There is likely no more vexing problem for non-profits than the fractious board, the arguing board, the won't-work-together board, the every-person's-right board. People feel it often starts with one little thing, that single incident when one or more directors refuses to allow the board to speak with one voice. (In his book Boards That Make A Difference: A New Design for Leadership in Non-Profit and Public Organizations (John Carver: 1990 - Jossey-Bass Publishers) John Carver emphasizes the need for Boards to act in a unitary fashion. The Board must act as a whole unit in working to achieve the organization's purposes.)
As a result, a frequently suggested solution is an ethics agreement or a board code of conduct. (There is no magic in the name of the agreement. Pick something that is meaningful to your organization.) But what does a code look like? Here is one proposal to consider. It is an example to be adapted to fit your situation. (This is an example I've used in my practice for some years with success. Readers are encouraged to let the La wNo w editor have their comments and suggestions for improvement.) While a code of conduct won't solve the problems of disputing boards, it does provide a means to focus concerns and a mechanism to deal with the worst cases.
A word of caution. While often cited as useful, codes of conduct for boards of directors are not common. Their legal basis is uncertain; there seem to be no reported court cases considering their use.
The authority for the code should be in your organization's by-laws. By-laws provide the qualifications for directors. They are a statutory requirement. Often by-laws speak about requirements to hold office in one place and in another section deal with leaving office; what qualifications you have to have to be a director and under what conditions you lose the standing to be a director. By adding to these sections words which authorize the Board to adopt a code of conduct and requiring directors to sign and follow it, the foundation is laid to enforce compliance.
Code of Conduct for Directors of the Upstanding Society of Alberta
I, ______ , am a director of the Upstanding Society of Alberta (called here the "Society"). In carrying out my duties as a director of the Society during my term of office I declare that :
- I will use the powers of my office and carry out my duties
honestly, in good faith and in the best interests of the Society.
At all times I will apply myself with care, skill, and diligence.
And I will do so reasonably and prudently.
- I will honour and observe the Society's:
(a) Memorandum of Association and By-Laws;
(b) policies adopted and approved by the Board of Directors; and
(c) decisions taken by resolution of the membership.
- I will publicly support the policies and positions of the Society as approved by the Board of Directors.
- I will keep confidential all information I learn about matters
specifically determined by
board motion to be matters of confidence. Where I am uncertain in determining whether
something is a matter of confidence, I will seek direction by way of a resolution of the
Board of Directors. - I will publicly support actions taken by the Society's management to implement programs and achieve the objectives contained in the Society's approved plans and budgets.
- I will strive to place the interests of the Society and its Board of Directors ahead of my personal interests and I will immediately declare any conflicts of interest which arise.
- I will be deemed to have resigned as a director on the date:
(a) I make an assignment into bankruptcy;
(b) I am refused a bond; or
(c) I am not in good standing. - Where I do not abide by this Agreement or where I find that
I am in a situation where my continued presence on the Board
of Directors would cause embarrassment to the Society or would
undermine member confidence:
(a) I will immediately resign; or
(b) I will ask the board to determine the matter and then resign if there is a determination not in my favour; or
(c) I will resign where the board makes a determination not in my favour after the board raises the matter itself.
A board determination must be made by a vote of two-thirds of the directors attending a meeting after I have been given the opportunity to be heard by the other members of the board.
Notes
For purposes of this Agreement:
- member in good standing means not being in default for fees, dues, or costs payable to the Society by which af filiation a person maintains the qualification required by the Society's by-laws to serve as a director of the Society;
- the board of the Society can determine what are matters of embarrassment or matters tending to undermine member confidence, which may include, by way of example, charges under the Criminal Code relating to spousal assault, theft from an employer, or other mat-ters which in the sole and absolute opinion of the board could bring the reputation of the Society into disrepute either with its members or generally.
Laird Hunter is a lawyer with the firm of Worton & Hunter in Edmonton, Alberta.
