By James A. Woehlke, CAE
In the last quarter of 2010, NYSAE formed a new shared interest group, the Law SIG. Limited primarily to C-suite executives of tax-exempt organizations and lawyers serving the NYSAE membership, the Law SIG has been developing a presence on the NYSAE website, including discussions of legal issues and the posting of legal information useful to senior executives in the tax-exempt organization community. The Law SIG also held its first two quarterly luncheons.
Duval and Stachenfeld hosted the second Law SIG luncheon on March 8. David Samuels spoke on Pitfalls in Nonprofit Governance. Keying off the 33 nonprofit best practices first articulated by Independent Sector, Mr. Samuels described a number of scenarios to be avoided by nonprofit organizations in New York.
During the post presentation discussion, Mr. Samuels focused the group’s attention on the problem of underwater endowments and the recent passage of a New York version of the Uniform Prudent Management of Institutional Funds Act. Unfortunately, the New York version is significantly different than the UPMIFA passed in nearly all other states. Mr. Samuels strenuously emphasized the need for all New York nonprofit corporations to institute investment policies compliant with the NYPMIFA. This applies both for organizations with and without formal endowments.
Giving credit to the Patterson Belknap law firm for their excellent work on NYPMIFA, Mr. Samuels noted that investment policies will need to cover the following eight factors:
- general economic conditions;
- the possible effect of inflation or deflation;
- the expected tax consequences, if any, of investment decisions or strategies;
- the role that each investment or course of action plays within the overall investment portfolio of the fund;
- the expected total return from income and the appreciation of investments;
- other resources of the institution;
- the needs of the institution and the fund to make distributions and to preserve capital; and
- an asset's special relationship or special value, if any, to the purposes of the institution.
In addition, the policy needs to address:
- appropriate decision-making in context;
- types of assets; and
- delegation of investment management
Pillsbury, Winthrop, Shaw, Pitman hosted the inaugural Law SIG luncheon on December 15 at the firm’s Time Square office. Jerry Jacobs, author of ASAE’s Association Law Handbook, led the discussion. Mr. Jacobs spoke on Development in Association Law in 2009 and 2010. Following Mr. Jacobs presentation, the SIG discussed issues on the horizon for 2011.
James A. Woehlke, CAE, is general counsel & COO, MBL Benefits Consulting, One Penn Plaza, Suite 410, New York, NY 10119; 212-560-4442; jwoehlke@mblbc.com.
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