New Charities Law Provides More Oversight for Non-Profit Charities
AG Coakley Supports Law Which Gives Her Office Ability to Bring Civil Sanctions against Non-Compliant Charities
"This legislation builds on the efforts our office has made to modernize the system under which charities operate. Our attorneys worked closely with Senator Tolman, Representative Walz, community stakeholders, and other members of the Legislature to build even greater transparency and accountability into the system," said Attorney General Coakley. "It is essential that we maintain a vital charitable environment in Massachusetts. Non-profits serve as job creators, members of our communities, and frequently, essential human service providers. This new law will continue to foster this environment and protect the public," said AG Coakley.
The new law signed last week by the Governor includes, among other things, increased registration fees for professional solicitors, and a streamlined dissolution process for charities with no assets. Additionally, the process for bringing non-compliant charities into compliance with their disclosure requirements is clarified and enhanced.
Under state law, the Attorney General's office oversees public charities in the Commonwealth. Since taking office in January of 2007, AG Coakley has focused on improving the transparency and diligence of public charities oversight. Annual charitable filings are now available on the Attorney General's website, and the AG's office created an Internet search engine for the public to use to verify the status of a public charity. Additionally, the AG's office now provides a list of charities on its website that are out of compliance so that people can reference the list before making a donation. As a result of these efforts, members of the general public can now access vital and important information about the charities that serve them with a click of a button.
"I am pleased that after nearly 18 months of hearings, debate and collaboration with the Attorney General's office this common sense improvement to the oversight of public charities in the Commonwealth has been approved," said Senator Steven A. Tolman. " S. 2117's passage will streamline and simplify the dissolution of public charities and generate new revenue for the Commonwealth by restructuring the existing charities registration system and eliminating long existing loopholes. At a time of financial distress, ensuring that charities are operating in a transparent manner is of vital importance and the changes made by S. 2117 will help the Attorney General's office ensure that this is the case."
"This law makes common sense updates to the public charities law that will protect donors," said Representative Martha M. Walz. "I am pleased that donors will now have access to better information about the charities to which they contribute, and that the new fees better reflect the cost of meaningful oversight."
Professional solicitors that work for these charities also face new oversight, as the legislation increases the amount of the professional solicitors' bonds from $10,000 to $25,000 and requires bonding of all persons engaged in solicitations. To enforce these new protections, the legislation allows for the AG's office to impose civil penalties against professional solicitors that fail to follow these requirements. Increased bonding amounts and expanded bonding coverage helps to ensure that there will be a source of funds to cover damage and penalty claims and encourages bonding companies to be more diligent in their review of bond applications.
To better reflect the true cost of proper oversight, the filing fees for charities with revenues over $1 million per year will increase and change to a tiered system based on income. Currently, charities with revenues of $500,000 per year and those with revenues of over a billion pay the same fee: $250. The new fee schedule will more properly reflect the true cost of oversight of charities and their financial means. However, charities with revenues less than $1 million per year will not pay any increased fees.
The new law also creates an expedited, simplified system for inactive charities without significant funds to dissolve, an improvement from the old system that required the approval of the Supreme Judicial Court.
Throughout the legislative process, the proposal was supported by the charitable sector including the Massachusetts Nonprofit Network and the Massachusetts Council of Human Service Providers.