First is the formal legislative framework of the organization. This is the area of an organization’s governance system that is most difficult to modify. Among the foundation and core documents that comprise this framework is the legislation under which it was created – be it the Canada Corporations Act, an equivalent provincial statute or relevant government legislation. Also included here are the by-laws that are particular to each organization. Most often, by-laws require a vote of the membership at an Annual General Meeting to change.

The second element of the governance framework is the series of policies that a Board may decide to adopt to define in more detail how it will carry out its responsibilities, and the general rules under which it will operate. This part of the governance framework is easier to change than the formal by-laws or legal mandate of the organization.

Usually a board can change policies without reference to either the government or the membership. There is a range of possibilities for boards when it comes to adopting policies. For examples of the kinds of policies a board may adopt, click here. Some boards may get by with very few such policies. Other boards find it necessary to have a broad range of policies, reflecting the size and complexity of the organization (a hospital, for example).

“Informal governance” refers to traditions, organizational values, founding principles and culture that are typically unwritten but that nonetheless prevail in the organization. In practice, a great deal of what happens in governance falls in this area. Informal governance may include things such as how conflicts are managed, how succession planning takes place, decision-making styles, and how the board actually conducts itself in relationship to the organization’s statement of values (if it has one) or code of conduct.

Here are some things to keep in mind when designing a governance framework or seeking to improve an existing one. The board as a whole should have a good understanding of its role and the tasks it needs to perform. These tasks include setting the board agenda, ensuring financial health and monitoring the performance of the organization as a whole and that of the CEO or Executive Director. Other important tasks of the board include establishing the mission and planning for the future, financial and human resources stewardship, and risk management. There also needs to be a clear understanding of the relationship between board and staff. This can be fostered by clear job descriptions for board members and the CEO or Executive Director.