Report: Mass. Senate OKs bill to stop charities from paying boards
BOSTON (Legal Newsline) - The Massachusetts Senate last week approved a measure that bans pay for nonprofit boards.
According to the Boston Herald, a proposal to stop public charities from paying their boards of directors was attached to a budget amendment that state senators approved Friday.
The bill only targets those charities that receive taxpayer money, the newspaper reported.
Attorney General Martha Coakley, who supports such legislation, was pleased with the Senate's approval.
"Voluntary service by board members is the practice at the overwhelming majority of public charities, and for good reason," she told the Herald.
"Compensation of board members raises concerns about maintaining board independence and ensuring the proper use of charitable funds."
In April 2011, Coakley released a report showing that board members at the state's four major not-for-profit health insurers -- Blue Cross Blue Shield, Fallon Community Health Plan, Harvard Pilgrim Health Care and Tufts Health Plan -- were wrongly compensated.
The attorney general said there was no justification for their pay.
Since then, Blue Cross and Fallon have stopped compensating their board members, while Harvard Pilgrim and Tufts have continued the practice.
Coakley has said paying board members creates an unavoidable conflict between board members' personal financial interests and their obligation to safeguard the organizations charitable resources.
The attorney general's Public Charities Division is responsible for the oversight of more than 25,000 non-profit charitable organizations, which includes everything from local social service organizations to large health care systems.
Coakley's office now requires annual statements from all Massachusetts-based public charities that compensate independent directors, explaining in detail the basis for the practice.
However, the Senate-backed proposal would take things a step further.
According to the Herald, the bill still needs to be approved by the House of Representatives and signed by Gov. Deval Patrick.
From Legal Newsline: Reach Jessica Karmasek by email at email@example.com.