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SD 1514

An Act relative to public charity executive and board of directors compensation

194th Legislature (2025-2026) Introduced by Mark Montigny

Public charities earning over $1M must cap top executives at $500k and ban board pay; waivers require public hearings and audits, and violations risk loss of public-charity status.

House concurred
0
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Bill Summary · SD 1514

Summary: An Act relative to public charity executive and board of directors compensation (Senate Docket No. 1514)

Status and Legislative Context
- Bill Number: SD 1514
- Title: An Act relative to public charity executive and board of directors compensation
- Session: Massachusetts Senate (2025-2026)
- Filed: January 16, 2025; Referred to the Judiciary
- Status: House concurred (as of 2025-02-27)
- Related prior measure: Similar matter previously filed as Senate No. 1067 (2023-2024)

Overview and Intent
This bill adds new provisions to Chapter 180 of the General Laws governing “public charities” (defined by annual gross revenues exceeding $1,000,000) to establish caps on executive compensation and prohibit compensation for board members, while also creating a formal waiver process for rare, justified deviations. The aim is to align compensation practices with public accountability and protect charitable assets.

Key Provisions

1) Executive Compensation Cap (Section 30)
- Scope: Applies to public charities with >$1,000,000 in annual gross revenues.
- Cap: No officer, director acting in an executive capacity, or senior manager may receive more than $500,000 in annual compensation.
- What counts as compensation: Salary, bonus payments, incentive payments, deferred compensation, severance payments, below-market-rate loans, and lease or rental of a vehicle.

2) Board of Directors/Trustees Compensation Prohibition (Section 31)
- Prohibition: No member of the board of directors or trustees appointed by a public charity may receive compensation as defined in Section 30.
- Permitted: Reimbursement of expenses directly related to duties as a board member.

3) Waiver Hearing Process (Section 32)
- Waivers: Charities may seek a waiver to compensate above the cap or to compensate a board member.
- Public hearing: Hearings are held before a Commission comprising the Secretary of the Commonwealth, the Inspector General, and the Attorney General.
- Procedure:
- Written request to the Commission with good cause.
- Hearing within six months of request.
- Independent auditor engaged by the charity (at its expense) must provide a report at least seven days prior to the hearing.
- Public records: Audit documents and additional evidence submitted for the waiver are public records.
- Evidence and deliberation: The Commission weighs all evidence, the charity’s charitable purpose, and the public interest.
- Decision: Written determination within 30 days after the hearing; waiver, if granted, valid for five years and may be renewed with another waiver process.

4) Penalties (Section 33)
- Sanctions: A public charity that violates Sections 30 or 31 and fails to obtain a waiver loses its status as a public charity under Massachusetts law.

Impact and Implementation Considerations

  • Affected Entities: Public charities with annual revenues exceeding $1 million. They would face a hard cap on top-tier executive compensation and a ban on compensation for board members.
  • Governance and Compliance: Charities would need to monitor and document compensation to ensure compliance; the waiver process introduces a formal mechanism to justify exceptions, supported by an independent audit.
  • Transparency: Waiver proceedings and evidence become public records, increasing public accountability.
  • Enforcement: Loss of public charity status is a serious penalty, affecting tax-exempt status and related benefits.

Timeline and Procedural Notes

  • The bill was introduced in the 2025-2026 session, filed January 16, 2025, and referred to the Judiciary.
  • The House subsequently concurred on February 27, 2025.
  • If a waiver is sought, the Commission must act within six months of a written request, and final determinations are issued within 30 days after the waiver hearing. Waivers last five years.

Compiled from official sources — confirm details with the bill’s official record.

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