Not for Profit Organizations and Charitable Organizations in Canada

Non Profit and Charity

A not for profit corporation (non-profit corporation) is an entity that is created for a non-profit purpose eg. social welfare, civic improvement, recreational activities, or for any purpose except for earning a profit. Any money earned by a non-profit is used to support the administrative and financial requirements of the entity or to further the objectives of the corporation. Unlike a for-profit company, the money earned in a non-profit cannot be used to pay dividends to its incorporators or members.

Registering a Non-Profit Corporation in Canada

A non-profit company can be registered federally (in Canada) or provincially (in a province of Canada). If the organisation intends to carry out its activities within a particular province, it should consider registering provincially. If the organisation intends to carry out its purposes outside Canada, it should consider registering federally. You need to file all the requisite documents to register a non-profit federally or provincially.

Once the non-profit has been incorporated, the incorporators will have to adopt the bylaws (rules defining how to govern and operate the organization), appoint members, elect officers and directors. The corporation should maintain corporate records including appointment and meeting of directors, register of members, appointment of officers, and member meeting minutes.

Non-profit corporations are not designated as charities by default. A charity uses the money raised or earned for charitable purposes for the benefit of the community.

Charitable Organizations in Canada

If the non-profit company intends to be registered as a charity, there are some specific requirements that it must adhere to like minimum number of directors, restrictions on activities, and distribution of property upon dissolution.

Registering a Charity

A non-profit corporation that intends to accept public money for charitable purposes needs to be registered as a charity with Canada Revenue Agency (CRA). To see CRA’s charity registration form, click here.

A registered charity must only engage in activities that are allowed by CRA and must maintain corporate books and records for required period of time. The charity must also keep track of the permitted annual spending requirement (also known as disbursement quota) and must spend the minimum amount calculated for its disbursement quota. In addition to CRA’s requirements, the charity also must maintain the federal, provincial or municipal requirements in order to maintain its legal status as a charity. If the charity intends to change its objectives or activities, it needs to apply to the Directorate, to confirm that the new activities qualify as charitable purposes.

For more information on how to register as a non-profit corporation or a charity, contact us.