Two risk management checklists freshly updated in October,  Legal Risk Management Checklist for Charities and Legal Risk Management Checklist for Not-for-Profit Organizations, are available free of charge through the websites of Carters Professional Corporation. 

“The operations of charities and not-for-profit organizations have become complex, and the possibility of litigation against charities and not-for-profit organizations occurring as a result of their operation is significant,” says charity law specialist Terrance Carter. “The exposure of charities and not-for-profit organizations to liability goes further than the loss of assets and/or the insolvency or winding up of the organization.”

Without due diligence, directors may be personally sued

Directors of such organizations may also personally face legal actions against themselves by donors, members, third parties and governmental authorities for breach of their fiduciary duties or even breach of trust in failing to adequately protect or apply the assets of the organization, Carter warns. 

The checklists provide a brief outline of some of the more important issues that directors and/or executive staff of organizations, whether incorporated or not, may need to consider in ensuring due diligence in the operation of the organization. They include an overview of liability exposure faced by charities and not-for-profit organizations in Canada and some of the steps that can be taken to protect these organizations against such risks. 

Carter cautions that the lists provide only a general overview of the many considerations that charities and not-for-profit organizations and their boards of directors may need to be aware of to identify and manage legal risks.