· Legal Considerations of Paying Board Directors to Achieve DEIGoals
· Camp Bomazeen Charitable Trust Ruling
Legal Considerations of Paying Board Directors to Achieve DEI Goals
Traditionally, it’s been rather rare for the typical small or midsized nonprofit organization to compensate Board directors. The exceptions have been some large health care nonprofits and private foundations, where it’s especially difficult to find volunteers.
But in an effort to further DEI (Diversity, Equity, and Inclusion) goals, many nonprofits in Maine and elsewhere are considering how their Board practices might have the unintended effect of limiting who serves to those who are privileged enough to have ample free time on their hands and can afford the peripheral expenses of Board service. This tradition of non-compensation can lead to Boards that are overrepresented by wealthy retirees, at the expense of a healthy diversity of ages, races, and life experiences. To counter this dynamic, there is an increasing trend of offering modest levels (usually in the hundreds of dollars per year, not thousands) of compensation to Board Directors.
There is no right answer to the question of whether to compensate Board Directors, and there are many programmatic and practical factors for Boards to consider. Putting those programmatic matters aside, here is a rundown of the key legal and accounting issues:
It is too soon to know whether compensating Board Directors will be efficacious in diversifying Boards, and results will probably vary from organization depending on location and a number of other factors. Ideally, compensating Board Directors should be part of a package of broader efforts to diversity Boards. For other ideas, see this useful article outlining six governance steps to consider.
Camp Bomazeen Charitable Trust Ruling
A recent trial court decision over deed restrictions on a Boy Scout property serves as the latest application of Maine’s charitable trust principles. The decision is expected to be appealed to the Maine Supreme Court, so this won’t be the last word on the matter.
Here’s what happened: Back in 1944, George Averill donated a 344-acre property on Great Pond in Belgrade, known as Camp Bomazeen, to a group of individuals who served in a trustee capacity for the Boy Scouts of America. The deed created what is called a “charitable trust” by including specific charitable restrictions on the use of the property. In particular, the property was to be “forever” used “for camping purposes to the troops and members of the Boy Scouts of America, and especially for the troops and members of the Boy Scouts of America in the central part of the State of Maine.” The deed allowed the property to be sold, but the proceeds would have to support those same purposes. The deed stated that the local council of BSA could appoint successor trustees, and if they failed to do so then title would vest in the local council.
Fast forward 75 or so years to 2021, and the local council, known as the Pine Tree Council (PTC), sought to sell Camp Bomazeen and to use the proceeds to pay off general debts of the council that were not related to the property. The Maine Attorney General opposed the use of the proceeds for activities or debts unrelated to the purpose of the charitable trust., i.e., to support scouting activities in central Maine. Meanwhile, a group of Camp Bomazeen supporters intervened to oppose the sale outright. In turn, the PTC argued that the charitable trust was no longer in effect because successor trustees had never been appointed and the “vesting” in PTC effectively terminated the charitable trust.
Ina ruling on summary judgment, Judge Michaela Murphy found that the charitable trust is still valid, and the PTC couldn’t terminate the charitable trust restrictions simply by failing to appoint successor trustees. And the court declined to apply the doctrine of cy pres to broaden the charitable purposes beyond scouting activities in central Maine. Thus, the court ruled that the PTC can sell the property, but that any proceeds must continue to be devoted to scouting programs in central Maine. The PTC has signaled its intent to appeal.
I send E-Bulletins 3 or 4 times per year to provide updates and analyses on legal and policy matters respecting Maine land conservation. I do my best to keep my messages brief, timely, and useful to conservation-minded landowners, as well as land trust professionals and volunteers. At the same time, no one should rely on these E-Bulletins as legal advice, and I encourage you to consult a qualified attorney for advice on any particular situation.
If you find this free E-Bulletin to be valuable and interesting, please forward it to a friend or colleague. Subscriptions remain free, and I respect my subscribers’ privacy.