November 2024: Massachusetts Allows Stipend for Charitable Board Representation and Amends Nonprofit Financial Statement Requirements
Nonprofit board members may now receive a stipend of up to $500 without losing statutory protections; annual gross support and revenue thresholds for charities submitting financial statements raised to $500,000 for reviewed statements and $1,000,000 for audited statements.
In an effort to encourage job creation and growth in Massachusetts, the Legislature recently passed, and Governor Healey signed, H5100, an Act relative to strengthening Massachusetts’ economic leadership. This legislation encourages representation on boards by allowing a small stipend for board volunteers, and supports nonprofits through updated requirement thresholds. MNN worked to build support for and secure passage of these reforms.
Nonprofit board members may now receive a stipend up to $500 for their time and efforts related to board service without losing state statutory civil liability protections. Previously, if a nonprofit board member received compensation, they would not be entitled to the personal civil liability protections afforded by Massachusetts General Law Chapter 231 Section 85W. This change was proposed by MNN, and is in line with the Federal Volunteer Protection Act, which provides similar protections for nonprofit volunteers so long as they are not compensated more than $500.
“Allowing board members to receive a modest stipend for their time and effort will do a great deal to advance equity and representation for nonprofits and the people they serve,” said MNN’s CEO, Jim Klocke. “This provision enables nonprofits with smaller budgets to encourage board participation from individuals who may not otherwise be able to serve because of financial constraints. MNN hopes that with the allowance of a stipend, nonprofit boards will gain valuable voices and improve board representation.”
Additionally, Massachusetts raised the thresholds for requiring nonprofits to submit reviewed or audited financial statements. Now, organizations that have gross support and revenue of more than $500,000 in a fiscal year (compared to $200,000 previously) must submit financial statements that have been reviewed or audited by an independent certified public accountant (CPA). Whether the statements must be audited or reviewed now depends on whether the gross support and revenue exceeds $1,000,0000 (compared to $500,000) in that year, with audits required for those with $1 million or more.
“MNN applauds the Legislature for recognizing the need to raise the thresholds, as they were last updated in 2008,” said Klocke. “Inflation and rising costs are straining nonprofits. This legislation alleviates a costly requirement and will have a real and important impact on smaller to medium-sized nonprofits.”
Please use the Massachusetts Nonprofit Network as a resource for support as these changes are implemented.
If you have any questions, please contact Jessica Seney at jseney@massnonprofitnet.org.
Additional 2023-2024 Session Accomplishments
MNN worked with a coalition to change Massachusetts law to allow nonprofit boards to permanently meet and vote remotely. The Legislature temporarily allowed remote meetings during the pandemic, but this allowance was set to expire in March 2023. After hearing from MNN and others about the importance of allowing remote meetings for purposes of increasing accessibility, the Legislature codified the permanent allowance in February 2023.
With the Executive Branch, MNN worked with Attorney General Campbell’s office to raise the threshold for requiring nonprofits to annually file an IRS 990 with the Form PC from $5,000 to $25,000 of gross support and revenue. The threshold increase saves small nonprofits significant time and expenses.
At the MA Supreme Judicial Court, MNN helped to shape the Justices’ opinion when deciding a case about the state wiretap law by joining with the Greater Boston Chamber of Commerce to submit an amicus brief on the potential consequences of the case. Lawsuits against nonprofit hospitals alleged that the use of common “ad-tech” software violated the wiretap law. MNN’s brief articulated the legislative history of the law, argued that lawmakers never intended the law to apply to ad-tech, and identified the ways in which MA nonprofits could be harmed if the court ruled in the Plaintiff’s favor. The SJC ruled in favor of the Defendants, and MNN was grateful to share the sector’s perspective and thereby protect its interests.
