This week we want to take the opportunity to highlight the exemplary work of a BBA group operating somewhat behind the scenes to serve the Commonwealth. The Chapter 180 Working Group has been meeting for a number of months now, discussing an overhaul of the law governing Massachusetts nonprofit corporations. The Working Group has accomplished a lot over the last few months, but they still have a long way to go. Their ultimate goal is to revise the nonprofit corporation law in the most inclusive manner possible with input from all stakeholders.
In furtherance of that end, we are excited to be hosting the Chapter 180 Working Group Forum on Thursday, November 12, 2015, from 3:00 to 5:00 pm at the BBA. Leaders of the Chapter 180 Working Group will briefly discuss their progress and are eager to hear from forum attendees about their interests and concerns. We hope that you will join us and help spread the word. Please click here to learn more and RSVP if you are interested in attending. The forum is free and open to everyone.
Nonprofits, which include institutions of higher education and many hospitals, are a major part of the Massachusetts economy. According to a 2012 Bureau of Labor Statistics report, they employ 17.7% of the state’s total private work force, one of the highest such percentages in the country. Chapter 180 is the principal corporate statute that applies to nonprofits in Massachusetts. It has existed generally in its current form since the early 1970s, and the last round of minor revisions were completed in early 1991. Almost twenty-five years later, it is overdue for a fresh look.
As it applies to nonprofit corporations, Chapter 180 largely cross-references governance provisions from Chapter 156B, the outdated business corporation law. In 2004, Chapter 156D, which is based on the American Bar Association Model Business Corporation Act, replaced Chapter 156B as the business corporation statute. However, Chapter 156B remains on the books, mainly because of the cross-references contained in Chapter 180 and for its application to insurance and banking corporation laws. Confused yet?
Many Massachusetts nonprofit leaders, as well as lawyers who practice in this field, are frustrated with this construct. Not only are the laws regarding nonprofits cumbersome and difficult to find, cross-reference, and interpret, but they are also seriously outdated. For example, Chapter 180 does not address modern technology, such as email communication, or the current understanding of fiduciary obligations. Other provisions permit overbroad access to members’ personal contact information and make mergers and amendments to articles of organization exceedingly difficult. For practitioners who deal with nonprofits only occasionally, the existing laws can easily be subject to misunderstanding or misinterpretation. For non-lawyer directors, officers, and organization members, the primary audience for the statute, it is an exemplar of obscurity and inscrutable legalese.
Having identified these issues, the Working Group, which is comprised of leading lawyers from many nonprofits and government entities and is co-chaired by Michael Malamut, an attorney-at-law with a practice in nonprofit governance, and Melissa Sampson McMorrow, of Nutter, McClennen & Fish, created a number of sub-groups to examine specific aspects of the issue. In preparation for the revision, Working Group members looked at the current text of Chapter 180, the language of 156D, the cross-references to 156B, and the ABA’s Model Nonprofit Corporation Act. They are attempting to identify all the problems with the statute as currently written and devise the best fixes that will maximize the statute’s utility while minimizing disruptions to current practice, existing corporate by-laws, and the surrounding case law.
At the same time, members of the Working Group are continually reaching out to those stakeholders with particular interests in the potential revisions. They have already met with a number of representatives of Massachusetts nonprofits, including foundations, hospitals, universities, religious groups, social service agencies, cultural institutions, conservation organizations, sports leagues, government employee unions, and business and trade associations. These meetings have been extremely beneficial in gathering input and determining how best to take on the daunting challenge of redrafting an entire statute, and the chairs anticipate having more similar meetings to come. Many individuals have expressed their support for the Working Group’s goal and shared their insights on ways to fix the law as well as anecdotes about frustrations caused by Chapter 180’s myriad problems. The members of the Working Group are working to compile all the information from these meetings as evidence for why the law needs to be changed and also as inspiration for aspects of the law to streamline, modernize, and improve. The Forum is the next step in these efforts.
As for officials from state government, representatives from the offices of the Attorney General and the Secretary of State are part of the Working Group. In addition, the Chairs have been in communication with the staff of the state legislature’s Joint Committee on Economic Development and Emerging Technologies and the Executive Office of Housing & Economic Development’s Office for Business Development and International Trade.
So what’s next? Following the Forum, the Working Group will start the initial drafting of legislation that incorporates all of the concerns they have heard. Their work so far offers a model for how to pursue major statutory revisions, and we are confident that their reasoned, methodical, and comprehensive process will be effective in producing — and securing consensus around — the right bill for the Massachusetts nonprofit sector, one that can ultimately win approval at the State House. We look forward to seeing you at the Forum, keeping you updated on the Working Group’s progress, and making Massachusetts, a state known for the significant role of its nonprofits, into a legislative leader in this area.
– Jonathan Schreiber
Legislative and Public Policy Manager
Boston Bar Association
