The non profit sector is one of the fastest growing in North America today. With over 15,000 registered charities in Canada alone, it is important for newly formed non profits to fill an existing need in the community. Non profit organizations must have a clear understanding of their mission and goals in forming the organization in order to not impede on existing corporations and to find success as an organization.
Similarly to corporations, non profits need to also address the legal requirements associated with starting their organization. Non profit corporations are required to have a board of directors. Likely this will be a group of founding members of the organization. The board should be established right off the bat so that all other decisions are made by those who have a vested interested in the corporation. Mission, roles, responsibilities, headquarters and financing will need to be hashed out before any legal paperwork can be started. Most importantly, the board will need to establish a name for the organization and whether to incorporate the organization, become a registered charity, or both.
After selecting and registering your corporate name, you may choose to incorporate your non profit. Though not essential to do so, incorporating will give the organization a legal status and with it rights and responsibilities. The process to incorporate a non profit is generally the same as a corporation. You can incorporate federally or provincially and requirements are dependent upon the jurisdiction in which you incorporate. The one difference is the option to also register for charitable status.
In order to be granted charitable status, you must apply through the Canada Customs and Revenue Agency by fulfilling a number of requirements. In order for an organization to be registered its purpose needs to either relieve poverty, provide advancement in education, advancement in religion, or benefit the community in certain ways in which a court has deemed acceptable. The process can take up to 8 months to complete, but after completion your non profit will have the advantage of providing tax receipts to charitable donors as well as receiving certain tax deductions.
Following these first steps will help your non profit corporation achieve success in its mission and future activities in the community!
Click here to find out more about non profit incorporation and to start the incorporation process!