Are non-profit organizations (NPOs) left to their own devices in Quebec? In the event of internal bickering or abuse of power by the leaders, the absence of effective recourse is noticed on the ground. Some point to imprecise rules and an “obsolete” law that would benefit from being modernized, in particular to prevent conflicts.
Quebec NPOs are everywhere, and touch our lives in a multitude of ways. While they are often associated with the community, some are dedicated to affordable housing, environmental protection, and even various sports and recreation.
When things are going well, these organizations achieve great things. But when the fire is caught internally, some say the law can be easily flouted and there is no way to enforce one’s rights except by going to court — a costly decision for mere volunteers.
” THE [organisations sans but lucratif], they can be excessively efficient, and it can work wonders. But it can be a shell filled with fraud and bad intentions,” explains Stéphane Parent, Executive Director of Espace OBNL, an organization dedicated to training managers and disseminating knowledge. According to him, the worst are the private NPOs, without employees or government funding, because they “have fewer structures”.
When the fire is caught
Recent cases have highlighted conflicts that could shake them, such as the governance crisis at the Montreal Museum of Fine Arts or the sale to private interests of Faubourg Mena’Sen, an affordable housing complex for seniors in Sherbrooke. . Tenants have brought a class action, in particular to have the transaction canceled, and claim that the directors of the NPO have appropriated the proceeds of the sale, some 18 million.
The duty also met with former members of the Lower Canada Gun Collectors Association, Jean Forest and Yves Boies. Fearing breaches of the law and mismanagement by the board of directors, they claim to have asked for explanations as early as 2019, as well as to see the books and records of the NPO.
The association refused: it maintained in its response, a lawyer’s letter, that it did not have a registered office where these registers could be consulted.
The two members report having then asked the Board – with others – to organize an extraordinary general meeting. Another refusal. The board has “done everything within the rules”, declared the current president, Agathe Émond, who adds that their accusations are “completely unfounded”. In any case, there were not the number of signatures required for the CA to be required to convene it, says the one who was administrator at the time, because some of the signatories were no longer members, for lack of having renewed their membership. The board suggested that they wait for the annual general meeting (AGM) to make their grievances known.
The two men wonder how they could have known that signatories were no longer in good standing, since they were denied access to the list of members. Mme Émond explains that the law prevents him from disseminating members’ personal information. Some of the experts consulted by The duty prove him right.
The two men then convened the extraordinary assembly themselves. Except Mr. Forest was suspended before it was held and eventually they were both expelled before the AGM.
Unacceptable, said Normand Gilbert, a former trainer from the Center St-Pierre, now retired, who worked in the community world for 40 years. He reports having seen during his career many conflicts undermine organizations, he who accompanied the two men in their efforts.
For its part, the CA reproaches MM. Forest and Boies of harmful behavior, and deduces that their goal was to take the reins of the association: as proof, he points out that the special assembly had among its objectives the replacement of each of the members of the Board.
A similar conflict has pitted members of the Polish-Canadian Mutual Aid Society and some of its leaders, who have been accused of running the Quebec NPO as their personal property. Three lawsuits have been filed, on both sides of the dispute — one is still ongoing. There are various allegations, including that directors are hiding financial statements and membership lists, and that a man who protested these ways was expelled. The leaders, they believe that it is the protesting members who harm the organization and that they declared themselves elected without right.
According to the lawyer specializing in commercial litigation and governance, Ms.e Karine Chênevert, many conflicts arise when members have a “different vision” of how the organization should achieve its mission.
Sometimes board members take over as if the organization were their own, but she’s also seen well-run nonprofits with competent boards struggling with “members who challenge everything”. “It’s going on both sides,” summarizes the lawyer firm Borden Ladner Gervais, who teaches at the College of Administrators.
Remedies?
The members have little power, recognizes Me Holm oak. “Their major power remains that of electing and dismissing directors. »
Part III of the Companies Act governs Quebec NPOs.
And there is “almost no recourse,” adds Stéphane Parent, of Espace OBNL.
“And those that exist are complicated and expensive, drop Me Patrice Blais, a lawyer who specializes in this area in particular. It is a law that has no teeth. Dating from 1964, it is “totally obsolete”, he says.
To obtain the books and registers, or to contest his expulsion, it is possible to bring an application for an injunction. Another possibility is to ask the Superior Court to review the legality of the actions taken by the CA. “But it’s difficult and very expensive,” says Me Blais. He reminds that the members are volunteers. Who wants to spend $8000 to see records? he asks. For this reason, few disputes end up in court.
When things are going badly, is it possible to ask the Registraire des entreprises to launch an inspection on an NPO, a power provided for in the law?
“Good luck,” replied M. laconically.e Blais.
After verification, the Registrar has not conducted any investigation on an NPO in the past 20 years. And if he ever makes one, he will demand a bond — a sum of money — from those who ask for it. “These fees can be high, depending on the complexity of the inspection,” says the organization. The mechanism is little used, he admits in an email, noting “that the current trend is to entrust the powers of inspection to the courts”.
“It doesn’t make sense,” criticizes Mr. Gilbert.
Ignorance, not abuse
According to Normand Gilbert, the majority of NPOs are doing very well. When mistakes are made, it’s more often because volunteers lack knowledge, not out of bad faith, he says, adding, however, that he has seen “extreme cases” of fraud, scheming and abuse of power.
Mr. Parent agrees. For him, the number one problem is training. He says he has seen officials unable to read financial statements!
For his part, Mr. Gilbert believes that there should be at least one control mechanism, including an obligation to reconcile and a sort of “community ombudsman”. He is of the opinion that the law should be amended to limit abuses and better supervise associative life. A new legislative version could provide, for example, that an association cannot expel a member who has signed a request for an extraordinary meeting.
But the government is not interested in NPOs, he laments.
Pretty much everyone is hoping for, or has already called for, law reform, says Parent. One question remains unanswered, according to him: how to give it teeth without creating an overly rigid structure that could deprive NPOs of the leeway necessary for their mission?
The federal law on NPOs has been updated, but that of Quebec has barely been touched up since its creation.
But a reform of the law does not seem to be in the short-term cards of the Minister of Finance, responsible for NPOs. “We are analyzing the situation to assess whether changes are possible and desirable,” said Eric Girard’s office by email.
The law could be simpler, easier to understand, judge Me Chênevert, especially for those who do not have a lawyer to advise them. Moreover, interviewed by The duty on the obligations of the CA, several experts were not of the same opinion.
Stéphane Parent believes that a good part of the key lies in the hands of funders, who can notably promote training, for example by giving money to organizations whose leaders have taken training in governance. In addition, NPOs that receive public money are subject to additional accountability requirements.
In the world of sport, a code of governance has been imposed on NPOs that receive public funding. “It’s a first exploration,” says Mr. Parent. Will this work? We will see it in the long term. »