Bill
S 1195
Massachusetts bill caps executive and board pay at public charities over $1M revenue, requires waivers via public hearings, and bans paid board members.
Status and Sponsor
- Filed in the Massachusetts Senate (Senate Docket No. 1514 / S.1195) on Jan. 16, 2025. Petitioned/presented by Senator Mark C. Montigny. Referred to the Judiciary Committee. (Similar matter filed in the prior session: Senate No. 1067 of 2023–2024.)
Purpose
- To limit executive and board compensation at larger public charities and to create a public-waiver process for exceptions. The bill aims to increase transparency and public oversight of high compensation paid by charities that solicit public trust.
Key provisions
- Coverage threshold: Applies to any “public charity” with annual gross revenues in excess of $1,000,000.
- Executive compensation cap: No officer, director acting in an executive capacity, or senior manager shall receive annual compensation exceeding $500,000. “Compensation” is broadly defined to include salary, bonuses, incentive and deferred compensation, severance, below‑market loans, and vehicle lease/rental.
- Board compensation prohibition: Members of a public charity’s board of directors or trustees may not receive the compensation types defined above. Boards may receive reimbursement for reasonable expenses related to board duties.
- Waiver process:
- A charity seeking to pay above the cap or to compensate a board member may request a waiver and be entitled to a public hearing before a three‑member commission composed of the Secretary of the Commonwealth, the Inspector General, and the Attorney General.
- The charity must submit a written request explaining good cause and must engage and fund an independent auditor to prepare a report for the commission (report due at least 7 days before the hearing).
- The commission must commence a hearing within six months of receipt of the request and issue a written decision within 30 days after the hearing. Waivers may only be granted upon a finding of good cause and only if the grant is deemed in the public interest.
- If granted, a waiver is valid for up to five years; subsequent waivers may be requested before expiration.
- Public records: Auditor reports and materials submitted at the hearing are public records.
- Penalty for violations: A public charity that pays prohibited compensation without an approved waiver would lose its status as a public charity under state law.
Who is affected
- Directly affected: public charities (Massachusetts) with annual gross revenues > $1,000,000; their officers, executive directors, senior managers, and boards of directors/trustees.
- Indirectly affected: beneficiaries, donors, employees, and the state oversight community (AG’s office, Secretary of the Commonwealth).
Procedural/timeline notes
- The bill prescribes specific timelines for waiver hearings (commission to commence hearing within six months; written decision within 30 days) and makes audit materials publicly available at least seven days before the hearing.
- Implementation would require the commission (Secretary, IG, AG) to conduct hearings and issue determinations; the bill does not specify additional staffing or funding.
Potential impacts and considerations
- Likely to constrain pay packages at larger charities and prohibit paid board memberships, increasing oversight and public transparency.
- Could raise administrative and compliance burdens on charities (independent audits, public hearings).
- May affect recruitment and retention of senior nonprofit leaders and boards; charities may seek waivers in competitive markets.
- Enforcement is severe (loss of public charity status), which could motivate conservative compensation policies or litigation over definitions and constitutionality.
- Fiscal impacts on state agencies are not detailed in the bill text.
Note: This summary focuses on the Massachusetts bill text provided. Separate documents included in the source materials (from other jurisdictions or unrelated appropriation bills) are not part of this summary.
Compiled from official sources — confirm details with the bill’s official record.
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