|
|
|||||
|
|||||
| Path: Main Street : NewsWeek : Archive : Cover Stories : Article |
This is an archive of CharityVillage NewsWeek.
To find a word on the page, use your browser's "find" feature (CTRL-F or CMD-F).
Please note: While we ensure that all links and e-mail addresses are accurate at their publishing date, the quick-changing nature of the web means that some links to other web sites and e-mail addresses may no longer be accurate.
To view other articles in the archive, use our Chronological Index.
Financial Accountability and Ontario's Bill 25: It's a Hobson's Choice for Ontario Charities
By Terrance Carter
August 30, 1999This article appeared previously in Canadian FundRaiser
Many Charities have been left in an uncertain position by some of the more problematic aspects of Ontario's Bill 25, which amends the investment power provision of the province's Trustee Act. Proclaimed in force as of July 1, Bill 25 limits the authority of trustees to delegate investment decision-making solely to the area of mutual funds, which is not a defined term. Most large charities, however, draw on the services of investment brokers not only to advise on investment policy but also to make regular routine buy-sell decisions independently within the agreed discretionary investment policy.
Charities that, for practical reasons, feel they must continue to delegate their investment decisions would be well advised to build as many terms of reference and directions as possible into their investment policies. This will increase the chances that the directors or trustees of a charity would be able, if challenged, to argue that their reliance on investment brokers for routine investment decision-making was done in accordance with the reasonable expectations of a 'prudent investor', rather than as an unauthorized delegation of their investment decision-making power.
It remains hard to tell, nonetheless, at what point the delegation of routine investment decision-making power becomes unauthorized. Ideally then, charities should avoid delegating investment decision-making altogether, or if they feel they must do so, they should work very closely with their investment broker and legal counsel to develop an investment policy that evidences 'due diligence' in setting up and maintaining a 'reasonable and prudent' investment portfolio.
The fact remains, however, that only by following the former course of action -- i.e. retaining all investment decision-making within the board -- can a director or trustee ensure that they are not in violation of this aspect of Bill 25. And until this matter is dealt with by the courts, the issue of delegation of investment decision-making by charity boards will remain unsettled, leaving many charities in a vulnerable situation.
Terrance Carter is a partner in Wardlaw, Mullin, Carter & Thwaites, 235 Broadway Ave, P. O. Box 67, Orangeville, Ontario L9W 2Z5. Telephone (519) 941-1760, fax (519) 941-3688, www.wardlaw.on.ca.
|
|||
