Late last week, the Massachusetts Senate adopted legislation that would require public charities to obtain approval from the Massachusetts Attorney General before compensating non-employee officers, directors, and trustees for their service in those roles. A “Massachusetts based public charity” seeking to compensate officers, directors, or trustees would be required to submit an application to the Director of the Non-Profit Organizations/Public Charities Division that demonstrates in a clear and convincing manner that compensation is necessary to attract and retain experienced and competent individuals to serve as non-employee officers, directors, and trustees. The Senate legislation provides that if an application is approved, the compensation granted to non-employee officers, directors, or trustees must be reasonable as compared to the purposes for which it is awarded. After granting approval, if the Director of the Non-Profit Organizations/Public Charities Division later finds it excessive, the Director may rescind the compensation authorization.
The legislation defines a “Massachusetts based public charity” as a public charity established under the laws of Massachusetts and specifically includes a public charity established outside of Massachusetts if the organization “primarily conducts its business in the commonwealth.”
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