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Professional Fundraiser Contracts in New York

Posted: March 2nd, 2021

New York is one of the leading bases for charitable nonprofits nationally. Two million New York taxpayers reported giving $42.5 billion to charities in 2017.[1] Raising money has its own costs, however. Many charities use professional for-profit fundraisers as outside contractors to increase donations. Fundraisers play a crucial role in educating the public about and furthering a charity’s mission. Whether you are part of a nonprofit organization seeking to outsource fundraising, or a fundraiser for charities yourself, read on to learn about fundraising contracts and the costs and regulations related to fundraising in New York.

Giving by the Numbers

The New York Attorney General’s Charities Bureau is responsible for supervising charitable organizations to protect donors and beneficiaries of those charities from unscrupulous practices in the solicitation and management of charitable assets. Fundraising professionals who contact donors in the state are required by New York law to register annually and file fundraising contracts with the Attorney General’s Office. Depending on the nature of the activities, financial reports may also have to be filed. Additionally, the Association of Fundraising Professionals publishes a Code of Ethical Standards to foster and promote high ethical behavior in the fundraising profession.[2]

The Charities Bureau publishes an annual report called Pennies for Charity, which identifies trends in the charitable sector and shows the amounts retained by the actual charities, as opposed to professional fundraisers. The 2020 report includes data from 824 fundraising campaigns conducted in 2019 by professional fundraisers in New York; those campaigns raised over 1.2 billion dollars, but not all that money went to charities, or their intended beneficiaries.

More than $364 million was retained by professional fundraisers, while charities received $918 million (28% to 72% of funds raised, respectively). In 31% of campaigns, charities received less than 50% of funds raised. In 17% of campaigns, expenses exceeded revenue, which cost charities about $17 million. Since 2016, the percent of funds given to fundraisers has decreased from 33% to 28%.

Fundraising Contracts

Professional fundraisers are hired for many reasons, including due to inadequate staff available to raise funds and insufficient expertise to conduct fundraising campaigns. Further, retaining a professional fundraiser may be a means by which to get more people involved in a cause or mission. No matter the reason for hiring a professional fundraiser, it is important to learn about the fundraiser’s prior experience, reporting, and ethics before signing a fundraising contract.

To make the success of a fundraising campaign more probable, and to assist in avoiding problems that may result from hiring an inexperienced, non-compliant fundraiser, an organization should:

Check to make sure it is properly registered with the Charities Bureau and is current in its annual financial filings
Check with the Charities Bureau to see if the fundraiser is registered and has filed the required contracts and financial reports
Find out which other charities the fundraiser represented
Request copies of the fundraiser’s contracts with other charities and copies of the fundraiser’s financial reports
Ask the fundraiser for a list of references and contact those charities where the fundraiser worked

New York law requires that all fundraising contracts must be in writing and include no less than provisions as follows:

Within five days of receipt, all funds solicited by a fundraiser must be deposited in a bank account exclusively controlled by the charity
The charity has the right to cancel without penalty within fifteen days after the fundraiser has filed with the Attorney General
Descriptions of the services to be provided by the fundraiser and the financial terms of the contract must be clear
Names, addresses, and registration numbers of both parties

Other areas relevant to the engagement should be addressed as well. Like any business contract, the terms of the fundraising agreement must be drafted, reviewed, discussed, and negotiated completely before signing.

Whether you are a professional fundraiser or are considering hiring a professional fundraiser, please contact us for guidance.

Thank you to Daniel Axelrod for his research and writing assistance with this article.

[1] 2017 is the most recent year available to find tax return statistics.

[2] See https://afpglobal.org/ethicsmain/standards-guidelines (visited 3/2/2021). Specifically, it provides, in part, that members shall not accept compensation or enter into a contract that is based on a percentage of contributions, not accept finder’s fees or contingent fees, be permitted to accept performance-based compensation, and neither offer nor accept payments for the purpose of influencing the selection of products or services.

Campolo Presents Virtual Series, “Beyond the Book: The Go Giver”

Posted: February 24th, 2021

Event Date: March 19th, 2021

Take “Book Club” to the next level and go “Beyond the Book” with like-minded business professionals. Join CMM’s Joe Campolo, Co-Founder of Moving Forward Strategies, for an in-depth analysis, interactive discussion, and an intimate Q&A with the author during a 3-part complimentary virtual series!

ABOUT THE SERIES

The Go-Giver tells the story of an ambitious young man who yearns for success and learns that changing his focus from getting to giving—putting others’ interests first and continually adding value to their lives—ultimately leads to unexpected returns. In the first session, MFS Co-Founder Donna Sirianni will demonstrate through interactivity how you can implement tips from the book into your life right away. In our second session, MFS Co-Founder Joe Campolo will share how he has applied the book’s message to his personal and professional life.

ABOUT THE AUTHOR:

Bob Burg, coauthor of the international bestseller, The Go-Giver and a much sought-after speaker at sales and leadership conferences, is committed to inspiring the entrepreneurial spirit in us all. His book, The Go-Giver, coauthored with John David Mann, itself has sold over 975,000 copies and it has been translated into 29 languages. He shows that companies both large and small that conduct their businesses “The Go-Giver Way” are not only of much greater value to their customers; they are also significantly more functional, and profitable, as well.

DATE: March 12, March 19, March 25
TIME: 9:00 A.M. – 10:00 A.M

New Policies Allowing Legal Surrogacy in New York

Posted: February 24th, 2021

By: Christine Malafi, Esq. email

Tags: corporate, healthcare

Many people are surprised to find out that before February 15, 2021, surrogacy was not legally permitted in New York. Surrogacy has just become legal under New York State’s Child-Parent Security Act, which has New York join every other state (except Louisiana and Michigan) in legalizing surrogacy. The Act legalizes and regulates contracts related to gestational surrogacy in New York, and requires that surrogacy contracts contain no less than the following items:

Compensation: The base compensation and additional expenses for the surrogate must be placed in escrow with an independent agent.
Custody: The surrogate must agree to the embryo transfer and to give birth to the child. Additionally, both the surrogate and their spouse, if applicable, agree to concede legal custody to the intended parents immediately upon birth of the child.
Intended Parent Requirements: At least one intended parent must be a US citizen or lawful permanent resident and must have been a New York State resident for at least six months.
Legal Counsel: Both the surrogate and intended parents must be represented throughout the contractual process by independent legal counsel.
Medical Expenses: The intended parents must cover the medical expenses of the surrogate and child.
Surrogate Requirements: The surrogate must be US citizen or lawful permanent resident; at least 21 years of age; have successfully completed a medical evaluation; must not have previously provided the egg used to conceive a child; and must give informed consent.
Will: A will designating a guardian for the child must be executed.

Additionally, the statute includes the Surrogate’s Bill of Rights that includes a list of the surrogate’s substantive rights. These rights, which cannot be waived, include the right to:

make all health and welfare decisions regarding the pregnancy
independent legal counsel, of their own choosing, paid for by the intended parents
a health insurance policy paid for by the intended parents throughout the duration of the pregnancy and extending one year after the pregnancy
obtain counseling and disability insurance paid for by the intended parents
a life insurance policy paid for by the intended parents that takes effect prior to treatment and extends for one year after the pregnancy
walk away from an agreement prior to pregnancy without penalty

Other subjects which should be addressed in the agreement include:

Conception: How conception will occur (i.e. whose gametes will be used, are the embryos to be fresh or frozen, how many embryos will be transferred per attempt, and how many attempts will the parties make).
Death: What occurs if the intended parents die or become seriously disabled during the surrogacy process (how should the gestational carrier proceed)?
Governing Law: Indicate the specific state whose laws will govern the surrogacy arrangement and if a dispute arises, how will it be handled (i.e. in which court will the action commence or will there be mediation before a court action).
Parental Rights: Clearly define how the parentage will be addressed (i.e. how will the intended parents be established as the legal parents and how the gestational carrier will be relieved of all rights regarding the child).
Payment of Expenses: Spell out the methods and types of payments associated with surrogacy.
Termination of Pregnancy: Parties must agree on the possibility of termination of pregnancy. This is allowed when the pregnancy puts the carrier’s life in danger, but the contract should provide remedies when the carrier aborts (or refuses to abort) contrary to the wishes of the intended parents.

These topics are not an exhaustive list, and before any medical processes can begin, the entire contract must be finalized, even if the parents already have a friendly relationship with their intended surrogate.

Surrogacy agreements clearly involve the most important family decisions one could make. Although surrogacy is inherently a personal decision between loved ones, surrogacy agreements are still complex business contracts that must be given substantial thought. Like any business contract, the terms of the surrogacy agreement must be drafted, reviewed, discussed, and negotiated.

Whether you are considering expanding your family via gestational surrogacy, or are interested in becoming a surrogate, please contact us for guidance.

New York State Guidance on COVID-19 Sick Leave Pay

Posted: February 11th, 2021

By Christine Malafi

Ten months ago, in March 2020, NYS enacted legislation authorizing sick leave for employees subject to a mandatory or precautionary order of quarantine due to COVID-19. In January 2021, NYS recently issued updated guidance on the use of COVID-19 sick leave. Before diving into the updated guidance, here is a review of the initial legislation.

March 2020 NY COVID-19 Paid Sick Leave Legislation

Number of Employees	Amount of Sick Leave	Supplemental Benefits
0 – 10 employees with a net income of $1 million or less in the prior tax year	Unpaid Leave for the duration of the order	Guaranteed job protection for the duration of the quarantine orderCompensation for the duration of their quarantine through your existing Paid Family Leave (PFL) and Disability Benefits Policy (DBP)
0 – 10 employees with a net income of greater than $1 million in the prior tax year	At least 5 days of paid sick leave	Guaranteed job protection for the duration of the quarantine orderCompensation for the remainder of their quarantine through your PFL and DBP
11 – 99 employees	At least 5 days of paid sick leave	Guaranteed job protection for the duration of the quarantine orderCompensation for the remainder of their quarantine through your existing PFL and DBP
100 or more employees	At least 14 days of paid sick leave	Guaranteed job protection for the duration of the quarantine order
Public employer (regardless of number of employees)	At least 14 days of paid sick leave	Guaranteed job protection for the duration of the quarantine order

January 2021 NY COVID-19 Paid Sick Leave Updated Guidance

On January 20, 2021, NYS updated its guidance on the use of COVID-19 sick leave. This guidance supplements the prior guidance on the application of COVID-19 sick leave; all prior guidance still remains in effect. The new guidance significantly expands on employers’ obligations set forth in the prior legislation.

If an employee tests positive for COVID-19 following a period of mandatory quarantine, the employee (1) cannot report to work, (2) is automatically deemed subject to a subsequent mandatory order of isolation from the NY Department of Health; and (3) is entitled to paid sick leave under the NY COVID-19 sick leave law (even if the employee already received NY COVID-19 sick leave for the first period of mandatory quarantine). However, to receive NY COVID-19 sick leave for a subsequent time, the employee is required to submit documentation of a positive COVID-19 test result from a licensed medical provider. Employees can qualify for COVID-19 sick leave for up to three orders of quarantine.

Additionally, the guidance appears to require employers to provide employees with paid leave if the employer mandates that the employee does not report to work due to potential exposure to COVID-19. If this happens, the guidance states that the employee must be paid at their regular rate of pay until the employer allows the employee to return to work or the employee becomes subject to an order of quarantine. If the employee is subject to an order of quarantine, then the employee would receive NY COVID-19 sick leave for the duration of that order.

The COVID-19 sick leave legislation passed in 2020 provided that leave was only available in the event an employee was subject to an order of quarantine. This new guidance seems to go beyond that statute. Consequently, this updated guidance may be subject to legal challenges because the NY Department of Labor cannot create obligations that go beyond statutory requirements; the DOL can only promote regulations that interpret a statute.

If you have any questions regarding the new COVID-19 paid sick leave guidance, please contact us.

UPDATE:

March 2021 NY COVID-19 Vaccination Leave

Beginning March 12, 2021, New York employees will receive paid time off to be vaccinated against COVID-19. Both public and private employees will receive up to four hours of paid leave per injection without having to use benefit time, including New York’s mandated sick leave. Employers must pay employees their regular rate of pay for the time off. Additionally, employers cannot discriminate or retaliate against employees who request to take a leave of absence to receive a vaccination. Learn more here.

Campolo Delivers Remarks Highlighting the Importance of the LI Innovation Park

Posted: February 11th, 2021

Joe Campolo, Chairman of the Innovation Park Task Force, delivered these remarks at the HIA-LI “Tradable Sectors & How They Impact the Economy” conference on February 10, 2021. Joe addressed the importance of tradable industries in the LI Innovation Park at Hauppauge, HIA-LI’s relentless efforts to grow these business clusters, and the momentous accomplishments the Task Force has achieved thus far. The panel included Matthew Brown, Vice President of Network Solutions & Technology, John Finn, Director of Leasing & Acquisitions at Damianos Realty Group, LLC, Devin Kulka, CEO of The Kulka Group, Anne Shybunko-Moore, CEO & Owner of GSE Dynamics, Inc, and Marc Blitstein, President & CEO of American Diagnostic Corp.

Good morning. Today we are here to discuss the tradable sectors that anchor the Long Island Innovation Park at Hauppauge, which in turn anchors the Long Island and regional economies.

Contained within the Park’s 11 square miles are about 1,400 companies run by some of the most innovative minds in the country – several of whom we are fortunate to have on our panel today.

Thanks to the HIA-LI’s tireless efforts, including those of the Innovation Park Task Force which I proudly chair, the economic output of the Park has been well documented over the past few years. So has the fact that it is the second largest industrial park in the country, the first being Silicon Valley. These facts attracted the interest of our friends at the Suffolk IDA who, along with the RPA, commissioned an Opportunity Analysis to do a deeper dive into the businesses that reside in the Park and come up with initiatives to further anchor the Park to Long Island’s revitalized economy.

Nearly two years ago, the IDA released the more than 160-page report, and the conclusions were staggering – in addition to verifying the prior economic analysis that had been conducted, this report also found that the Park has the largest concentration of tradable businesses not only on Long Island, but also is a full 20% above the national average for tradable business clusters.

Why is this so monumental? Well, to a region’s economy, tradable industries are a very big deal. Every ecosystem must include non-tradable businesses – the things that directly support the personal needs of the neighborhood. Thus, every community will have barbers, gas stations, delis, laundromats, 7-11s, and so on. And while these businesses play an important role, they typically employ local people who don’t require enhanced skills and who on average receive lower wages. These businesses are also fully dependent on the immediate residents of that location to consume their goods or services; there is simply not a synergy of either workers or customers who are going to commute a great deal for them. Therefore, dollars from non-tradable industries are non-growth dollars – they are simply being circulated around an area, without new dollars coming in.

High performing ecosystems, however, will also include tradable businesses, which are the businesses that aren’t dependent on customers from their immediate neighborhoods to thrive – these industries include aerospace, biopharma, manufacturing, IT, and others who have chosen to be there for reasons other than direct access to customers. These businesses enhance any community they are in because they vastly increase the local tax base by paying higher wages – all of which greatly stimulates the local economy. Tradable industries also attract skilled workers to relocate here from other states and cities, which also greatly helps grow our tax base without having to continue to raise taxes. An ecosystem with too few tradable businesses suffers greatly because it finds itself simply recirculating dollars rather than growing the pie.

The Opportunity Analysis has shown that while the national average for tradable business clusters is 38%, that percentage is much higher – 58% – in the Park. Having realized this staggering disparity, a large part of the investigation into the report focused on the “why” – why is this little 11-square-mile tract of land in the middle of Long Island such a hotbed for tradable industries, and the answer, almost uniformly, was this area’s access to a highly skilled workforce.

The excitement we all felt when the report was released two years ago seems more like two decades ago now that COVID dominates our daily lives. But the economic devastation of the past year only makes even more apparent just how critical these tradable businesses are to Long Island’s long-term sustainability. An economy with no tradable businesses will eventually collapse.

Thus, the Opportunity Analysis set forth a very detailed action plan of ways for all stakeholders – private business, government, education, and the HIA-LI – to partner and make sure that we keep this vitality alive in our Park and on Long Island.

I am proud to report that immediately following the Opportunity Analysis, our Task Force rolled up our sleeves and got to work. Already, we have presented the possibility of a workforce development center in the Park to the Long Island Regional Planning Council, which declared this project one of regional significance and issued a grant to further develop the initiative. We have achieved a renewable energy milestone in the Park with the installation of solar panels on the 35,000-square-foot roof of Long Island Cares. We have also worked with the Town of Smithtown to reclassify zoning in part of the Park, allowing developers to apply for exemptions to construct apartment buildings with ground-level retail space.

Just yesterday, our Task Force met to outline our plans for 2021. This is a group made up of leaders in business, education, and government who are dedicated to collaboration and finding points of engagement to move the needle and make an impact. I look forward to sharing the progress of the Task Force with the HIA-LI community.

During this process I have learned that not only is Long Island a national treasure, but we are a national model for how business and government should partner, and how bipartisan cooperation and support, rather than insults, is how we on Long Island operate and get things done.

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CMM Prevails for Employer in Hard-Fought Summary Judgment Motion in Wage Case

Posted: February 8th, 2021

Achieving an excellent result for a client is always rewarding, but it’s particularly gratifying when that excellent result helps a client hit hard by COVID keep their business afloat.

CMM represents a fence installation company that was sued for various wage claims, including non-payment of overtime, by two individuals claiming to be former employees. Our client steadfastly denied that the plaintiffs were employees, explaining that they worked instead for a subcontractor. The plaintiffs’ attorney argued that our client and the subcontractor were “joint employers” and thus both subject to liability for unpaid wages.

These cases are often uphill battles for employers, but after discovery and depositions, it was clear that our client had not employed the plaintiffs. CMM’s litigation team, including Jeffrey Basso and Richard DeMaio, moved for summary judgment (essentially, asking the Court to find that there are no facts in dispute and to rule in our favor). In the motion, CMM argued that there was no evidence to support the “joint employer” theory.

This month, the Court agreed, issuing a decision that dismissed all claims. The Court wrote a detailed analysis of the factors of the various “joint employer” tests and found that CMM had clearly shown the absence of any triable issues of fact as to the plaintiffs’ employment. In granting our motion, the Court relied on much of what CMM argued and the cases we cited.

This outcome is a huge win for a client whose business was severely impacted by the pandemic. Had the case proceeded to trial, the client would have had an extraordinarily difficult time moving forward with their business. Thanks to CMM’s efforts, liability for the payment of wages to the plaintiffs is with the subcontractor, where it belongs, and our client’s business can continue on.

CMM Closes M&A Deal for Outdoor Recreational Company in Innovation Park

Posted: February 1st, 2021

Tags: M&A

Campolo, Middleton & McCormick’s M&A team has successfully closed another deal, demonstrating the breadth of industries in which we deliver value to clients buying or selling a business.

Our client, Bliss Hammocks, is a wholesale company specializing in recreational products for outdoor living. The company is based in the Long Island Innovation Park at Hauppauge, recognized as the anchor of Long Island’s tradable economy. The transaction involved the sale of our client’s inventory and intellectual property rights to a major conglomerate of companies that design, manufacture, and sell outdoor power tools and equipment. The success of Bliss Hammocks reflects the changing economy of the pandemic, as Americans invest in recreational and outdoor activities.

Randy and David Ertman, owners of Bliss Hammocks, recognized CMM’s ability to close the transaction so efficiently. “I am very happy that we engaged you for this transaction,” Randy Ertman told CMM’s Don Rassiger, who led the deal team. “I enjoyed working with you and am looking forward to retaining you again on future transactions.”

CMM’s M&A team is focused on being dealmakers, not deal breakers – working to creatively keep deals moving efficiently toward closing. Contact us today for guidance on your sale, purchase, or buyout.

Legal Updates & Upcoming Events

Posted: February 1st, 2021

New Federal Regulations Passed Regarding the Classification of Independent Contractors vs Employees

Posted: January 26th, 2021

By Christine Malafi

UPDATE: As of May 2021, this rule has been rescinded. Click here for updated guidance.

On January 6, 2021, the U.S. Department of Labor (“DOL”) issued a final rule changing the standard determining if a worker is an employee or an independent contractor under the Fair Labor Standards Act (“FLSA”).[1] According to the DOL, the purpose of this change is to make it easier to identify which workers are employees covered by minimum wage, overtime, and other provisions of the FLSA. This new rule reaffirms an “economic reality” test to determine whether an individual is in business for himself (e.g., independent contractor) or is economically dependent on a potential employer for work (e.g., FLSA employee).

Federal and State Issue

The determination of whether a worker is an employee or independent contractor is both a federal and state issue. The DOL views misclassification as denying access to critical benefits and protections to which employees are entitled by law. Employee misclassification also reduces taxes paid to federal and state governments and lowers contributions to state unemployment insurance and workers’ compensation funds.

New York State Guidance

According to the New York State Department of Labor, independent contractors must be free from supervision, direction, and control in the performance of their duties. They are in business for themselves, offering their services to the general public. Signs of independent contractor status include, but are not limited to, a person who has an established business, advertises in the electronic and/or print media, sets their own schedule, and pays their own expenses.

An employer-employee relationship may exist (rather than an independent contractor relationship) if the employer: (1) chooses when, where, and how workers perform services; (2) provides facilities, equipment, tools, and supplies; (3) directly supervises the services; (4) sets the hours of work; (5) requires exclusive services; (6) sets the rate of pay; (7) requires attendance at meetings and/or training sessions; (8) asks for oral or written reports; (9) reserves the right to review and approve the work product; (10) evaluates job performance; (11) requires prior permission for absences; and (12) has the right to hire and fire.

Federal Guidance

The new federal guidance describes two “core factors” that are most probative to this question: (1) the nature and degree of control over the work; and (2) the worker’s opportunity for profit or loss based on initiative and/or investment. Further, the test identifies three other factors that serve as additional guidelines in the analysis: (3) the amount of skill required for the work; (4) the degree of permanence of the working relationship between the worker and the potential employer; and (5) whether the work is part of an integrated unit of production.

Nature and Degree of Control Over the Work
- Whether the worker exercises substantial control over key aspects of the performance of the work (e.g., setting their schedule, selecting certain projects, working with little or no supervision, and performing work for others). The DOL states that requiring a worker to comply with health and safety standards, specific legal mandates, contractually agreed-upon deadlines, and insurance policies does not constitute the type of control under this factor.
Worker’s Opportunity for Profit/Loss
- Whether the worker has an opportunity for profit or loss based on their initiative (e.g., managerial skill and business judgment) or their investment (e.g., managing investments in, or capital expenditure on, equipment, materials, or helpers).
Amount of Skill Required for the Work
- Whether the work requires specialized skill or training that the employer does not provide.
Degree of Permanence of the Working Relationship Between the Worker and Employer
- Whether the duration of the work relationship is definite or sporadic. It should be noted that seasonal work does not necessarily show independent contractor status.
Part of an Integrated Unit of Production
- Whether the work is an element of the employer’s integrated production process for a good or service (e.g., if the work is analogous to a production line).

These factors are not exhaustive, and no single factor is dispositive. However, the DOL stated that if the core factors point toward the same classification (whether the worker is an employee or independent contractor), then the weight of those factors will most likely outweigh the additional factors.

The final rule was published in the Federal Register on January 7, 2021 and the effective date of the final rule is March 8, 2021. However, the Biden administration does not favor this rule and it is possible that they will delay its implementation. The Biden campaign’s labor platform included a commitment to restore the Obama administration’s aggressive wage-hour misclassification agenda. This would create a more rigid test for qualifying workers as independent contractors than this rule.

What if a Business Does Not Comply?

If a business is discovered to have improperly treated an employee as an independent contractor, the business will be held accountable for employment taxes for that worker, as well as unemployment insurance and workers’ compensation contributions, with associated fines and penalties.

If you have any questions regarding the classification of employees versus independent contractors, please contact us.

Learn more about this issue here.

Thank you to Daniel Axelrod for his research and writing assistance with this article.

[1] This rule is different from the prior factors used to distinguish employees from independent contractors. The prior factors were: (1) the nature and degree of the potential employer’s control; (2) the permanency of the worker’s relationship with the potential employer; (3) the amount of the worker’s investment in facilities, equipment, or helpers; (4) the amount of skill, imitative, judgment, or foresight required for the worker’s services; (5) the worker’s opportunities for profit or loss; and (6) the extent of integration of the worker’s services into the potential employer’s business.