Board Accountability When a Non-Profit Becomes Insolvent

Bridgewater Community Foundation, a non-profit society based in Red Deer, Alberta, continued authorizing expenditures for 3 months after its September 2023 audited financials confirmed insolvency. By December 2023, the organization faced $340,000 in unpaid obligations, with its largest creditor demanding immediate repayment and threatening personal liability claims against individual board members.

The remaining 4 directors are now in dispute over whether to file under the Bankruptcy and Insolvency Act or pursue voluntary dissolution under the Societies Act. A former director has alleged that $85,000 in restricted grant funds was improperly redirected to cover operating deficits, that no special general meeting was convened before the board resolved to wind down operations, and that minute books and corporate records have not been preserved as required by the society's governing documents. The board faces urgent questions about fiduciary accountability, proper dissolution procedure, and director exposure.