Fiduciary Responsibility & Good Governance

1. Fiduciary Responsibility & Good Governance Presentation to the College Student Alliance Wednesday, May 8, 2013 Bonnie St. George, Hons B.A., M.A., B. Ed. Durham College

2. What is Governance? • Governance is a system of checks and balances in an organization. • A governance framework is designed to restrain acts of harm and promote acts that benefit the principals or shareholders/beneficiaries. • Bylaws document this system.

3. Student Governance: Power and Trust • Through a democratic election, students delegated to you the authority to exercise power; you serve on behalf of other people. • Your job is to ensure the organization does what it is supposed to do. You make decisions to run the corporation and allocate the resources it produces. • Accountability means you answer to, satisfy and maintain the support of your student body because it grants you a mandate to govern. • Most Board fights will be about governance.

4. Principles of Good Student Governance: • Boards are responsible for increasing student value. • Boards delegate operations to management. • Management is accountable to the Board. • Students are the source of a Board’s legitimacy and power. Board members have a fiduciary duty to their students.

5. Fiduciary Duty • Defined: the legal duty to act honestly, selflessly and in the best interests of an individual or organization. • Unconditional loyalty is expected because discretion exists. • People in positions of trust should not personally gain from the power, position or opportunities that arise as a result without consent. • Presumes confidence and competence of the fiduciary and a vulnerability in the principal .

6. Examples of Fiduciary Duty Common examples of fiduciary relationships: • Doctor – patient • Lawyer – client • Parent – child • Executors – heirs • Guardian – ward • Teacher – student • Priest – parishioner • Director - corporation

7. Conflict of Interest • Defined: a situation in which a person has a private or personal interest sufficient to appear to influence the objective exercise of his or her duties/responsibilities. Potential conflicts for those in student associations: • Contracting out services • Spending on initiatives • Advocacy for individuals or small groups of students • Nepotism • Governance • Re-election

8. Breaches in Fiduciary Duty • Breaches are hard to identify – what is unethical or immoral is subjective. • Breaches can be errors of omission. • Financial breaches include kickbacks, commissions, discounts, bribes. • Breaches can be litigated and are compensable.

9. Breaches – Student Government • Circumstances on student boards that can lead to a breach of fiduciary duty: : lack of experience or knowledge of governance : “willful blindness” and/or malicious intent : under-estimating the impact of decisions : group-think or peer pressure environments : lack of processes to identify and address conflicts of interest before they occur

10. Embedding Fiduciary Best Practices • Ongoing education of board members on their responsibilities to act professionally and in the best interests of the organization. • Ensure “Declaration of Conflict of Interest” is a standing agenda item. • Publish meeting agendas publicly, ahead of time. • Use in-camera time sparingly. • Create clear policies, procedures, codes of conduct and/or attestations. • Ensure by-laws clearly address how to handle breaches of fiduciary duty. • Seek out advice. • Communicate and be transparent in your dealings (the “Toronto Star” test).

11. Questions