Dos and Don’ts of Starting a Non-Profit
Intro by Maria Turnbull, Associate ED; Resource by Law for Non-Profits
Our team regularly receives requests for information about the legal ins-and-outs of starting a non-profit organization. From our vantage point, it’s important to first ask whether the vision you have and the mission you will seek to achieve is truly unique and relevant to creating a new non-profit, rather than collaborating with an existing non-profit to give lift to the desired impact.
If you’ve been through a thoughtful analysis and have identified a clear and compelling purpose, that complements existing community change efforts, the pathway to incorporation as a Society and establishing your first set of governance polices, including bylaws, requires relevant and accessible legal support.
This year, we have deepened our collaboration with Pacific Legal Education and Outreach and Law for Non-Profits to support access to this type of legal expertise, including the upcoming (hybrid – yes, please consider joining us in the office!) Dos and Don’ts of starting a non-profit with PLEO. This workshop may also be helpful to new or fledgling non-profits that are wondering what to do next.
As a sneak preview, enjoy PLEO’s related resource re-posted here covering top legal tips for starting a non-profit in BC!
This resource was created for Law for Non-Profits by Sheldon Falk, Articling Student and reviewed for accuracy by lawyer Martha Rans, PLEO’s Legal Director.
1. The process of incorporation is not as difficult or complicated as you might expect
In fact, it is as simple or complex as you decide to make it. The hardest part is finding the information to get started. At the most basic level, you really only need to make a BCeID account if you don’t already have one, pick a name and have it approved, write out a purpose or two for your constitution, adopt the Schedule 1 bylaws as your own, and select your applying directors. While I would always recommend adapting the bylaws to fit your purposes, it really is that simple. Incorporation will result in more accountability, but the benefits far outweigh the costs: access to funding and donors, the ability to open a bank account, some protections from personal liability, a formal role for your supporters (as members), and a reduction of the likelihood personal burnout will spell the end of your group’s work in the community.
2. If you use Schedule 1 bylaws or another successful / similar non-profit’s bylaws, make an effort to adapt them to your own purposes
Just because the bylaws work well for another non-profit does not mean they will work best for you. Think about your bylaws in terms of how they will help or impede your purposes, planned activities, and the goals or desires of your members. Not every non-profit requires a lot of members to get off the ground. Members will have expectations, so take care.
3. Your bylaws don’t need to be perfect, but they should allow growth (and comply with the Societies Act)
Your bylaws are a living document that are meant to change as the non-profit changes. It would be a mistake to build your bylaws around what is working right now without putting any thought to the growth of your organisation over the next 5-15 years. If you are to put a lot of thought into one area, I think it’s best to focus on ensuring you have clear and simple procedures for your basics (e.g. election of directors). While legally you must follow your bylaws (and you certainly should as there are legal consequences if you don’t) we all know that in reality some board members don’t care and can’t even be bothered to read the bylaws, let alone follow them to a T. Thus, for new and fledgling non-profits, rather than creating elaborate bylaws for every possible situation, your efforts are best spent ensuring they are simple and straightforward, thus increasing the chance of awareness and compliance by your board.
4. Not everything needs to be in a bylaw
5. Ensure your board has the necessary skills to effectively manage the non-profit’s affairs
Does anyone on your board know how to prepare financial statements? Chair meetings? Take minutes? Ensure you recruit people to your board with abilities to perform key functions, especially if you don’t have the money to bring in outside help. But, don’t forget about important “soft” skills either; a sense of humour, willingness to learn, and a cool head are also very desirable traits in a director.
6. Director positions with specific roles and responsibilities can be beneficial or detrimental
Some boards are made up of several equal directors who select from among themselves a chair, secretary, treasurer etc. The advantage here is that the board decides who will be the secretary and responsible for taking minutes rather than it being imposed on someone who is ill-equipped to take minutes. Other boards have a title and responsibilities for each role on the board that the members directly elect. The benefits of having roles decided in advance include that every director has a job to do and they know what they are expected to bring to the table (some directors felt left out if they didn’t have a “portfolio”). However, directly electing directors to roles might reduce the flexibility of the organisation to adapt to new circumstances or a new desired direction or activities. Alternatively, you may consider that the same work could more flexibly be shared and completed through the use of (standing) committees.
7. Clear, proactive policy is the best antidote to infighting and personality clashes
Conflict is inevitable and it is a natural result of human interaction. Therefore, ensure you have policy in place to deal with disputes and misconduct before you ever need to use it. Hopefully, you will never have to use these policies, and just having them on the books can act as a deterrent to poor behaviour (especially when it comes to setting the expectations and standards of good behaviour). Few things are more difficult and complex than trying to implement a policy after the conduct has occurred without making it seem like a retaliation or targeting the director who acted inappropriately. Save yourself a nightmare and a headache, and ensure you have policies on topics like appropriate media interactions, privacy, sexual harassment, discriminatory comments or behaviour, financial access and safeguards, and acting within board approval.
8. You can never make everyone happy
As you transition from an informal group to an incorporated non-profit society, inevitably there will be disagreement about any number of things, such as your constitution, bylaws, and procedures. This is particularly true for grassroots organisations with very ad hoc, informal origins. And yes, there is such a thing as being too collaborative; do what you can to address concerns, but don’t let minor disagreements completely derail your progress.
9. You will make mistakes
Life is unpredictable. Learn from your mistakes and if appropriate set policy in place to prevent the same mistakes from happening again. On a personal level, I made the mistake of allowing too much informality around board decisions, which led to directors and non-director committee members becoming confused about which body was the decision-making authority and whether an official vote versus a discussion had occurred. It was a mess, but we learned to be very clear about what was a board meeting and what wasn’t.
10. Hope for the best and plan for the worst
When it comes to designing your bylaws and policies, hope for the best and plan for the worst. Hostile or renegade members or directors, AGM hijacking, and director misconduct are just a few examples of what can go wrong.
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