Not for Profit Organizations and registered charities are run by board of directors that are voted in by members of an organization. These organizations are not owner operated. The board of directors for NFP’s and registered charities usually consists of individuals who are leaders or experienced professionals in their respective communities (Carters, 2011). No individual has the right to any residual earnings or share capital in these organizations. This report will discuss the roles of directors and how they must perform these roles by abiding to certain standards of care. This report will also discuss the liabilities directors could face for not ethically or responsibly fulfilling their roles.
Roles of a Director of a NFP
The board of directors of a NFP are responsible for management of the organization. They participate in the administration, guidance and supervision of the affairs of an organization. Most provinces require at least three directors on the board; they could be given titles of governor, trustee or administrator. In small organizations, the directors may also be involved in the day to day operations of the organization. The overall responsibility of a director is to ensure the organization is achieving its legal purpose. Directors should be involved in the strategic decision making process (Burke-Robertson, 20 Questions Directors of Not-for-Profit Organizations Should Ask about Fiduciary Duties - item12325.pdf:, 2014).
Type of directors
1. True directors: Individuals who are elected or appointed on the board and have full voting privileges as a director.
2. Ex-officio director: Individuals who qualify as board members by virtue of their office. For e.g. the president of a NFP. They may or may not have voting power. This should be specified in the governing documents of the corporation. Regardless they have the same legal duties and responsibilities as regular directors.
3. Honorary director: Individuals who are given the