MNN’s Testimony Against S. 870, S. 874 & S. 875

Testimony to the Joint Committee on the Judiciary

Jim Klocke, Chief Executive Officer, Massachusetts Nonprofit Network

November 3, 2015

Thank you for the opportunity to testify today.  The Massachusetts Nonprofit Network (MNN) is a statewide association with over 750 member organizations, representing nonprofits in every region of the state.  Our members come from all subsectors of the nonprofit world, including education, health care, human services, and civic engagement.  They work in partnership with state government on many of the Commonwealth’s largest challenges related to health, education, economic development, and quality of life.

Among the bills before the Committee today, MNN recommends that S. 870, S. 874 and S. 875 not pass.  Current law provides strong transparency of, and oversight of, nonprofits’ operations.  It also defines balanced rules for tort proceedings that nonprofits are a party to.  S. 870, S. 874 and S. 875 would alter those well-established policies.

Nonprofits are granted a specific legal status in state law because they are dedicated to the common good.  Nonprofits are expressly prohibited from the private inurement of, or excess benefit transactions to, their executives and directors.  Clear mechanisms exist to monitor and hold organizations accountable to these standards—including immediate public access to extensive nonprofit financial information via the Internet.  The exceptional transparency, clearly defined process, and established monitoring and enforcement mechanisms that exists for nonprofit executive compensation suggests that further legislation is unnecessary.

In addition, the bills would make it more difficult for nonprofits to operate in Massachusetts at a time when their resources are already severely constrained.   The challenge all organizations face, of balancing costs with revenues, is especially acute for nonprofits.  Most receive revenues from a range of sources, each of which can be volatile.  Their expenses, whether related to service delivery or general operations, nearly always trend upwards.  Measures which increase nonprofits’ cost of operation can threaten that balance and reduce their ability to deliver services.

Mr. Chairmen, Committee members, on behalf of the members of the Massachusetts Nonprofit Network, I submit that S. 870, S. 874 and S. 875 are unnecessary for our large and critical sector, and I respectfully request that this committee vote against both bills.  MNN would be glad to work with the Committee on these or any other issues related to nonprofits in the months ahead.

Thank you for your time and for your consideration of our views.