Oct 2018 Charity & NFP Law Update
On September 27, 2018, the Mowat Centre released its report, Peering Into the Future: Reimagining Governance in the Non-Profit Sector (the “Report”), discussing the state of governance in the not-for-profit sector. The Mowat Centre is an independent public policy think tank located at the Munk School of Global Affairs and Public Policy at the University of Toronto.
The Report states that “Governance is one of the most challenging and complex issues in the non-profit sector”. Noting the limited but varied federal and provincial legislative and regulatory requirements for not-for-profit governance, the Report emphasizes that there is no “one size fits all” model of governance. In addition, not-for-profits are challenged by an increasingly complex operational environment, such as lack of diversity and constituent representation on boards, increasing demands from governments and funders, a greater focus on collaboration, transparency and sharing in the context of network-based models of organizing and cross-sectoral partnerships, changing trends regarding technology, engagement of volunteers, and a new generation of leaders.
One of the problems, as articulated by the Report, is that boards think that they have to do everything related to governance when some functions are either not really governance matters or could be handled by or shared with other bodies in the organization. For example, certain tasks such as fundraising, which may unduly burden board members, should be separated from the board through the creation of fundraising committees or councils. The key matters that the board must focus on are: overseeing and evaluating the performance of the organization, acting in accordance with their fiduciary duty, ensuring financial stability, and ensuring compliance and accountability. However additional responsibilities such as fundraising and advocacy do not need to be the responsibility of the board.
The Report also highlights how emerging technologies are challenging traditional notions of governance to the extent that the manner in which not-for-profits engage with their constituents and address complex social problems may be affected by new digital technologies. This may include the use of technology to engage with beneficiaries and stakeholders in a more meaningful and direct way or decentralizing certain board functions with non-board members in order to increase the organization’s response to social issues, which would result in more effective organizations. Some steps outlined in the Report to achieve this “future-oriented” model of governance include encouraging the exploration of governance approaches that are impact-driven rather than organization-specific, promoting governance through mentorship, and testing new governance models.