Non profit organizations and charities both big and small have a Board of Directors. Not all boards are created equal, but all can be improved so that they can be a better support body for the organization. Whether you are starting a new board, or hoping to achieve greater success with your current board, this post is for you.
We have developed a priority pyramid to help organizations better understand the priorities organizations should set for their governance starting with the basics of legal compliance, all the way to the smooth sailing stages of your board. This is a reference tool to take any board from good to great, and we use it to both audit what an organization needs, and explain our approach to tackling those issues in order of importance.
Note that this a summary only and is not specific or legal advice for your organization; there may be other items your particular organization should be addressing that Sharp Six can help identify with a quick governance audit.
Before any other considerations, a board must ensure that the non profit or charity they are governing is legally compliant with all applicable laws. Organizations that do not comply run a risk of dissolution or having their charitable status revoked; therefore legal compliance is the critical foundational step.
Registration (BC or Canada) & charitable application: If you’re not yet a registered organization, the first step is to make sure you’re properly registered with either the provincial or federal registrar, and, if you would like to apply for charitable status, that your application is well prepared and submitted to the Canada Revenue Agency well ahead of the date that you would like to receive confirmation of charitable registration.
Constitution and bylaws must be consistent: This includes ensuring that your constitution and bylaws are consistent with the Society Act – soon to be Societies Act, and also with your internal governance and operational policies. It’s also important to understand the role members play in your non profit and how you need to communicate with them – both for fees, notice and other important issues.
*** See our our post on the Societies Act for more information on when and how to transition to the new legislation. ***
Compliance with Societies Act, other laws, and charitable purposes: Compliance with the Societies Act, your charitable purposes (as approved by the CRA) and other laws such as the Employment Standards Act (ESA), Personal Information Protection Act (PIPA) and other relevant laws is important. Some of this includes keeping up annual filings and reports and submitting changes to your directors or their addresses.
Next, both non profit and charities should consider how they plan to manage risk.
General fiduciary & risk responsibility: Risk can come in the form of not only legal and financial risk but also various ways that an organization is ‘exposed’ to risk, such as via insurance, certain asset management and your relationships with other partners, suppliers, sponsors and funders. It’s important to have a mechanism to understand where your organization is exposed to risk and what you’re doing to minimize or mitigate it.
Insurance: D&O and other coverage: Non profits and charities should consider the types of insurance necessary for their organization including insurance needed for the board, staff, and volunteers. Additional coverage may need consideration depending on the activities of the organization.
Employment Standards Act & other HR compliance: Boards have a responsibility to hire and evaluate the executive director (or equivalent) of their organization and also to ensure the proper practices and policies are in place for the ED to recruit, hire, manage and evaluate employees and contractors. This ranges from human rights issues to ensuring overtime and vacation are properly accounted for.
Critical policies: audit, reserve, conflict of interest (COI), privacy, etc: Policies are not just papers that sit around and collect spider webs or the equivalent electronic dust! They are there to help you know what to do in difficult situations, plan for the future, and cover your butts when something – heaven forbid – goes wrong. We don’t advocate “over policying” yourself, but there are essential ones you want to make sure are not only in place but are also up to date and relevant to ensure you’ve got your risk management bases covered.
Efficient meetings agenda development and execution is important. We don’t believe there is a one size fits all solution to this; rather we like to figure out what works best for your particular board and committee structure.
Recruitment, orientation, evaluation & training tools: These are key pieces for ensuring the sustainability of any organization. A board that does not have a strategy to recruit future board members runs the risk of lack of diversity in a board in experience, skills and perspective. Developing tools for your organization will also ensure that your board is motivated and engaged in the decision making process.
Efficient meeting agenda development & execution: Meetings run most successfully when there is a clear process for developing and executing a meeting agenda. We like to think anyone can have fun and productive meetings, it’s just a matter of fine tuning the process to make it more enjoyable for everyone.
Full governance policies & operational manual: It is important to develop a set of policies that guide decision making for an organization. This often takes the form of a policy manual, providing clear rules on how members, staff, volunteers, board members can and should conduct themselves. Aside from the bare bones critical ones listed above, we’d also include terms of reference, expense policies, remuneration restrictions, and several others tailored to your organization and its activities.
Appropriate committee structure: A board can have multiple committees that are in charge of specific areas or subject matter, such as a governance, fundraising, finance, strategic planning or events committee. Committees are also a great opportunity to bring in non-directors as ex officio (non voting) members with expertise in certain areas. Like a committee, an Advisory Board can also serve special and helpful functions for an organization. All of these bodies should have terms of reference and reporting guidelines so they know what their roles are and how to communicate with the board effectively.
The last stage is to create ongoing processes to fine tune your board and to allow your organization to thrive and be sustainable in the long term.
Maintain & re-examine processes annually: The board should choose a time of year to review the processes that your organization has in place, whether minor or major. This meeting should occur well before an AGM so that any major changes (including to bylaws) can be brought to and voted on by the organization’s membership.
Spend time on professional development, strategy & generative thinking: Creating an environment that encourages learning and growth will help board members see the value they receive from the organization and further then interest in investing their time. You can both do pro-d workshops and set aside time at board meetings to have quick information sharing on topics you’ve identified are important to your directors.
Well oiled, efficient organization: This is where we all want to be and where we hope that Sharp Six can help get you to! At this point you’ve gone through all the previous stages and are either already a rock star or have revamped things so that all your governance pieces are in place and you can enjoy how well your board runs and also give yourself more time for fun stuff like strategic planning and generative thinking.