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Accountability – The Basics

Introduction
This module introduces the concept of accountability as it applies to registered charities and non-profit organizations. The key areas covered are:
  • What is accountability?
  • Who are charities accountable to?
  • What are charities accountable for?
Definition
Accountability is the requirement to explain and accept responsibility for carrying out an assigned mandate in light of agreed upon expectations.
– Panel on Accountability and Governance in the Voluntary Sector (1999)
Accountability
  • Externally imposed ƒ
  • Legal requirements ƒ
  • Funding requirements ƒ
  • Donors expectations
  • Self-regulated
Who are you accountable to:
  • Users / Clients
  • Donors
  • Funders
  • Government
  • Staff
  • Volunteers
  • Suppliers
  • Public
What are you accountable for?
  • Mission / Purposes
  • Governance
  • Finances
  • Compliance to legal requirements ƒ
    • Fundraising ƒ
    • Reporting ƒ
    • Both federal and provincial
  • Program outcomes
Mission / Purpose
  • Basis of your program activities:
  • Consistent with the stated object in your CRA application for registered charity status and in your incorporation document; ƒ
  • Substantial changes to your mission have to be approved by CRA.
Governance/Leadership
  • Board of Directors
  • Management ƒ
    • General operations ƒ
    • Finances ƒ
    • Human resources ƒ
    • Fundraising and donor relations
  • Reporting
Board of Directors

The board of directors is ultimately responsible for the charity regardless of the adopted board governance model. As the fiduciary, the Board has to:

  • Maintain a Standard of Care
  • Perform with duty of care
  • Act competently, diligently and loyally
  • Avoid and declare conflict of interest
Conflict of Interest
  • Conflict between the director’s personal interest and the interest of the organization;
  • Conflict of duties that the director owes to the charity and to another organization;
  • Not limited to financial (pecuniary);
  • Can be real or perceived.
Responsibility of the Board
The Board is responsible for approving and reviewing the charity’s
  • Mission and strategic direction
  • Annual budget
  • Major financial transactions
  • Legal compliance
  • Fiscal and governance policies
Financial Management
Stakeholders want to know that funds are managed responsibly:
  • Funds are mainly used for direct program activities;
  • Revenues and Expenses are documented;
  • No excessive funds used for administration, fundraising and other non-programming activities;
To be financially accountable, charities have to:
  • Track and aggregate expenses — administrative expenses, program expenses, fundraising expenses, political activities expenses;
  • Be able to meet financial reporting requirements (at times contradictory) of different funders and donors;
Legal Requirements – Registered Charities
Legal Requirements – Non-­Profit
For non-profit organizations including registered charities:
  • Federal GST, Harmonized sales taxes and/or provincial sales taxes;
  • Business registrations;
  • Source deductions of payroll taxes, CPP or Quebec Pension Plan, workers’ compensation and other provincial levies;
  • Provincial legislation – maintaining legal status and fundraising;
  • Payroll and other payment of services due to staff;
  • Provincial laws on employment, human rights, privacy, occupational health and safety.
  • CASL – Anti-Spam Legislation
Provincial Legal Requirements
Each province has its own legislation that focus on charities. In Alberta these Acts are:
  • Alberta Human Rights Act
  • Charitable Donation of Food Act
  • Charitable Fund-raising Act and Regulations
  • Employment Standards Code
  • Gaming and Liquor Act
  • Labour Relations Code
  • Occupational Health and Safety Code
  • Occupiers Liability Act
  • Personal Information Protection Act (PIPA)
  • Religious Societies’ Land Act
  • Societies Act
  • Companies Act (Part 9)
  • Trustees Act
Fundraising
Registered Charities engaging in fundraising activities have to comply with both: ƒ Provincial legislation and ƒfederal legislation
  • CRA Guidance on Fundraising by Registered Charities
  • CRA Funding Guidance does not apply to funding application to government and to charitable foundation.
  • Fundraising Activities Checklist
  • Alberta Fundraising Act – Organizations that ask Albertans to donate to fundraising campaigns or which solicit contributions that will be used for a charitable purpose must follow the rules that are set out in Alberta’s Charitable Fund-raising Act and regulation. These rules exist to protect potential donors from false and misleading requests for donations.
Program Activities
  • A charity’s activities are the means to further its mission;
  • Changes in a charity’s program activities have to be discussed with CRA;
  • The stakeholders expect to know the program outcomes;
Program Outcomes
To determine program outcomes, the charity needs to:
  • Have an evaluation process to monitor and measure the outcomes of its program activities;
  • Include the process during the planning of the program;
Result­ Based Evaluation

The common program evaluation process is referred to as Result-Based Evaluation or Evidence-Based Evaluation.

Some models are:

Result ­Based Evaluation
Common elements:
  • Identify outcome goals;
  • Choose indicators;
  • Identify ways to measure outcome goals;
  • Collect and analyze the data;
  • Communicate results to stakeholders
  • Use results for future programming
Accountability Checklist
  • Do you have an accountable and transparent organizational culture?
  • Are your staff and board able to state your mission and adhere to it?
  • Do you have a process to fulfill the legal requirements?
  • Do you have stated processes and practices on the implementation of your mission, governance, management of funds and program outcomes?
  • Do your board and staff have a clear understanding of the processes and practices?
  • Is there a clear line of responsibility and authority and is it understood?
  • Have you adopted a Statement or Code of Ethics?
  • Do you have written policies?
Resource Materials

More information on accountability:

Information in this module is provided for general educational purposes and not as legal or accounting advice.
Consult a lawyer or accountant for professional advice.
Information is accurate as of 2019. For changes after this date, consult Canada Revenue Agency.

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