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Winter 2001 Newsletter
Table of Contents
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Alberta Leads Canadian Venture Philanthropy Movement by David Jeu and Gary McPherson
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Director’s Duties and Responsibilities in the Charitable and Non-Profit Sector by Douglas Forer
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"Continuity Officer" for your Group? by Susan Ellis
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First Principles of Voluntary Action
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Book Review: The World of the Gift by Jacques T. Godbout in collaboration with Alain Caillé
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Book Review: Better Happy Than Rich? Canadians, Money and the Meaning of Life
by Michael Adams
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Alberta Leads Canadian Venture Philanthropy Movement by
David Jeu and Gary McPherson
What Exactly Is Venture Philanthropy?
"Venture Philanthropy refers to the non-profit sector’s application of
certain practices used by venture capitalists when investing in new business
ideas. There are five key elements of venture philanthropy:
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a managing partner relationship
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investments in long-term
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(3-6 yr.) business plans
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an accountability-for-results process
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provision of cash and expertise
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an exit strategy
Investors make long-term funding commitments, closely monitor performance
objectives through predefined measurement tools and problem solve jointly with
the non-profit team on a regular basis….Venture philanthropy invests in social
entrepreneurs who have developed programs that produce significant social
return."
(Centre for Venture Philanthropy, Peninsula Community Foundation.)
Venture philanthropy is motivated by the following values and beliefs:
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outcomes/impact thinking
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market concepts as a driver for designing social products and services
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investment is more effective than charity
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wealth creation should be balanced with public responsibility
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sustainability of social change needs to be supported through
philanthropic and earned income
(Tom Reis, W.K. Kellogg Foundation. Unleashing New Resources and
Entrepreneurism for the Common Good.)
Social Venture Partners
The Social Venture Partners (SVP) model pools the collective financial,
professional and human resources of its Partners to invest, using a venture
capital / entrepreneurial model, in innovative non-profit organizations to
address economic and social challenges in selected focus areas in a specific
geographic region.
An SVP program identifies community needs and promising solutions in the same
way that a venture capitalist seeks opportunities in emerging companies. While
venture capitalists make financial investments, they also infuse companies with
the knowledge and skills of their principals.
In many respects, SVP programs define the new "venture
philanthropy" movement in North America - investing money, time and
expertise in self-sustainability and organizational capacity by taking mid- to
long-term approaches with non-profit organizations.
A key feature distinguishing SVP from traditional philanthropy is the fact
that partners typically become more engaged with the organizations and causes
they are supporting, investing their time and business expertise to work
together towards annual objectives and measurable outcomes.
Six areas have emerged in existing programs as involvement focuses:
management and financial, funding, replication and expansion, marketing and
media, web and computing, mentoring and tutoring.
SVP programs also allow partners to have a greater impact on economic and
social issues through the program’s collective resources. The pooled assets of
its members create the opportunity to leverage significantly greater influence
than individuals.
Program funding is provided through partner commitments, typically over a
two-year term. Partners also participate in granting decisions.
SVP in North America
The SVP model was initially developed within Seattle’s young entrepreneurial
community, particularly the high tech sector. It has since expanded across the
United States to San Francisco, Phoenix, Boulder, Denver, Austin, Dallas, Kansas
City, St. Louis, and New York. The first Canadian program was launched in late
2000 in Calgary. It has attracted some 30 individual partners and is linked
operationally with the Calgary Community Foundation.
The impetus to raise awareness to the opportunity of bringing an SVP program
to Edmonton was provided by the Canadian Centre for Social Entrepreneurship (CCSE).
The mission of the CCSE is "to build on our collective understanding of the
scope of social entrepreneurship and to encourage entrepreneurial thinking and
approaches in matters of social interest between and within the voluntary,
private, and public sectors."
The CCSE believes that the Social Venture Partners model is an excellent
example of the innovation and collaboration required to find solutions to
critical economic and social challenges facing our community. Housed within the
University of Alberta’s School of Business, the CCSE brings with it the
collective resources of the school’s faculty, students and community advisory
leadership.
Since late 2000, the CCSE has been in dialogue with several community leaders
and groups to determine if there is an interest in bringing this model to
Edmonton and what would be the most appropriate platform from which to launch an
SVP program in Edmonton.
Web Resources
Web resources related to venture philanthropy and social entrepreneurship.
www.ccsecanada.org
www.venturephilanthropyguide.org
www.svpcalgary.org
www.svpseattle.org
www.sea-change.org
For more information on bringing the SVP model to Edmonton, please contact:
Gary McPherson, Executive Director, Canadian Centre for Social
Entrepreneurship,
Telephone: (780) 707-6786, E-mail:
gmcp@vlens.com or David
Jeu, Community Investment Counsel Inc.,Telephone:
(780) 443-0310, E-mail:
djeuconsultants@aol.com
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Director’s
Duties and Responsibilities in the Charitable and Non-Profit Sector by
Douglas Forer
This article originally
appeared in the January 26, 2001 issue of The Lawyers Weekly.
Relatively little compares with
the sense of pride and satisfaction accompanying an invitation from your
favourite charity or local non-profit organization to join its board of
directors.
Accepting the invitation brings
not only opportunity to make a difference in people’s lives, but the
obligation to discharge your duties as a director in a positive, responsible
manner.
Lawyers tend to focus on a
director’s statutory liability in such areas as income tax, GST, wages, the
environment and public welfare. However, the vast body of common law on the
duties and responsibilities of directors should receive equal attention. The
common law duties provide a wealth of practical guidance to both the novice and
experienced director. The following seven point summary sets forth these
director’s duties.
Duty of Knowledge
The duty of knowledge simply
requires a director to get to know the organization from the inside out. The
starting point should be a review of the fundamental documents establishing the
organization, (known as the constating documents), such as the charter,
memorandum of association or articles of incorporation. Next in line for review
are the organization’s internal procedures, generally contained in the
by-laws. Finally, while most directors are usually familiar with the
organization’s purposes and goals, a review of any formal mission, vision and
values statement is appropriate in order to fully discharge this duty.
Duty of Care
If one duty could encapsulate
the obligations of directors to their organization, it would be the duty of
care, expressed as follows: every director shall act honestly and in good faith
with a view to the best interests of the corporation, and exercise the care,
diligence and skill that a reasonably prudent person would exercise in
comparable circumstances.
Both subjective and objective
standards comprise the duty of care. The objective standard requires a director
to look to the mythical "reasonably prudent person" for guidance,
while the subjective standard requires an assessment of the director’s own
personal level of skill and experience.
Duty of Skill and Prudence
Once elected to the Board, a
director should actively bring his or her skills to the organization. The
exercise of the duty of skill and prudence depends largely on the experience of,
and responsibilities entrusted to, the director. The duty of skill and prudence
requires that the director act with practicality and caution, while anticipating
the potential consequences of any actions taken by the organization.
Duty of Diligence
The duty of diligence is perhaps
the most practical of the director’s duties. It requires the director to
review the meeting agenda and accompanying materials, attend meetings, take
meeting notes and review and comment, where necessary, on the post-meeting
minutes. Equally important is the director’s duty to express his or her views
during the meeting, along with a positive obligation to vote on all issues,
unless prohibited. Directors who make it a practice to routinely abstain from
voting jeopardize their compliance with this duty. Finally, the duty of
diligence requires that a director take actions that will preserve the integrity
and reputation of the organization.
Duty to Manage
It is a fundamental principle
that a director is entrusted with the management of the business and affairs of
the organization. This duty obliges a director to appoint officers, establish
and monitor policies, comply with legal requirements, acquire an adequate
knowledge of the organization’s ongoing affairs and enact appropriate internal
by-laws to assist the organization in the management of its affairs.
A director’s role in
management of the organization will vary considerably from one organization to
the next. A long-established international organization will likely have
extensive policies and procedures, with many tasks delegated to the senior
officers of the organization, while a newly incorporated local organization,
with few individuals occupying the roles of member, director and officer, will
mandate considerably more ‘hands on’ involvement. The key to management is
proper delegation, and the key to proper delegation is to consider what a
prudent person would do under similar circumstances.
Fiduciary Duty
A director is entrusted with the
ability to exercise power over another and to affect the legal or practical
interest of a vulnerable beneficiary. This expression of a director’s
fiduciary relationship with the organization imposes a fiduciary duty on the
director. Thus, a director must exercise the utmost good faith, trust,
confidence and candour, while acting with the highest degree of honesty and
loyalty toward, and with a view to the best interests of, the
beneficiary-organization.
The fiduciary duty arises most
frequently in a conflict of interest scenario. Where a director owes loyalties
to both the non-profit or charitable organization and another entity, a director
must properly manage the conflict by fully disclosing their interests and
refraining from voting on the subject of the conflict.
Duty to Act in Scope of
Authority
While the concept of scope of
authority is largely an historical curiosity in the context of for-profit
entities that possess the capacity, rights, powers and privileges of a natural
person, many non-profit and charitable organizations have specific restrictions
on their objects which are necessary to obtain their special status.
Accordingly, it is imperative for directors to be aware of the inherent
limitations on the activities of the organization, as expressed in the
constating documents.
In the event the directors
exceed the authority of an organization, the ultra vires doctrine may subject
the directors to personal liability for the organization’s illegal actions. A
director may avoid personal liability by opposing the board’s motion and
ensuring that this opposition is properly reflected in the minutes of the
organization.
By adhering to these seven
duties, the non-profit or charitable director can minimize potential liability,
while ensuring the future success of the organization.
Douglas J. Forer practices tax
and corporate law with Miller Thomson LLP in Edmonton.
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"Continuity
Officer" for your Group? by
Susan Ellis
Robert’s Rules of Order and other traditional references for how to run an
organization have missed the boat in one area. Everyone understands the roles of
president, treasurer, secretary and the other age-old officer positions. But I
have come to believe that we ought to create a new assignment category:
Continuity Officer. Whether a position held by an individual as a distinct role
or designated to an existing officer (the way Affirmative Action is often
treated), the Continuity function assures that the organization understands its
history.
Frequently, boards of directors are faced with an issue and have no idea if
or how it was handled by their predecessors. More important, they rarely know
WHY an earlier decision was made. True, the secretary generally has possession
of the minutes book, but how often does anyone ask for a search of historical
information? Unfortunately, too, past minutes are often incomplete or hard to
search because data is buried within long paragraphs.
A Continuity Officer would have the following assignment:
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Upon taking office, will read the entire minutes history, including any
written policies and procedures. [The very first Continuity Officer might agree
to create an index for the minutes and policies, which would help successors
enormously. In fact, given today’s technology, it might be possible to scan
all the minutes into a computer so that word searches for certain topics can
quickly be done.]
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When discussion occurs on a subject on which board/group action has been
taken previously, will make sure the group knows what was done earlier. The
point is not to stop discussion! But if the group wants to make a new decision,
they ought to do so in the full awareness that
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they are indeed making a change, and
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they have considered the reasoning of the previous group and feel the
situation has changed sufficiently to warrant the new course of action.
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Be the "keeper" of the Policies and Procedures list (those items
that do not require any bylaw changes but affect the daily working of an
organization), again bringing inconsistencies or changes to the attention of the
current leadership. Make note of new policies discussed and agreed to. The
concept of a Continuity Officer has application to major annual events, too. For
example, an annual fundraiser or conference tends to be most influenced
(rightfully so) by this year’s steering committee. But some things ought not
to change each year. It can drive patrons, vendors, and volunteers crazy if new
procedures, forms, and other details change annually. Besides, if something is
announced one year as a new annual activity, it ought to reappear the following
year! Too often no one on this year’s committee remembers last year’s
promise until it is too late. Decide what ought to be consistent from year to
year and assign the Continuity Officer to watch over these.
This article is reprinted from Energize’s Volunteer Management Web Update.
To subscribe e-mail: majordomo@energizeinc.com,
website: www.energizeinc.com
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First Principles of Voluntary Action
Voluntary Action is willing and non-salaried
The action of volunteering needs to be clearly distinguished from other
actions (often not of free choice) required as part of government or other
programs (e.g., community service orders, workfare). It is reasonable that volunteers
receive reimbursement for expenses related to their volunteer activity.
Voluntary Action includes advocacy as an essential part of democracy
Advocating at all levels within society is a legitimate mechanism by which
voluntary organizations represent and promote the interests of those they serve
(e.g., representing the rights of patients in institutions, or accessibility of
washrooms).
Voluntary Action is a hallmark of civic society
Voluntary action is rooted in citizenship and social responsibility.
Voluntary Action values diversity
We need to recognize and value the full spectrum of political, age, talents,
aspirations, ethnic, cultural, religious, and socio-economic differences of
society that are represented within the voluntary sector.
Voluntary Action complements and does not displace essential services
Government should continue to be accountable and responsible for the
provision of essential services to meet the basic needs of the citizens of the
province, although the voluntary sector may participate in the provision of
services.
Voluntary Action is an expression of responsibility to one another
Voluntarism provides an opportunity for individuals to contribute to their
community through a demonstration of civic and shared responsibility.
Voluntary Action advances quality of life
Voluntary Action should enrich and empower the lives of the people it
affects.
Voluntary Action should complement, not replace jobs
Voluntary action should not actively seek to replace employment or jobs, and
should be taken by individuals of their own choice to augment but not compete
with paid activity.
Voluntary Action is rewarding and satisfying
Volunteers need to feel as though what they are doing is making a difference
and contributing to their personal self-development.
Voluntary Action is enhanced when a volunteer’s own essential needs are met
People will more readily volunteer if they do not have to worry about their
own needs being met.
Reprinted with permission from "Canadian FundRaiser",
Vol. 6 #21.
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Book Review: The
World of the Gift by
Jacques T. Godbout in collaboration with Alain Caillé
Translated from the French by Donald Winkler
In an age dominated by consumerism and government agencies, many people
believe that self-interest is the dominant motive in society. Gifts are seen as,
at best, irrelevant frills. In The World of the Gift Jacques Godbout and Alain
Caillé show that, in fact, the gift is all-pervasive in our society.
The authors describe the gift not as an object but as a social connection,
perhaps the most important social connection because it creates a sense of
obligation to respond in kind. They examine how the gift works today in a broad
range of cases such as blood and organ donation; volunteer work; the bonds
between friends, couples, and family; Santa Claus; the interaction between
performers and their audience; and the relation of the artist to society.
Written in an engaging manner, The World of the Gift will appeal to anyone
who is interested how the world really operates.
Jacques T. Godbout is a speaker at this year’s Canadian Centre for
Philanthropy Symposium.
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Book Review: Better Happy Than Rich? Canadians, Money and the Meaning
of Life
by Michael Adams
Maybe money isn’t everything but, like it or not, Canadians have very
distinct, and strong, attitudes towards it. In this provocative sequel to the best-selling
Sex in the Snow, Michael Adams, president of Environics Research
Group, updates his portrait of Canada’s social values tribes by looking at our
attitudes regarding money.
In his discussion of making it, spending it, stealing it, investing it,
giving it away and losing it to taxes, Adams, one of Canada’s most influential
pollsters, outlines the changing perceptions and enduring ambivalence of
Canadians towards money: we lust after it but resent those who have it, and
unlike our American neighbours, those lucky enough to have it are averse to
flaunting it.
In his chapter on "Giving It Away," Adams identifies the move
toward donor directed charitable giving. He writes, "Canadians’ interest
in shaping their charitable giving is strongly rooted in their increased desire
for personal control and autonomy, their diminished willingness to surrender
control of their affairs to impersonal or bureaucratic institutions and their
refusal to donate merely out of a sense of guilt, duty or noblesse oblige."
Anyone interested in Canadian society and trends will find this book of
interest. His "Giving It Away" chapter will be of a particular
interest to fundraisers.
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