The Handbook of Board Governance, 3rd Edition

67A Primer on Charitable and Not-for-profit Organization Governance

Donald J. Bourgeois, BA (Hons), LLB

Barrister & 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

The “why” implicitly draws into the discussion the concept of “value for money.” At its simplest, the “why” for businesses is to make money for the shareholders, with the profits being distributed to those shareholders. Of course, the reality is more complex than that simple statement. Businesses and their owners have other motivations for being in business—including the potential for improving people’s lives, the environment, and so forth. These other motivations may be personal in nature, or they may arise from legal requirements. Nonetheless, in the case of charitable and not-for-profit organizations, the motivation is typically not one of profit and the distribution of profit to members or owners.

“Good governance” ...