In this article, the author examines dispute resolution in Canadian not-for-profit organizations, a topic of growing importance given the sector’s size, diversity, and social significance. The author begins by outlining the primary sources of conflict, including governance tensions, personnel disputes, and relational breakdowns with external stakeholders. The author then explores the legal context, including fiduciary obligations under federal and provincial nonprofit statutes, the limits of regulatory oversight, and the challenges posed by weak or outdated bylaws.
This article examines dispute resolution within Canadian not-for-profit organizations (NPOs), a critical but underexplored topic. Nonprofits play a vital role in society by delivering essential social services, cultural programming, environmental stewardship, religious practice, advocacy, and community development. Globally, the nonprofit sector is extensive, comprising over 10 million organizations. The United States alone is home to more than 1.5 million registered nonprofits, while the United Kingdom maintains hundreds of thousands. In Canada, approximately 200,000 registered charities and nonprofits contribute to the public good. Despite this prevalence and societal importance, the topic of dispute resolution in the nonprofit context remains underrepresented in both legal scholarship and organizational practice. Albeit, the topic of dispute resolution in the nonprofit context remains underrepresented in both legal scholarship and organizational practice.[1] This is so confirmed by me via personal correspondence in 2023 with the staff lawyer of the Ontario Nonprofit Network that there is absence of dedicated dispute resolution services or guidance. It further illustrates the gap in sectoral support.
Not-for-profits vary widely in size and complexity, from informal volunteer collectives to professionally staffed, multimillion-dollar organizations. Larger nonprofits—those with budgets exceeding $1 million and typically employing at least 15 full-time staff—are more likely to have internal legal counsel and structured governance practices. However, the vast majority operate with lean resources and may lack access to formal legal or dispute resolution services. This article focuses on the Canadian context while drawing comparative insights from other Anglo-American legal jurisdictions. It explores common sources of conflict, the relevant legal and structural frameworks, current dispute resolution practices, and reform proposals. The aim is to enhance understanding and provide a foundation for developing more robust, mission-aligned approaches to conflict in the nonprofit sector.
Sources and Types of Disputes in NPOs
Disputes within nonprofit organizations can arise from a range of relationships and operational contexts. Internal conflicts are especially prevalent, often emerging among board members, between boards and executive directors, or among staff. Governance-related disputes are particularly common, including disagreements over strategic direction, financial oversight, leadership succession, and compliance with legal or organizational mandates. Conflicts between board members and officers—such as executive directors—often reflect differing views on operational autonomy versus board oversight. These tensions may escalate when expectations are unclear or communication is poor.
Personnel-related conflicts are another frequent source of disruption. These may involve disputes between paid staff and volunteers, performance disagreements, allegations of harassment or discrimination, or disputes over working conditions. In organizations with complex volunteer structures or advisory committees, additional tensions may arise over unclear reporting lines or competing authority. Furthermore, disputes can extend beyond internal dynamics. Donors may object to fundraising practices or programmatic decisions, while community members or beneficiaries might raise concerns about equity, access, or mission drift. Conflicts may also arise with external contractors, partner organizations, or funding agencies—particularly where accountability and deliverables are contested.
Case studies from religious and ethnocultural nonprofits in Canada—such as Sikh[2] temples, Tamil[3] temples, and Hare Krishna[4] and other communities[5]—demonstrate the multifaceted nature of disputes. These conflicts often involve both governance disagreements and identity-based tensions, making resolution particularly complex. Courts have occasionally intervened in such disputes, but with caution, especially when the conflict implicates religious doctrine or community leadership norms. These examples illustrate the wide range of dispute types and the importance of context-specific approaches to conflict management in the nonprofit sector.
Legal and Structural Context
Canadian NPOs operate within a statutory framework that varies by jurisdiction. At the federal level, the Canada Not-for-Profit Corporations Act governs federally incorporated nonprofits, while provinces such as Ontario have enacted their own statutes, including the Ontario Not-for-Profit Corporations Act. These laws establish basic governance structures, define member and director roles, and offer certain remedies in cases of mismanagement or procedural failure.
A central legal concept within this framework is the fiduciary duty owed by directors and officers. These duties include the duty of loyalty, requiring directors to act in the best interests of the organization; the duty of care, obligating them to exercise due diligence and informed judgment; and the duty of obedience, mandating adherence to the organization’s purposes as stated in its governing documents. Breaches of these duties may lead to liability and, in some cases, judicial intervention.
Regulatory oversight of nonprofits in Canada is relatively limited compared to some other jurisdictions. Corporations Canada and provincial registrars primarily oversee compliance with filing and incorporation requirements. The Canada Revenue Agency supervises registered charities with respect to tax compliance and public benefit delivery but does not intervene in internal disputes unless financial misconduct or misuse of charitable resources is alleged.
In terms of remedies, Canadian courts may provide relief through orders to comply with bylaws, injunctions against improper governance actions, or, in rare cases, the removal of directors. However, courts generally avoid involvement in internal nonprofit disputes, particularly where the organization is unincorporated or operates on a voluntary basis. This judicial deference is rooted in respect for associative autonomy and the principle that internal conflicts should first be addressed through the organization’s own procedures. The Supreme Court of Canada has confirmed this reluctance to intervene, especially in the context of religious associations.[6]
The effectiveness of these statutory frameworks depends heavily on the quality and clarity of a nonprofit’s governing documents. Unfortunately, many organizations operate with outdated or vague bylaws that provide little guidance for handling internal disputes. Without clear processes, even well-intentioned boards may struggle to resolve conflicts fairly and efficiently. In Ontario, nonprofit organizations are currently required to bring their bylaws into compliance with the Ontario Not-for-Profit Corporations Act, 2010, by October 2024. While this legislative deadline aims to modernize governance documents and improve clarity around dispute resolution, there is no statutory penalty for non-compliance. Moreover, the cost of professional bylaw updating—often ranging between $2,000 and $5,000—can be prohibitive for many smaller or resource-constrained nonprofits. This financial barrier contributes to ongoing governance gaps despite regulatory intentions.[7]
Absence of Sector-Wide Dispute Resolution Mechanisms
In addition to legal and governance gaps, there is a notable absence of sector-wide infrastructure to support dispute resolution in Canadian nonprofits. Major umbrella organizations, such as the Ontario Nonprofit Network, explicitly refrain from intervening in member disputes. In correspondence with Ontario Nonprofit Network representatives, it has been confirmed that the organization does not provide conflict resolution services or advisory support for internal governance disputes. This reluctance is consistent with the decentralized and under-resourced nature of the sector but leaves many nonprofits without accessible alternatives.
Canadian courts also exercise restraint in nonprofit disputes. Unless a legal right has been clearly violated—such as the denial of membership rights under a statute or a violation of procedural fairness—courts often decline jurisdiction. This is particularly evident in religious and cultural organizations, where courts are especially cautious not to intrude upon doctrinal matters or community governance traditions.
Judicial deference can leave parties without a clear path forward, especially where bylaws are silent or governance practices are informal. This vacuum may result in prolonged conflict, reputational harm, or organizational paralysis. The lack of accessible, nonprofit-specific dispute resolution mechanisms thus represents a serious gap in Canada’s civil society infrastructure.
Current Dispute Resolution Practices in Canadian NPOs
Despite the prevalence of conflict, many Canadian not-for-profits rely heavily on informal dispute resolution practices. In smaller organizations, disputes are often addressed through direct conversation, facilitated discussions, or peer-based problem-solving. These methods align with the collaborative ethos of many nonprofits but are also susceptible to power imbalances, emotional strain, and procedural inconsistencies.
In the absence of structured procedures, board chairs or respected members may act as informal mediators. In some cases, nonprofit organizations with advisory boards or ethics committees may refer disputes to these bodies, though such arrangements are often ad hoc and lack formal authority. Peer review processes are more common in professional associations or regulated organizations but remain underutilized in the broader voluntary sector.
Formal mechanisms—such as internal complaints processes, arbitration, or litigation—are less common and typically reserved for severe or unresolved disputes. Internal complaints procedures are more likely to be found in larger organizations, particularly those with unionized staff or compliance obligations. Arbitration and mediation clauses may be included in employment contracts or collective agreements but are often absent from the bylaws themselves.
When informal methods fail, litigation may become necessary, particularly in cases involving financial misconduct, director oppression, or procedural violations. However, litigation is a last resort, given the costs, reputational damage, and resource diversion it entails. The judicial system is ill-suited to resolve the relational and values-based conflicts that often arise in nonprofit settings. Moreover, it is unclear who will bear the costs of legal proceedings, particularly when disputes involve allegations of mismanagement or require forensic audits.
One significant weakness in current practice is the failure to include conflict resolution provisions in organizational bylaws. Many bylaws address voting rights, quorum, and meetings but omit procedures for addressing complaints, handling grievances, or engaging neutral mediators. As a result, organizations are often left improvising responses to disputes without a clear roadmap.
To improve practice, a sequence of best-practice steps is recommended: initiating dialogue to de-escalate tensions, bringing the issue to the board as a motion, appointing a neutral internal committee, seeking guidance from an external consultant or mediator, issuing formal notices where fiduciary breaches are suspected, calling a general meeting to involve the membership if necessary, and protecting the dignity of all parties to avoid escalation or blame. Litigation should only follow when all other avenues have failed and with clarity on how legal costs will be funded. The overarching goal is to preserve mission focus and organizational integrity by resolving conflict constructively.
Comparative Perspectives: International Approaches to Dispute Resolution in Nonprofit Organizations
Looking beyond Canada, comparative analysis reveals a range of institutional strategies for managing nonprofit disputes. Anglo-American jurisdictions, in particular, offer instructive examples of how regulatory design, sectoral leadership, and legal culture shape dispute resolution in the not-for-profit sector.
In the United States, the nonprofit sector operates under a decentralized framework governed by state corporate laws. Although state attorneys general retain broad powers to oversee fiduciary conduct, day-to-day conflict resolution is left largely to internal governance. However, the U.S. nonprofit landscape benefits from a well-developed philanthropic ecosystem that funds governance training, board development, and leadership education. Sector bodies such as BoardSource provide extensive resources on conflict management. Yet, the litigious character of American legal culture means that disputes may still end in court, especially where significant donations, reputational interests, or leadership roles are at stake.
The United Kingdom offers a more centralized model through the Charity Commission for England and Wales, which combines oversight, guidance, and enforcement powers. The Commission has the authority to intervene in cases of governance breakdown, misuse of funds, or trustee conflict, and it promotes early resolution through formalized inquiry and decision-making procedures. UK law also emphasizes fiduciary obligations rooted in trust law, reinforcing a strong legal standard for director behavior. Moreover, charity law guidance materials explicitly address conflicts of interest, internal disputes, and procedural remedies, offering a more structured approach than is currently available in Canada.
Australia presents a hybrid model that combines federal regulation with sector-based capacity building. The Australian Charities and Not-for-Profits Commission acts as a supportive regulator, issuing governance standards, responding to complaints, and encouraging internal resolution where possible. Australia’s nonprofit governance is also shaped by culturally specific approaches, especially in Indigenous communities where relational accountability and restorative conflict resolution are emphasized. Publicly funded mediation programs and nonprofit ombuds services are available in several states, illustrating a government-supported infrastructure that complements internal governance tools.
These international examples point to several lessons for Canada.
First, regulatory support—whether through a charity commission or a sector regulator—can offer authoritative guidance and neutral dispute resolution options.
Second, internal governance frameworks must incorporate clear conflict resolution provisions in bylaws and policies.
Third, sector-wide capacity building, including leadership development and access to dispute resolution resources, is essential.
Finally, conflict resolution mechanisms should align with the values and relational culture of the nonprofit sector, emphasizing transparency, fairness, and mission alignment.
Proposals for Reform and Capacity Building
The preceding analysis highlights the urgent need to build dispute resolution capacity in Canada’s nonprofit sector. This requires action on multiple fronts: legislative reform, organizational policy enhancement, sector-wide coordination, and investment in education and research.
From a statutory perspective, the Canada Not-for-Profit Corporations Act and provincial equivalents should be amended or interpreted to encourage, if not require, the inclusion of specific dispute resolution provisions in nonprofit bylaws. These provisions could set out a graduated process beginning with dialogue, followed by internal committee review, then external mediation or arbitration, with litigation available only as a last resort. Clear legislative expectations would signal the importance of governance preparedness and create consistency across the sector.
Regulatory bodies such as Corporations Canada or provincial registrars should be given resources and a clearer mandate to provide neutral guidance and mediation services. Drawing from the Charity Commission in the United Kingdom or the Australian Charities and Not-for-Profits Commission, Canadian regulators could play a more active role in supporting dispute prevention and resolution without overstepping governance autonomy. Sector-specific alternative dispute resolution mechanisms—such as panels of trained nonprofit mediators—could also be developed under the auspices of these bodies or through public-private partnerships.
At the organizational level, nonprofits should be encouraged to revise their bylaws to include robust conflict resolution clauses. These should define the steps involved in internal grievances, set out timelines, protect against retaliation, and allow for external mediation where appropriate. Resources such as model bylaws, sample policies, and training tools should be made widely available to assist organizations in this process.[8]
Board education is another vital area. Directors, officers, and senior staff should receive training in conflict prevention, fiduciary obligations, governance norms, and interpersonal communication. These competencies are essential to spotting early signs of conflict and managing disputes in a principled, mission-focused manner. Boards should also establish designated committees—such as governance or ethics committees—to monitor internal dynamics and assist with resolving disputes when they arise.
Beyond the individual organization, the sector as a whole must develop stronger institutional infrastructure for dispute resolution. A centralized resource hub could house template policies, offer confidential advice, maintain a registry of nonprofit-competent mediators, and provide learning materials. The Ontario Nonprofit Network, Imagine Canada, or a new collaborative platform could play a convening role.
To sustain these initiatives, funders—both governmental and philanthropic—should support dispute resolution as a core element of nonprofit capacity. Grants could be directed toward pilot projects, subsidized mediation services, leadership development, and research. Emphasizing conflict resolution as a strategic investment would help normalize proactive governance practices.
Finally, ongoing research is needed to assess the prevalence of disputes, evaluate the effectiveness of interventions, and identify promising innovations. Academic institutions, think tanks, and sector partners should collaborate to build a stronger evidence base that informs policy and practice.
Conclusion
This article has examined dispute resolution in Canadian NPOs, a topic of growing importance given the sector’s size, diversity, and social significance. It began by outlining the primary sources of conflict, including governance tensions, personnel disputes, and relational breakdowns with external stakeholders. The legal context was explored, including fiduciary obligations under federal and provincial nonprofit statutes, the limits of regulatory oversight, and the challenges posed by weak or outdated bylaws.
It was noted that the sector lacks consistent, accessible mechanisms for conflict resolution, with few external supports available. Informal practices predominate, while litigation remains costly and rare. Comparative analysis with the United States, United Kingdom, and Australia revealed a spectrum of approaches that could inform Canadian reform, particularly in relation to regulatory guidance, mediation support, and sector-wide capacity building.
In response to these challenges, the article offered a set of proposals to strengthen dispute resolution in the nonprofit sector. These include statutory reform, governance enhancements, sector coordination, leadership education, and targeted funding. Together, these measures would help organizations address conflict constructively, reduce reputational and operational risks, and uphold the trust placed in them by communities and stakeholders.
While this article has delineated key issues and recommendations, it also acknowledges the need for further empirical research. Understanding how conflicts arise, are experienced, and are resolved across different organizational contexts will be critical to refining future interventions. Nevertheless, by synthesizing current knowledge and proposing a reform agenda, this article contributes meaningfully to the growing scholarly and practical discourse on nonprofit governance in Canada. It affirms that effective dispute resolution is not merely a technical challenge but a foundational element of healthy, accountable, and mission-driven organizations.
[1] S.D. Phillips, “Dissecting the Governance Discourse: What’s In a ‘Governance’ Approach?,” in The Nonprofit Sector in Canada: Roles and Relationships, ed. K. Brock, 103-38 (McGill-Queen’s University Press, 2006); T.S. Carter & T.W. Man, “Directors and Officers of Charities: Duties, Liabilities and Protections” (Carters Professional Corporation, 2019); T.H. Jeavons, “When the Management Is the Message: Relating Values to Management Practice in Nonprofit Organizations,” Nonprofit Management & Leadership, 2(4), 403-17 (1992).
[2] Sandhu v. Siri Guru Nanak Sikh Gurdwara, 2015 ONSC 2839 (Ontario Superior Court of Justice).
[3] Arumugam v. Canadian Tamil Congress, 2018 ONSC 5432.
[4] International Society for Krishna Consciousness (ISKCON) v. Mukunda, 1993 ABCA 341 (Alberta Court of Appeal).
[5] Highwood Congregation of Jehovah’s Witnesses (Judicial Committee) v. Wall, 2018 SCC 26 (Supreme Court of Canada); Aman v. Federation of Muslim Women’s Associations in Canada, 2006 BCSC 1324 (British Columbia Supreme Court).
[6] Highwood Congregation of Jehovah’s Witnesses (Judicial Committee) v. Wall, 2018 SCC 26. In this case, the Supreme Court of Canada emphasized judicial restraint in intervening in internal disputes within religious organizations, particularly where those disputes implicate doctrinal or governance matters intrinsic to religious freedom and associative autonomy. The court recognized that courts should avoid entangling themselves in religious governance conflicts unless there is a clear legal or procedural breach that warrants intervention.
[7] Ontario Nonprofit Network, 2023; Ministry of Government and Consumer Services, 2023.
[8] Imagine Canada (2015). Standards Program Handbook.