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?
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)
- Externally imposed
- Legal requirements
- Funding requirements
- Donors expectations
Who are you accountable to:
- Users / Clients
What are you accountable for?
- Mission / Purposes
- Compliance to legal requirements
- 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;
- Substantial changes to your mission have to be approved by CRA.
- Board of Directors
- General operations
- Human resources
- Fundraising and donor relations
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
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
- Issuing of tax receipts
- Maintaining adequate books and records
- Reporting – T3010 charity return – Filing information
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
Registered Charities engaging in fundraising activities have to comply with both: Provincial legislation and federal 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.
- 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;
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:
- Logic Model https://www.extension.uidaho.edu/publishing/pdf/CIS/CIS1097.pdf
- Balanced Scorecards www.balancedscorecard.org
- Social Auditing
Result Based Evaluation
- 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
- 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?
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.