This blog post is to introduce 91��Ƶ-based nonprofits to this approach to meeting procedures, and consider some of its legal implications through an 91��Ƶ corporate law perspective. I can think of no legal reason why an 91��Ƶ nonprofit looking for an alternative to Robert’s Rules more in line with its values of care and collaborative decision-making, could not adopt Martha’s Rules.

What are Martha’s Rules of Order?

Martha’s Rules were originally developed by Martha’s Housing Co-op for families in Madison, Wisconsin. They reflect a desire for more consensus-based decision-making, but a recognition that not all decisions warrant the investment of time and energy consensus decision-making takes. 

It consists of six steps:

1. Preparing: Notice to participants ahead of time with supporting information as needed. Facilitator, pre-selected or at the beginning of a meeting, proposes an agenda with time limits, which must be approved by consensus.
2. Generating proposals: when an issue is presented without a specific proposal, the group discusses the issue with the goal of exploring what can be done about the issue and what would be the implications of taking various actions. 
3. Making proposals concrete: The facilitator works with the participants to group proposals into concrete plans. For each plan, essential logistical issues are decided on, such as: who would be responsible to implement? How much would it cost? When would it happen? etc.  
4. Voting a “sense” vote: For each proposal, the facilitator takes a vote to determine (a) Who likes the proposal? (b) Who can live with the proposal? (c) Who is uncomfortable with the proposal? Those who are uncomfortable are specifically asked why, and a discussion may ensue. 
5. Taking an official vote: If no one is uncomfortable, a simple vote can be taken. If anyone voted their discomfort, a proposal is put to the group with the following question, “Should we implement this decision over the stated objections of the minority, when a majority of us feel it is workable?” A majority of yes votes on this question mean the proposal has passed. If it fails, then the group can generate new proposals or amend existing ones to accommodate the objections.
6. Implementing and reviewing: The facilitator reiterates to everyone exactly what has been decided (including the specific wording of the resolution) as a result of the vote, and assigns tasks, deadlines, etc. accordingly.

Several of Martha’s Rules distinctive aspects have the potential to help boards meet their fiduciary duties. 

Legal strengths of Martha’s Rules

Firstly, the generating proposal step, in contrast to meeting procedures that encourage discussions to begin with a fully formed question or motion, helps to avoid tunnel vision or false dichotomies when making decisions. A board that can show it turned its mind to genuine alternatives is far less likely to be open to the charge of “rubber stamping” a motion presented by an influential director or officer.

Secondly, having a distinctive step to make the proposal concrete helps to avoid ambiguity in the language of resolutions when it comes time for implementation. I have personally been the secretary at board meetings where everybody felt the resolution they were voting on was clear until a month later when a practical question about implementation came up and no one could agree on what was intended.

Thirdly, voting a sense vote in which people are asked point-blank about their feelings without that vote having to be “for” or “against” the motion is a brilliant way to surface reservations and objections. Directors have a legal duty to raise any concerns they have about a decision. However, there are many reasons why on many boards directors keep quiet. This could range from not wanting to slow things down or be perceived as difficult to doubting one’s own competency. These issues are especially acute for directors from equity-seeking communities who may face stereotypes from other directors. Martha’s Rules encourages these types of intervention from directors and even forces it a bit, so that no one can blame an individual director for answering truthfully exactly the question they were asked. 

Fourthly, framing the official vote as a question about “do we approve this over the stated objections?” creates an unambiguous record that the objections were weighed and the decision was taken anyway. Some boards are afraid of having such a written record for fear that their decision turns out to be wrong, but this attitude is exactly backwards. The law does not expect perfection from directors, but it does expect that directors have a robust decision-making process. Boards are entitled to weigh competing factors as they wish, provided they can show they considered all relevant factors and appreciated their relative seriousness.

Some potential legal pitfalls in Martha’s Rules

Martha’s Rules are compatible with 91��Ƶ corporate law, but there are some aspects that could lead to confusion or have unintended legal consequences.

Firstly, while it helps to be specific in a Board or Member’s resolution, making the wording of a resolution too specific with respect to logistics could lead to issues if upon implementation it is found that some of the agreed upon details need to be changed (e.g. the project goes over budget). For that reason, an organization adopting Martha’s Rules may wish to have a policy or include wording in the resolution that makes it clear who has the authority to vary the details if need be and to what extent.

Secondly, under 91��Ƶ’s Not-for-Profit Corporations Act, directors have the ability to object to a resolution and ask that their reason be noted in the minutes. The effect of doing this is to shield the director from liability for that decision. Voting as part of this process that an individual is “uncomfortable” with the proposal would likely not be enough (since such a vote is not an outright rejection of the proposal). Consequently, organizations using Martha’s Rules may wish to inform directors that if they wish to exercise their right to formally object so as to protect themselves legally, they would need to vote against the proposal in the final vote and ask that their reason be noted. This may lead to duplication in the minutes.

Thirdly, in order for many of the legal benefits of Martha’s Rules to be achieved, it is necessary that the minutes properly document the robustness of the conversation and in particular, when a vote is taken, make clear whether it is a sense vote or an official vote. 

Food for thought

Even if Martha’s Rules aren’t for your organization, I hope this discussion gave you some food for thought, and some individual practices you could adopt to help improve decision-making within your organization.

Editorial note: Thank you to everyone who reached out with commentary about this blog. Some of the insights noted that, Martha’s “Rules” is more of a method for discussion, and can be combined with different sets of rules. Martha’s Rules is better suited for board meetings than members’ meetings. Martha’s Rules, like all meeting procedures, requires regular training, and careful selection of a chair to be implemented properly.

Below, we will briefly canvas recent developments and what an effective alternative policy response would look like. We will see that the only way to ensure a safer world is to strengthen nonprofits, not overburden them.

Why anti-money laundering and terrorist financing policies should be on your radar

Here are just a few of the significant developments over this past fall that show Anti-Money Laundering and Terrorist Financing (AML/TF) policies are changing and targeting nonprofits: 

• The 2025 federal budget included new funding, new agencies, and a host of AML/TF .��
• Getting better data to address AML/TF concerns appears to be part of the motivation for the government’s for all nonprofit organizations (NPOs) under the Income Tax Act starting in 2027.��
• The Canada Revenue Agency (CRA) Charities Directorate received of systematic flaws and likely Islamophobic biases in its division responsible for terrorist financing concerns. this will lead to some changes in CRA’s internal processes.��
• The Department of Finance led a of anti-money laundering systems as they relate to nonprofits as part of Canada’s role in the Financial Action Task Force, an international coalition dedicated to AML/TF. This will likely lead to recommendations and further policy proposals.

In short, AML/TF appears to be a significant lens through which the federal government is looking at the nonprofit sector. In the coming years, we will likely continue to see policies that affect all nonprofits, not just organizations that have been traditionally targeted by these systems such as international development organizations or Muslim charities. 

These measures result in increased administrative burden and cumbersome, sometimes completely misdirected, enforcement processes. So we all have an interest in the government getting this area right. But, what would an effective policy response look like? 

What an effective response would look like: Why a stronger sector means a safer world

Fair regulations that are applied consistently and without bias are important tools to combat the misuse of nonprofits for criminal or violent ends. However, when you look at Canada’s of where the alleged risk in the nonprofit sector is, you start to realize what’s actually needed is a healthy and well-supported sector. 

For example, the Federal Government’s own risk assessment found that most nonprofits involved in AML/TF concerns are not doing so intentionally. Here are a few of the scenarios the analysis presents as most likely: 

• a bad actor either infiltrates the board or acts as a fundraiser to divert funds away from the organization,
• a fake organization uses the name of the nonprofit to fraudulently fundraise,
• organizations receive anonymous donations that are then redirected in some way.

In all these cases the nonprofit is actually the victim in the situation. Regulating and penalizing the nonprofit not only fails to prevent these types of situations, it exacerbates them. 

Let’s look at what creates the opportunity for each of the above scenarios to happen:

• When governments increase administrative burden and pass laws that make directors personally liable, this discourages potential volunteers from joining the board at a time when 42 per cent of organizations are facing volunteer recruitment problems anyway. This makes organizations more desperate for candidates and opens them up to bad actors.
• Nonprofits cannot effectively police the use of their name online due to a lack of digital capacity and human resources for anything outside of program provision. This lack of capacity is that leave little room for administration costs.
• Nonprofits facing increased demand and costs, flatlined government revenue, and declining individual donations, are less financially able to turn down donations and are actively being encouraged to seek new sources of funding through new avenues like crowdfunding platforms. No amount of regulation addresses this precarity.

By understanding that these are the real underlying systemic and systematic issues that expose the nonprofit sector to being vulnerable to exploitation by bad actors, governments at all levels concerned about money laundering and terrorist financing can take responsibility for strengthening the nonprofit sector by, for example:

• Reducing barriers to volunteering.
• Providing long-term, stable, and flexible operating funding.��
• Include nonprofits at the table when discussing upstream policy solutions, so that demand for services downstream are reduced and social systems aren’t overwhelmed and left vulnerable to exploitation

Desperation cannot be regulated away

At the heart of the vulnerabilities canvassed above are organizations and individuals in increasingly desperate circumstances. Desperation cannot be regulated away. The effectiveness of AML/TF policies is fundamentally limited by the fact that nonprofits themselves have not had a strong voice at the table. Technical reforms to the financial system are important, but taking a step back and seeing the realities on the ground is even more important. Only nonprofits can provide the government with this context.

Next time you hear about a money laundering or terrorist financing consultation and wonder “what does that have to do with me?”, now you know the answer is “quite a bit”.��

We had a thought-provoking discussion that has led me to the conclusion that more accessible governance is oftentimes simply better governance. This is similar to , whereby curbsides that are made more physically accessible end up being more useful to all users regardless of physical ability. So here are three ways that removing barriers that prevent specific directors and members from participating will ultimately help all your directors and members participate. 

Decentralizing governance to reduce burnout
One principle of accessible governance we’ve discussed before is the importance of giving more detail ahead of time. This starts even before a director is recruited. One way to make recruitment more accessible is to name honestly the extent of the commitment you are asking for. You wouldn’t ask a donor to write you a blank cheque. Why would you ask a volunteer? 

If after writing out the actual commitment you are asking of directors you realize it is an inaccessible position either for time, financial, or other reasons, it may be a sign that you are concentrating too much work with the board more generally. ONN’s Reimagining Governance project has in the past emphasized how much boards can delegate if they choose to. One of the benefits of a decentralized governance approach is that it reduces the likelihood of burnout on those involved, which report they’re seriously concerned about.

Thinking ahead nips accessibility issues in the bud
One of the principles we discussed previously was giving people as much notice as possible before decisions are made. Sometimes this accessibility principle can be in tension with the need to make decisions quickly in urgent situations. But, it is possible to get the best of both worlds to have plans, such as crisis communications plans, in advance so that individual directors who may need more time have when deciding how best to delegate for crisis situations as well as what principles and processes will govern those decisions.��

Enabling directors to participate even when they must be absent
One common situation that comes up for boards is a director is unable to fully participate due to a medium term issue, such a health or family caregiving situation. The questions often become, “at what point do we ask this person to step down since they’re not fulfilling their duties?” or “how can we remove them?”

The answer may well be for them to step down, but a more accessible way to approach this situation is to first ask “What support can we provide to ensure they are still meeting their duties as a director within their current constraints?” To answer this question effectively, it’s important to understand what is truly the minimum standard a director is required to meet. 

Every organization is different, but in many cases, on a temporary basis, keeping the director informed, so they know if they need to object to something, and providing them with a meaningful opportunity to share feedback in a format and timeline that works for everyone allows you to continue to benefit from their expertise during their “absence”.

Indeed, taking such an approach may even be legally required if the reason for their absence is due to disability since the 91��Ƶ Human Rights Commission that the duty not to discriminate against workers extends to volunteers (and therefore may cover volunteer directors). 

Learning and sharing to advance accessibility
As we continue to deliver the accessible governance workshops, we will continue to learn and share from our participants and partners.

Understand that these initial claims are often intended to intimidate you or at least bring you to the table to give them something for free without them having to incur the major expense of taking you to court. So take a deep breath and get into the habit of separating out the bluster and posturing from verifiable claims of fact and sound legal arguments of their implications. Focus your mind on the objective argument and try to tune the rest out. If there’s no sound basis behind what they’re saying, you have a lot less to be concerned about.

Step 2: Verify the facts

If the allegations someone is making have caught you off guard, then it is especially important to verify every detail of what they are claiming. Gathering detailed information (including exact dates and locations of events) complete with supporting documents will not only help focus you, it will make it easier, faster, and therefore cheaper to present your case to any lawyer you retain. It will also increase the likelihood that you’ll get a clearer legal opinion faster from them if your counsel starts with a full picture of the situation.��

Step 3: Notify the board and relevant insurers

The board should be notified of any credible threat of or pending litigation. If gathering the facts does not entail a significant delay, being able to present them with a fulsome picture of the situation also helps ensure board decision-making is well-informed from the start.��

Additionally, depending on the nature of the lawsuit, this liability may be covered by your insurance policy. So review your insurance policy and if there’s a chance that it is covered by your insurer, get in touch. Insurers often have what’s called a “right of subrogation” basically to take over the defence of a lawsuit so they can recover any costs for the damages they need to pay for.��

Step 4: Seeking and retaining the right legal counsel

Lawyers are expensive and if you do not have lawyers in your organization’s network it can be difficult to find pro bono support. However, the expense is more effective the earlier it is incurred in the process. For example, early advice on how credible the threat of litigation is can inform what level of organizational resources are directed to respond to it and avoid costly errors in communications. You may conclude you can simply ignore the threat or decide to indeed settle as soon as possible.

When it comes to choosing the right lawyer, Community Legal Education 91��Ƶ developed that offers a general framework for vetting lawyers. Though the page is focused on transitioning to 91��Ƶ’s Not-for-Profit Corporations Act, the same principles can apply to other legal issues. In short, it is important that the lawyer’s fees are transparent, that they have the right values and approach that align with your organization, and have the relevant competence for the issue at hand.

Step 5: Giving instructions to your lawyer

Your lawyer will likely require that the board appoint one or more individuals who are empowered and trusted to act as point person (often appointed through a board resolution if the authority is not clear under some bylaw or policy) with the lawyer. This individual (or individuals) must have clear parameters around when they can give instructions to the lawyer and when they must seek broader board approval as well as how, when, and in what detail communications from the lawyer will be communicated back to the board as a whole.��

Especially if there are disagreements on the board or between board and staff about how to handle the litigation, having these systems in place will help ensure the nonprofit is taking a consistent and internally coherent approach to litigation.��

Step 6: Communicating during litigation

Often the biggest concern of nonprofits during litigation is the impact it will have on the nonprofit’s reputation. As such, having a clear plan for how litigation will be communicated about with the community is crucial. Often, if there is an outside party threatening or undertaking litigation, they may simultaneously be engaged in damaging communications on social media and traditional media. For this reason, while your lawyer may want you to minimize all communications about the litigation to mitigate the risk of prejudicing some claim in the litigation, you likely need to have a broader calculus in mind about the impact of failing to speak to certain allegations publicly. Engaging with communications staff and volunteers early and often as you discuss communications strategy with your lawyer will help you strike the right balance between legal and reputational concerns throughout the process.��

Step 7: Learn from the experience

As painful as litigation, or the threat of litigation, can be, it can also be a significant opportunity for your organization to learn and grow (especially if the claim against you has some basis). Documenting your processes as you go along for the future and improving your policies and practices to prevent the situation from recurring will help leave you better prepared.

Conclusion

We have only scratched the surface of this topic, but a few good principles can go a long way in helping to turn down the temperature during a turbulent time. If you are interested in learning more, consider viewing .

But what about the disputes that can’t be resolved? What about the divisions that run so deep and are so acrimonious, the most robust process in the world won’t get people to sit down together? It’s still possible for directors and officers to fulfill their fiduciary duties under these circumstances in a way that accounts for everyone’s interests whether they recognize it or not. 

I want to take a step back and reflect through the lens of corporate law what these governance disputes mean in our polarized world. After all, nonprofits are often referred to as “schools of democracy”, i.e. places where individuals learn the skills necessary to participate in public decision-making processes. As with any school, the habits we practice within them could reflect the pathologies or foster the kind of skills and attitudes so desperately needed outside of them.  

What are we doing here? Remembering the corporate purposes.

Those charged with responsibility for nonprofits (directors and officers) are required to first and foremost act in the best interests of the corporation. Courts¹ have said the best interests of a nonprofit is the accomplishment of its corporate purposes. Reasonable people often disagree over what these are. How are these disputes to be settled? 

The Supreme Court in the classic case said:

In considering what is in the best interests of the corporation, directors may look to the interests of, inter alia, shareholders, employees, creditors, consumers, governments and the environment to inform their decisions. Courts should give appropriate deference to the business judgment of directors who take into account these ancillary interests, as reflected by the business judgment rule.  The “business judgment rule” accords deference to a business decision, so long as it lies within a range of reasonable alternatives…

Among other things, commentators have puzzled over: 

1. How could a board ever be held accountable if they can always fall back on one interest group or another with directly opposing views?
2. How could a board, in the pursuit of the corporation’s best interests, be required to consider groups who may have opposing interests of the corporation itself?

The conflict is the way

In the context of acrimonious and apparently unresolvable disagreement, the Supreme Court invites us to consider the following principles: 

1. Governance is an exercise of weaving together disparate interests towards a particular goal. Those with opposing interests are every bit as relevant as those who support your cause since they have the capacity to undermine your purposes. This doesn’t mean appeasement of every critic is necessary, it means an effective strategy must account for this opposition in its design. Alienating an interest group is not in itself a sign of governance failure, making decisions without accounting for an interest group’s perspective just because you disagree (e.g. the “difficult” member) is by definition a failure. Put differently, the fact that a party will never be satisfied does not absolve an organization of its duty to consider them. For example, certain neighbours may not be pleased at a social service provider expanding its facilities; in order to win municipal approval, the social service provider may incur additional costs to install noise reducing fences. Though this doesn’t satisfy the oppositional neighbours, it clearly takes them into account.
2. The who matters as much as the what. Governance is not a science in the sense that a good governance process checks all the boxes of consulting all the relevant people to gather all the right data to discover the correct answer. In the absence of a marked defect in the process, (e.g. failing to consider a relevant interest-holder) a range of solutions will pretty much always be possible. Within that range is the space of a board’s discretion that no amount of expertise can settle. It’s a space filled by nothing else but the board’s collective judgment, so who’s at the table and, who they are accountable to, matters.
3. A decision must be made. The law assumes that a decision must be made because there is an underlying duty to move towards the purposes of the corporation. Making no decision at all due to a fear of acrimony or an inability to achieve sufficient consensus is treated for the purposes of corporate law as a decision in the sense that a board may be held accountable for any consequences of inaction.��

Conclusion: Conflict happens and that’s OK

The above principles explain why we cannot let polarization freeze us or ignore third rails if we know addressing them is vital to the mission. It also reminds us that everyone is part of the solution whether or not they like that solution. Governance practices aimed at eliminating conflict may mitigate some and hide the rest. 

“Depolarization” in the corporate law context means navigating towards our end goal cognizant of the reality of conflicts, minimizing unnecessary conflict, and taking principled positions on those we cannot minimize.��

1. Bloorview Children’s Hospital Foundation v. Bloorview MacMillan Centre, 2002 CarswellOnt 517, 22 B.L.R. (3d) 182, 44 E.T.R. (2d) 155, [2002] O.T.C. 108, [2002] O.J. No. 521 (Ont. S.C.J.) at para 32. ↩︎

You can negotiate and it’s worth it!

1. Negotiating is a collaborative process of finding solutions to shared problems together. It doesn’t have to be adversarial.
2. Even small gains today add up when you consider they may last over decades in your funding relationship.��
3. A funder who says no but recognizes you’re justified will be motivated to make it up to you, so it is still worthwhile to make your case.
4. Funders want to see their projects succeed, so they may be very grateful when you identify problems in the agreement to the success of the project.��
5. You do not have to call what you are doing, negotiating. Asking reasonable questions about what provisions mean and whether they make sense is just being curious.

Finding the right time

6. When you negotiate it affects your leverage. When deciding when to start the conversation ask yourself: what do I have to gain by waiting (e.g. more info)? What could I lose (e.g. cash flow urgency)?
7. Transfer payment funders are obligated to consider changes to agreements when there has been a significant change in circumstances or laws governing a fundee.
8. When a funder requests a change to an agreement, you are entitled to ask for changes you would need to enact their request.
9. Make your own agenda for funding agreement meetings. Write down your questions and the points you want to get to.�� 
10. Requesting a bit more time in meetings enables more creative discussions.
11. Always ask “is this still a good time to talk?” when phoning a funder. If they are rushed or stressed, they’re more likely to say no.��
12. Make time in the meeting to build rapport. People who connect on a personal level are more willing to collaborate to find solutions.
13. End meetings with a summary of what has been agreed to and next steps. This confirms mutual understanding and makes sure you are moving forward.

Understanding who is negotiating

14. You are negotiating with a human being. Institutions can be intimidating, but the human being across from you has probably chosen that job because they want projects like yours to succeed.
15. Speak to your negotiating partner’s needs. Understand what their incentives and needs are and justify your requested changes in terms of the impact it will have on them.
16. Understand who has discretion to change what. If higher approval is needed, you must win your counterpart over as your champion to make your case internally.
17. Empower your nonprofit’s representative appropriately. Constantly reporting back and seeking approval leads to delays, broken telephone, and duplicative meetings.
18. Those not in the room can be an important part of your negotiating team. For example, you could say, “I don’t mind this provision, but I know my board is going to have concerns with this. Can you say again why it has to be in there?”
19. Identify who holds the information you need. An informed negotiator is a successful negotiator. Identify who in your organization has the data you’ll need to justify your asks.

Set the stage for successful conversations

20. Send email summaries following oral conversations. This ensures common understandings are properly documented to ultimately capture in the agreement.
21. Bring funders to your site when you can. They will see your great work. You will feel more comfortable. However, government funders are limited in allowable travel.
22. If possible, offer to go to their offices to talk. Though more time consuming, it allows you to connect with their colleagues, show your confidence, and connect in person.

90 per cent of successful negotiation is preparation

23. Understand the norms of negotiating with this funder. Speak to others who have been funded by this funder before. You may be surprised by what’s possible.
24. Gather as much useful information as you can. For example, review the funder’s strategic plan to understand their priorities or past negative experiences to know their anxieties.
25. Check your assumptions. You probably think you know the funder better than you actually do. You may be sure that the funder will say no to something, but it’s beneficial to avoid making any assumptions when negotiating.��
26. Your funding application is your opening offer. Budget on the assumption that they will try to haggle you down for it.
27. Identify your walk away point. Funders rarely hear “no”, so when they do it’s even more powerful. Identify the terms of the agreement that would simply be unsustainable.
28. Identify your best alternative to a negotiated agreement (BANTA). This may be another funder or diversifying your revenue sources. The better it is, the more leverage.
29. Identify the funder’s BANTA. Nonprofits overestimate the alternatives funders have. If you are having this conversation with them, it means you’re their preferred option.��

Reviewing the funding agreement

30. Review the agreement with an eye towards what must change versus what would be nice to change. This will set clearer priorities in negotiating.
31. Review the agreement from the perspective of the funder. What do they actually care about versus what is there because it’s part of the template agreement? 
32. Terms of agreement may have been changed by delays in the application process, don’t be afraid to highlight that the timing or results may also have to change.
33. Check to make sure the agreement includes everything you discussed. Typically agreements will exclude past oral discussions, unless the terms are worked in the text or appendix.��
34. Check the interpretation section to make sure no key terms are missing. Defining a key term, such as “day”, “client”, “best practice” can cost the funder nothing, but may save you time or money or simply create clarity.
35. Where the funder is unwilling to change the agreement, propose non-binding appendices (e.g. disbursement schedules) as psychological anchors.
36. Is the amount of interest in interest bearing accounts worth the admin time it takes to process it? If not, discuss with your funder alternatives (e.g. non-interest bearing accounts).��
37. Calculate whether the allowed financial flexibility is sufficient for the predictable variation in expenses. Provide numbers to back up your projected ranges.
38. Government of 91��Ƶ funders must make a business case for flexibility beyond 10 per cent. Provide your point of contact with all the information they need to make that case.
39. Review the definition of conflict of interest carefully to make sure you are not walking into the agreement already offside.
40. You can buy yourself some time by defining the notice period to not include important dates for you (e.g. culturally significant days).
41. For reporting requirements, ask what the information will be used for. Government of 91��Ƶ funders are required not to ask for information they will not use.��
42. For recordkeeping requirements, ask whether it is realistic to keep everything. Often funders could assess compliance with far less than “all the documentation”.
43. For notice of inspection, ask yourself if this gives you enough time to prepare to support the auditor. It is typically at the funder’s expense so they have a vested interest in the auditor getting the most in their limited time.
44. For acknowledgement of support, ask whether your own branding guidelines can be included in the agreement. The funder will look better if acknowledgements don’t clash with your existing communications practices.��
45. If a specific level of insurance is required above what you currently have, obtain quotes to identify the marginal costs and factor that into your budget accordingly.��
46. If a provision specifies the funder owns any intellectual property (IP) from the project, ask them what they will do with it. Often if they have no plans or means to use the IP, they will understand why it makes sense for you to own it in the end.
47. For the termination provision, calculate concretely your wind-down period and anticipated costs. The more informed you are, the stronger your position.
48. For the default provision, ask the funder what if they are the cause of the breach (e.g. through payment delays). These provisions often don’t contemplate how a funder may contribute to a breach of an agreement.��
49. For the description of activities, do not volunteer to include more in the description than is actually being funded. Including more than necessary diminishes your ability to ask for adequate funding later.
50. Build in time for the unexpected in every phase of the project. But have a justification for your estimated timeline.��
51. Unless the funder’s policies specifically say otherwise, your budgeted HR costs can include things like pension, benefits, and professional development (PD). Be a decent work employer.
52. The Government of 91��Ƶ is required to accommodate your accessibility needs in signing funding agreements.��

Making a negotiations plan

53. Identify three alternative agreements that are equally acceptable to you. Each option will offer different trade-offs on the identified key provisions.��
54. Identify potential objections a funder may have to your requested changes. Be prepared to not get defensive and instead identify solutions to those underlying issues.
55. Ask for the items that you must have or would like to have that are neutral for your funder first. These are low hanging fruit.
56. Focus discussion time on the items that are both important to you and to your funder.

Getting in the room together to negotiate

57. Be bold in your asks but make sure you have a justification. People are less likely to get offended if there’s a rational basis connected to their best interests for your ask.
58. Provide a range of options when you can. This helps to define the scope of discussion and shows you are flexible (e.g. length of time, PD costs, etc.).
59. “No” is the beginning of the discussion, not the end. Don’t be afraid to hear “no”, respond with curiosity about the underlying reasons for the “no” so you can propose an alternative that meets that need.
60. Don’t be fooled by false ultimatums. For example, if they say you must sign by the end of the week, ask why. If they can’t provide a concrete answer, it’s false urgency.��
61. If they don’t give you the full amount, is there a project you could do instead? If you’re afraid to reject their offer of partial funding outright, offering an alternative will both clearly express the project they wanted is not doable for less while showing you are flexible.
62. Ask open ended rather than close ended questions. If you are afraid of hearing no, then don’t ask questions that have “yes” or “no” answers, e.g. “What would you think if we expanded the timeline by 3 months?”
63. Be ok with silence. Especially after you have asked a question, silence is not a sign you should back down, it’s just a sign they’re thinking. On the flipside if they have asked a question or made a statement and you need time, signalling silence may cause them to back down.��
64. Mirror back to them their answer to confirm you have understood correctly. A funder may not realize the impact of their words. By non-judgmentally mirroring back to them what they’ve said, it may cause them to rethink.��
65. Listen both to what the funder says and doesn’t say. Body language including tone of voice are powerful. A funder who says no but doesn’t flinch or sound shocked suggests you haven’t pushed too far and can discuss.��
66. Negotiate in small increments. If you ask for 100 and they say 50, go back to 90 and only give up value in exchange for something. If you give in immediately, your ask for 100 will appear dishonest.��  
67. If the person you are talking to doesn’t have the final decision, then negotiate with the goal of recruiting them to your side to be a champion within their organization.
68. Debrief with your team after each meeting. Reflect on what went well and what didn’t to constantly hone your negotiating skills.

Think outside the agreement

69. Your funder likely has a network of professionals that can be useful to you. Feel free to ask for recommendations for evaluators, accountants, and more.
70. Your funder may have separate funds set aside for specific kinds of costs, e.g. AI adaptation, evaluation, etc.
71. If you have multiple funders with conflicting requirements (e.g. in reporting versus privacy) introduce them to each other and highlight the issue.
72. Government funders may be able to champion your purchase of surplus goods or lands from other parts of government.

There are limits to what you can do alone

73. You can gain leverage and shift the power imbalance between you and your funder by negotiating collectively with other nonprofits and engaging in advocacy together.��

If you found these tips helpful and want to share your own or book a workshop, reach out to benjamin@theonn.ca and, sign up to receive NPLO news direct to your inbox.

For boards of charities considering a Canada First (or even All Canadian) investment strategy, there are some key legal barriers worth reflecting on that teach us a lesson about furthering our organization’s purposes more broadly. 

Are 91��Ƶ charities allowed to pursue a Canada first or All Canadian investment strategy?
This question may seem strange. Why wouldn’t charities be allowed to prioritize Canadian investments? The answer lies in which sets out criteria that boards of charities must consider when making investment decisions to further the best interests of the charity: 

A trustee must consider the following criteria in planning the investment of trust property, in addition to any others that are relevant to the circumstances:

1. General economic conditions.
2. The possible effect of inflation or deflation.
3. The expected tax consequences of investment decisions or strategies.
4. The role that each investment or course of action plays within the overall trust portfolio.
5. The expected total return from income and the appreciation of capital.
6. Needs for liquidity, regularity of income and preservation or appreciation of capital.
7. An asset’s special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries. 

One traditional way of understanding this criteria is to say that a board must maximize return to the charity, which requires a diversified portfolio and avoids taking unnecessary risks. was the allowance to consider the purposes of the organization (criteria 7) added to this list to allow for impact investing. 

Following this traditionally narrow understanding of a charitable board’s investment duties, it might be argued that, in the context of the general economic conditions of the  trade war, investing in Canada has actually become more risky (not less) when only viewed from the point of view of returns on capital. In a condition of economic uncertainty, a less diversified portfolio (i.e. focusing on Canadian investment opportunities) may be exactly the opposite of what traditional investment logic recommends. Furthermore, on a narrow reading of criteria 7, unless a foundation happens to have Canada’s general interest as one of its purposes, it is unclear whether promoting the Canadian economy in general would have a special relationship to the charity’s purposes.

If we take the above traditional approach and a narrow view of what’s in a charity’s best interests we may well conclude that a charity can perhaps marginally increase its Canadian holdings, but may actually not be allowed to take a Canada First and certainly not All Canadian approach to investing.

Towards a more holistic view of a charity’s best interests
It should be clear from the above reasoning how broken and self-defeating taking the above traditional approach to investing is for charities, especially in times of crisis. Thankfully, there is an alternative. 

The best interests of a charity is the accomplishment of its purposes (1). Most charities’ purposes clearly cannot be reduced to the bottom line of an investment portfolio. For instance, a health charity that spent five per cent of its assets improving the health of 1,000 children earned from investments in companies who damaged the health of 100,000 children in principle could be found on net not to be charitable because it does not benefit the public (2). 

It may seem like a charity whose only purpose is to grant to charities perhaps could measure the furthering of their purposes in terms of the bottom line on their balance sheet and corresponding granting. Yet even in that case, the Charities Accounting Act calls on us to consider the special value of investments not only to our purposes but to our beneficiaries. This guards against a situation where our investment activities further our purposes in a narrow sense at the expense of the broader interests of our beneficiaries. What good is two per cent more of granting when our investment activities perpetuate a situation of 20 per cent increases in demand?  

In short, it is at least arguable In our interconnected world, that no charity is an island and the law affords boards considerable latitude to take into account “any relevant circumstances” and rise to the moment in pursuit of that public benefit. 

With this framing in mind, let’s take a second look at some of section 27(5)’s criteria:

1. General economic conditions: In the context of a trade war that some are saying is sparking a long-term shift in continental supply chains and trade patterns, investing domestically now pushes back against recession and may be a crucial long-term bet that will indirectly support a wide range of charitable purposes from relief of poverty to promotion of the arts and more. 
2. The role of each asset within the overall portfolio: Canada’s economy is large and considerable diversification is still possible with a Canada First approach. What diversification may look like at this moment may mean building up traditionally undercapitalized markets in Canada, such as Indigenous, Black, women and gender-diverse or newcomer owned businesses.
3. An asset’s special relationship or value to the purposes or beneficiaries: Even if your foundation’s purposes are simply to grant to qualified donees, a significant downturn in the Canadian market or recession will significantly negatively impact qualified donees with declines in donations and spiking demand as we saw during the height of .  

Once we embrace this deeper approach to pursuing the charity’s interests, the implications go beyond our investment portfolio. We start to see how it might lead us to through our procurement policies or engage in advocacy to fix the systems that hurt our beneficiaries.

The time to act was yesterday.
As the headlines attest, the situation is changing daily and sometimes hourly. Part of fulfilling a board’s fiduciary duties is acting at an appropriate pace for the speed of events. Boards of charities and foundations in particular have an opportunity to show moral leadership and signal confidence in Canada’s future with a principled investment strategy that furthers their charitable purposes in the deepest sense. 

If you are an Executive Director, CEO, or member of a board, consider sharing this with others on the board. At the very least, a prudent investor is required to revisit their investment strategy when times are significantly changing. If you have questions about the legal principles underlying this short article, reach out to benjamin@theonn.ca .

Sources

1. Bloorview Children’s Hospital Foundation v. Bloorview MacMillan Centre, 2002 CarswellOnt 517, 22 B.L.R. (3d) 182, 44 E.T.R. (2d) 155, [2002] O.T.C. 108, [2002] O.J. No. 521 (Ont. S.C.J.) at para 32 :”The principle that the directors of a corporation without share capital must act only in the best interests of the objects of the corporation is clearly dispositive of this issue.” citing 91��Ƶ (Public Trustee) v. Toronto Humane Society (1987), 1987 CanLII 4192 (ON SC), 60 O.R. (2d) 236 (Ont. H.C.); Victoria Order of Nurses for Canada v. Greater Hamilton Wellness Foundation, 2011 ONSC 5684, 2011 CarswellOnt 12086, 94 B.L.R. (4th) 246,
2. National Anti-Vivisection Society v Inland Revenue Comrs [1948] AC 31 at 50.

~

Disclaimer: The above is intended as general legal information to help inform your decision-making process, not legal advice specific to your organization’s situation.

Nonprofits incorporated under 91��Ƶ’s Not-for-Profit Corporations Act or the Canada Not-for-Profit Corporations Act are required to hold a members’ meeting at least every 15 months and within six months of the end of your last fiscal year. This annual members’ meeting is commonly called an AGM. 

In this blog post, we’ll review: 

• the purpose of AGMs, 
• what nonprofits can do to increase member attendance and participation, and
• if necessary, how nonprofits can reduce their quorum.

The purpose of AGMs: Nonprofits and democracy

Some nonprofits rarely see their members. They may not come to meetings when invited or even open emails. In some cases, you may not even know who your members are. All of this may lead someone to ask, “why do nonprofits have to have AGMs anyway?” or “why do nonprofits need to have members?”

The short answer is to ensure that boards of nonprofits are accountable to someone. AGMs are designed to bring the organization’s stakeholders together, however a nonprofit has chosen to define that group in their bylaws. At an AGM, the board must present the nonprofit’s financial statements and board members face election or removal by its members. Just like in our broader society when voters don’t show up or pay close attention to what people in power are doing, accountability is significantly reduced. AGMs that are well attended by engaged and informed members help to ensure that those on the board are not abusing their positions and that the people who are on the board have the skills and vision to steward the nonprofit.

What nonprofits can do to increase member attendance and participation

Understanding what you need to do to increase member participation requires understanding why members are not attending in the first place. Here are four common reasons people don’t attend and what you can do about it.

Implementing these strategies below takes time and resources, but they are strategic investments in your organization.

How can nonprofits reduce quorum

If a nonprofit has tried these strategies but is unable to meet its quorum of members for its AGM, then it may want to consider the following legal strategies.

1. Lowering the quorum: You can change the quorum in your bylaws or articles to a lower percentage or absolute number of voting members or define quorum in another way that works for you. Remember that the lower the quorum, the easier it is to have the meeting but less accountability may result. There is also a risk that a small group of individuals may exploit this opportunity to take over the organization.
2. Redefining membership: If a large portion of the individuals you define as members do not want to be engaged in governance, you may wish to reconsider which stakeholders in your community really want to have . Who you define as members may be the most important governance question your nonprofit asks itself. Fundamentally, it is about who you believe the nonprofit should answer to. explores the pros and cons of different membership structures.

Conclusion

Ultimately, AGMs are one small way your nonprofit stays responsive and relevant to its stakeholders. If you are struggling to get quorum at your AGM, you may still be very successful at engaging with your stakeholders in other ways. In other cases, the struggle to get quorum may be a warning sign of deeper issues of your governance and stakeholder engagement that you should address. You are best positioned to assess the situation. But one thing is for certain, AGMs can and should be an opportunity to strengthen your organization.��

In this post, we will address what these changes mean for shared platforms (also known as fiscal sponsors or trustee organizations). 

Is there still a role for shared platforms?

In the past, one of the reasons for shared platforms has been to allow funders to support grassroots organizations who do not have charitable status without having to exercise direction and control. Instead, the funder can rest easy knowing the shared platform, another charity, would exercise the oversight and ultimately be responsible for the carrying out of the grant. 

For example, the acts as a hub and provides capacity building to several grassroots initiatives in the Northwestern Toronto area.

Now that it’s legally possible for charities to directly support nonprofits without charitable status without having to exercise direction and control, some may ask “is there still a role for shared platforms?”

The answer is absolutely yes!

Firstly, shared platforms provide a variety of supports to grassroots organizations including backend administration, mentorship, and professional development opportunities, networking, and more. These new rules do not change the exceptional value shared platforms continue to provide. 

Secondly, some funders will continue to want to rely on trusted third parties they have experience dealing with to oversee grants with nonprofits that may have less experience or infrastructure. 

Are shared platforms still allowed?

With the new rules in 2022, the government also introduced a section to the Income Tax Act prohibiting a registered charity from accepting a gift on the condition that it grants that gift to an NQD (called “directed giving”). After some initial confusion in the sector regarding whether this prevented shared platforms from accepting grants to be administered for a trusteed group, ONN requested clarification from the CRA. 

Fortunately, the CRA clarified this issue by stating in the final version of their guidance that directed giving does not include a situation where the charity maintains direction and control over the resources. Since this is currently what shared platforms do (maintain direction and control over the grants with their trusteed groups), it means that shared platforms are still permitted to do what they’ve always done.

Unfortunately, what the directed giving rules mean is that a shared platform cannot receive a grant on the condition that it then makes a grant to a trusteed group (so shared platforms cannot directly benefit from the new rules). The funder has to either make the grant directly to the trusteed group or it can make a grant to the shared platform without the condition (explicit or implicit) that the shared platform makes that grant to a particular trusteed organization. 

For example, the Care About Community Foundation wishes to make a grant to a grassroots group of children who are beautifying their local park. Unfortunately, the children cannot count for the most part and don’t have their own bank account. A local shared platform called Generic Youth Nonprofit (GYN) steps forward and offers to administer the funding for the foundation. Broadly speaking, the foundation has two options. It can either (a) give the money directly to the children on condition that they work with GYN to manage their finances, and other aspects of the grant, or (b) grant to GYN without any explicit or implicit condition that GYN passes the funding on to the children, but perhaps the reasonable expectation that they will do so. 

It is possible for the funder to set other types of conditions on its grant to the shared platform (e.g. it must be spent on promoting racial equity), but the shared platform would be legally entitled not to fund the trusteed group the funder intends. Obviously, a funder and trusteed organization would only enter into an arrangement like this if they trusted the shared platform. 

The bottom line is that shared platforms can continue to do what they have always done.

Can shared platforms benefit from these new rules?

It is early days in this new system, and we continue to monitor to see how different organizations will use these new rules to meet their needs. With that being said, initial conversations suggest that shared platforms may be able to benefit from the new rules by having funders grant directly to the NQDs, and list as a condition in the funding agreement the use of the shared platform’s services for things like monitoring and back-end administration. 

The work of the shared platform can contribute to the funder discharging their due diligence. This is an intermediate step between the funder simply granting to the shared platform and thereby absolving itself of any liability, and the funder making the qualified disbursement directly to the NQD thereby requiring it to do some due diligence itself. 

Put differently, under this new system, shared platforms may reposition themselves as offering due diligence services to funders making qualified disbursements.

Adapting to meet community needs

We look forward to seeing shared platforms and grassroots organizations continue to grow, and change in this new system adapting the rules in ways that continue to drive resources to meet the diverse needs of their communities.

If you have questions about the new rules that you think should be added to this list, email benjamin@theonn.ca. We can provide general legal information but not legal advice specific to particular situations. 

Related resources:

• How charities can grant to nonprofits: A guide for grantees
• Resource on talking to funders
• by McConnell Foundation
• FAQ for new NQD guidance

Below are five things I took away from our conversation about how nonprofits could make their governance more accessible.

One: Building accessibility into the Director Consent Form and onboarding process

At CILT, accessibility is just a way of doing business. Wendy explained that they discuss accessibility upfront with all prospective and new directors. With such conversations, it’s often a case of the earlier the better. Nevertheless, if your nonprofit does not have a consistent recruitment or nomination process for directors, 91��Ƶ’s Not-for-Profit Corporations Act (ONCA) at least requires that your elected directors consent in writing to act as directors (s.24(8)). 

I often tell nonprofits that does not have to simply be extra paperwork. It can be a meaningful part of the onboarding process as nonprofits can include all kinds of information in this consent form. Consequently, nonprofits can both invite directors to identify ways in which they need to be supported to do their job most effectively as well as make clear the organization is actively working towards accessible governance and operations.

Two: Ensuring accessible signing authorities

Wendy shared that sometimes institutions require signatures on documents to be in a particular form that may arbitrarily prevent signing authorities with vision or motor impairments from signing. It is important to remember that requirements for physical signatures are choices of an institution not a requirement of the law. ONCA offers a very broad definition of electronic signatures (s.1(1)) that allows you to take a very flexible approach to your signing authorities if you choose to. 

“Electronic signature means an identifying mark or process that is,

• (a)  created or communicated using telephonic or electronic means,
• (b)  attached to or associated with a document or other information, and
• (c)  made or adopted by a person to associate the person with the document or other information, as the case may be;”

Nonprofits will want to check their bylaws and policies to make sure there aren’t unintentionally restrictive rules that predate the more modern and flexible definition above.

Three: Longer notice periods ahead of board or members meetings

Wendy pointed out that while using plain language and multimedia supports can help all directors and members by simplifying complex material, there is a limit to how simple material can be without compromising the content. In such cases, she noted, it is important to give sufficient time in advance and opportunity for people to ask questions.

It’s amazing what time can do for accessibility. You can help ensure there is lead time by providing notice well in advance of meetings. ONCA says notice of members’ meetings can be sent as early as 50 days before and does not limit how early notice of board meetings can be sent (s.55(1)). If you are worried that will prevent you from turning around decisions quickly, you can always provide for a range of notice in your bylaws (e.g. 10 to 50 days). 

This is a great example of how more accessible governance often means more democratic governance. I often tell nonprofits that especially if they are dealing with a controversial decision, providing ample opportunity to discuss the matter ahead of the deciding vote will help smooth that final discussion and ensure whatever the final decision is more likely to be viewed as legitimate, and less open to challenge.

Four: Allowing support people in meetings

Another way Wendy identified to help decision-makers (be they directors or members) make better decisions is to ensure they have a support person of choice with them in the room to help translate and explain information as needed. This has been something CILT has done in the context of public consultations, but we can also use this practice in the context of board and members’ meetings. While ONCA limits who has a right to attend meetings (e.g. only directors at board meetings and only members, directors, and auditor at members’ meetings), ONCA also provides you with the flexibility to include a right for others to attend these meetings. 

You therefore have the option to enshrine in your bylaws a right of members or directors to choose a support person to attend with them. 

If you choose to implement this practice, be aware that your nonprofit may have obligations under privacy law that require you to exclude non-directors from confidential discussions. In such cases, it may still be possible to include support persons, provided you have them sign an appropriate confidentiality agreement.

Five: The fiduciary imperative to be accessible

Wendy pointed out that in order for directors and officers to fulfill their duty to the nonprofit to “exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.” (s.43(1)(b)), they need to be able to access and understand all material presented to them. This makes accessibility not just a good practice but a legal imperative to support boards in the same way the law clearly recognizes that directors and officers need to get expert advice when dealing with financial questions outside of their expertise.

Did we miss anything?

What practices have you put in place to make your governance more accessible? We’d love to learn and share more! Please reach out to benjamin@theonn.ca.