In May of this year, the RHI Board afforded me with a unique opportunity to attend "Governance Essentials for Not-For-Profit Organizations," a 3-day course developed by the Institute of Corporate Directors and the University of Toronto's Rotman School of Business.
I would like to provide a few key highlights that continue to resonate for me in my role as a board member with RHI.
According to Imagine Canada, Canada’s nonprofit and voluntary sector is the 2nd largest in the world (the Netherlands is the largest and the United States is ranked 5th). There are an estimated 165,000 nonprofit and charity organizations in Canada and the sector represents $106 billion, or 7% of GDP. This sector also employs 2 million people and involves more than 12 million volunteers.
This course focused on the key accountabilities and responsibilities required of leaders at nonprofit organizations. The program included topics such as governance best practices, management principles to elevate board effectiveness, and a review of fiduciary duty.
The course material suggested that generally speaking, there are three models of governance: traditional, policy based and results oriented. It is this latter form which best describes most modern NFP organizations. The characteristics of a results-oriented board are:
- Driven by the vision of the organization
- The board works with the CEO to set the direction of the organization
- The CEO leads and engages the board in the planning process
- Committees are based on board responsibilities and expertise
- Board members evaluate the performance of the board, CEO and organization
Role of the Board
A significant portion of the course was spent reviewing the roles of a modern board. Of primary importance is the board's fiduciary role to: “Act honestly and in good faith with a view to the best interest of the organization.” Each board member has the responsibility to subscribe to and support the purposes of the organization (rather than the shareholder or its substitute). RHI demonstrates this in its by-laws: "Every Director will unreservedly subscribe to and support the purposes of the Corporation" (5:7).
Conflict of Interest
Conflicts of interests are bound to arise at some point and are not in themselves necessary of concern. It is the manner with which a conflict of interest is dealt that is of significance. If a board member thinks that there is a conflict, it should be disclosed in writing. The member should then not participate in discussion and should consider recusing himself/herself. Finally, any such actions should be recorded in the minutes of the meeting.
Standard of Care
Standard of care refers to the care, diligence and skill that board members bring to their boards. In most instances it can be assessed by the reasonable person test: “The skill and diligence that a reasonable and prudent person would exercise in comparable circumstances."
Under this topic there was considerable discussion about the dangers of becoming too involved in the running of an organization. We learned that the mantra of a board should be “noses in, fingers out,” or short, NIFO.
Governance in Today's Context
So what does good governance mean in today's context? Today's boards should have:
- A clearly defined mission statement that is reviewed regularly
- A strategic planning focus with measurable goals
- Transparent policies
- Meetings and interaction with management
- Committed and knowledgeable directors with time to give to the organization
In sum, it means boards should have responsibility and accountability to themselves and the organization.
Governance at RHI
Throughout the three days I kept asking myself: "How does RHI stack up against all these tests?"
In my opinion, we are currently meeting all of the governance criteria outlined in the course. Our strategic planning process is in alignment with our vision. We work to support the mission of the organization, while following the NIFO principle. Further, I believe that we are able to attract and retain talented, representative board members and senior management.
Thank you to the leadership of RHI for supporting me in my learning of modern governance for NFP organizations, and thereby enabling me to be the best board member that I can be.
When Kevin Lamarque was in his last year of high school, he received a spinal cord injury in a tobogganing accident, which left him a paraplegic. After his primary rehabilitation, Kevin continued his education at the University of Western Ontario where he completed a Bachelor of Arts, Masters of Arts and a Bachelor of Education.
Kevin served over thirty years in public service working in both the political and civil service fields and in the Ontario provincial and the federal government. He has worked as a policy advisor for several Cabinet Ministers and three years as a Policy Advisor in the Prime Minister's Office. As a civil servant, Kevin continued his career as a Policy and Programme Officer and as an Executive in several federal departments. Kevin is also the former Director of the Department of Canadian Heritage in Nova Scotia. Kevin is the former Chair of the Canadian Paraplegic Association – Nova Scotia and currently serves as a member of Rick Hansen Institute's Board of Directors.