SECTION 1.  Chapter 12 of the General Laws, as appearing in the 2008 Official Edition, is hereby amended by inserting after section 8F, the following new section:-

Section 8F 1/2.  (a) For the purposes of this section, the following words shall have the following meanings:

                “Compensation”, anything given or received as an equivalent for services, but shall not include reimbursement for costs and expenses reasonably incurred by the independent officer, director or trustee in the course and support of such service.  

“Independent officer, director or trustee”, an officer, director or trustee of a public charity who is not also serving as an employee, or the equivalent of an employee, of such public charity.

“Massachusetts based public charity”, a public charity incorporated or otherwise organized in Massachusetts or, if incorporated or organized outside of Massachusetts, that primarily conducts its business in Massachusetts.

(b)  No Massachusetts based public charity required to be registered under section 8E and to file annual reports under section 8F, shall provide compensation to any independent officer, director or trustee for service as such independent officer, director or trustee except with the approval of the Director in accordance with the provisions of this section.

Any such public charity intending to provide compensation to any independent officer, director or trustee shall file an application with the Division, on such forms and with such supporting information and documentation as the Director shall from time to time prescribe, requesting the approval of the Director to provide compensation. 

The Director may adopt and promulgate guidelines, rules or regulations to carry out the provisions of this section including, but not limited to, the criteria for granting approval and the time period during which such approval shall be effective.  Such criteria shall recognize that service as an independent officer, director or trustee of a public charity is recognized as a voluntary contribution of time and expertise to benefit the community served by the public charity and that any departure from the voluntary nature of such service requires a clear and convincing showing that compensation is necessary to enable the public charity to attract and retain experienced and competent individuals to serve as independent officers, directors or trustees.

If the Director approves an application for compensation, amounts paid as said compensation shall be limited to the amount the Massachusetts based public charity reasonably determines are necessary to accomplish the purposes for which compensation is paid.  The Director may rescind the approval for compensation if he finds that any compensation paid under this section is in excess of that reasonably necessary to accomplish the purposes for which compensation is approved and paid. 

SECTION 2. Section 1 shall take effect six months after the effective date of this act.