Welcome to our general subject guide to starting a charity or nonprofit organization in Canada. Here you will learn about some of the basic things to consider before you decide to start a nonprofit, as well as resources and tools to help you through the early stages of the process.
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The nonprofit sector is one of the fastest growing sectors in North America right now, and with almost 150,000 registered charities and nonprofits currently operating in Canada, it shows no signs of slowing down. Of course, as more and more organizations are added to the mix, groups must become increasingly creative in the planning and carrying out of their mission. Keeping this in mind, there are several questions that should be considered before you begin the process of starting your own nonprofit organization or charity.
Do you have a clear understanding of the problem or need you want to address? Is that need ongoing or short-term?
Are there other similar organizations currently operating that already address this need? If so, will you be competing with these groups for funds, resources, or clients?
Do other individuals agree that such an organization is needed? Are they willing to volunteer their time and energy to help get things started?
Will you be able to locate the resources and finances necessary to achieve your mission?
Do you understand the rules, regulations, and requirements of running a nonprofit organization or charity in your region?
Once you've decided to go ahead with your organization, there are a few initial steps that should be taken.
Assemble a group of like-mined individuals who believe in the cause and are willing to dedicate themselves to its initial undertaking. These founding members will likely form the organization's first board of directors. Under provincial legislation by which nonprofit societies are registered, a board of directors is a legal requirement. It is also required by the federal government if you plan to apply for charitable status.
Discuss and clarify the issues or needs that the organization will address and what your next steps will be.
Agree upon and write a mission statement to describe what your group aims to achieve.
Choose a name for the organization and figure out important logistics, such as where the organization will be housed, how it will be financed, what role each person will play, and what their responsibilities will be.
Decide whether to incorporate your organization, become a registered charity, or both.
You can incorporate your organization either provincially or federally and the process is much the same as it is for incorporating a company. It is relatively straight forward, and can be handled by a competent solicitor with some experience in this area. Without incorporating or registering, your organization will not be legally recognized as a nonprofit, nor will your group's name be protected against use by other legal entities. Below are links to government web pages that deal specifically with nonprofit incorporation.
Not-for-Profit Corporations Act
Income Tax Guide to the Non-Profit Organization (NPO) Information Return
T1044 Non-Profit Organization (NPO) Information Return
Newfoundland and Labrador
Prince Edward Island
The Canada Revenue Agency (CRA) -- formerly Revenue Canada -- is the government department responsible for granting organizations charitable tax status. The process routinely takes 6 months to 18 months and requires applicants to fulfill a number of requirements. One of the major advantages of obtaining charitable status, is that the organization is able to issue receipts to donors for income tax purposes. This can be a major advantage when soliciting for donations. In addition, charities receive certain tax exemptions.
Not to be overlooked however, is the fact that registered charities are subject to a number of regulations and restrictions. One such restriction is the limitation on a charity's ability to advocate for a specific cause. Currently, groups with charitable tax status can only use 10% of their budget for advocacy. As well, charities are required to file an income tax return at least every two years and these files are available to the public, along with other official documents pertaining to the organization.
Below are relevant links to the CRA web site:
Canada Revenue Agency (formerly Canada Customs and Revenue Canada)
Application to register a charity under the Income Tax Act
Charities Division Contact Information
List of Canadian Registered Charities
Canada Revenue Agency now makes the following information publicly available about registered charities:
- a charity's governing documents (i.e., the letters patent, articles of incorporation, trust deed, constitution);
- the application form (completed by a charity when it sought registration or re-registration);
- the notification of registration or re-registration (a letter sent by the Department to notify a charity of its registered status);
- the letter the Department sends to a charity that has been de-registered, explaining the reasons for
- the Department's action; and
- the names of the persons who are or have been directors/trustees of the charity, and the periods during which they served as directors/trustees.
To request public information on charities, call 1-800-267-2384 for toll free long distance calls.
Sector Source: To be a charity or not? Published by Imagine Canada as part of their Sector Source website, this site has excellent and comprehensive information on what it means to be a charity in Canada, and why other forms of registration and incorporation may be more suitable for your organization.
Imagine Canada This site has an extensive listing of resources for anyone considering starting their own nonprofit organization.
Charity Central This site provides information on not-for-profit, nonprofit, and charity management; liability; directors, volunteers, and employees; fundraising law; and tax law.
Not-for-Profit Incorporator's Handbook Prepared jointly by the Companies Branch of the Ministry of Consumer and Commercial Relations and the Office of the Public Guardian and Trustee for Ontario, Charitable Property Division, this guide walks you through the steps of incorporating a nonprofit corporation in the province of Ontario. Although it's specific to Ontario, many of the same procedures apply across the country.