brief summary of the new disclosure obligations:

  • Annual Financial Report: Any charitable organization that is required to file an Annual Financial Report with the Office of the Attorney General under Executive Law Section 172-b, or that is required to file a Funding Disclosure Report and/or a Financial Disclosure Report with the Department of State for a reporting period during the applicable fiscal year is also required to file such Annual Financial Report, including all required forms and attachments, with the Department of State.
  • Funding Disclosure Report: Charitable organizations that have received tax exemption pursuant to Section 501(c)(3) of the Internal Revenue Code (IRC) are required to file funding disclosure reports with the Department of State. These reports identify the financial support an IRC Section 501(c)(3) tax-exempt organization has given to an IRC Section 501(c)(4) tax-exempt organization. Only those IRC Section 501(c)(3) tax-exempt organizations that have made an in-kind donation greater than $10,000 during a reporting period are required to file this report.
  • Financial Disclosure Report: Charitable organizations that have received tax exemption pursuant to IRC Section 501(c)(4) are required to file financial disclosure reports with the Department of State. These reports identify a 501(c)(4) organization’s issue-based advocacy spending (“covered communications”). Only those IRC Section 501(c)(4) organizations that have made expenditures on covered communications in an aggregate amount or fair market value exceeding ten thousand dollars in a calendar year are required to file a financial disclosure report with the Department. A “covered communication” is defined as one conveyed to 500 or more members of the general public, and “refers to and advocates for or against a clearly identified elected official, executive or administrative body or legislative body relating to the sponsorship, support, opposition, or outcome of any proposed legislation, pending legislation, rule, regulation, hearing or decision, or advocates for or against action by any elected official, executive or administrative body or legislative body.”
  • Mission Statement: When filing any of the above reports, entities must also file a statement of the filing entity’s mission that is consistent with what was or would be provided to the IRS with a filing entity’s application for recognition of exemption as a 501(c) organization, all charitable categories identified in such application, any narrative description of the filing entity’s activities provided with the application, and any supporting details to the narrative description provided with the application.
  • IRS Form 990: When a 501(c)(3) organization is required to file a Funding Disclosure Report, it must also submit a “complete” IRS Form 990 Schedule B, including the names and addresses of donors, with the Department regardless of whether Schedule B must be filed with the IRS.

Deadlines for New Disclosure Reports

The Annual Financial Report must be filed with the Department of State on or before the fifteenth day of the fifth calendar month after the close of the charitable organization’s fiscal year. So, if a covered entity’s fiscal year ends on August 31, that entity is required to file its Annual Financial Report on or before the following January 15. If the covered entity’s fiscal year ends on December 31, the entity is required to file its Annual Financial Report on or before the following May 15.

The Funding Disclosure Reports and Financial Disclosure Reports must be filed with the Department of State within 30 days of the close of a reporting period. “Reporting period” is defined as the six-month period within a calendar year starting January 1st and ending June 30 or the six-month period within a calendar year starting July 1 and ending December 31.

Filing New Disclosure Reports

Reports must be filed online through the Department of State’s Charitable Organization Financial Reporting System. The fee for filing a financial report with the Department of State is $25. Filers need a NY.Gov account to file a report through the Department’s Charitable Organization Financial Reporting System.

Public Disclosure of Reports

If the funding or financial activity described in a covered entity’s Financial Disclosure Report is inconsistent with the charitable purposes of the entity, the report will be published on the Department of State’s website. The published materials will not include the names and addresses of individual donors to covered entities, or the covered entity’s IRS Form 990 Schedule B. The published report may not be made public pursuant to Executive Law Section 172-f if, based upon a review of the relevant facts presented by the covered entity, such disclosure may cause harm, threats, harassment, or reprisals to the source of the donation or to individuals or property affiliated with the source of the donation. The covered entity may appeal the Department’s determination.

Executive Law Section 93-a provides that whenever the Secretary of State, in consultation with the Department of Taxation and Finance or the Department of Law, determines that the nature and extent of a covered entity’s in-kind support to other entities or the nature and extent of a covered entity’s spending on covered communications is inconsistent with the charitable purposes of such covered entity, the Secretary must publish the financial reports, including Annual Financial Reports, on the Department of State’s website. However, any published materials may not include the names and addresses of individual donors to covered entities or covered entity’s IRS Form 990 Schedule B.

If you have questions, please contact us

If you have questions or if you would like to discuss the matter further, please contact me, Dan Brecher, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Tariff Response Options for Small Businesses Facing Financial Distress post image

Tariff Response Options for Small Businesses Facing Financial Distress

The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]

Author: Brian D. Spector

Link to post with title - "Tariff Response Options for Small Businesses Facing Financial Distress"
Common Causes of Partnership Disputes and How to Resolve Them post image

Common Causes of Partnership Disputes and How to Resolve Them

Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]

Author: Christopher D. Warren

Link to post with title - "Common Causes of Partnership Disputes and How to Resolve Them"
President Trump's Termination of Member Gwynne Wilcox post image

President Trump's Termination of Member Gwynne Wilcox

On January 28, 2025, the Trump Administration terminated Gwynne Wilcox from her position as a Member of the National Labor Relations Board (NLRB or the Board). Gwynne Wilcox, a union side lawyer for Levy Ratner, was confirmed to the Board for an original term in 2021 and confirmed again for a successive five-year term expiring […]

Author: Matthew F. Mimnaugh

Link to post with title - "President Trump's Termination of Member Gwynne Wilcox"
How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide post image

How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide

Closing your business can be a difficult and challenging task. For corporations, the process includes formal approval of the dissolution, winding up operations, resolving tax liabilities, and filing all required paperwork. Whether you need to understand how to dissolve a corporation in New York or New Jersey, it’s imperative to take all of the proper […]

Author: Christopher D. Warren

Link to post with title - "How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!