Thank you to all of you that have contributed posts, comments and supported this blog over the last few weeks. A copy of the collaborative submission was submitted to the Ministry of Finance last week on behalf of almost 100 different organizations. We encourage you to keep in touch through www.yourtake.ca for any updates and continue the dialogue regarding the Act.
It is April 1st. Over the past month I have spoken at 8 events across the Province including many arts administrators. For many in the arts this has been a dispiriting month – may we see improvement in the coming Spring. Herewith my submission to the Review.
Dear Mr Minister:
My name is Martha Rans and I am a lawyer in private practice working with societies, charities and co-operatives. In addition, I direct a pro bono legal project that provides by-weekly summary legal advice to artists and arts organizations, the Artists Legal Outreach (www.artistslegaloutreach.ca). The ALO has been providing advice to staff and board members of societies on a monthly basis across the Province for the past 3.5 years. We have held three workshops on the Society Act and most recently launched a Society Survival Series for young and emerging artists and companies. My submission for the Society Act Review is entirely personal to my experience and observations working with (and within) the sector for the past 25 years.
In my experience if there is non-compliance with statutes it is often a result of lack of resources. Lack of resources lie at the heart of much inefficiency. That said, there is little doubt that modernization of the Society Act can only improve compliance where those changes simplify and streamline the process. In that respect I would recommend that the Society Act be modernized consistent with the Corporations Act and the Co-op Act. The BCLI Report for the most part ought to be adopted. One of the consequences of such a modernization would be consistency in corporate governance statutes and one can hope improved access to advice and information.
Improving access to information and advice whether legal, financial, management or governance would go a long way towards improving the efficiency and effectiveness of societies. It is a sector that is used to doing more with less often at the expense of the very administrative resources that ensure compliance with the myriad of regulatory requirements that impact most societies. Often this is to their detriment. I doubt very much that enacting new regulations towards “greater accountability” would address the skills and knowledge gaps on many society boards of directors including large, sophisticated ones. New regulations could make a basically functional sector (as a whole) – at a time when both public and private resources are decreasing – dysfunctional. A new regulatory structure without the information and advice to accompany it may not meet the goals of reform particularly given the absence of a clear and coherent policy framework.
The not for profit and charitable sector is an important part of the BC economy. It employs many more British Columbians than many sectors that are able to access resources to address such skills and knowledge gaps. Ongoing and effective legal advice and education delivered through the community is necessary if we are to address these gaps. Such a project could help enable the sector to function more efficiently and effectively no matter the regulatory framework. Whatever decisions are made with respect to changes to the Society Act they ought to come with sufficient resources to ensure that the hundreds of thousands of British Columbians who sit on boards (3 directors of each of the 26,000), the staff who work in the sector and the public are aware of and can understand how to comply with the statute and are able to access continued and effective information and advice.
In closing Mr. Minister I encourage you to consider the modernization of the Society Act within a larger policy context. One where resources will be committed so that we can support compliance rather than continuing the “if it ain’t broke, don’t fix it” reality that societies struggle with every day.
I would welcome an opportunity to discuss these issues with you and Ministry staff.
Yesterday evening, Margaret Mason, Michael Blatchford and I met with a group of emerging artists and arts organizations to talk about the Society Act and have a look at some bylaws. We called it the Society Survival Series because many of the issues are now a matter of survival. Among the comments we received were : “We need a beginner’s guide to reading legal documents! How do we manage volunteers? How about a glossary of legal terms? ” All great ideas that we hope to be able to followup with over the coming months. There were a number of newly-formed societies and a few folks who had not yet decided what to do. There was a distinct lack of clarity on whether there were alternatives to setting up a non profit society. These observations caused me to wonder whether funding and revenue streams too often dictate our choice of model and limit our ability to be creative across the non profit sector? Two arts administrators who collectively manage 50 or so groups express continuing frustration at the Society Act model for the arts. What are the alternatives? Would a new legal structure help or hinder the sector?
In the last few days before the first review phase on the Societies Act closes I’ve been impressed by the huge commitment of volunteers in the ENGO sector. Environment organizations are a widely diverse bunch but none of them large or small could exist without engaged volunteer work.
Many of those that I have talked to over the past few weeks have relied on the volunteers in their ranks to take on the review of the Societies Act changes. So along with the BC Gaming cuts to environment groups which will devastate the core of many small local organizations now we learn that Volunteer Centres that support their activities are threatened. Imagine Canada’s nonprofit news service picked up a story late last week from Nanaimo and the struggles of their Volunteer Centre working on half its previous year’s budget. These centres provide invaluable training and support for the sector by partnering with non-profits to build their capacity.
Those volunteers active in their societies, who give not only of their time and talents, will be the foundation that keeps many organizations and initiatives alive in these challenging times.
Enterprising Non-Profits – enp has signed on to the joint submission, and in addition have submitted a letter pertaining more directly to social enterprise… here is part of it, the full letter is available on our website at www.enterprisingnonprofits.ca:
A Social Enterprise is a business operated by a non-profit that is directly involved in the production and/or selling of goods and services for the blended purpose of generating income and achieving a social, cultural and/or environmental aim. In a social enterprise operated by a non-profit there is no distribution of profits to owners or members, rather surpluses from the business activities are re-invested in meeting community needs. By the nature of incorporation under the Society Act, social enterprises operated by societies are non-share corporations: operated by and for members without individual ownership rights.
Social enterprises meet many needs in urban, rural and remote communities; to name a few: Employment for persons with disabilities, youth at risk and others Expand the cultural offerings in communities Provide day care, access to health care, and other critical community services Engage in recycling and environmental education
Revisions of the Society Act should be framed and written to contribute to a supportive environment for social enterprise. Specifically we recommend:
The Society Act state clearly that societies are permitted to operate or own social enterprise businesses provided that the business activities:
1) further the social, cultural or environmental purposes of the society; and,
2) all net revenues arising from the business activity be retained within the society to be used to further its purposes.
3) if a business activity is conducted by a society but is unrelated to its social mission or the society’s purpose, all net revenues must be used by the society to further its purposes.
On the matter of “calls for a whole new framework to enable a “hybrid” type of organization…”, enp believes this matter is outside the realm or concern of this consultation. A “hybrid corporation” consultation, decision and framework should be considered within the Business Corporations Act of British Columbia since it will clearly involve some ‘hybrid’ form of share based ownership and will use shared based investment instruments for investors seeking an economic return on investment. (See the American limited partnership models – L3C – and the United Kingdom’s Community Interest Corporations, CIC.)
Did you hear the one about the foreign national who incorporated his own privately held off-shore Society in BC? Currently the Society Act requires that every Society must have at least one Director who normally is actually resident in British Columbia. Well, under the Business Corporations Act there no longer needs to be a local owner – someone who actually lives in British Columbia. Could the same rules apply to Society Directors? If not, what difference would it make?
The BC Law Institute’s paper recommends that the new Society Act accept the principle that no directors of any society must be residents. To quote recommendation number 29: “A new Society Act should not impose residency requirements on directors.” So, given that the Law Institute paper also recommends that a Society can have one member / one director, the one about the foreign national who set up her own private off-shore Society here in BC could be true. So, what’s wrong with that?
I believe that continuing to unbundle the concept of community accountability from a form of incorporation that really needs community accountability is just plain the wrong way to go. When do we stop thinking that automatically applying the globalization frame on everything is the right solution? In this context, globalization means that no one is actually accountable. I don’t think that is good enough. How about a counter solution that builds community accountability?