June 12, 2009
(State House, Boston) — The State Senate, with Senator Cynthia Creem’s support,  has passed legislation to help non-profit institutions weather current economic times by using “prudence factors” to manage endowments. The bill brings Massachusetts in line with 35 other states, and will permit non-profits to draw down endowment funds below their “historic dollar value” as long as it is prudent to do so in light of a number of enumerated factors. Universities, hospitals, and other non-profits currently employ 13 percent of the state’s workforce, and often rely on endowments that have now greatly declined in value thanks to the national recession.

“I was pleased to Chair the Judiciary Committee hearing on this proposal,” said Senator Creem. “The testimony made it clear that non-profits in our state needed more flexibility to weather this economic downturn, with careful oversight by the Attorney General to ensure assets are protected as donors intended.”

Advocates for the bill indicated that non-profits could be forced to lay off staff or even close their doors if these changes are not instituted. The Attorney General will oversee the release or modification of restrictions on any endowment expenditures.  The bill will now be considered by the House of Representatives.