Charity Board Transitions and Continuity

Board members of charities and nonprofits play a critical role in ensuring the organization runs effectively and complies with laws. However, when a board member decides to resign, they must leave the organization prepared for a smooth transition. Proper documentation, clear communication, and adherence to Canadian regulations are essential during this process.

This guide outlines what board members of Canadian charities and nonprofits should leave behind upon resignation to avoid disruptions in operations and ensure legal compliance.

1. Why Is Proper Transition Important in Canadian Charities and Nonprofits?

Charities and nonprofits in Canada often operate on tight budgets and with limited staff. Board members are critical to the governance of these organizations, so any gap in leadership or institutional knowledge can lead to setbacks.

A proper transition ensures:

• Continuity of operations.
• Preservation of institutional knowledge.
• Compliance with Canadian laws, such as the Income Tax Act for registered charities or the ONCA (Ontario Not-for-Profit Corporations Act) for Ontario-based nonprofits.

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2. Essential Documents to Leave Behind

When a board member resigns, they should ensure the following documents are accessible to the remaining board and new members:

A. Meeting Minutes

Meeting minutes are official records of board decisions and discussions. These documents provide continuity and allow the new board to understand past decisions and their rationale.

B. Financial Records

Financial records, including budgets, audit reports, and financial statements, are vital for transparency and compliance. Canadian charities, in particular, are required to keep detailed financial records for CRA reporting purposes.

C. Policies and Procedures

Charities and nonprofits operate based on a set of policies and procedures. Leaving these documents ensures the new board can adhere to established protocols for governance, fundraising, and operational management.

D. Key Correspondence

Emails, letters, and other communications related to major projects, government compliance, or donor relations must be documented and passed on.

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3. Digital Access and Technology Transition

In today’s digital world, board members often manage or oversee technology systems. Upon resignation, ensure that access to these systems is transitioned securely.

A. Shared Accounts and Passwords

Transfer access to shared email accounts, cloud storage, and CRM systems like Salesforce or HubSpot. For registered charities, ensure CRA My Account credentials are properly secured and handed over.

B. Website and Social Media Access

Social media accounts, website management tools, and fundraising platforms like CanadaHelps must be transferred. Include login credentials and instructions for usage.

C. Data and Record Storage

If your nonprofit uses platforms like Google Drive or Dropbox, ensure all files are well-organized and accessible to the next board.

4. Key Insights to Share
While documents are important, the outgoing board member’s insights and experience are invaluable. Before resigning, consider sharing the following:

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A. Unfinished Projects

Provide a status update on ongoing initiatives. Include timelines, challenges, and the next steps required.

B. Strategic Priorities

Share insights into the charity’s strategic direction, including long-term goals and any upcoming opportunities or risks.

C. Stakeholder Relationships

Document relationships with key stakeholders, including donors, volunteers, and community partners. Highlight important contacts and the nature of these relationships.

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5. Legal and Administrative Obligations in Canada
Board members of Canadian charities and nonprofits are subject to specific legal responsibilities. Upon resignation, ensure the following:

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A. Resignation Letter

Submit a formal resignation letter to the board, specifying the resignation date. This letter should be retained in the organization’s records.

B. Notify Corporations Canada and the CRA

For registered charities, update the Canada Revenue Agency (CRA) about changes in board members. This is typically done through filing Form 4006 – Changes Regarding Directors through Corporations Canada and updating the CRA via the MyBusiness or Represent a Client portals.

C. Update Provincial Registrations

If your nonprofit is provincially incorporated, update the relevant provincial registry. For example, in Ontario, the necessary changes are filed with the Ministry under the ONCA.

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6. Tips for a Smooth Transition
To further support your charity or nonprofit after your departure:

A. Conduct a Handover Meeting: Organize a meeting with remaining and incoming board members to discuss key issues and responsibilities.

B. Prepare a Transition Memo: Summarize critical information in a document for easy reference.

C. Offer Support During the Transition Period: Be available to answer questions or provide guidance if needed after your resignation.

Resigning from a charity or nonprofit board is more than a personal decision—it has implications for the entire organization. By leaving behind essential documents, providing digital access, and sharing valuable insights, outgoing board members can set their charity or nonprofit up for continued success.

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In Canada, these steps are not just best practices but critical for maintaining compliance and ensuring the organization thrives in its mission. Transitioning responsibly is the final act of stewardship every board member owes to the charity or nonprofit they serve.

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