Information for new Directors

Many of the postings the Community Ambassador Committee have involve being a Treasurer or on the Board of Directors for a not-for-profit organization.  For many, this is unchartered territory and a big step in your career, and you might not know where to start.  There are plenty of resources out there that can help make the transition into directorship easier, such as:

CICA Directors Series
The CICA has a number of 20 Questions documents, questions you should be asking as director to help ensure you are providing appropriate governance.  The listing can be found here: http://www.cica.ca/publications/risk-and-governance/item61006.aspx

Canadian Society and Association of Executives has a handy resource outlining the duties and responsibilities for directors of NPOs for a reasonable price.
http://www.csae.com/Resources/Bookstore/Book/ArticleId/1496/NEW-Duties-and-Responsibilities-of-Directors-of-Not-for-Profit-Organizations-3rd-Edition

Canadian Charity Law
Charities have been in the news quite a bit lately, with some controversies occurring as a result of organizations taking illegal donations, taking part in unlawful political activities, and the like.  This website has current analysis of the latest trends for you, as a member of the not for profit community should be aware of:

http://www.canadiancharitylaw.ca/index.php/blog/

Similarly, also have a look at http://www.globalphilanthropy.ca/index.php/blog/

Canada Revenue Agency
As you know, charities have many compliance obligations and responsibilities through the CRA.  The CRA website has many checklists and educational resources for those operating and providing governance to a registered charity.  Specifically, check out these links:

http://www.cra-arc.gc.ca/chrts-gvng/chrts/menu-eng.html
http://www.cra-arc.gc.ca/chrts-gvng/chrts/chcklsts/menu-eng.html
http://www.cra-arc.gc.ca/chrts-gvng/chrts/cmmnctn/menu-eng.html

Duties of Directors

Duty of Knowledge – must know and understand all aspects of the corporation’s (charter, letters patent, memos, by-laws, terms of reference) and must review (and recommend updates where required), at least annually these documents

Duty of skill – held to the standard of a reasonable person in the related position would be expected to have, or in some jurisdictions to the higher standard based on experience/designations etc..  Must act cautiously and anticipate any probable/possible consequences.

Duties of Diligence – must be acquainted with policies/processes. Must review agendas/materials, attend meetings, be prepared to discuss materials, provide guidance and vote.

Duty to avoid conflicts of interest – must always act in the best interest of the corporation. In the case of a person involved with two corporations involved in same transaction, the director has a fiduciary duty to both organizations.  Directors not receive any direct/indirect benefit.  Must declare conflict of interest and recuse themselves from voting.

Liabilities of Directors

• Criminal – conspiracy or fraud; can be on behalf of the corporation
• Civil – typically only when some personal participation in the offence (including authorization) contract law (must always sign ‘per’ – can never sign as the individual
• Statutory – laws or liabilities based on the jurisdiction – adhering to standards (ex. CRA reporting)
• Employee/Workplace – eg. Wages/benefits/discrimination/harassment; at many times due to personal participation
• Environmental – eg. Environmental Protection Act/Water Resources Act – liable when corporations engages in an activity that results in the discharge of a contaminant or when not in compliance for setting up a system of controls

Fiduciary Duty

It’s important to remember that as a director, you have a fiduciary duty to the organization.  If you’re about to sign off on something, remember that a director is in a position of TRUST and therefore they must act in the best interests the corporation.  They must:

• act honestly and in good faith
• be loyal to the interests of the corporation
• avoid any conflict of their duty and self-interest

Ensure that you ask lots of questions and make sure you’re comfortable with what you’re about to sign.