What You’ll Learn
If you’re a nonprofit in New York, or you’re a nonprofit considering fundraising or other activities in New York, you must understand the requirements that New York has established for nonprofits operating in the state.
How can you become familiar with these laws? Where should you start?
Start here. This state profile includes the basic requirements nonprofits must consider. Reading the profile and implementing appropriate compliance measures will help you prepare your organization for success in New York.
Getting to Know the State Nonprofit Corporation Law
*Important primarily for nonprofits incorporated in New York
Emma Woodhouse, handsome, clever, and rich, with a comfortable home and happy disposition, seemed to unite some of the best blessings of existence; and had lived nearly twenty-one years in the world with very little to distress or vex her. She was the youngest of the two daughters of a most affectionate, indulgent father; and had, in consequence of her sister’s marriage, been mistress of his house from a very early period. Her mother had died too long ago for her to have more than an indistinct remembrance of her caresses; and her place had been supplied by an excellent woman as governess, who had fallen little short of a mother in affection.
- Emma, Jane Austen
When reading a novel, we get to know a fictional character by the author’s description. The author tells us about the character’s appearance, purpose, actions, mannerisms, and values.
Nonprofit corporations are something like fictional characters.
We learn how a nonprofit will look and act and make decisions not by reading a novel, but by reading the state law (called the nonprofit corporation act) and the rules the nonprofit makes for itself (called the bylaws and articles of incorporation). The law and the organization’s own rules tell us the organization’s name, purpose, way of acting, and method of making decisions.
To get to know your own nonprofit, be sure to review the sections below.
State Nonprofit Corporation Law
For Religious Nonprofits
Nonprofit Religious Corporation Act: New York’s nonprofit corporation law acknowledges the ability of nonprofit corporations to incorporate for religious purposes but does not include specific provisions to protect religious nonprofits’ right to self-government in internal affairs or an option to incorporate expressly as a nonprofit religious corporation. N.Y. Relig. Corp. Law; Confused about what it means to be a religious nonprofit corporation? See our whitepaper “Why a Religious Corporation?”
Reliance on Religious Guidance in Governance: New York law affirms the ability of a director to, in the fulfillment of the director’s fiduciary duties, rely on the opinion of individuals who can reasonably be assumed to have expertise on a certain matter, but does not expressly allow a director to rely on guidance from religious figures within his or her faith tradition. N.Y. Not-for-Profit Corp. Law § 717
Understanding Religious Liberty in this State
*Important for all nonprofits doing business in New York, whether incorporated in New York or elsewhere
The religious education and formation of students is the very reason for the existence of most private religious schools, and therefore the selection and supervision of the teachers upon whom the schools rely to do this work lie at the core of their mission. Judicial review of the way in which religious schools discharge those responsibilities would undermine the independence of religious institutions in a way that the First Amendment does not tolerate.
- Our Lady of Guadalupe School v. Morrisey-Berru, 140 S. Ct. 2049 (2020).
Sometimes, the state or local government (like the city or county) makes laws that could conflict with your organization’s free exercise of religion or its sincerely-held religious beliefs.
For example, a law might require employers not to make faith-based distinctions between job candidates. If your organization’s mission is to pass on the teachings of your faith, you will need to make faith-based distinctions in evaluating candidates because their faith commitments will impact their abilities to partner in your mission and witness the faith to your program participants.
So what do you need to do? Be aware of the laws listed below. If any of the laws impact your organization—for example, if you are an employer or a facility open to the public—learn more about how you can protect yourself by reviewing Napa Legal’s religious liberty resources. Talk to an attorney if you have specific concerns.
Religious Liberty Protections
State Religious Freedom Restoration Act: New York has not enacted a RFRA and has enacted nondiscrimination laws that conflict with the beliefs of many religious organizations. Not sure what a “religious freedom restoration act” is? Click here to learn the fundamentals.
State Constitutional Protection of Free Exercise: The New York Constitution follows in “lockstep” with the federal constitution’s protections, meeting but not exceeding the required minimum protections of the First Amendment. N.Y. Const., art 1, § 11
State Blaine Amendment: The New York Constitution contains a Blaine Amendment that could prevent the participation of faith-based schools in generally available public benefit programs on the same terms as similarly situated secular schools. This is not as broad as a general Blaine Amendment, which prohibits all aid to faith-based institutions, but is still detrimental to the work of faith-based institutions. Current U.S. Supreme Court precedent has rendered this language ineffective, but it could become effective in the future if Court precedent changes. N.Y. Const., art. XI (Education), § 3; Not sure what a Blaine Amendment is? Review the basics here.
Other Relevant State Laws and Regulations
New York currently has a statewide public accommodation law. The law deems organizations incorporated under New York’s religious corporation to be private for purposes of this accommodation mandate. Be sure you understand this and any local regulations that may apply to your organization.
Religious Freedom and Public Accommodation Laws: New York’s nondiscrimination laws generally restrict religious freedom for religious organizations that offer public programming and facilities but provide accommodations or exemptions for the vast majority of religious organizations. N.Y. Exec. Law § 296(2)(a); see also N.Y. Exec. Law § 292(9); Not sure what a public accommodation law is or what it means for your organization’s religious liberty? Learn the basics in this article which discusses the issue in the context of the case Fulton v. City of Philadelphia.
Protections for Religious Exercise in State of Emergency: New York law has no explicit constitutional or statutory protections for religious exercise during a time of emergency.
Key Employment Laws and Regulations
In addition to tracking with the protected classes in the federal anti-discrimination employment law (race, color, religion, sex, and national origin), Title VII of the Civil Rights Act of 1964, New York prohibits employers from discriminating on the basis of age, creed, sexual orientation, gender identity or expression, military status, disability, predisposing genetic characteristics, familial status, marital status, or status as a victim of domestic violence. Some religious exemptions apply to these requirements. More information is available in N.Y. Comp. Codes R. & Regs. tit. 11 § 52.2. Local governments may also have employment-related regulations. An attorney can help you understand what requirements apply to your organization.
Religious Freedom for Employees: N.Y. Exec. Law § 296(10)
Conducting Activities or Programs in this State
Understanding the Business Registration Requirement
*Important primarily for nonprofits doing business in New York but incorporated elsewhere
If you are fundraising or conducting activities in this state, you must consider whether you need to register as a foreign nonprofit corporation. The state law requires entities that are conducting activities in the state to register. An attorney can help you decide whether you need to register based on the type and volume of activities you have in this state.
Business Registration Statute
Fundraising and Charitable Registration in This State
How to Know (And What to D0) If You're Fundraising In This State
*Important for both New York and Foreign Nonprofits
Not sure what “charitable registration” is? Need to review the basics? Read this article for a refresher.
In this state, religious organizations are automatically exempt from charitable registration requirements. The religious exemption is not limited to IRS Form 990 Non-Filers, such as churches.
This state has a broad definition of what constitutes solicitation and does not specify what minimum activity level triggers registration requirements.
If You're Fundraising In Multiple States, Make Sure You Understand the URS
In this state, organizations which are required to register have the option of registering through the Unified Registration Statement, which is a standardized charitable registration accepted in many states. Using the URS, rather than a state-specific registration form, has pros and cons. The URS typically must be submitted by mail. New York has an online filing system and using that system may be more efficient than completing and mailing the URS manually.
Additionally, creating the online profile will save the organization time in preparing future annual reports, which are processed using the same system.
Evaluate Whether You'll Need a Registered Agent
Some states require organizations to appoint a “registered agent” in the state as part of the organization's charitable registration. This state does not currently have this requirement. Note that a registered agent may be required pursuant to other state registrations.
Follow the Rules About Communicating with the Public
This state requires organizations to include specific statements whenever the organizations is requesting donations (also called "charitable solicitation"). Religious organizations generally are not required to include this statement, but posting the language is often a best practice to build trust with donors and state regulators. Below is sample language to use with charitable solicitations in this state:
This solicitation is made by *ORG*, doing business as *DBA*, in support of its *PURPOSE* and *PROGRAMS*. For more information about *ORG* and other charitable organizations, visit the New York Attorney General’s website at https://www.charitiesnys.com/ or call (212) 416-8401.
Charitable Registration Statute
Charitable Registration Exemption Statute
Annual Report Requirement
Audit Requirements: As a condition of maintaining authorization to fundraise in the state, New York requires the submission of: (a) reviewed financials for organizations with annual revenue between $250,000 and $1 million, and (b) audited financials for organizations with annual revenue of more than $1 million. N.Y. Exec. Law § 172-B. Note: In 2021, New York state passed additional charities regulations focused on obtaining donor information and information about support of 501(c)(4) organizations.
Get Acquainted with State and Local Taxes and Exemptions
State and Local Taxes
*Important for all nonprofits doing business in New York, whether incorporated in New York or elsewhere
In this state, organizations which have received federal income tax exemption are also exempt from the state income tax. However, to receive this exemption, organizations must apply. The exemption is not automatic. The current application form is available from the New York Department of Taxation and Finance. Note that, although an organization may be exempt, if it has unrelated business taxable income (UBTI) that is subject to federal taxation, that UBTI may be subject to state income tax. See N.Y. Tax Law Article 13. Consult with an accountant or attorney to confirm.
In New York, almost all business entities, even out-of-state business entities, must pay an annual franchise tax. However, entities operated exclusively for religious purposes (such as a faith-based nonprofit) are exempt from this tax. See N.Y. Tax Law § 208, 209; 20 CRR-NY 1-3.4(b)(6). Some organizations may choose to send a copy of their IRS determination letter to the New York Department of Taxation and Finance to indicate the organization’s position that it qualifies for the exemption.
It is also important to consider whether your organization might be eligible for sales and use tax or property tax exemption. In this state, federal § 501(c)(3) status does not automatically provide an exemption from sales, use and property taxes. More information about the sales and use tax exemptions and applications is available on the New York Department of Revenue website and in New York administrative rules. An accountant or attorney can provide answers to specific questions regarding your organization’s eligibility for exemption.
Corporate Income Tax Statute
New York imposes a statewide corporate income tax but offers exemptions to organizations with federal 501(c)(3) exempt status upon application. N.Y. Tax Law § 209(9)
Corporate Franchise Tax Statute
In New York, the corporate franchise tax is synonymous with corporate income tax; see N.Y. Tax Law § 208, 209; N.Y. Comp. Codes R. & Regs. tit. 20, § 1-3.4(b)(6) for information on the corporate income tax.
What You Need to Know About Sales Tax
Sales and Use Tax: New York imposes a sales and use tax on religious organizations’ sales and purchases but generally provides a broad and comprehensive, entity-based tax exemption for 501(c)(3) religious organizations’ sales upon application. N.Y. Tax Law § 1116. Note: Religious organizations must first apply for tax-exempt status
State Tax Treatment of Unrelated Business Income: N.Y. Tax Law Article 13.
Property Tax: N.Y. Real Prop. Tax Law § 420-a exempts certain 501(c)(3)s, including those organized and conducted exclusively for religious purposes, from property taxes. However, religious organizations must first apply for tax-exempt status using this form.
State-Specific Special Requirements
This resource contains general educational information related to legal concepts, but this information does not constitute legal advice. Anyone seeking legal advice is strongly encouraged to consult with a licensed attorney regarding any of the matters discussed herein. Although licensed attorneys work with Napa Legal, Napa Legal is not a law firm and does not undertake legal representation on behalf of any clients. Further, no licensed attorney working with or on behalf of Napa Legal agrees to undertake legal representation on behalf of any client unless the terms of such representation are set forth in a separate, written representation agreement.
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**Please note that the following state profiles are forthcoming and will be published soon:Hawaii and Washington