Massachusetts Senate Bill Would Require Prior State Approval of Compensation Paid to Non-Employee Officers and Directors of Public Charities

A bill has been introduced in the Massachusetts State Senate which, if enacted, would require public charities organized or operating primarily in the state to obtain state approval before paying compensation to non-employee officers, directors, or trustees. Bill H.3516 would allow such charities to reimburse non-employee officers, directors, and trustees for costs and expenses reasonably incurred in the course of service of the organization. However, in order to pay “compensation”—broadly defined as any other thing “given or received as an equivalent for services”—the charity would have to file an application with the state Division of Public Charities. The bill provides that if the application is approved, “said compensation shall be limited to the amount the Massachusetts based public charity reasonably determines are necessary to accomplish the purposes for which compensation is paid.”

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