This checklist may be of use to those considering joining a board of a charity. As well, it may be useful to staff and the board of charities who are interested in improving their legal compliance and improving their risk management. Furthermore, if you are planning on donating a large amount to a charity you may be interested in conducting some due diligence before finalizing any major or planned gift. This checklist is by no means complete. In addition some of these points may not be applicable to all charities in Canada. If you have any questions about Canadian and Ontario nonprofit and charity law please contact Mark Blumberg at 416-361-1982 or mark@blumbergs.ca.

Corporate

• Is the charity incorporated, and if so, under which jurisdiction?
• Is the charity up to date with corporate filings such as annual returns?
• Have you conducted a corporate profile report on the charity and ensured that the corporate filings are accurate, such as address of charity, names of directors and whether the charity is using its correct corporate name (especially important with bequests in a will)?
• Has the charity registered all business names that it is using?
• If the charity has not been incorporated and you are considering incorporation you may wish to review our article Should we set up a Canadian Charity?

Charitable status

• Is the charity currently registered with the Canada Revenue Agency and up to date with Canada Revenue Agency T3010A filings?
• Have you reviewed some recent T3010A filings on the CRA website?
• Is the charity meeting its disbursement quota?
• Has the charity’s charitable registration ever been revoked, and if so, why?
• Does the charity have a gift acceptance policy?
• Is the “charity” considered by the Canada Revenue Agency to be a charitable organization, public foundation or private foundation?

Minute book

• Does the charity have a ‘minute book’ with key documents such as letters patent (articles of incorporation), by-laws, minutes, ledgers? Is it organized and kept in one place? If a charity does not have a properly organized minute book it may be a red light to warn of problems.
• Are the important documents such as articles of incorporation/letters patent and by-laws consistent with each other and the statutes governing nonprofits and charities?
• Does the charity keep minutes of meetings and are they available to the directors and members?

Objects

• Are the charity’s objects updated and reflective the scope of the charity’s work?
• Do the activities of the charity fall within the charitable objectives?

Insurance and litigation

• Does the charity have Directors and Officers Liability Insurance and what scope and exclusions are there?
• What other types of insurance does the charity maintain, and are they adequate?
• Has the charity been involved with lawsuits or threatened litigation?
• Do the charity’s bylaws adequately provide for indemnification of directors?
• Does the charity occasionally undertake a risk assessment in order to evaluate the risks faced and attempt to mitigate or eliminate such risks?
• Is the charity aware of all of its contractual obligations>
• Does the charity maintain adequate record-keeping, including easy access to important documents and contracts?

Employment

• Does the charity have written employment agreements with each employee?
• Has the charity been up to date in remitting all source deductions?
• Is suitable screening of employees conducted, especially when dealing with vulnerable groups such as children, sick or elderly?
• Are there clear personnel policies, and is workplace safety taken seriously?
• Does the charity have policies and protocols dealing with volunteers?

Intellectual property

• Trademarks – Has the charity trademarked words, phrases or logos used in association with the ware and services of the charity?
• Copyright – Has the charity confirmed, especially with outside contractors or independent contractors, that the charity owns content that it is paying for?

Corporate governance

• Does the board of directors understand its legal obligations?
• Is there proper division of responsibilities between the board and CEO/ED?
• Are a majority of the board independent directors, and are the main stakeholders views reflected in the decision-making?
• Are conflicts of interest and breaches of confidentiality and privacy scrupulously avoided?
• Are proper policies in place depending on the needs of the charity?
• Are accounting policies consistent with legal requirements, including audits of financial statements when required?

Operating abroad

• If the charity sends money abroad to an agent, does the charity have a proper written agency agreement with their agent abroad?
• Is the agency agreement, joint venture/joint ministry agreement or co-operative partnership agreement up-to-date, in compliance with the CRA requirements and being followed?

Gift planning and major gifts

• Does the charity have a gifts acceptance policy and is the charity prepared to accept and understand the consequences of accepting certain types of planned gifts?
• Does the charity provide correct bequest information?
• Does the charity have a bequest management program?
• Are fundraising programs and receipting protocols up to date?

Outside counsel

• Does the charity have an accountant, lawyer, insurance agent, and investment advisor – if substantial investments or endowments are held – who are familiar with nonprofit and charity requirements?

Technology

• Does the organization maintain adequate physical and computer security?
• Does the organization have a disaster recovery plan including regular backups of data?

Mark Blumberg is a lawyer at Blumberg Segal LLP in Toronto, Ontario. He can be contacted at mark@blumbergs.ca or at 416-361-1982 x. 237. To find out more about legal services that Blumberg provides to Canadian charities and nonprofits, please visit their Nonprofit and Charities page at www.blumbergs.ca/non_profit.php or www.globalphilanthropy.ca.

This article was first published on September 28, 2005 and is reprinted with permission.