On Thursday, May 26, 2011, the Massachusetts Senate passed an amendment as part of the Senate budget to prohibit public charities from providing board compensation without prior approval from the state Attorney General. The amendment also provides that the AG may review executive compensation and, if the AG does a review, must report findings to the legislature. This budget measure did not survive conference committee negotiations. Nonetheless, it remains a priority of the state attorney general. The provision on board compensation is similar to a bill sponsored by Senator Mark Montigny and Representative Martha Walz earlier in the session.
Current Status The Senate bill (S. 824 and companion S. 825) are currently under consideration by the legislature.
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Chronicle of Philanthropy, June 7, 2011
The Chronicle of Philanthropy reports on reactions of Massachusetts foundations to efforts to prohibit compensation of nonprofit board members:
Here’s an excerpt:
The measure arose from a proposal backed by Martha Coakley, the Massachusetts attorney general, that followed a public outcry over five-figure stipends for directors of the state’s four nonprofit health insurers, two of which voluntarily suspended board compensation.
The bill has moved swiftly in recent weeks after it was attached to the state budget bill that passed the Massachusetts Senate last month
Beth Smith, executive director of the Hyams Foundation, said she had been following the attorney general’s report on nonprofit health insurers but did not realize until recently that the proposed law could apply to her foundation as well. The Hyams Foundation paid 10 of its dozen board members a total of $134,125 in 2009.
“A number of our trustees come from the nonprofit sector, including grass-roots groups, and immigrant communities and low-income communities. It might affect our ability to attract some people if they really need to make a tradeoff in terms of their own income and lives.” Ms. Smith said. “If the law passes, the board will have to have an important conversation about it. I’m not sure what the board would decide to do.”
Further Reading
Consider this…
Here’s something that has been flying under the radar in Massachusetts that could be of great concern to some in the foundation community and beyond.
First, consider that the definition of a public charity in Massachusetts is very broad – indeed it draws in private foundations as well as health insurers. Second, consider that Massachusetts is leaving no stone unturned in trying to tamp down health care costs. Combine that with a nonprofit health insurance company in Massachusetts where the Board of Directors is being paid as much as $90,000 a year and an ousted nonprofit health insurance executive is receiving $11 million in severance, and you’ve got a recipe for policy trouble.
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