THE MEMBERS ONLY FILES

DIRTY LITTLE SECRETS

"The Dirty Little Secret of NonProfit Boards" is the title of an eye-opening article written by Hildy Gottlieb in 2003. It's been widely shared among non-profit organizations all over the United States and Canada (I obtained this copy from Sport Manitoba). I shared this article with my fellow directors during the time I was Naturist Legacy's president. Here are a couple of opening paragraphs:

Unfortunately, this isn't the only dirty little secret of non-profit boards. There's another one you should know about.

Instead of board members who don't understand how to read financial statements, the second dirty little secret concerns board members who don't understand (or don't even know) what's in their by-laws, or what's in applicable municipal by-laws, provincial laws, provincial regulations or federal laws.

Instead of board members making countless decisions without understanding the financial ramifications, this dirty little secret concerns board members making countless decisions without understanding the legal ramifications.

• These can be board members who don't realize that provincial law requires their full compliance with all of the corporation's by-laws. No exceptions.

• These can be board members who have read their by-laws but forget what they learned as time passes.

• These can be board members who lose track of which version of their by-laws to follow after they've been amended.

• These can be board members who aren't aware of which government laws and regulations apply to them.

• These can be board members who have read applicable government laws and regulations but fail to keep up with subsequent amendments.

• These can be board members who simply choose to follow a leader within their ranks rather than do the required reading and thinking for themselves.

I was Naturist Legacy's first president and served in that position for more than three years. I witnessed a lot, experienced a lot and learned a lot — both then and in the years afterward. Among so many other important things, I learned this:

1. Naturist Legacy's by-laws along with government laws and regulations offer substantial legal protections when they're understood and obeyed to the letter.

2. Naturist Legacy's by-laws along with government laws and regulations pose substantial legal risks when they're misunderstood, disobeyed or ignored.

My Advice

Here's the advice I would give directors if I was still serving as president today:

1. Read your by-laws. Not just once, but periodically. Discuss them with your fellow directors. Make sure your understanding of the by-laws is the same as theirs.

2. Read The Corporations Act and the Corporations Regulation. Read them from beginning to end more than once. Seriously! Discuss what you learn with your fellow directors.

3. Read all the other government laws and regulations that are applicable to Naturist Legacy Inc. and Naturist Legacy Park. Continually monitor them for amendments. Discuss what you learn with your fellow directors.

4. Read Naturist Legacy's history (a lot of it can be seen on this website). Read about what your predecessors did right. Read about what they did wrong. Discuss what you learn with your fellow directors. Try not to repeat the bad stuff.

5. And after you've done all that, please do this:

Obey your corporate by-laws.
Obey municipal by-laws.
Obey provincial laws.
Obey federal laws.
Obey them all.
To the letter.

Bottom Lines

Bottom line #1: You shouldn't be governing your organization and its members if you don't know or understand what governs you.

Bottom line #2: You shouldn't expect members to obey the rules you make for them if you don't obey the rules you make for yourselves.

Bottom line #3: You should never disobey your by-laws or government laws and regulations. Disobedience invites lawsuits. Obedience prevents lawsuits.