Crises, Corporate Governance and By-laws
There has been increasing interest in corporate governance of charities and how charities are run and the degree to which they are transparent and accountable to their donors and stakeholders. We are sometimes called in to help a non-profit or charity that is suffering from the effects of poor governance. Examples include an executive director who receives a full-time salary while refusing to be accountable to the board of the organization paying the salary, or an executive director of a charity controlling the charity by having a large number of proxies for every board meeting! Then there is the case of self-dealing by the chairperson of a charity, whether he or she is well-intentioned or not. In some cases the charity requires legal advice but often the charity just requires someone to assist in implementing a plan to clean up the charity - sometimes by terminating a chair or ED that has acted inappropriately and other times to put in place proper controls in the governing documents or by-laws.
We provide assistance with the legal and practical issues and also an external and more objective assessment of the situation. In some cases lawyers are called in because the charity is made up of friends or business associates and it is far easier for the lawyer to tackle the issues compared to any individual officer, employee, or board member. Often there is also a realization that dealing with certain issues in a poorly governed charity without legal advice may take many months which will distract the charity from its charitable work and be extremely costly in terms of wasted time and resources. Although we are frequently called on to assist with crises, most work in corporate governance is not nearly as exciting and usually involves helping draft policies, tweaking by-laws, and making suggestions for incremental improvements in the charity's governance.