Standards for Canadian organizations

2020 Edition

Governance (CA-GOV) 5: Governing Body Responsibilities

The governing body actively fulfills its legal responsibilities, sets a tone of responsible stewardship, and ensures policies and performance uphold the public trust and support achievement of the organization’s mission.
2020 Edition

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Purpose

The organization's governing body guides and supports the planning, development, and achievement of the organization's mission and goals.
Note: Please see the Governance Standards Tool Kit - Governing Body Responsibilities Worksheet for additional guidance on this standard.
1
The organization's practices fully meet the standard, as indicated by full implementation of the practices outlined in the CA-GOV 5 Practice standards.
2
Practices are basically sound but there is room for improvement, as noted in the ratings for the CA-GOV 5 Practice standards.
3
Practice requires significant improvement, as noted in the ratings for the CA-GOV 5 Practice standards.
4
Implementation of the standard is minimal or there is no evidence of implementation at all; e.g.,
  • The governing body is ineffective, inactive, poorly organized, or does not otherwise fulfill its fiduciary responsibilities; or
  • The executive director dominates the governing body to the extent that it does little more than ratify decisions already made by the executive director.
Self-Study EvidenceOn-Site EvidenceOn-Site Activities
  • Succession planning procedures
  • Succession plan
  • Governing Body and/or committee meeting minutes from the previous 12 months addressing each of the CA-GOV 5 practice standards
  • Interviews may include:
    1. Governing body chair
    2. Governing body treasurer
    3. Governing body members
    4. CEO
    5. CFO

Fundamental Practice

CA-GOV 5.01

Policy development responsibilities of the governing body include:
  1. adopting policies;
  2. reviewing policies at least every four years and when legislation, regulations, contracts, and programs change;
  3. adopting any changes to policies resulting from recommendations; and
  4. evaluating management’s implementation of policies.

Interpretation

An organization that follows a policy governance model may not typically develop, ratify, and maintain statements known as “policies.” However, distillations of the organization’s principles, philosophies, practice, or “ends” may be considered policies for the purposes of this standard.

For organizations with Boards that delegate the responsibilities for adopting, reviewing, changing, and/or evaluating implementation of policy to the Executive Director, evidence of presenting and discussing with the Board, any changes, additions, etc. related to policies should be reflected in the Board minutes to demonstrate Board involvement.
1
The governing body actively exercises its policy-setting prerogatives as per the requirements of the standard, and policy decisions are reflected in comprehensive and up-to-date minutes of the governing body meetings. 
Policy setting is viewed as the board's major means of providing a framework and guidance for the organization's overall direction.
2
Practices are basically sound but there is room for improvement; e.g.,
  • Governing body practice related to one or two of the elements could be strengthened in some minor way.
3
Practice requires significant improvement, e.g.,
  • A systematic review of policies has not been conducted for more than four years; or
  • In some instances, organizational policies have been implemented prior to, or without, governing body review or approval; or
  • The governing body review of management implementation of policies is sporadic.
4
Implementation of the standard is minimal or there is no evidence of implementation at all; e.g.,
  • The organization's executive director approves policies without involvement of the governing body; or
  • One of the elements is not addressed at all.

Fundamental Practice

CA-GOV 5.02

The governing body:
  1. works with management to evaluate the organization's financial capacities and the resources needed to provide services;
  2. works with the CEO to secure adequate resources to implement the organization's strategic planning and budgeting decisions; and
  3. oversees fundraising activities including establishing fundraising targets and goals that flow from the strategic plan.
Examples: Actively supporting work to secure funding that is aligned with the organization’s planning and budgeting decisions is one way the governing body can support the achievement of mission and improved outcomes for persons served.
 
Examples: While not all organizations fundraise, it is a vital means to achieving a flexible revenue base and is a traditional role assumed by nonprofit governing bodies. Strategies for resource development can include, for example, fundraising, grants, contracts for service, and new business development opportunities.
1
The organization's governing body actively fulfills its resource development responsibilities as per the requirements of the standard.
2
Practices are basically sound but there is room for improvement; e.g.,
  • The link between resource development and strategic goals and objectives needs clarification.
3
Practice requires significant improvement; e.g.,
  • Management is largely responsible for resource development with the governing body taking a secondary role while providing limited oversight of management's activities.
4
Implementation of the standard is minimal or there is no evidence of implementation at all; e.g.,
  • The governing body is not involved in resource development.

CA-GOV 5.03

The governing body's responsibilities regarding the executive director include:
  1. appointment of the executive director;
  2. collaboration with the executive director;
  3. delegation of the authority and responsibility for organization management and policy implementation to the executive director;
  4. oversight and annual evaluation of the executive director's compensation and performance against the organization’s strategic goals and additional responsibilities outlined in the CEO’s job description;
  5. approval of the executive director's employment activities outside of the organization to ensure they do not interfere with her/his administrative responsibilities; and
  6. evaluation of the effectiveness of its partnership with the executive director, at least every two years.
Examples: Organizations may use a performance review tool to help examine the many facets of the CEO’s performance including, for example: leadership, management of the organization, working relationship with the board and staff, and management of the organization’s finances.
 
In addition, criteria for evaluating compensation may include, for example: compensation paid to other CEOs in similar positions, compliance with regulations and guidelines regarding reasonable compensation, cost of living considerations, and the total professional experience of the CEO including advanced degrees and other experiences and skills that uniquely contribute to the success of the organization.
1
The organization's practices reflect full implementation of the standard.
2
Practices are basically sound but there is room for improvement; e.g.,
  • There is minor confusion or overlap as to the relative roles of the governing body and the executive director (e.g., resource development); or
  • The governing body annually reviews the executive director's compensation but could improve the quality of its analysis with industry practice and/or federal requirements.
3
Practice requires significant improvement, e.g.,
  • The governing body evaluates the executive director's performance less than annually; or
  • The evaluation of the executive director is informal (not written, dated, or signed); or
  • The evaluation of the executive director is not comprehensive or does not use specific performance criteria; or
  • The executive director is not involved in the evaluation process; or
  • The executive director has not received governing body approval for unrelated external business activities; or
  • The governing body does not evaluate its partnership with the executive director.
4
Implementation of the standard is minimal or there is no evidence of implementation at all; e.g.,
  • At least two of the elements are not addressed at all.

CA-GOV 5.04

To ensure continuity during transitions in leadership, the organization maintains succession planning procedures and a succession plan.
Examples: Information included in a succession plan may include, for example:
  1. critical positions within the organization and their key leadership and management functions;
  2. under what conditions interim authority can be delegated for those positions, including unexpected leadership disruptions and planned departures, and the limitations of that authority;
  3. to whom various leadership and management functions will be delegated;
  4. governing body and staff responsibilities as they relate to transition planning;
  5. how succession planning and leadership transitions will be communicated to the governing body, staff, and other relevant stakeholders; and
  6. mechanisms for assessing readiness to assume leadership positions and for providing training, mentorship, and other leadership development opportunities to support readiness.
1
The organization's practices reflect full implementation of the standard.
2
Practices are basically sound but there is room for improvement.
3
Practice requires significant improvement.
4
Implementation of the standard is minimal or there is no evidence of implementation at all.

Fundamental Practice

CA-GOV 5.05

At least annually the governing body assesses overall risk to the organization, including the organization's continuing ability to pursue strategic goals and meet the needs of persons served.
Examples: Areas of potential risk can include, for example:
  1. compliance with legal requirements;
  2. technology and information management;
  3. insurance and liability;
  4. health and safety of administrative and service environments;
  5. human resources practices, including use of independent contractors and volunteers;
  6. contracting practices and compliance;
  7. client rights and confidentiality issues;
  8. financial risks;
  9. public relations, branding, and reputation; and
  10. conflicts of interest.
Financial risk assessment involves the identification of factors or conditions related to funding and financial health that may pose a threat to the achievement of an organization’s objectives and mission including, for example, the effectiveness and efficiency of financial operations and the reliability of financial reporting. Areas of known financial risk include:
  1. fraud and misuse of funds;
  2. investments;
  3. tax liabilities;
  4. physical assets and financial information;
  5. fundraising practices;
  6. funding of benefits, including health retirement benefits, pensions, etc.; and
  7. deferred revenue.
1
The organization's practices reflect full implementation of the standard.
2
Practices are basically sound but there is room for improvement.
3
Practice requires significant improvement, e.g.
  • The governing body has not conducted a risk assessment within the last two years; or
  • Documentation of the annual risk assessment in minutes is weak or missing.
4
Implementation of the standard is minimal or there is no evidence of implementation at all; e.g.,
  • A comprehensive risk assessment has not been conducted for more than two years or did not involve the governing body.