News and Views
The Opportunity in ONCA: Why and How to Approach the New Ontario Not-for-Profit Corporations Act From a Governance Perspective
December 16, 2021
Posted in: WATSON Views
Not-for-profit organizations incorporated in Ontario, including charities, sports organizations, and member-based associations, have just been presented with an incredible opportunity: new legislation. Some might react with surprise, as coming into compliance with new legislation involves effort and resources, but stay with us on this.
In October 2021, the Ontario Not-for-Profit Corporations Act (ONCA) came into effect. This is part of a broader movement to modernize previous outdated NFP legislation across Canada, similar legislative changes came into effect in BC and federally.
This is more than just an exercise in compliance. The transition also offers a chance to take stock, think strategically about how to improve the organization’s governance structures and processes, tap into the Board’s perspective, and engage the membership,
You might be unsure if ONCA will impact your organization, as there are some exceptions and variations (for example, some NFPs headquartered in Ontario transitioned to the federal act while waiting for ONCA to come into effect). So, first things first, determine if your organization is impacted – most organizations currently incorporated under predecessor legislation will be.
If you organization is impacted, a key step to tackle this transition is to start with assessing your current state. Gather the corporate documents you may not have reviewed in a while (e.g., letters patent, bylaws) and get a sense of just how much of an impact this will have on your organization.
Review key features
The NFP sector is incredibly diverse, and the impact of the legislation will be wide-ranging. Each organization will vary in terms of which new provisions are most relevant to them. Some changes to flag include enhanced member rights, voting rights and requirements at Board and general meetings, and the introduction of a new Public Benefit Corporations category.
Bring the Board on board
Management and legal counsel can, and should, handle many aspects of the transition, but it needs to be on the Board’s radar from the beginning. This is an opportunity to take a long-term strategic approach to any changes that might need to be made, and it is crucial that the Board is engaged in these conversations early on.
Think critically about what changes need to be made, considering things like:
- What has been working well/what has not been serving us well?
- Is our governance structure fit for purpose?
- Do we need to review the membership structure and explore options?
- Do we need to review the board structure and explore options?
Think strategically about those changes, asking questions such as:
- What should we hard wire?
- Where do we need flexibility in our structure or approach?
- Who do we need to consult or engage? What is the membership’s perspective?
Remember your members
Do not underestimate this piece. In our experience supporting organizations through transition, effective member engagement can be critical in certain contexts. For organizations with a substantial and potentially diverse membership base, you might find a membership that wasn’t highly engaged becomes very active and interested if they perceive they might gain or lose something in the transition. Take your members along with you, engage them at the right level, and all parties will feel more satisfied with both the transition process and the outcome.
Model or sample bylaws will be available, and they can be a good starting point, but they won’t speak to your organization’s complexities and nuances. Work with your legal counsel or an advisor to ensure your bylaws meet your needs and are relevant to your context. Think of it like buying a suit online vs having one tailor-made to your measurements; a bespoke suit takes more time and is a bigger investment, but it will be in your closet a lot longer than one that came with express shipping and is a bit too tight in the shoulders. You don’t want to go back to your membership year after year for amendments because those sample bylaws don’t quite fit the way you thought they would.
Ask the experts
As always, WATSON is here to help. We can support you through the governance aspects of this transition in many ways, be it a governance diagnostic, advice around membership engagement, or key considerations for your Board as the transition approaches.
Your organization has three years to come into compliance – October 2024. That might seem like a long time, but the clock has already started, and you don’t want to find yourself in 2024 with ill-fitting bylaws and a dissatisfied membership. Plan now, you’ll thank yourself later.