All About Boards
The success of any organization is directly associated with the success of their board. This holds true for non-profit organizations as it does for any other. The development of your board and also the liability of your board both play a role in fulfilling the mission statement of your organization. This is not to say that responsibility for success falls on the board, the full organization plays a part in the effectiveness of the work they do.
You must choose the proper structure of your board depending on the operations and needs of your organization. You must ask the right questions before determining what model of board is going to be the right choice. Structure alone will not create a completely effective board. The board members must also be committed, competent, diversified and be collective decision makers. The members must understand their roles and responsibilities and be prepared to govern the organization.
As a member of a board of directors you share overall responsibility for everything the organization does. As a general rule you should look after the organization and its resources and liabilities at least as carefully as if they were your own. That’s “stewardship” – management on behalf of others. The board is required to maintain a system of “governance” that will support its stewardship responsibilities.
Risk is a reality for every not-for-profit organization. There are many things that can go wrong, from minor, day-to-day incidents to major crises. These may adversely affect the delivery of programs and services, damage the organization’s reputation or, at worst, threaten its capacity to survive. These “risks” can generally be reduced or avoided by good risk management – one of the key responsibilities of a board of directors.
The sustainability of a not-for-profit organization – its ability to continue and fund its activities year after year – is a major responsibility of the board. Directors need to understand why the organization exists, the interests of its stakeholders and how it manages the risks it faces. They should also be actively involved in the development and approval of its strategy.
Directors of not-for-profit organizations in Canada have a legal duty to act in the best interests of the organization which they serve at all times. In fact, the law requires a director to place the interests of the organization ahead of his/her own. This is known as the fiduciary duty. Successful fulfillment by directors of their fiduciary role is critical both in terms of the wellbeing of the organization, and in order for directors to protect themselves from liability.
The Chartered Accountants of Canada have created a very useful tool to answer many questions you may have about boards, please view the documents in their 20 Questions Series:
- 20 Questions Directors of Not-for-profit Organizations Should Ask about Governance
- 20 Questions Directors of Not-for-profit Organizations Should Ask about Risk
- 20 Questions Directors of Not-for-profit Organizations Should Ask about Strategy and Planning
- 20 Questions Directors of Not-for-Profit Organizations Should Ask about Fiduciary Duties
Industry Canada has made available a document on their website that directors of non-profit organizations may find very informative, please view:
When looking for answers to questions about boards please look to:
- Board Development Program
- Board development training, accountability and governance in the Canadian Voluntary Sector
For answers to questions you may have regarding the liability, responsibilities, of directors please view the Volunteer Alberta website:
If you have questions on the decision making process you may find the answers in:
To find training solutions or share training opportunities please visit:
Public Legal Education and Information Service of New Brunswick (PLEIS-NB) has launched a new series of free resources for charities and non-profit organizations. The handbook contains an overview of some of the legal issues and questions to consider when becoming involved with an organization’s board of directors. The handbook provides space to record important information about the specific organization and references to other resources.