On December 22, 2022, then-Attorney General Maura Healey released a revised “Guide for Board

Members of Charitable Organizations” (the “Guide,” available here), last updated in 2015, to outline best practices for charitable boards in Massachusetts. The press release regarding the new Guide is available here. The revised Guide includes “a call for boards to emphasize the connection between the board, the organization’s leadership, and the communities they serve and to center the charitable missions of their organizations in all of their work.” To that end, many of the additional recommendations in the revised Guide focus on diversity, including with respect to the composition of charitable boards and their leadership teams. The revised Guide also contains new recommendations regarding financial accountability and conflicts of interest, including situations where there is the potential for a perceived conflict. A summary of the changes and additional recommendations made in each section of the revised Guide is outlined below. The revised Guide adds the following provisions and recommendations:

• •  Introduction:
    • • The Guide’s content is intended for trustees of nonprofit organizations, in addition to board members

• • I. Board Members Have Responsibilities:
    • • The duty of loyalty should be considered in light of the organization’s purposes, and that board members’ fiduciary duties are duties owed “to the charitable mission of the organization at least as much as, and in some circumstances even more than, to the organization itself
    • • The duty to oversee the executive director and other senior leaders, in addition to the CEO
    • • The recommendation to evaluate existing commitments and obligations to ensure that board members have adequate time and energy to dedicate to their role on the board
    • • The recommendation that boards periodically complete self-assessments about how well the board is performing its oversight and leadership functions, such as evaluating how well the organization is furthering its charitable purposes and evaluating its diversity (including, but not limited to, diversity in leadership and representation from the community the organization serves); includes a reference to a self-assessment tool

• • II. Educate Yourself:
    • • Board members should have a copy of, and be familiar with, the organization’s bylaws, in addition to its articles of organization, and understand the organization’s indemnification policy and any applicable insurance policies
    • • Board members should regularly attend trainings on fiduciary obligations, sub-sector specific trainings relevant to the organization, and good governance practices, including diversity and equity issues and other matters that impact effective board composition and functioning
    • • The board should have a board manual addressing, among other things, governing documents, copies of the most recent regulatory filings, the budget, and other orientation materials, including the Guide

• • III. You Have the Right to Information:
    • • No substantive changes

• • IV. Pay Close Attention to Financial Matters:
    • • The obligation for the board to act as a responsible fiscal steward, regularly considering the organization’s short-term and long-term financial health
    • • The requirement that the board should require periodic confirmation from the organization’s management that the required regulatory filings are up to date
    • • The board should ensure that employee withholdings are properly and timely administered
    • • If the terms of any existing restriction on the organization’s funds conflict with the organization’s mission or public policy, the board should direct management to seek modification of those terms, and should ensure the organization has a system in place to prevent the acceptance of such conflicting gifts in the future

• • V. Make Sure Your Board is Vital and Diverse
    • • The recommendation that the board include term limits for board members and officers, to ensure diversity of viewpoints and representations
    • • The board should develop an equitable and inclusive board recruitment practice that encourages a diverse pool of candidates
    • • The nominating process should actively seek out and recruit diverse board members and, importantly, representation on the board should include individuals connected to and reflective of the community that the organization is serving
    • • As a means to encourage more diversity, the board should regularly review new board member qualifications, including financial contribution expectations

• • VI. Choose and Evaluate Your Organization’s Leadership Carefully
    • • Hiring the organization’s leadership should be done through equitable recruitment, hiring, and compensation practices that encourage a diverse pool of applicants
    • • The board should regularly consider whether there is representation from diverse racial and ethnic backgrounds in its leadership
    • • It may be beneficial to include a diversity officer on the search committee

• • VII. Get Involved in Setting Executive Compensation
    • • When evaluating the impact compensation may have on the organization’s reputation, the board should consider the perception of senior leadership’s compensation as a whole, including from positions held because of, but outside of, their role at the charity
    • • Forms 990 are posted on the Attorney General’s Office’s filing search page, in addition to the IRS search page

• • VIII. Beware of Conflicts of Interest
    • • Clarifies that serving on other boards could constitute a conflict of interest if the work of those organizations overlaps or appears to compete with the organization
    • • Upon notice of a conflict, the entire board should consider whether the proposed transaction or relationship is in the organization’s best interest, including the public perception of the transaction or relationship and the potential impact on the organization’s reputation

• • IX. Other Resources to Assist You in Your Responsibilities
    • • Provides a list of additional resources for further education and information

Should you need assistance or have any questions concerning the revised Guide or nonprofit governance matters in general, contact Sharon C. Lincoln at lincoln@casneredwards.com, Anita S. Lichtblau at lichtblau@casneredwards.com, Drew S. Douglas-Steele at douglassteele@casneredwards.com, or your Casner & Edwards attorney.