Corporate Governance Principles For Non‐Profit Entities

Non‐Profit Sectors

• Canada has one of the largest and most vibrant nonprofit and voluntary sectors in the world.
• It accounts for 6.8 percent of the nation's gross domestic product (GDP) and employs 12 percent of Canada's economically active population.
• With the significant role nonprofit organizations play in Canadian life and the increasing demand for accountability in nonprofit organizations, more attention is being drawn to governance issues.

Thesis: Four Points for Non‐Profit Governance

1. Good faith and best interests of the corporation parallel but are not identical to the tests articulated for profit corporations;
2. Non‐profits are subject to corporate criminal liability which may be an ethical blind spot;
3. There are risks of being a victim of fraud but also risks of non‐compliance on a corporate level;
4. Matrix risk management is essential

Thesis: Four Points for Non‐Profit Governance

1. Good faith and best interests of the corporation parallel but are not identical to the tests articulated for profit corporations;

Canada Not‐for‐profit Corporations Act (S.C. 2009, c. 23)

148 (1) Every director and officer of a corporation in exercising their powers and discharging their duties shall

(a) act honestly and in good faith with a view to the best interests of the corporation; and

(a) act honestly and in good faith with a view to the best interests of the corporation; and

(2) Every director and officer of a corporation shall comply with

(a) this Act and the regulations; and

(b) the articles, the by‐laws and any unanimous member agreement.

To view the full article click here

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.