Not-for-Profit Guide

1. Introduction
2. Not-For-Profit Incorporation
   • Federal Incorporation
   • Provincial Incorporation
3. Managing the Books
4. Charitable Status
5. Taxation
6. Funding
7. Next Steps

1. INTRODUCTION

Not-for-profit corporations are organizations that provide products or services without making profit. They are generally dedicated to activities that improve or benefit a community. A not-for-profit may generate revenue, but only if the revenue goes back into the organization to further its aims and projects. For example, a social club may hold an art sale or craft fair in order to raise money for the services it provides to the community. The money made by a not-for-profit must not be made for the personal gain of its directors, members, or officers.

There are several kinds of not-for-profit organizations such as:

• General (such as professional or community organizations)
• Sport or athletic
• Social clubs
• Service clubs (such as Kiwanis or Lions)
• Charities

This guide provides information on not-for-profit corporations. To set up an informal not-for-profit, you may wish to speak with a lawyer. The Law Society of Upper Canada's Lawyer Referral Service may be able to assist you in finding a lawyer, based on your needs.

Contact the Law Society of Upper Canada:
1-800-268-8326
Law Society of Upper Canada's Lawyer Referral Service

If you are interested in information on setting up a cooperative, please refer to our Cooperatives Guide.

2. NOT-FOR-PROFIT INCORPORATION

You can structure your not-for-profit organization as a federal or provincial corporation. The process and requirements for setting up your corporation will vary based on the option you choose.

Federal Incorporation

For information on creating a federal not-for-profit corporation, you can contact Corporations Canada or refer to their website.

Read online:
Creating a Not-for-Profit Corporation

To set up a federal not-for-profit corporation, you will have to submit the following documents to Corporations Canada.

• Articles of Incorporation- Form 4001 (click here for instructions)
• Initial Registered Office Address and First Board of Directors – Form 4002 (click here for instructions)
• A Canada-wide NUANS name search report that is not older than 90 days
• The filing fee

Contact Corporations Canada:
1-866-333-5556

You can also learn more about the specific rules for operating a federal not-for-profit corporation on the Corporations Canada website.

Read online:
Operating a Federal Not-for-Profit Corporation

Provincial Incorporation

If you would like more information about the requirements for setting up and operating a provincial not-for-profit corporation in Ontario, refer to the Not-for-Profit Incorporator's Handbook.

Read online:
Not-for-Profit Incorporator's Handbook

To set up a provincial not-for-profit corporation, you will need to submit the following documents (hard copy) to the Ministry of Government Services:

• Application for Incorporation of a Corporation without Share Capital - Form 2 completed in duplicate with original signatures on both copies
• Ontario-biased NUANS Name Search Report
• Fee of $155 (standard service – processing time 6-8 weeks) or a fee of $255 (expedited service – processing time 7 business days)
• Covering letter giving a contact name, return address and telephone number

Contact the Ministry of Government Services:
1-800-361-3223

As of 2012, there are new rules governing the incorporation and operation of Ontario not-for-profits. Find out how your not-for-profit corporation may be affected by the new laws.

Read online:
Modernizing the Not-for-Profit Sector

3. MANAGING THE BOOKS

Once you’ve incorporated your not-for-profit, you will have ongoing responsibilities that are specific to not-for-profit corporations, including:

• Maintaining records and making them available to directors
• Proper filing and income reporting
• Making sure that any changes to the structure of the corporation conform to the articles of incorporation.

Federal
You can find out more about the financial record-keeping and reporting obligations of a federal not-for-profit from Corporations Canada.

Contact Corporations Canada:
1-866-333-5556
Financial Statements and Review

Provincial
You can find out more about the financial record-keeping and reporting obligations of a provincial not-for-profit from the Ministry of Government Services.

Contact the Ministry of Government Services:
1-800-361-3223
Corporations Information Act Annual Returns

4. CHARITABLE STATUS

You may want charitable status for your not-for-profit corporation in order to issue tax receipts or be eligible for specific tax incentives. Although many not-for-profit corporations are registered as charities, charitable status is not automatically obtained when you set up a not-for-profit. If you are interested in registering for charitable status, see our document on Charitable Status.

5. TAXATION

If you sell goods and services in Ontario and make $50 000 or more within any 12 month period, you must register for a business number to charge, collect and remit the Harmonized Sales Tax (HST).

Read online:
HST for Public Service Bodies

As a not-for-profit organization, you are generally exempt from paying income tax but may be required to file a T1044 - Non-Profit Organization (NPO) Information Return with the Canada Revenue Agency (CRA). The information return is filed annually and, depending on your organization’s activities, you may also need to file additional forms. Speak with CRA for more information.

Contact CRA:
1-800-959-5525

6. FUNDING

There are many different ways to finance your business. Canada Business can help you find government financing that is available for starting a business.

Search online:
Find Government Grants, Loans and Financing

Contact the Business Info Line:
1-888-745-8888

The following financing program also applies specifically to not-for-profit organizations.

• The Trillium Foundation
  The Trillium Foundation offers a variety of funding programs in support of organizations that give back to the community. Charitable or not-for-profit businesses are eligible for funding.
  
  Contact the Trillium Foundation:
  1-800-263-2887
  Ontario Trillium Foundation

7. NEXT STEPS

For additional information that relates to starting a business, you can read the following guides:

• Business Planning
• Market Research and Statistics
• Grants and Financing
• Employment Regulations Guide: Hiring

You can also find books, magazines and other relevant print material at business service organizations in your community. To locate a Canada Business Ontario (CBO) community partner, contact us through the Business Info Line at 1-888-745-8888.

Need more information?

Click: Canada Business
Call: The Business Info Line, a collaboration between ServiceOntario and Industry Canada, at 1-888-745-8888
Visit: Find a Community Partner Location near you

DISCLAIMERS

Information contained in this document is of a general nature only and is not intended to constitute advice for any specific situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.

Some of the organizations listed above are not subject to the federal Official Languages Act or the French Language Services Act of Ontario. Their services may not be available in both official languages.