Act II: An update on the Ontario Not-for-Profit Corporations Act

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Some 50,000 Ontarian nonprofits are still waiting eagerly for the province to proclaim the new Ontario Not-for-Profit Corporations Act (ONCA) into force after more than two years since it received royal assent at Queen’s Park.

As CharityVillage reported in July 2012, the “new” act is set to replace and update various regulations governing the province’s incorporated nonprofits that currently exist under the now 60-year-old, and some say outdated, Ontario Corporations Act (OCA).

Initially scheduled for proclamation on January 1, 2013, the announcement was pushed back to July 2013 after much consultation with the government’s sector partners, many of whom felt a certain amount of trepidation about what the changes to the laws might mean for them.

As of this week, the July proclamation date remains just a suggestion and could well change yet again.

So why still all the fuss?

Meet the new boss; same as the old boss?

Ontario’s ruling Liberal party recently saw a changeover in leadership, with former Premier Dalton McGuinty - under whom the ONCA was drafted and passed into law – being replaced by new Premier Kathleen Wynne earlier this year. This fact alone helps partly explain why the government’s Ministry of Community Services, the body that will administer the new act, is sounding less resolved about its insistence last July to CharityVillage about the firmness of the July proclamation date and its then-unwillingness to contemplate any further changes to the act.

At the time, Bryan Leblanc, a spokesperson for the ministry, told CharityVillage that fears from the sector were unfounded; in particular, allegations from the Ontario Nonprofit Network (ONN) that charged wording in the new act could potentially debilitate nonprofit boards by allowing any member of a nonprofit to have voting rights on all board decisions, thereby creating the potential for “divisive proxy struggles.”

“The act doesn’t come into full force for a full three years [after proclamation]. If there’s a need for action, we’ll take action. But we don’t think it’s in the public interest to delay implementation,” Leblanc said at the time, noting that the ONN had been involved with the discussions and consultations around the drafting of the ONCA since 2008 and insinuating the network knew that organizations would have ample time to adjust to new regulations during the phase-in period.

But that was then. When contacted last week, both sides backed off the mild hostilities of last summer, and have since begun working together to figure out the potential obstacles and issues that the act might create once proclaimed.

In January, an “implementation steering committee” was struck to further investigate the act prior to it coming into force. The team is co-chaired by members of both the ONN and the Ministry of Community Services.

“We are not contemplating making any amendments to the ONCA before proclamation, which is planned for July 1, 2013,” Leblanc said. “However, following discussions with ONN in the fall of 2012, MCS agreed to work with ONN on [the committee], to advise on implementation tools for the sector and to monitor implementation. This committee will examine possible post-proclamation amendments as part of the implementation monitoring.”

Lynn Eakin, ONN’s policy advisor, would not comment on the exact discussions during the initial committee meeting, referring CharityVillage to her organization’s website for information on where the matter stands and saying only that matters were currently “in flux” but that she was “very pleased at the progress” the steering committee has made.

According to the group’s website, the joint committee will “identify transition needs of organizations, make recommendations on appropriate tools and resources to deliver on those needs, including potential investing, and establish a monitoring process of the transition to identify possible amendments, among other duties.”

Aside from the ONN, nonprofits on the committee are represented by Jennifer Holmes-Weier from YMCA- Ontario, Rob Black of the Rural Ontario Institute, Mario Calla of COSTI- Immigrant Services, Margarita Mendes from Nellies Women’s Shelter, Sport Alliance Ontario’s Holly Graham, and Pat Bradley of the Ontario Arts Council.

Panic is a mug’s game

Despite much apprehension in the sector about what the ONCA will mean for the daily functioning of nonprofits, charity lawyer Mark Blumberg urges sector organizations to come down off heightened alert and embrace the new act as a significant improvement over the regulatory system.

He and fellow Blumbergs charity lawyer Kate Robertson penned an excellent briefing for the sector in January titled Governance Changes and the New Ontario Not-for-Profit Corporations Act (ONCA). It’s full of intelligent analysis about the potential ramifications of the laws, and it also urges nonprofits to take a Zen-like approach to the matter.

“The implementation of the ONCA will provide a good opportunity for Ontario nonprofit corporations to assess their governance practices and make changes,” the authors write. “While three years is not an eternity, it is until mid-2016 and does provide an organization with ample time to ensure they are in compliance with the ONCA.”

However, Blumberg and Robertson also balance their exhortations to the nonprofit community with a call on the government to finally provide long-anticipated formal guidance on what it expects organizations to do.

“In order for a nonprofit to understand...how much their organization will be impacted by the ONCA, they will need to wait for the Ontario government to release certain documents including the following:

a) A simplified plain language guide to the ONCA;

b) Regulations covering various matters;

c) Forms that will need to be completed;

d) A draft default By-Law; and

e) A Nonprofit Incorporators Handbook."

Additionally, they write, it’s nonsensical for nonprofits to “jump into the intricacies of the ONCA at this point in time with so much information still outstanding. Having a discussion with only 70% of the information available is a recipe for frustration.”

That said, Blumberg and Robertson suggest 13 ways a nonprofit can improve its governance structure now that would likely align it more closely with what will be expected once the ONCA is proclaimed.

Among the items listed are finding out whether your nonprofit is incorporated as a provincial or federal institution (federally incorporated nonprofits will not be affected by the ONCA changes); ensuring your nonprofit has copies of its letters patent, supplementary letters patent and by-laws for the organization, as well as a minutes book; updating the nature and purpose of your board; updating the current list of directors, officers and their contact information; and determining whether membership classes will differ under the new act.

The full Blumberg and Robertson document can be viewed here as a submission to the Ontario Trillium Foundation.

Ontario nonprofits, what do you think? Are you ready for the ONCA? What questions do you have? Are you nervous? Do you think the act will help or harm the sector?

 

Andy Levy-Ajzenkopf is president of WordLaunch professional writing services in Toronto. He can be reached at andy@wordlaunch.com.

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