The Microboard Legal Structure

The Microboard Legal Structure: Plain-Language Guide for Families and Allies

A microboard is a small, person-focused board of directors—family, friends, and trusted allies—formed to steward one person’s life plans with clear governance, transparency, and staying power. This article explains the legal building blocks so you can choose a structure that fits your goals and your jurisdiction. It’s practical guidance, not legal advice; always check local laws.

What “legal structure” actually means

Your legal structure determines:

• Who is responsible (and to whom).

• How decisions are made (and documented).

• Who can hold funds and sign contracts.

• What compliance obligations you have (filings, taxes, reporting).

• How you protect the person, members, and assets (liability and insurance).

Microboards typically choose from four pathways. You can start simple and evolve as needs grow.

Four common pathways (choose one to start)

1) Unincorporated Association (informal, fastest to launch)

• What it is: A group that operates by written agreements (charter + bylaws) without forming a separate legal entity.

• Good for: Pilots, very small budgets, early coordination with a Circle of Care.

• Pros: Fast, free/low-cost, minimal paperwork.

• Cons: Limited ability to hold a bank account or contracts; members may have personal liability exposure; fewer grant options.

2) Nonprofit Corporation / Society (most common for microboards)

• What it is: A standalone legal entity under your province/state’s nonprofit or societies act.

• Good for: Handling funds, entering service agreements, buying insurance, applying for grants.

• Pros: Limited liability, clear governance, bank account in the org’s name, credibility with partners.

• Cons: Incorporation fees and ongoing filings; basic corporate housekeeping required (minutes, registers, annual returns).

3) Fiscal Sponsorship (operate “under the umbrella” of an existing nonprofit)

• What it is: A larger nonprofit hosts your microboard’s program, holding funds and providing back-office support.

• Good for: Interim solution while you incorporate; small teams that want compliance support.

• Pros: Immediate access to banking/receipting (if sponsor is a charity), established policies, reduced admin.

• Cons: Fees, slower decision cycles, you must follow the sponsor’s policies and branding rules.

4) Charity Registration (optional, only if you need charitable receipting)

• What it is: A regulatory designation layered on a nonprofit corporation (e.g., CRA/IRS charity).

• Good for: When you will fundraise from donors who need tax receipts.

• Pros: Access to charitable grants and receipting.

• Cons: Stricter purposes, limits on activities, complex filings and controls; often not necessary for person-directed microboards funded via supports budgets.

Practical tip: Many microboards incorporate as a nonprofit first, then consider fiscal sponsorship or charitable status only if a clear funding strategy requires it.

Core governance duties (what directors must do)

Regardless of structure, board members (directors) owe three universal duties:

1. Duty of Care: Be prepared, ask questions, rely on credible information, keep good records.

2. Duty of Loyalty: Put the person’s interests first; manage conflicts; no private benefit.

3. Duty of Obedience: Follow your governing documents and applicable laws; act within your mission.

Make these duties real by adopting simple policies: conflict of interest, consent & privacy, financial controls, and records retention.

The documents you need (lightweight, but real)

1. Charter (1 page): Purpose, values, decision principles, 12-month priorities.

2. Bylaws (10–15 clauses): Roles, quorum, decision rules, conflicts, meetings, records, banking, succession.

3. Consent & Privacy Framework: Who can see what; how access is granted/revoked; where data lives; sharing with the Circle of Care.

4. Financial Controls: Spending limits, dual approvals, reimbursement rules, budget/report cadence.

5. Meeting Pack: Agenda, minutes template, decisions log, action register, dashboard.

Keep everything in a single, access-controlled folder with consistent file names. Publish minutes within 7 days.

Forming an incorporated microboard (typical steps)

1. Name & purpose check: Confirm your name is available and your purpose fits local nonprofit rules.

2. Draft articles/constitution + bylaws: Keep them plain-language but complete.

3. Appoint initial directors & officers: Chair, Secretary, Treasurer, Guardian of Values.

4. File incorporation: Province/state registry (and national if required).

5. Get tax/registry numbers: Business Number/EIN; sales tax if applicable (usually not needed).

6. Open bank account: Bring incorporation papers, board resolution, and ID.

7. Adopt policies: Conflicts, privacy & consent, financial controls, signing authority.

8. Insurance: Director & Officer (D&O) liability; consider general liability if sponsoring activities.

9. Operational kickoff: Approve the person-centered plans, budget, meeting calendar, and reporting rhythm.

Money: holding, spending, and proving impact

• Budget by plan area: Health & wellness, communication, life skills, community, work skills, transport, equipment, coaching, contingency.

• Approvals: Board approves annual budget; Chair/Treasurer can authorize small variances; escalate bigger changes.

• Controls: Two signatures (or one signer + documented email approval) for payments above a threshold.

• Reporting: Simple monthly snapshot—spend vs. plan, outcomes dashboard, issues & recommendations.

• Documentation: Keep receipts, service agreements, and timesheets (if relevant) for 7 years or as your jurisdiction requires.

People: volunteers, contractors, or employees?

Be clear about relationships—regulators and insurers will be.

• Volunteers: No wages; covered by volunteer policies and waivers; minimal control.

• Independent Contractors: Written agreement, defined deliverables, invoices; you don’t control day-to-day methods.

• Employees: You set hours, duties, supervision; payroll obligations apply.

When in doubt: Get advice. Misclassification is a common (and costly) risk. If you manage daily shifts and supervision, you may have an employment relationship.

Privacy, consent, and data sharing

• Plain-language consent: The person (or legal decision-maker) authorizes what information can be shared with whom and why.

• Need-to-know access: Limit folders and files based on role (board vs. Circle of Care).

• Secure storage: Encrypted cloud drive; avoid sending sensitive details by email—share links instead.

• Review cadence: Re-confirm consents and access lists quarterly.

Insurance: right-sizing your protection

• D&O (Directors & Officers) Liability: Protects board members from governance-related claims.

• Commercial General Liability: Covers bodily injury/property damage related to activities.

• Professional Liability: If you contract professional services.

• Cyber/Privacy Rider: If handling sensitive data.

Ask an insurance broker experienced with nonprofits; bring your charter and planned activities.

Compliance calendar (sample)

• Monthly: Minutes + action log, budget vs. actual, dashboard.

• Quarterly: Conflict-of-interest declarations; privacy/consent review; risk check.

• Annually: File annual return; board elections; bylaw review; approve next budget; insurance renewal.

• As needed: Update signing authorities; onboard/offboard directors; amend policies.

When to get legal/accounting help

• Incorporating or amending bylaws

• Entering funding/service agreements

• Hiring staff or managing terminations

• Applying for charitable status or issuing tax receipts

• Purchasing/leasing property or vehicles

• Managing serious incidents, investigations, or complaints

Targeted, time-boxed advice early often saves money and stress later.

FAQs (fast answers)

Do we need to be a charity?No. Most microboards do not need charitable status unless donor receipting is central to your funding.

Can we start informal and incorporate later?Yes. Begin as an unincorporated association, then incorporate once you handle funds or need insurance/grants.

How many directors?Small and nimble: typically 3–7. Enough diversity to cover skills; few enough to act quickly.

What’s the difference between microboard and Circle of Care?Microboard = governance and stewardship (why/what).Circle of Care = day-to-day coordination (how).

Bottom line

Choose the simplest structure that safely lets you do the work—and evolve as needs grow. For many, that means starting informally to prove the model, then incorporating as a nonprofit to hold funds, buy insurance, and document accountability. With clear duties, lightweight policies, and a steady compliance rhythm, your microboard will have the legal backbone to keep the person’s life—and voice—at the center for the long term.