Should the state of New York be concerned about nonprofits incorporating outside state lines?
New York lawmakers arecurrently in the process of reforming the state’s Not-For-Profit CorporationLaw. Key players in the reformation process explain that they are trying toreconcile the differences in S3755 and S5198.
The current New YorkNot-For-Profit Corporation Law has not experienced significant changes since1969. The law’s contemporary critics claim that its regulatory scheme is overlyintrusive and has ultimately caused nonprofit organizations to incorporateoutside of the state of New York.
New York is home to about 103,000nonprofit organizations that employ somewhere around 1.25 million people. Thesenumbers clearly indicate that New York nonprofits do a lot of good for thestate in terms of providing public benefits and employment opportunities forNew Yorkers. However, each year New York also loses millions of dollars inproperty taxes due to nonprofit tax exemptions. Is the state in which anonprofit is incorporated a valid consideration when weighing the benefits andburdens associated with tax-exempt organizations? If a nonprofit organizationchooses to be present and operate in New York, but simply elects to incorporateoutside of the state, in what way is the state of New York affected?
http://www.newyorklawjournal.com/PubArticleNY.jsp?id=1202601454225&thepage=1
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