Viewpoint: Alison Brewin on Non-Profits and the Law

The following Viewpoint post by Alison Brewin was originally published on the website of Alison Brewing Consulting, and is shared here with her permission. 

Doing Good Better
Struggling with the Undertow: Non-Profits and the Law

The legal system can feel like an undertow, like an invisible tugging just below the surface of our daily lives. Some non-profit organizations are lucky to never feel its pull and manage to float along on the strength of their resources and the buoyancy of their focus. Some feel an occasional tug but manage, with resiliency and stability, to keep moving through their work.

Sadly, some organizations get yanked under and dragged out to sea before they can lift their heads again.

But the law, like an ocean undertow, is a knowable entity. It is something that can be assessed, considered and mitigated against before jumping into the deep water. More importantly, an organization that is already deep into its work can choose to pause for a moment to look directly at the undertow of the law and make sure the organization is safe from unnecessary risks.

Governance, employment law, human rights, contract law and privacy are five areas that legal issues often arise. If an organization has charitable status, a huge area that can create legal pitfalls and disasters is in efforts to comply with the Canada Revenue Act to ensure they can maintain that status. If an organization avoids thinking about these topics, avoids considering best prevention practices, they will quickly move to crisis mode if a legal issue arises.

Traditional approaches to ‘risk assessment’ are usually focused on narrow legal liabilities – things like financial mismanagement and negligence. Financial mismanagement is a serious concern for non-profits, but there are accessible and simple tools for lowering the risk of fraud or theft. Tools like annual budgets and public monthly statements comparing actuals to that budget; dual signatures on checks in which one must be a Board member; dual review of cash in and out of the organization etc.

While negligence and its criminal cohorts (think negligence is bad behaviour, criminal really really bad behaviour) especially where your organization works with children, are also serious problems, more often then not non-profits fire a staff or board member before they sue them for negligence or call in the police.

Which brings me to the area of law that, in fact, causes the most problems for non-profits: employment law.  While lawyers are quick to point out that the area of law that lands non-profits in court is in the area of governance and compliance with the Society Act or Tax law, I argue that this is only because employment law works outside the realm of court – with the Employment Standards Branch and Labour Relations Board. And it also is true from a study conducted by me and local lawyer Martha Rans that non-profits themselves find employment law more problematic than governance.

Here are some examples of things that can turn from problem to crisis and potentially drag an organization out to sea:

An exiting employee announces they want to be paid out for all the overtime they did ‘volunteering’ for the organization after hours;
An organization lends their performance to another group for an event and there is damage to the space;
The Chair of the Board fires the Executive Director without consulting the rest of the Board;
An ED announces that the staff are all contractors so the organization doesn’t have to pay any CPP or EI, and stops paying any;
A Board makes decisions by email for two years before someone points out that the by-laws are the old generic ones from the Society Act and don’t allow for it.

There is a new Society Act coming in BC – possibly in the spring sitting of the legislature – and a recently updated one nationally. This should act as a catalyst for non-profits around the province to spend time considering legal issues. A great place to start, without having to engage the services of a lawyer, is with the new tool developed by yours truly and Martha Rans  (www.martharans.ca). Based on years of work together, Martha and I focused this tool on some of the common legal issues that organizations in BC struggle with regularly. It will provide your organization with a clear picture of the areas you need to work on to help prevent the kind of situation above from becoming an organizational nightmare. In other words, this tool can help you see the undertow before it drags you down!

To use the tool, go to lawfornonprofits.ca. After you have completed it, you will get the Key to help you interpret your responses on your own. Feel free to contact Martha or me if you want to delve into it further!

Of course, I can't end a blog about non-profits and the law without mentioning the impact public policy plays on it all. The fact is that a government bent on undermining civil society can decide what 'compliance' with charitable laws looks like and pronounce an organization as non-compliant (see recently: Dying with Dignity; Tides Foundation; Ecology Action Centre; CCPA etc etc). While working harder to elect different people into office is one answer (seriously people, we need to change the direction of electoral politics in this country, like, super duper seriously), the organizations that have been able to withstand the ideological wind shifts are the ones with solid internal systems in place, ones not afraid to acknowledge the undertow and establish some basic structures that will support stability.

So if you'd like to take the first step in that direction, start with this excellent tool to ensure you have the information in your hands that takes you below the surface and exactly where the undertow is moving.

(BTW: The development of the tool was funded by the City of Vancouver and Vancity, and was sponsored by the Artists' Legal Outreach and included Rob Gloor, Ingrid Liepa and Tracey Axelsson as part of the team involved).

- Alison Brewin, Alison Brewin Consulting
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