Can an Ontario not-for-profit corporation indemnify its directors and buy D&O insurance?

Yes. ONCA permits an Ontario not-for-profit corporation to indemnify its directors and officers against liabilities and costs they incur in connection with acting for the corporation, provided the director or officer acted honestly and in good faith with a view to the corporation's best interests — indemnification is not available to protect someone who acted dishonestly or in bad faith. The corporation can also purchase directors' and officers' (D&O) liability insurance to cover these exposures, which is common practice even among small volunteer-run organizations.

This matters because not-for-profit directors face real personal liability exposure despite usually serving as unpaid volunteers. Indemnification provisions in the by-laws and a D&O policy work together: the by-laws set out the corporation's promise to stand behind its directors, and the insurance provides the practical funding to make that promise meaningful if a claim actually arises.

Organizations recruiting volunteer directors — particularly for roles with real financial or regulatory responsibility, like treasurer or board chair — should be able to tell prospective directors clearly whether indemnification is in the by-laws and whether D&O coverage is in place, since this is a legitimate and common question for someone considering joining a board.