Every non-profit in Canada is required to have a Board of Directors. The number of Board members, their specific roles, and their tenure are laid out in the non-profit’s bylaws. Furthermore, the actions of the Board of Directors are governed by provincial and federal legislation under the Canadian Not-for-Profit Corporations Act and, in BC, our Societies Act.
These ACTs guide the operations of all not-for-profits in our province and clearly outline how the Board should make decisions. Let’s take a deeper dive into the responsibilities of a Board based on the two ACTs.
According to the BC Societies Act, when acting as a member of a Board of Directors, all Board members must:
Exercise the care, diligence, and skill that a reasonably prudent person would exercise in similar situations, acting honestly and in good faith with a view to the best outcome for society.
Ensure decisions made reflect the Act and its regulations and according to the organization's bylaws.
Make decisions with the purpose and mandate of the Society in mind.
According to the National Council of Non-Profits, every board member has three legal responsibilities that they must uphold individually and as a group:
Duty of Care – “Ensure the prudent use of all assets, including facility, people and good will.”
Duty of Loyalty – “ensure that the non-profit’s activities and transaction are, first and foremost, advancing its mission; recognize and disclose conflicts of interest; make decisions that are in the best interest of the non-profit corporation.”
Duty of Obedience – “ensure that the nonprofit obeys applicable laws and regulations; follows its bylaws, and that the nonprofit adheres to its stated corporate purposes /mission”
What is critical about these ACTs is that they clearly outline the care that Board members should take when making decisions for a non-profit:
Ensure resources are used appropriately.
Ensure that activities move the organization forward toward its’ mandate and purpose.
Ensure that decisions are in the non-profit's best interest, not the Board Members as a group or as individuals.
Ensure the laws that govern the non-profit provincially and federally are followed.
Woven into these four “truths” that all Boards must follow is the understanding that the Board has a legal responsibility to make “good” decisions. These decisions help the organization move forward.
Put another way, the Board is responsible for exploring and assessing each decision with care, considering what influences the decision, what impact the decision will have, what risks arise because of the decision, and asking hard questions. By doing this, they ensure they have done their due diligence and met the criteria outlined in the ACT.