The Handbook of Board Governance, 2nd Edition

50Charitable and Not-for-Profit Organization Governance

Donald J. Bourgeois BA (HONS.) LLB

Barrister and Solicitor

Introduction

Board governance for charitable and not-for-profit organizations is in many ways similar to board governance in “for-profit” or business corporations. The tools of governance are common—such as risk assessments, strategic and business planning, budgeting, and financial statements. What is largely different is the purpose or rationale underlying the organization itself. The “why” the organization exists is something that is essential to understand and the “why” for charitable and not-for-profit organizations is different from the “why” for business corporations, whether those corporations are privately owned or publicly traded.¹

“Good governance” is “good governance.” The boards of directors and senior management of charitable and not-for-profit organizations have no less obligation to ensure that the organization is governed in an appropriate manner and in compliance with the applicable law than do the boards of directors and senior management of business corporations. Indeed, arguably, given the “why” of charitable organizations in particular, that obligation is even greater in common law jurisdictions. Charitable organizations hold the assets “in trust” for their charitable purposes and it may be that this “trust” obligation extends to the directors. All directors have fiduciary obligations to the corporation, but this “trust” obligation extends ...