Crains New York - June 17, 2013 - (Page 11)

ERIC T. SCHNEIDERMAN State’s red tape is choking nonprofits T hink of a multibillion-dollar industry hamstrung by absurd, expensive, outdated rules, yet one that New York state relies on to address some of its most pressing needs. It’s not financial services or health care. It’s New York’s vast network of nonprofit organizations, and reform is long overdue. New York is home to many of the most effective, innovative and influential charities in the world.The state’s nonprofit sector generates close to $200 billion in economic activity each year. In this difficult economy, nonprofits create jobs; they employ more than one in six New York workers, from scientists to social workers. Yet we burden this industry with red tape. Just following state laws and regulations costs nonprofits up to 30% of their operating budgets. Other charities never get started, scared away by maddening bureaucratic barriers to entry. It’s economically foolish and morally wrong. We can do better. My office and leaders of the nonprofit community, working with state Sen. Mike Ranzenhofer and Assemblyman James Brennan, have proposed a package of reforms to reduce administrative burdens and improve accountability and governance. The Nonprofit Revitalization Act would free our charities to do more of what they do best. In the age of electronic communication, current law requires charities to circulate a blizzard of paper notices and hold in-person board meetings. The act will let nonprofit boards use 21st-century technology like email and Skype to carry out their responsibilities, and let organizations e-file annual disclosures. The act will also slash compliance and organizational costs. New York requires even relatively small charities to hire auditors to review their fi- On jobs, Democrats are out to lunch L eave it to Anthony Weiner to take a major issue for all the Democratic mayoral candidates—lowwage jobs—and find a bizarre way to grab the spotlight. “It ain’t enough just to say, ‘I created another job at a Red Lobster,’ ’’ he said in claiming the city is creating low-wage jobs at the expense of middle-class jobs.“I don’t know what Red Lobster is; it’s like a Lundy’s for tourists or something.” Tourists do like Red Lobster, which is why there is one in Times Square, but that is beside the point. Is New York City creating low-wage jobs at the expense of other kinds of jobs? And is New York’s record worse than the rest of the country’s in doing so? The answers are a little complicated, but the bottom-line response is no—and the way Mr. Weiner put it is completely wrong. The chart at right compares job gains in key sectors in New York and the nation. These are Eastern Consolidated’s most recent seasonally adjusted numbers. Let’s start with low-wage jobs. The city is gaining those much-criticized restaurant jobs at about the same rate as the rest of the country. More retail jobs are being created here, in large measure because New York has traditionally been “understored” (as retailers say) and because nances. That can eat up a staggering percentage of their budgets. Our reform exempts charities with revenues up to $500,000. Furthermore, it makes it simpler for nonprofits to merge, sell real estate and take other such measures without a court order. Starting a New York nonprofit is so difficult that one prominent lawyer has joked that advising a client to incorporate here should qualify as malpractice. Many must get “preapproval” from one agency before filing incorporation papers with another. Applicants are rejected for typos and minor mistakes,forcing them into an expensive merry-go-round of lawyers, resubmissions and delay. For most nonprofits, our reform will eliminate preapproval. For all, applications will be dramatically simplified. And applicants will be allowed to let state agencies correct small errors on their behalf, rather than forcing them to start over. The proposal also bolsters fraud prevention, curbing self-dealing and conflicts of interest, and protecting whistle-blowers. It gives my office tools to stop improper transactions and unwind insider deals. New York owes a debt of gratitude to its charities for the profoundly important work they do for people and our economy. As models of service and innovation, they deserve a legal framework to match. Eric T. Schneiderman is the attorney general of New York state. GOOD JOBS, BAD JOBS % of jobs gained by sector since the end of the recession SECTOR Construction Manufacturing Retail NYC U.S. +0.4% +4.4% -0.1% +8.6% +15.4% +11.1% Information +4.0% Finance, RE +2.9% +2.3% Professional* Tech, advertising -0.7% +1.5% +9.5% +10.3% +4.0% Education, health +25.5% +19.8% Restaurants +16.7% +15.2% Government -5.0% -10.2% *Accounting, law, architecture Source: Eastern Consolidated GREG DAVID gentrifying neighborhoods are attracting the kinds of shops that shunned them in the past.This is bad? As for higher-wage jobs, the city is doing fairly well. Manufacturing and construction are lagging,but factory jobs will do well just to remain at the current level, and construction didn’t implode here the way it did in many other parts of the country. Look at technology, advertising and even finance. New York is far outpacing the U.S. with what are typically well-paying jobs. Professional services have lagged some because of the woes of big law firms, but even there the worst is over, and accounting is booming. Oh, and there are those middleclass jobs Mr. Weiner keeps harping on. Well, health, education and government are three major sources of middle-class jobs, and New York is doing very well in those sectors compared with the country as a whole. Politicians exaggerate, of course, but the level of understanding of the city’s economy in the Democratic race leaves a lot to be desired. June 17, 2013 | Crain’s New York Business | 11 http://www.mogil.com http://www.mogil.com

Table of Contents for the Digital Edition of Crains New York - June 17, 2013

IN THE BOROUGHS
IN THE MARKETS
THE INSIDER
SMALL BUSINESS
BUSINESS PEOPLE
OPINION
GREG DAVID
FOR THE RECORD
REPORT: FORTUNATE 100
THE LIST
REAL ESTATE DEALS
CLASSIFIEDS
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crains New York - June 17, 2013