Directors Liability and Risk Management
Despite their commitment to countless causes and organizations, many board members may be unaware of the legal ramifications of their volunteer work and issues surrounding personal liability. This liability applies to all non-profit organizations-including clubs, associations, societies, leagues, committees and charities.
The basic responsibility of directors is to represent the interest of the organization, their members and their constituencies in directing the affairs of the organization, and to do so within the law. In their role as 'trustee', directors must adhere to three basic principles:
Diligence: to act reasonably, prudently, in good faith and with a view to the best interests of the organizations and its members;
Loyalty: to place the interests of the organization first, and to not use one's position as a director to further private interests;
Obedience: to act within the scope of the governing policies of the organization and within the scope of other laws, rules and regulations that apply to the organization.
A volunteer director who fails to fulfill his or her duties as outlined above may be liable.
The term 'liability' refers to the responsibility of directors and organizations for the consequences of conduct that fails to meet a pre-determined legal standard. Usually, the term 'consequences' refers to damage or loss experienced by someone, and being responsible for such consequences can mean having to pay financial compensation.
A director or officer can no longer rely on the assumption that, provided they do their job to the best of their ability, they are free from personal risk.
Directors' and Officers' may be held personally liable for claims arising from:
- activities of volunteers and/or staff in the name of the organization
- employee discrimination
- wrongful dismissal
- breach of duties as described previously
Claims may be made by:
- volunteers
- employees
- government bodies
- suppliers
- customers
- general public
Volunteer Canada has created a resource that helps inform board members about their legal duties and obligations and that offers a practical 'prevention checklist' to help minimize personal liability.
Click here to download this resource
Directors and Officers Liability Insurance
Some boards may choose to protect themselves by obtaining Directors and Officers Liability Insurance.
The CLN has arranged for a group insurance policy for Councils. The policy contains competitively priced coverage for Commercial General Liability, Directors' & Officers' Liability, and office contents.
You can visit their website at 
Robinson Insurance Brokers Ltd or contact: Bryan Robinson at bryan@ribrokers.ca
Resources - Websites and Documents
Risk Management: Exercising Your Due Diligence - by charityvillage.com
The Board of Directors - A Fiduciary Relationship - by enVision.ca
Risk Management - Absolutely, Probably, Possibly, Maybe...But What If? - by enVision.ca
Directors and Officers Liability Insurance: An Overview - by ChariltyVillage.com
Volunteers and the Law - A guide for volunteers, organizations and boards by People's Law School of British Columbia
Liability insurance for Volunteer Board Members - by enVision.ca
