New York plans charity law reform to cut red tape

Schneiderman said he would form a working group of nonprofit, government and labor representatives to develop proposals and recommend reforms. He also appealed to New York City's corporate leaders to take a role.

New York's nonprofits employ 500,000 people -- up to 18 percent of the state's workforce -- while finance and insurance companies in New York City employ about 341,000 people.

"New York's statutory requirements governing charities are so burdensome that one leading not-for-profit lawyer has stated that it is essentially malpractice to advise a not-for-profit client to incorporate in New York," Schneiderman told the nonprofit Association for a Better New York.

There are about 2 million nonprofits in the United States. Of that number, just 20,000 receive about 85 percent of the $300 billion in U.S. donations made annually, experts said, while many smaller charities rely on city or state funding.