Tenants on the board: benefits and challenges
Many non-profit housing providers consider having tenants on the board to be invaluable for the health of their organization. Some organizations may be considering including tenants on their board but are unsure about potential liabilities or conflicts of interest. There are many benefits to tenant participation, but your organization must be prepared to properly integrate tenant and non-tenant board members. Read on to learn more about how to start planning for a tenant presence on your board.
Benefits of including tenants on your board
Best practice for board recruitment and succession planning involves ensuring a good amount of diversity in terms of experience and background. Engaging with tenants helps bring a different perspective to your board. Benefits of having tenant board members include:
- giving tenants a voice on issues that directly affect them
- giving tenants and non-tenants the opportunity to work together
- broadening the board’s perspective
- bringing a new pool of committed volunteers
Common misconceptions about tenants on the board
Having tenants on the board creates a conflict of interest
This is a common concern, but non-profits usually find that tenant board members have a vested interest in the long-term sustainability of the organization. While tenants might need to declare a conflict of interest if they or their unit was to receive special treatment, you can address this risk by building out your board orientation program to help board members more proactively identify and declare conflicts of interest and by strictly enforcing conflict of interest policies.
Having tenants on the board increases the risk of a confidentiality breach
Tenants are beholden to confidentiality just the same as the other directors and present no greater risk for a confidentiality breach. To ensure clarity regarding confidential items, the chair should announce when an item is confidential and consider whether tenants’ names are necessary when reviewing items such as rent arrears.
Tenant directors don’t represent all tenants
While this might be the case, tenant board members likely have more insight into the issues facing tenants than a non-tenant board member would. Non-tenant board members, unless they are also a member of municipal council, are also not expected to represent the will of the larger community while serving on the board.
Tenant board members complicate board liability
In this regard, tenant board members are no different from their non-tenant counterparts. All board members have ‘limited liability’ meaning that the non-profit corporation as a whole, not the individual directors, is liable for most decisions. Individual directors can be held personally liable for:
- conflict of interest
- for not acting “honestly, in good faith, in the best interest of the corporation, or with the degree of care, diligence and skill that a reasonably prudent person would use in similar circumstances”
- not submitting employee deductions that have been taken from salaries
- employee wages and vacation pay if the corporation goes bankrupt
Non-profits can buy insurance to protect its directors except in cases of dishonesty. Sometimes directors must pay a portion of the insurance premium themselves, but it is usually not more than $10/year.
ONPHA strongly suggests that non-profits check their current insurance for exclusions related to COVID-19 as individual board members are at higher risk of liability for COVID-19-related claims due to the gap in coverage. ONPHA is advocating for Good Samaritan protection for non-profits who are following public health advice to limit their liability in the event of claims related to the pandemic.
Tips for including tenants on the board
If your organization is looking to recruit tenant board members, make sure you implement the following practices:
- Clarify the role of tenant board members regarding their accountability to, and relationship with their fellow tenants
- Think about the practical obstacles tenants might face (babysitting, transportation) and ways your board can help them overcome these issues
- Set up governance structures, such as committees and working groups, that encourage tenants to participate and help give them the knowledge and confidence to join the board
- Decide on a transparent, consistent method for selecting tenant board members
- Ensure there are enough tenant candidates for the board
- Make sure voters get to know the candidates
- Establish a comprehensive orientation process for tenant board members
- Strictly enforce your organization’s conflict of interest policy for all board members.
In light of restrictions due to COVID-19, consider establishing an online method of engaging with tenants for board selection. Check out Virtual AGMs: what you need to know right here on the blog for tips on running governance activities online.
Bringing on tenant board members can seem a bit daunting if your organization is new to the idea, but the benefits in having a board with diverse experience, directors with a vested interest in the health of your non-profit, and the opportunities to create an active, engaged tenant community can make the effort well worth it.
Questions about tenants on the board or other governance issues? Check out our library of governance resources (note: you must be an ONPHA Housing Member and signed in to your online profile to view) or contact us at email@example.com. We’re always happy to hear from you, and to help!