Glossary:

Vice-President, Strategic Communications & Business Development, Imagine Canada

Prior to Imagine Canada, Stephen served as the Executive Director of Second Harvest, an organization which collects fresh, perishable food and distributes it to more than 200 social services agencies throughout Toronto. He also worked in management capacities with Operation Eyesight; Scarborough Community Care Access Centre; Schizophrenia Society of Canada, and a number of other nonprofit organizations.

Stephen holds a certificate in marketing for nonprofit organizations from Carlton University and a diploma from Centennial College in radio and television journalism.

Vice-President, Strategic Communications & Business Development, Imagine Canada

Prior to Imagine Canada, Stephen served as the Executive Director of Second Harvest, an organization which collects fresh, perishable food and distributes it to more than 200 social services agencies throughout Toronto. He also worked in management capacities with Operation Eyesight; Scarborough Community Care Access Centre; Schizophrenia Society of Canada, and a number of other nonprofit organizations.

Stephen holds a certificate in marketing for nonprofit organizations from Carlton University and a diploma from Centennial College in radio and television journalism.

Activities are subordinate if they that are subservient to a charity's charitable purpose or are a minor focus of the charity in relation to its entire program of activities.

The Canada Revenue Agency generally considers “substantially all” to mean 90% or more.

Generally, a tax shelter is any arrangement where the tax benefits equal or exceed the net cost of entering into the arrangement.

The purchase of goods or services from a charity is a commercial transaction, not a gift, and is therefore not eligible for a tax receipt. In certain circumstances, however (for example, when the purchaser pays more than the fair market value of the goods or services with the intention that the overpayment be donated to the charity), a receipt can be issued for that part of the payment that represents a donation (see Split Receipting)

Example 1: A person buys a book worth $30 from a charity and pays the charity $30 for it. This is a commercial transaction, not a gift. Therefore no receipt can be issued.

Example 2: A person buys a book worth $30 from a charity but gives the charity a cheque for $50. Part of the payment ($30) represents an advantage to the donor (that is, the book), and the rest ($20) represents a donation. Therefore a receipt can be issued for $20 – the difference between the cash received by the charity and the advantage obtained by the person (see Split Receipting for limitations on issuing receipts in such cases).

A qualifying security is a security that is traded on a recognized stock exchange. The donation of a qualifying security is eligible for a tax receipt.

A non-qualifying security is, generally, a security where the owner of the security (e.g. a shareholder) is not at arm's length with the issuer of the security (e.g. a private company).  A charity can issue a tax receipt to the donor of a non-qualifying security in some circumstances.  The charity should get professional (legal, accounting or tax) help when someone intends to make this kind of gift.

• Tangible property (property that a person can touch)
  • real property (land and attached buildings)
  • capital property (property that is purchased with the intention of holding or using it, rather than reselling it)
    • depreciable property (property that is expected to be used, generally in a business, over a number of years)
    • personal use property (property generally used by a person, not in a business context)
      • listed personal property (specifically identified property that is expected to increase in value over time, such as various types of collections)
      • other personal use property
    • other capital property
  • non-capital property (inventories of goods held for resale)

• Intangible property (that is, property that has no physical form)
  • securities and investments
    • qualifying securities (generally, securities that are traded on a stock exchange)
    • non-qualifying securities (securities that are not traded on a stock exchange)
  • interests in tangible property
    • leasehold interests (the right to possess and use a property for a period of time, through a lease)
    • residual interests (the remaining rights to a property after the current owner continues to possess and use it; these rights are usually created in a will)
  • intellectual property (trademarks, patents, licenses, and so on)
  • other legal rights and intangibles

What is a mission statement and why is it important? A mission statement is a short, written statement that describes the core purpose of the organization including what it does, for whom and why. The mission statement should be sufficient to guide the strategies and actions of an organization, describe its overall goal, provide a sense of direction, and guide decision-making. ¹

In order to effectively govern a nonprofit organization, the board of directors must have a clear understanding of the organization’s mandate. This is provided by the mission statement, which presents an organization’s primary purpose or goals. A mission statement tells the world why your organization exists. ² Everything an organization does should align with its mission. Boards must review their organization’s mission statement regularly to ensure that it continues to express the organization’s highest aims and commitments. ³ Effective reviews of the mission statement should always involve the full board as well as the Executive Director or most senior staff person.³

A great mission statement:

• is concise and easy to understand
• distinguishes your organization from others with a similar mandate
• inspires others to support your organization’s important work

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “Standards Program Definitions,” Imagine Canada, May 2011 
2. “Strategic Planning: Train the Trainer Workshop Handout,” Cathy Brothers, 2012 
3. “Primer for Directors of Not-for-Profit Corporations: Rights, Duties, and Practices,” Industry Canada, 2002

Definition: Stakeholders¹
A stakeholder is a person, group or organization that has a direct or indirect stake in the organization because he/she/it can affect or be affected by the objectives, actions and policies of the organization.

Who are my organization’s stakeholders and why do we need to communicate with them? One of the primary tasks of the nonprofit and charitable board of directors is to communicate openly to its stakeholders, including its members and the broader community it serves.² The effectiveness of an organization depends on maintaining positive relationships with its stakeholders and on meeting their expectations to the extent that this does not compromise the organization’s mission, values, or strategies.³

An organization’s stakeholders may include:³

• Members
• Clients or participants
• The most senior staff person
• Employees
• Volunteers
• Individual donors
• Partners
• Funders
• Business donors or sponsors
• The broader community

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “Standards Program Definitions,” Imagine Canada, May 2011.
2. “Primer for Directors of Not-for-Profit Corporations: Rights, Duties, and Practices,” Industry Canada, 2002.
3. “‘Governance’ in Key Risks & What To Do About Them,” Imagine Canada, 2009.

What are codes of ethics / conduct and why are they important? Codes of ethics or codes of conduct present the ethical principles that guide behaviour and decision-making within an organization. The purpose of the policy is to provide staff, volunteers and other interested persons with guidelines for making ethical choices in the conduct of their work. It may also outline how the organization intends to treat its volunteers, employees and clients. Principles may include, for example, acting with honesty, accuracy and integrity and respecting privacy and confidentiality.¹

The benefits of creating codes of ethics / conduct include:²

• Establishing clear expectations for behaviour
• Building a reputation for credibility
• Strengthening organizational values
• Discouraging unethical behaviour
• Mitigating risks related to conflicts of interest and legal liability

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “Standards Program Definitions,” Imagine Canada, May 2011.
2. “Ethics and Nonprofits,” Deborah L. Rhode and Amanda K. Packel, Stanford Social Innovation Review, Summer 2009.

What is a conflict of interest? Real or perceived conflicts of interest can occur when the personal interests of board members, staff, or volunteers are in conflict with the interests of the nonprofit or charitable organization with which they are affiliated. For the board, conflicts of interest might arise when a director:¹

• Has a personal interest in a proposed contract with the nonprofit organization
• Has an interest in a proposed contract because they are an employee or stakeholder in the organization with which the nonprofit is contracting
• Has an interest in a proposed contract because they are also a board member in the organization with which the contract is proposed

What is a conflict of interest policy?² A conflict of interest policy is a policy that requires that directors, officers, staff and volunteers act in the best interest of the organization and stipulates that they should not be controlled or restricted by any external entity or interest group. The policy (or related procedures) should require disclosure, review and decision on actual or potential conflicts in order to ensure that all conflicts of interest or the appearance of one, within the organization and the board are appropriately managed through disclosure, recusal or other means. The conflict of interest policy should ensure that no person benefits inappropriately, or appears to benefit inappropriately, from any transactions in which the organization is involved.

Why is it important to have a conflict of interest policy? Directors of nonprofit or charitable corporations have a legal obligation to act in the best interests of their organization.¹ As such, it is essential that members of a nonprofit or charitable board of directors understand their role and avoid any actions that could be construed as conflicts of interest.¹ Section 98 of the Canada Corporations Act instructs directors to declare a conflict of interest as soon as it becomes apparent.¹ In cases where legislation does allow contracts in which a director has a conflict of interest to be ratified, the director must declare his or her interest and abstain from voting on related matters. (Also see Standard B12.) Having a defined conflict of interest policy will help boards of directors navigate cases in which conflicts of interest arise.

Conflict of interest policies should include:

• Guidelines on what types of circumstances constitute a conflict of interest
• Consequences for failing to disclose a conflict of interest

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “Primer for Directors of Not-for-Profit Corporations: Rights, Duties, and Practices,” Industry Canada, 2002.
2. “Standards Program Definitions,” Imagine Canada, May 2011.

Why is it important to have a privacy policy? Protecting the personal information of nonprofit staff, volunteers, and clients fosters a strong reputation for integrity. This has become an essential part of a nonprofit’s accountability to its stakeholders, many of whom are increasingly concerned about how their personal information is stored, used, and transferred.¹

What government legislation does my organization need to comply with when creating its privacy policy? In 2004, the federal government initiated the Personal Information Protection and Electronic Documents Act (PIPEDA). PIPEDA applies to all nonprofits and charitable organizations that are conducting commercial activities, defined as “...any particular transaction, act or conduct or any regular course of conduct that is of a commercial character, including the selling, bartering or leasing of donor, membership or other fundraising lists. " In certain provinces, including Alberta, BC, and Quebec, provincial privacy legislation has been deemed “substantially similar” to PIPEDA, and should be followed instead.² Organizations in Alberta can use the Protecting Personal Information: A Workbook for Nonprofit Organizations. (Government of Alberta, March 2010) to determine what should be included in their privacy policy. The workbook also contains a sample privacy policy template.

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “Protecting Personal Information: A Workbook for Nonprofit Organizations,” Government of Alberta, March 2010.
2. “Canada’s Federal and Provincial Privacy Laws for Nonprofits,” Blog by Tierney Smith for TechSoup Canada, June 9th, 2011.

Why is it important to have a process for addressing complaints promptly? Every organization at one point or another will receive complaints. Instead of viewing complaints as a nuisance, they can be seen as an opportunity to consider the organization’s activities and to make changes that could improve programs, services, or operations. Providing simple and meaningful ways for external stakeholders to express complaints will strengthen your organization’s reputation by demonstrating that it takes their needs seriously.¹ Addressing complaints promptly also helps avoid escalation and is a sound risk management practice.

Why is it important for the board to be made aware of complaints received? Complaints that express dissatisfaction with an organization’s programs, services, or activities can inspire change, leading to improvements in an organization’s operations or ability to fulfill its mission.² Reviewing complaints may also alert board members to risks they may not have considered. A complaints and compliments approach can allow both positive and constructive feedback to be captured and communicated to the board and other stakeholders.

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “The Eye of the Beholder: Managing Reputation Risk,” Carlye Christianson and Melanie Lockwood Herman, Nonprofit Risk Management Center.
2. “Uncommon Sense,” Melanie Lockwood Herman, Nonprofit Risk Management Center E-News, April 27, 2011

Why is it important for Level 3 organizations to have a whistleblower policy? Whistleblower policies and procedures protect individuals who discover that an organization is engaged in illegal practices or conduct that goes against an organization’s policies or other governing documents. Ensuring that “whistleblowers” who disclose illegal or unethical practices are protected from retaliation cultivates transparency and accountability in the workplace.¹ Protecting whistleblowers also increases the likelihood that nonprofit or charitable organizations will be made aware of unethical or illegal conduct internally instead of from law enforcement, other regulatory bodies, or the media.¹

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “Whistleblower Protections in the Nonprofit Sector,” Jason M. Zuckerman, Nonprofit Risk Management Center.

Why is it important for nonprofit and charitable organizations to hold at least two meetings with an unrestricted agenda? Board meetings are the most significant venue in which board members are made aware of and assess the activities of a charity or nonprofit.¹ This standard recognizes that in order to govern effectively, the board of directors must hold at least two meetings in addition to meetings that address specific issues such as the appointment of officers.

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “Primer for Directors of Not-for-Profit Corporations: Rights, Duties, and Practices,” Industry Canada, 2002.

Definition: Board Terms of Reference¹
A document approved by the board that specifies the stewardship responsibilities of the board of directors and their accountabilities to the organization’s members and stakeholders.

Why are terms of reference important? Board and committee terms of reference describe the purpose and operating structure of a nonprofit or charitable organization’s board of directors. By setting clear expectations, terms of reference guide behaviour and provide a framework for board decision-making. Terms of reference should be written in clear, concise language so that they are easy to understand and follow.² Board terms of reference should describe the purpose of the group and outline board members’ responsibilities.

The scope of responsibilities included in the board terms of reference (sometimes called ‘mandate’ or ‘job description’) usually includes:¹

• setting the strategic direction (approving strategies and goals),
• managing the most senior staff person,
• monitoring the organization’s performance (overseeing the conduct of the business of the organization),
• overseeing risk management,
• approving policies appropriate for the business of the organization, and,
• establishing procedures for good governance.

Committee terms of reference should include:¹

• The name of the committee
• The committee’s purpose
• Important duties and responsibilities
• The committee’s composition and roles
• Meeting details
• Resources, including financial resources and staff support
• Annual objectives
• Reporting details
• Process for review and evaluation of the committee
• Approval date and review date of the terms of reference

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “Standards Program Definitions,” Imagine Canada, May 2011.
2. “Board Development: Committees,” Board Development Program, Voluntary Sector Services Branch, Alberta Culture and Community Spirit, 2009.

Back to Standard Resource listing

Why is it important for the boards of nonprofits and charities to consist of at least three members that are at arm’s length to each other and to the most senior staff person? The Canada Not-for-profit Corporations Act states that any soliciting corporation must have a minimum of three directors.¹ Requiring directors to be at arm’s length from one another and to the most senior staff person and other management staff ensures that board members act in the best interests of the organization and avoid conflicts of interest. It also helps to maintain the diversity of the board, one of the board’s key responsibilities.²

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “‘Number of Directors’ in New Legislation Canada Not-for-Profit Corporations Act: The Directors,” Corporations Canada.
2. “Primer for Directors of Not-for-Profit Corporations: Rights, Duties, and Practices,” Industry Canada, 2002.

Why is it important that board members of charitable and nonprofit organizations not receive financial compensation for their role as a director? This standard prohibits board members from receiving monetary compensation in return for their service as a director of the board. “In their capacity as a director” implies that board members may be paid for services they provide to the nonprofit or charitable organization in another role, for example as a consultant (although a director in this position must abide by all conflict of interest policies and procedures). In the case of charities that are registered under the Income Tax Act, certain provinces prohibit directors from receiving any remuneration in any capacity, as this is seen as an inherent conflict of interest.¹ (Also see Standard B12).

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “‘Remuneration of Directors, Officers and Members’ in New Legislation Canada Not-for-Profit Corporations Act: The Directors,” Corporations Canada.

Definition: Strategic Plan ¹
The strategic plan is a document that outlines the desired future for the organization and provides a roadmap that defines how the organization will achieve it. The roadmap contains broad directions as well as more specific ways they will be achieved. The plan usually addresses critical issues, opportunities and threats facing the organization and allocates appropriate resources to pursue the strategic directions.

What is strategic planning and why is it important? Strategic planning, the process by which the board determines how the organization will accomplish its mission, is one of the primary duties of nonprofit and charitable boards of directors. ²  Strategic planning is an opportunity to explore an organization’s potential, test ideas, question outdated practices, and develop new and innovative strategies that challenge the status quo in pursuit of greater social impact. It allows the board to set priorities for action that shape decision making throughout the organization. ³

The benefits of strategic planning include: ³

• Identifying important issues (often by conducting a SWOT analysis)
• Identifying potential resources
• Developing a framework for action
• Creating a clear plan that can be used in communications and marketing as well as in funding proposals
• Developing a tool for managing change
• Increasing creative thinking
• Allowing the board to discover shared values
• Building trust and respect among board members
• Creating a positive organizational culture

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “Standards Program Definitions,” Imagine Canada, May 2011
2. “Primer for Directors of Not-for-Profit Corporations: Rights, Duties, and Practices,” Industry Canada, 2002
3. “Strategic Planning Workshop Presentation,” Cathy Brothers for Capacity Waterloo Region, Sept. 30th 2011.

Why is it important to orient new board members? Orientation of new board members is an essential component of creating an effective board of directors.¹ In order to govern a nonprofit or charitable organization, board members must be informed of the organization’s goals and activities and must also understand their role as board members, including their personal liability for the organization’s finances or actions.

Orientation of new board members might include the following:

• The organization’s letters patent
• The organization’s bylaws
• The organization’s recent annual reports
• The organization’s policies and procedures
• A document describing the role of the board of directors, such as the “Primer for Directors of Not-for-Profit Corporations: Rights, Duties, and Practices,” Industry Canada, 2002.
• The role of the board in hiring, performance evaluation, compensation management, and firing, if needed, of ED/CEO.
• The organization’s mission statement
• The organization’s strategic plan or long-term goals
• The programs and services offered by the organization
• The organization’s administrative structure
• The organization’s financial status, budget, and funding structure

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “Primer for Directors of Not-for-Profit Corporations: Rights, Duties, and Practices,” Industry Canada, 2002.

Why is it important to record board meetings and retain policies? Preparing and retaining proper minutes from board meetings is an essential part of a transparent and accountable governance process and serves to preserve a record of agenda items discussed, documentation reviewed, votes taken, and decisions made.¹ Minutes from board meetings record organizational history and can play an important role in risk management by demonstrating that directors have exercised a reasonable standard of care in decisions made regarding the organization. Board minutes can also be a useful tool for orientation and training of new board members, employees, or volunteers. Similarly, policies guide practice within nonprofit and charitable organizations and must therefore be recorded and retained. All board members, staff, and volunteers of an organization should be familiar with the organization’s policies.

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “‘Governance’ in Key Risks & What To Do About Them,” Imagine Canada, 2009.

Why is it important to have a succession plan for the board chair and committee chairs? The board of directors of a charity or nonprofit is responsible for board succession planning.¹ Planning for succession to the positions of board chair and committee chairs minimizes disruption as directors leave or join the board and allows the board to ensure that important skills continue to be represented among its members and committees.² Like planning for the succession of the Executive Director or other staff members, board succession planning increases the resilience of the organization and builds capacity among board members.

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “Primer for Directors of Not-for-Profit Corporations: Rights, Duties, and Practices,” Industry Canada, 2002.
2. “Succession Planning for the Board,” Beth Deazeley, Feb. 2010.

Why must the board consider development oppurtunities for potential board chairs and committee chairs?Providing developmental opportunities for board members is a valuable practice¹ that represents an investment in individual board members, the effectiveness of the board as a group, and the impact of the organization in the community.² Opportunities for development build the skills and experience of board members and help retain the right people on your organization’s board.²

Effective opportunities for board development:²

• Are pertinent for the individual director and for the board as a whole
• Meet the needs of board members and of the organization
• Advance the organization’s priorities
• Are relevant for the board member outside the board room
• Are convenient and cost-effective
• Increase understanding of the organization’s mission, structure, and/or stakeholders

Development opportunities for board members might include:²

• Information sessions during meetings
• In-house training and workshops
• Board retreats
• External workshops or conferences
• Books, articles, and other learning resources
• Distance education
• Meetings focused on reflection and dialogue

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “National Study of Board Governance Practices in the Non-profit and Voluntary Sector in Canada,” Strategic Leverage Partners Inc., 2006.
2. “Board Building - Recruiting and Developing Effective Board Members for Not-for-Profit Organizations, A Self-Guided Workbook,” The Muttart Foundation and Alberta Culture and Community Spirit, 2008.

Why does the board need to review its performance? Evaluating its own performance is a way for the board to build capacity and to demonstrate its commitment to ongoing learning and improvement. Although not a requirement for this standard, good practice suggests that time should be allocated during each board meeting to conduct a brief evaluation of the meeting in order to enhance effectiveness in the future. In addition, the board should evaluate its performance annually along with the performance of the board chair.¹ The board should engage an external facilitator if board members have difficult or contentious relationships that may hinder their ability to conduct meaningful evaluations of themselves or their peers. Annual evaluations may also contain input from members or stakeholders.¹

Benefits of evaluating the board and its individual directors include:²

• Recognizing the significance of the board’s role and of the commitment made by its directors
• Ensuring that activities are accomplished and that board members receive enough support to fulfill their roles
• Encouraging accountability by evaluating how effective the board is at its work
• Providing recognition to board members, which may help with motivation and retention
• Helping the board and individual directors to improve their performance
• Creating a record of information that can be useful when recruiting new board members
• Giving board members an opportunity to self-identify if their role on the board is not a good fit³

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “Primer for Directors of Not-for-Profit Corporations: Rights, Duties, and Practices,” Industry Canada, 2002.
2. “Board Building - Recruiting and Developing Effective Board Members for Not-for-Profit Organizations, A Self-Guided Workbook,” The Muttart Foundation and Alberta Culture and Community Spirit, 2008.
3. Lynn Chambers, Manager of the Standards Program at Imagine Canada, personal communication, September 2012.

Why is it important to have an anti-harassment policy? It is incumbent upon charities and nonprofits to provide an environment that is free from harassment for all parties concerned. Developing and adopting an anti-harassment policy helps to ensure that staff and volunteers understand their rights and responsibilities in relation to this issue, and clarifies procedures for prevention, response, and enforcement. Anti-harassment policies are important from a human rights perspective. The Canadian Human Rights Act protects employees from harassment based on race, national or ethnic origin, colour, religion, age, sex, sexual orientation, marital status, family status, disability or pardoned conviction. An anti-harassment policy helps organizations to ensure they are meeting their legal obligations with respect to the issue of discrimination.

According to the Canadian Human Rights Commission,¹ your organization’s anti-harassment policy should include:

• Definitions of “harassment” and “sexual harassment”
• Responsibilities and expectations of the organization, supervisors, employees, and volunteers
• Procedures for addressing a harassment complaint, including clear steps for how to file a complaint
• A statement about privacy and confidentiality in relation to harassment complaints
• Steps to take if a complainant is not satisfied with the outcome of the complaint process

Note: Your organization’s anti-harassment policy may be found within a broader conflict management policy and it will still be considered compliant as long as it includes the above elements.

1. Workplace anti-harassment policy template from the Canadian Human Rights Commission

Charities and nonprofits are community trusts and as such should not be seen as “owned” or “operated” by any individual or group of individuals other than the members / community stakeholders who are passionate about the mission of the organization. As such, volunteer board directors should not view their role as permanent, although their interest in the wellbeing of the organization should be long-term in nature.

Experience has shown that organizations that do not have term limits imposed on board members may have long-serving directors who are no longer contributing effectively and may in fact be a negative influence on the board culture and organizational decision-making. Although term limits may prevent an effective director from continuing to serve, the larger risk facing organizations is when a lack of term limits results in the continued tenure of long-serving, influential directors who are no longer contributing positively to the organization or board. In fact, recent research shows that after 8 to 9 years on a board, a director is no longer adding value, and has likely become a detriment to the board.1

The standard allows for a certain number of board members to exceed the 9-year term limit. The rationale behind this flexibility in the standard is the recognition that some organizations face contextual constraints such as only having access to a small volunteer pool, the need to fill officer positions, and/or the need for particular skills.

1. “The relationship between director tenure and director quality” in the International Journal of Disclosure and Governance

Definitions:

Equity: Fairness, impartiality, even-handedness. A distinct process of recognizing differences within groups of individuals, and using this understanding to achieve substantive equality in all aspects of a person's life.1

An inclusive workplace is fair, equitable, supportive, welcoming and respectful. It recognizes, values and leverages differences in identities, abilities, backgrounds, cultures, skills, experiences and perspectives that support and reinforce Canada's evolving human rights framework.2

Why is it important to have an equity and inclusion policy? As organizations working towards the betterment of Canadian society, charities and nonprofits have a responsibility to demonstrate leadership in the area of human rights. This means providing discrimination-free services to clients as well as following discrimination-free engagement practices for employees, the board and non-board volunteers. Given that the sector often serves vulnerable people and communities it is especially important that charities and nonprofits lead in equitable and inclusive practices to reflect the communities we serve.

Many organizations use the term “diversity, equity and inclusion” (DEI) to name this policy. Please note that the standard is not intended to be prescriptive about how the policy is named but is looking for the elements of the standard listed below. The choice to name the standard “Equity and inclusion policy” rather than using the more common term “DEI” came about through consultation with experts in equity and anti-oppression who advised that increasing diversity in an organization is only one of many steps an organization can take to promote the values of equity and inclusion.

Your organization’s equity and inclusion policy3 should include:

• Definitions of the terms “equity” and “inclusion”
• An overarching statement of what the values of equity and inclusion mean for your organization
• Goals your organization intends to meet with respect to the values of equity and inclusion
• Practices your organization has committed to following in order to accomplish the aforementioned goals

1. Teaching human rights in Ontario - A guide for Ontario schools
2. Building a Diverse and Inclusive Public Service: Final Report of the Joint Union/Management Task Force on Diversity and Inclusion from the Treasury Board of Canada Secretariat
3. Diversity, Inclusion, and Equity Policy Template and Guide from Bloomerang

In order to operate effectively and to address confidential issues in a timely and effective manner, boards sometimes need to meet without any staff or other stakeholders present. Some board responsibilities (e.g., performance evaluation or compensation of the most senior staff person) require in camera meetings at regular times during the year. However, calling for a special in camera meeting when one was not expected can cause awkwardness, particularly between the board and the most senior staff person. According to governance experts, best practice is to hold an in camera session at every regular board meeting, first with only the most senior staff person and board members present, and then with only board members present.1 This practice helps to normalize in camera sessions, countering the notion that they are only scheduled to deal with matters concerning the CEO or an imminent crisis.2 

It is important that the board does not use the in camera meeting for topics that are typically discussed with management present. Some questions directed to the most senior staff person are best addressed when no other staff members are present. Other issues (e.g., internal board dynamics) are more effectively dealt with by the participants themselves without any other observers, including the most senior staff person. The distinction to be made is between maintaining confidentiality and engaging in secrecy.3

Note that the board chair is responsible for ensuring that any decisions or major topics covered during an in camera meeting are documented in either the board meeting minutes or separate minutes for in camera sessions.

1. In Camera Board Sessions: Careful How You Use Them, Governing Good
2. In-Camera Sessions, Miedemas Board Consulting
3. What is an in camera session? How to maintain confidentiality in the Boardroom without generating fear, Conscious Governance

Definition: Most Senior Staff Person ¹
The person who reports to the board of directors and to whom any other employee of the organization reports either directly or indirectly. Common titles for the most senior staff person include President, Chief Executive Officer and Executive Director.

Recruiting the most senior staff person: Hiring and monitoring the Executive Director or most senior staff person is one of the primary responsibilities of the Board of Directors of a nonprofit organization. ² It is important to have processes in place for recruiting a new Executive Director to ensure that the best possible candidate is selected for the job and to avoid crisis as your organization transitions between one Executive Director and the next.

Why is orienting the most senior staff person important? Effective orientation has been demonstrated to improve job performance as well as to instill a sense of commitment among new employees. ³

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “Standards Program Definitions,” Imagine Canada, May 2011
2. “Hiring a Director for a Nonprofit Agency: A Step-by-Step Guide,” Kurt J. Jenne and Margaret Henderson, Popular Government, Spring 2000
3. “HR Management Standards: Second Edition,” HR Council for the Nonprofit Sector, 2011

Why is a written job description important? The board of directors is responsible for monitoring the performance of the organization’s most senior staff person in order to ensure that the organization is functioning effectively. ¹ A formal job description lists all the activities and competencies required for the most senior staff person’s position and creates a structure with which to assess individual performance. ² Written job descriptions also provide a sense of professionalism when recruiting a new ED / CEO.

Job descriptions usually include: ²

• A list of the position’s duties, tasks, and responsibilities
• A description of how the position advances the organization’s goals
• A list of required experience and competencies
• Any special requirements (for instance, a police check)
• A list of key relationships to the organization’s stakeholders

Why are annual performance objectives important? Level 2 and 3 organizations must develop annual performance objectives for their most senior staff person and conduct an annual performance review. Annual performance objectives should assess progress toward the nonprofit or charitable organization’s strategic plan ² and measure success against annual work plans and the most senior staff person’s job description. ³

Benefits of regular performance reviews of the Executive Director or most senior staff person include: ⁴

• Increased understanding among board members of the role of the Executive Director and of day-to-day operations
• Increased understanding of progress toward the organization’s mission
• Ability to respond more effectively to shifts in the external environment including changes to funding and community needs
• Enhanced communication between board members and the Executive Director
• Ability to proactively address emerging challenges
• Enhanced performance of the Executive Director

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “Primer for Directors of Not-for-Profit Corporations: Rights, Duties, and Practices.” Industry Canada, 2002
2. “HR Management Standards: Second Edition,” HR Council for the Nonprofit Sector, 2011
3. “Performance Management for Executive Directors,” in HR Council for the Nonprofit Sector’s HR Toolkit. 
4. “Hiring and Performance Appraisal of the Executive Director,” The Muttart Foundation and Alberta Culture and Community Spirit, 2008

The board is responsible for determining and reviewing the compensation package of the organization’s most senior staff person. When reviewing the most senior staff person’s total compensation package once per year, it is important that the board review all related expenses.

Definition: Total Compensation Package¹
The sum total of all rewards (cash and other) that are provided to an employee, including: base salary, commission, bonus, car allowance, housing allowance, benefits, pension, etc.

The HR Council for the Nonprofit Sector identifies three forms of compensation,² all of which should be considered when reviewing the total compensation package of your organization’s most senior staff person:

• “Direct financial compensation consisting of pay received in the form of wages, salaries, bonuses and commissions provided at regular and consistent intervals
• Indirect financial compensation including all financial rewards that are not included in direct compensation and can be understood to form part of the social contract between the employer and employee such as benefits, leaves, retirement plans, education, and employee services
• Non-financial compensation referring to topics such as career development and advancement opportunities, opportunities for recognition, as well as work environment and conditions”

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “Standards Program Definitions,” Imagine Canada, May 2011.
2. Definitions from “Compensation Defined,” in the HR Council for the Nonprofit Sector’s HR Toolkit.

Definition: Succession Plan¹
A succession plan sets out how potential departures of key personnel would be dealt with in the short-term and long-term through internal or external candidates. It could define key competencies, identify pools of talent and outline how current staff members are being developed to fill positions.

What is succession planning and why is it important? A succession plan describes how an organization will respond to the expected or unexpected departure of their most senior staff person. Organizations may find it helpful to create two succession plans: one that reflects long-term planning and one for emergencies. Having an effective succession plan in place for the most senior staff person improves organizational resilience by:² 

• Avoiding disaster should an Executive Director leave unexpectedly
• Strengthening operations and building capacity within the organization by training staff, board members, and volunteers to perform aspects of the most senior staff person’s role
• Building leadership competencies within staff and volunteers throughout the organization, strengthening the nonprofit sector as a whole and enabling organizations to achieve greater positive impact in the communities they serve

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “Standards Program Definitions,” Imagine Canada, May 2011.
2. “Building Leaderful Organizations: Succession Planning for Nonprofits,” Tim Wolfred, 2008. Baltimore, Maryland: The Annie E. Casey Foundation

What is risk? Risk is anything that could prevent a nonprofit from achieving its mission.¹ An organization’s risks can be considered in terms of its four primary assets:¹

1. People (board members, volunteers, staff, clients/participants, donors, etc.)
2. Property (buildings, facilities, equipment, contents, important papers)
3. Income (grants, contributions, contracts, investment earnings)
4. Goodwill (reputation, ability to raise funds, stature in the community, appeal to prospective volunteers / board members / staff)

Definition: Operational Risks²
Operational risks are risks arising from the organization’s people, systems, strategies and processes or from external events which have a negative impact on its assets, including physical, financial and human resources, programmatic content and material and its integrity and reputation. It also includes other categories such as fraud risks, legal risks, and physical or environmental risks.

Definition: Strategic Risks²
Strategic risks are associated with the strategic direction of an organization. Strategic risks are often a function of uncertainties that may be driven by government policy, competition, court decisions or a change in stakeholder requirements.

Why is identifying and planning to minimize risk important? Assessing and mitigating the risks facing a nonprofit or charitable organization is one of the primary responsibilities of the board of directors.³ Every nonprofit faces risks, and risks can never be completely removed.⁴  What is most important is that your organization is aware of the risks involved in its programs and activities and that it takes reasonable action to avoid harm to its board members, volunteers, staff, clients, property, or reputation in the course of its operations.

Effectively managing risk will help your organization to:

1. Prevent or reduce harm to your people or damage to their property
2. Prevent or reduce damage to your nonprofit’s reputation and public image
3. Help you attract and maintain the confidence of your stakeholders
4. Increase peace of mind
5. Keep regulators happy
6. Reduce the chance of a lawsuit
7. Help obtain (or keep) strong insurance coverage at a competitive price
8. Assist in clearly defining insurance needs, particularly as needs and activities change
9. Save nonprofit resources by preventing loss of time, assets, income, property, or people
10. Lessen the chance of disruptive investigation
11. Inform decision-making
12. Reduce uncertainty by knowing what could happen
13. Risk management can be a valid defense in a lawsuit
14. Risk management can be a valid defense in a lawsuit even if an employee or volunteer did not follow your policy (by demonstrating that your organization took reasonable steps to mitigate risks)

From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

1. “Key Risks & What To Do About Them,” Imagine Canada, 2009.
2. “Standards Program Definitions,” Imagine Canada, May 2011.
3. “Primer for Directors of Not-for-Profit Corporations: Rights, Duties, and Practices,” Industry Canada, 2002.
4. “Developing a Risk Management Strategy: Five Steps to Risk Management in Nonprofit and Charitable Organizations,” Karen Six and Eric Kowalski, Imagine Canada, 2005.

Why is it important to review insurance coverages? Insurance protects your organization’s people and property from injury, loss, or damage incurred in the course of your organization’s operations. This standard seeks to ensure that nonprofit and charitable organizations possess adequate insurance coverages based on their programs, services, and other activities. Board members need to be familiar with their organization’s insurance policies in order to protect their organization and themselves from risk.

What kind of insurance does my organization need? The amount and kind of insurance an organization needs to purchase depends on the programs and / or services the organization offers as well as the kind of activities it conducts.¹ Boards should consider whether their insurance policies are sufficient given their organization’s mission and operations, and should be familiar with any limitations of their policies.² Limitations can include exclusion of coverage for sexual or physical abuse, limitations related to the geographic area covered by the policy or limitations regarding who is covered by the policy.² Most general liability insurance policies only cover claims made in the context of an organization’s operations. Nonprofit and charitable organizations should also consider obtaining additional directors’ and officers’ liability insurance to protect against claims involving board decisions or actions.² Board members need to understand their organization’s insurance policies as they could be held personally liable if the organization is unable to meet its financial obligations.

1. “Insurance for Voluntary Organizations: Things to Consider,” Insurance Bureau of Canada, 2007.
2. “Primer for Directors of Not-for-Profit Corporations: Rights, Duties, and Practices,” Industry Canada.