Testimony to Joint Committe on Consumer Protection and
Professional Licensure.
November 3, 2005
Testimony to Joint Committee on Consumer Protection and Professional
Licensure
Ron Ancrum, President, Associated Grant Makers
Elizabeth Smith, Executive Director, Hyams Foundation, & Chair
of the Board, Associated Grant Makers
We appear today on behalf of the Board and members of Associated
Grant Makers (AGM) – the regional association of grant makers,
foundations, corporate philanthropy programs and philanthropic advisory
services serving Massachusetts, New Hampshire and Vermont –
to advise you that the Board of AGM has voted to endorse and support
passage of the legislation entitled “An Act to Promote the
Financial Integrity of Public Charities.”
Nonprofit organizations, grant makers and the government form a
critical partnership to meet the needs of Massachusetts residents.
Nonprofit organizations and governmental agencies work together
to provide services and supports in a variety of situations. Foundations
and grant makers – the members of AGM – provide funds,
knowledge, and technical expertise to help nonprofits carry out
their vital missions. Recent studies, such as the report released
in March of this year by the Massachusetts Institute for a New Commonwealth
(MassINC), demonstrate in conclusive terms the vast importance of
the nonprofit sector to the health, well-being and economy of our
state.
As an organization dedicated to advancing effective and responsible
philanthropy, we applaud the Office of the Attorney General’s
efforts to improve the accountability and transparency of charities
in Massachusetts. We do not believe there are wide-spread issues
of mismanagement or malfeasance in the philanthropic community.
We know that our members are deeply committed to operating in conscientious
and community-focused ways. However, we also recognize that there
is a need to clearly delineate Board and organization responsibilities.
We feel that the draft bill does an excellent job in most respects
of finding an appropriate balance between those goals and the burdens
associated with compliance that might take away from nonprofit organizations’
focus of limited resources on the accomplishments of their valuable
missions.
As you consider this legislation, AGM offers the following comments
and observations, which were voted by the AGM board at the same
time:
• In the summary accompanying the legislation, there is reference
to requiring that members of audit committees be “independent.”
This word has caused some confusion and concern among our members,
as it is not used in the legislation itself and is nowhere described
or defined. Indeed there is a clear definition of the criteria for
audit committee membership in the language of the proposed law.
We suggest the word “independent” be dropped from the
summary and use the language from the legislation in its place,
letting the language of the Act speak for itself.
• We respectfully suggest that in explanatory materials or
summaries that accompany the bill, and perhaps even in the statutory
language itself, that the AG’s office ensure that the public
and the non-profit community understand that the bill is intended
to apply not only to “public charities” as that term
is commonly understood, but also to private foundations (as defined
in federal law). While AGM leadership understands that that term
includes private foundations, we are concerned that the public –
and perhaps a number of private foundations themselves – do
not share this understanding. We will of course make every effort
to ensure that our members are fully aware of the meaning of the
term as used in Massachusetts legislation.
• We believe that extensive outreach and education will be
required to ensure that the nonprofit community is aware of and
understands the requirements of the new legislation. Associated
Grant Makers sponsors a number of training and education programs
throughout the year for our members and partner nonprofits, and
we would like to offer the Attorney General’s Office the opportunity
to inform charities about their rights and responsibilities as charities
in Massachusetts through these venues. This offer reinforces earlier
communications to Assistant Attorney General Jamie Katz to this
effect both from AGM and from the Massachusetts Council of Human
Service Providers.
• We believe that significant additional resources will be
required by the Attorney General’s Office, Public Charities
Division to accomplish the goals of this legislation, both for enforcement
activities and for the kind of informational and educational outreach
described above. We urge you to provide those funds and we pledge
to support the Attorney General’s efforts to the extent permitted
by our nonprofit status.
Thank you for allowing us to testify in regard to this important
legislation.
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