Consumer and Non-Profit Law
Welcome Aboard - Becoming a Board Member
You’ve been invited to join the board of directors of a charitable or non-profit organization and you are not sure what is involved. Agreeing to sit as a director is one way to support a good cause. Being a director is a volunteer position, so you won’t get paid; but it is a great opportunity to get involved in your community and learn new skills. It is also a position that comes with many responsibilities, so think carefully about your obligations as a director and the legal requirements of charitable or non-profit organizations.
To help you decide whether to join a charitable board, consider the following:
Mandate and operation of the organization
Find out about the organization before you join the Board of Directors and commit your time. Consider the following:
- Know the mission statement and mandate of the organization.
- Review governing documents such as the bylaws, policies, and procedures.
- Read copies of annual reports and get a summary of programs and projects.
- Visit the organization’s website.
- Arrange a site visit.
- Talk to current and former board members.
Time commitment of volunteer board members
Be aware of how much time the board will expect you to contribute. This will be different for each organization, but you can ask current or former board members the following questions:
- How often does the board meet?
- What other time commitments does the board expect?
Role of board members
The role of board members can also vary from one organization to another. To find out what board members actually do, consider asking the following questions:
- Does the organization have written job descriptions for board members?
- Can you meet with other board members to discuss the way the board works?
- Will the board expect you to take on the responsibilities of a specific position such as treasurer or secretary?
Legal status of the organization
The legal status of the organization may affect your decision to join the board. You should consider whether the organization is an unincorporated non-profit, incorporated non-profit or a registered charity.
DEFINITIONS
Charitable Organization
Registered charities are incorporated non-profit organizations which have applied and met the criteria for charity status with the Canada Revenue Agency. Having registered charity status gives an organization a number of benefits including the right to issue tax receipts for donations.
Registered charities also have various reporting requirements and restrictions and the board of directors must ensure the organization complies with the Canada Revenue Agency regulations and guidelines.
Non-Profit Organization
Not all non-profit organizations are incorporated. An incorporated organization must have bylaws and governing documents which may provide some protection for directors in the case of legal liability. Many non-profit organizations will have obligations to file annual tax returns or information returns to the CRA and the provincial or federal government.
Day-to-day operation of the organization
The amount of involvement that board members have in¬the day-to-day operation of the organization varies. Smaller organizations may not have paid staff so board members may play a key role in the operation of programs. Larger organizations may have staff and volunteers who handle programming, fundraising and management. Ask the following questions:
- Are the directors expected to contribute to programs and administration of the organization?
- Does the board of directors delegate the work of the organization to staff or volunteers?
Knowing the level of involvement of board members in the operation of the organization should give you a better idea of what kind of work the board expects of you and how much time they will ask to contribute.
Legal risks and responsibilities of being a volunteer board member
All organizations have an obligation to follow the law. The board of directors is responsible for ensuring that the organization meets its legal requirements. It is a good idea for potential board members to ask the following questions:
- What are the specific legal responsibilities and risks associated with the organization?
- What steps has the organization taken to reduce risk and protect the board, the employees, clients or public?
- Does the organization follow clear bylaws and policies?
- Does the organization have policies to handle confidentiality, harassment, hiring, firing and other employment matters, and so on? Ask to review the policies and procedures.
- Does the organization have liability insurance? Does the policy cover board members?
Staff and Board Training
Trained board members, staff and volunteers can help to ensure that the organization is well-run and meets all of its legal obligations.
- Does the board provide a training manual and orientation for new board members?
- Does the board provide appropriate training for new employees?
Welcome Aboard!
Asking questions about the organization and the board of directors can help you make an informed decision about becoming a board member. Give careful thought to the legal risks and responsibilities. Finding an opportunity to serve your community can be a rewarding experience but it’s a good idea to determine if your time and skills fit with the needs of the organization.
For specific information about the Canada Revenue Agency’s role in regulating charities and the reporting requirements of non-profit organizations, visit the CRA website at www.canada.ca/en/revenue-agency.html.
More information on the roles and responsibilities of board members is available in the Welcome Aboard series from Public Legal Education and Information Service of New Brunswick. This series includes a video, board member’s handbook, and pamphlets to help inform individuals about the law around non-profit organizations and registered charities. Check out our free resources online at www.legal-info-legale.nb.ca.
Published by:
Public Legal Education and Information Service of New Brunswick
P.O. Box 6000
Fredericton, New Brunswick
E3B 5H1
Tel: (506) 453-5369
Fax: (506) 462-5193
E-mail: pleisnb@web.ca
Production of the Welcome Aboard series has been made possible by a financial contribution from the Canada Revenue Agency.
February 2010
ISBN: 978-1-55471-750-7
Disclaimer: Please note that our website contains general information about the law. This is not a complete statement of the law on particular topics. We try to update our publications often, but laws change frequently so it is important for you to check to make sure the information is up to date. The information in our publications is not a substitute for legal advice. To receive legal advice about your specific situation, you need to speak to a lawyer.
