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ADVISORY SERVICES BLOG ADDRESSES HOT-BUTTON ISSUES

Dear Amy...

We here in Advisory Services usually talk to members one-on-one, and it's great to be able to provide this kind of personalized service. We know, however, that for every member who contacts us, there are more of you out there wondering the same diing. That's why we've created an advisory blog called "Amy's Corner" on the Institute's website at www.ica.bc.ca.

The purpose of this blog is to provide a wide audience of members with answers to frequently asked questions and advice on hotbutton issues. We need your input to make this vehicle work, so if there's a topic you'd like to see covered, contact me at amyscorner @ica,bc.ca; 604-488-2629 (direct); 1-800-663-2677 (toll free in BC); or 604-681-1523 (fax).

You can also sign up to receive email notifications as new instalments of "Amy's Corner" are posted to the website. Using your userid and password, you can change which updates you receive at any time by signing in and going to the "My Profile" page.

Blog entry #2

My second blog entry shares information from die Institute's first round-table discussion for members in the not-for-profit sector, which was held in Vancouver in June 2006. Drawing on many years of experience with NPOs, Bruce Milley, FCA, one of our professional advisors and practice review officers, presented "Working with the Not-For-Profit Board." A summary of this blog entry follows.

Working with NPOs

As the not-for-profit sector in Canada has grown, NPOs have become increasingly business savvy, mirroring the business practices of for-profit organizations to compete for donation dollars. Nonetheless, there are still distinct differences between NPOs and forprofit organizations. For NPO boards, this means operating under different pressures and mandates for a different set of stakeholders.

Bruce identified the following six differences in his presentation:

1. Allocating profits

While an NPO has to be financially viable to achieve its goals, its surplus funds do not accrue to the benefit of shareholders; rather, the board must ensure that surplus funds are put towards programs designed to achieve the NPO's mission.

2. Defining the mission

Whereas some for-profit organizations see "being good" as a means to an end (i.e. good for business in a climate where consumers are demanding greater social responsibility), NPOs see "being good" as the end in and of itself. This differing mission creates a significantly different mindset for board members.

3. Measuring results

The mission of an NPO can make it difficult to gauge the organization's effectiveness. A key challenge for the board is developing meaningful measures to assess how well the NPO is achieving its mission.

4. Defining the owners

An NPO is accountable to any of the people who have an interest in or who may be affected by its decisions or actions. The board may need to consider all of these groups when formulating a strategic plan. Moreover, if a board member belongs to one of these stakeholder groups (which is commonly the case), it's critical that they keep these roles separate and distinct.

5. Managing the pressures

Because most NPO board members are volunteers, they tend to be juggling myriad commitments and demands, which can be very stressful. NPO staff can alleviate some of this pressure by ensuring that board members are well prepared in advance of meetings.

Staff members, being on the front line, are often frustrated by the slower pace at which boards operate. Board members can alleviate some of this frustration by understanding priorities and ensuring that urgent matters are dealt with on a timely basis.

6. Recruiting and retaining staff

Due to budgetary constraints, many NPOs are tempted to base their hiring decisions on the right salary amounts rather than the right skills. Unfortunately, this can put pressure on board members to intervene, stepping outside their governance roles to interfere with management decisions.

While those who work in NPOs are not necessarily poorly paid, many have opted to forego monetary benefits for the satisfaction of working towards an organization's vision of bettering society. It's important to note this distinction when designing human resources policies.

More forums in the works

Bruce's presentation stimulated a lively discussion about the challenges of working with NPO boards. Members also suggested a number of future topics for discussion, and the ICABC agreed to organize a similar meeting on a quarterly basis. Keep checking our website for details on upcoming meetings!

FAQ: Insurance for volunteer work

Question: Can members purchase additional liability insurance for volunteer activities through their home insurance with Western CA Services (WCASA)?

Answer: Yes, and it provides coverage of up to $1 million. Note, however, that this insurance is not part of the standard contract, so you'll have to ask WCASA about it specifically.

By Amy Lam, CA, Director of Advisory Services

Copyright Institute of Chartered Accountants of British Columbia Sep 2006
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