By Leslie Milton, CPA, CA, LPA, Associate Partner
The Board is responsible for everything an organization does. It sets the policies and procedures, in conjunction with management, that establish and monitor the long-term direction of the organization. Boards ensure the proper stewardship of the organization’s assets. They monitor the organization’s operations, and they establish and ensure adherence to the organization’s principles, with a particular emphasis on its objects or purposes.
Board governance refers to who makes decisions, who has the power in what situation and how all parts of the organization interact. It is reflected in the policies and procedures established by the board of directors, the use of standing committees, how often they meet, and the relationship between the board and the organization’s staff. As a non-profit organization, listed below are just a few of the broad issues that should be addressed in order to create an effective governance structure and culture in your organization.
- Does the organization have a strategic plan?
- Are there clear and concise mission and vision statements for the organization?
- What are the risks facing the organization?
- Is the organization economically dependent?
- What is the budget philosophy and how does the organization address variances?
- What processes need to be in place to ensure that management and the board have accurate financial information that is necessary to make informed decisions on a timely basis?
- What financial controls should you have in place to safeguard the organization’s assets?
- Are key records secure? Is client information protected? Are there regular offsite backups of accounting and other key information?
- How does the board evaluate its own work and effectiveness?
- How does the board make sure that it has the appropriate levels of expertise, diversity and representation necessary to guide the organization?
This is a very brief overview of the things that leaders of non-profit organizations should consider as they establish a governance framework. CPA Canada has a number of excellent publication that you can download for free including Good governance for not-for-profit (NFP) organizations; Questions for directors. As always, an accountant’s perspective is important but your legal counsel will be an invaluable resource as well. If you have any questions, please do not hesitate to contact GGFL, and we can help you find the answers you need to effectively manage your not-for-profit organization.
