No big surprises about what gets non-profits into trouble with the Massachusetts Attorney General: it is not a good idea to steal, or for the board to govern so laxly that others can steal.

At Tuesday’s Boston breakfast panel presented by the National Association of Corporate Directors-New England, board experts and a representative of the Massachusetts AG’s office (which supervises public non-profits) discussed good governance for non-profit entities.

One theme was how to structure the board of directors most effectively. The larger the organization, the more likely that a board of directors will assume a strategic role; in smaller non-profits (there are 23,000 non-profits in Massachusetts), it is not uncommon to find board members actually doing the day-to-day work. But as organizations get larger, board members must understand that they are there to guide, and not “to do.”

One audience member asked (likely in light of the Harvard Endowment) what the role of the board might be in balancing between the size of an endowment and operational needs. While boards generally establish a spend rate of between 4.5% and 5.5% as prudent, one panelist urged recognition that an endowment was also a rainy day fund for dire circumstances. The panel avoided directly engaging the issue of systematic reduction of allegedly excessive endowments in order to support ongoing operations and reduce charges, tuitions, etc.

How much to pay your CEO? There are resources available to understand the marketplace, from consultants to the Federal 990 reports which provide compensation information in detail (posted on the Massachusetts AG’s website). No need to overpay. However, how can you compensate skilled executives, now moving from the for-profit arena into larger non-profits, who may be willing to work for less money but who have retirement needs which cannot be met (in a non-profit) by such things as stock options? The compensation to senior non-profit executives becomes very sensitive in social service non-profits, the clients of which are poorer people for whom “retirement benefits” are an unobtainable concept.

There was general consensus that large boards are unwieldy, that boards should have a robust committee system to do much of the work, and that financial heavy hitters on non-profit boards need to be invested in the mission but should not expect to have undue influence in how monies are spent just by reason of the size of their checks. If real control of expenditures is sought by a large donor, a restricted gift should be considered; imposing the will of heavy hitters on the operation of an organization through board pressure is not prudent management.