Standard 6: Financial and Asset Management
The land trust manages its finances and assets in a responsible and accountable way.
Sound financial and asset management is critical for a land trust. Federal and provincial laws have financial reporting requirements, and financial records should be available to donors upon request. Poor financial management may jeopardize the future of the land trust and its land conservation programs. It could even lead to legal challenges against the land trust. Even a small land trust with modest revenue and expenditures should have annual budget and periodic financial reports, although the format of these may be simple. Organizations with larger budgets must follow specific reporting formats. Assuring sound financial management is one of the core responsibilities of the full board, no matter who keeps the books or prepares financial reports.
- Society Act, RSBC 1996, c. 433, s. 39, 41.
- Canada Not-for-profit Corporations Act, SC 2009, c. 23, s. 179-194.
- Society Act, RSBC 1996, c. 433.
- Canada Corporations Act, RSC 1970, c. C-32.
- Society Act, RSBC 1996, c. 433, s. 30.
I. Risk Management and Insurance
The land trust assesses its risks, develops a written risk management policy and carries liability, property, and other insurance appropriate to its risk exposure and provincial law. The land trust exercises caution before using its land to secure debt and in these circumstances takes into account any legal or implied donor restrictions on the land, the land trust's mission and protection criteria, and public relations impact.
Every land trust should regularly assess its risks and evaluate risk management options. This may involve inventorying potential hazards on and potential risks involved with uses of land trust properties, reviewing provincial liability and protective laws, setting up a procedure to document and review every injury or potential claim and decide what steps need to be taken to avoid similar events in the future, and other actions. However, the best risk assessment and management program, the best provincial recreational use statutes, and the best lawyers cannot prevent lawsuits. Thus, insurance (commercial general liability, non-owned automobile liability, property and owned assets, directors and officers, and other, as appropriate) is important for every land trust.
A risk assessment should also be conducted before a land trust considers mortgaging any of its property. In these situations, the land trust should carefully consider factors such as whether or not the land is subject to any restrictions designated by the donor or others, how the land trust’s supporters and the general public will perceive such an action, and whether it is consistent with or furthers the land trust’s mission.
A land trust, like any organization, is open to the threat of litigation and some land trusts have asked how adopting the Canadian Land Trust Standards and Practices will impact their risk of litigation. Following the guidelines contained within the Canadian Land Trust Standards and Practices could help reduce the land trust’s risk. If a land trust were involved in litigation, a court would be likely to look at the specifics of the issue at hand—for instance, if the land trust had the proper documentation or employed standard business procedures, or if the conservation agreement was, well-drafted and contained language related to estoppels and waiver of defences. If involved in litigation a land trust should always seek outside legal counsel to guide their actions.
CLTA Assessment Questions
- Does the land trust have general liability insurance?
- Does the land trust carry directors and officers (D&O) insurance?
- If the land trust uses its land to secure debt, does it carefully consider factors such as whether or not the land is subject to any restrictions, how the land trust’s supporters and the general public will perceive such an action, and whether it is consistent with or furthers the land trust’s mission?
Resources: Example Policies & Template Documents
- Fund from Outside Sources Policy - SSIC
- 6I Risk Management and Insurance - COLT (volunatry land trust)