Articles & Resources
What is a Not-for-Profit Organization?
Not-for-profit organizations, also called non-profit organizations is a club, society, or association that is organized and operated solely for either:
- social welfare;
- civic improvement;
- pleasure or recreation; or
- any other purpose except profit.
It has some similarities and differences compared to a for profit corporation:
The main similarities are:
- A corporation has perpetual existence,
- It exists separate and apart from its shareholders or members,
- It may hold real estate in its own name,
- It can sue, be sued and contract in its own name as a separate entity, and
- In most cases, individual shareholders or members of a corporation are exempt from personal liability for the debts and obligations of the corporation.
The main differences are:
- not-for-profit corporations are without share capital and have members rather than shareholders,
- in a not-for-profit corporation, the members are prohibited from receiving any pecuniary gain, and
- not-for-profit corporations are established for purposes other than gain for their members.
Not-for-profit organizations are incorporated by filing Articles of Incorporation and can be incorporated under Federal law or Ontario law, and the purpose of the Not-for-Profit Organization must be written in the section called ‘objects’ in the Articles of Incorporation, which can be either charitable objects i.e. raising funds for community services, or non-charitable objects i.e. badminton club.
Not-for-profit organizations must have by-laws which outline the rules for decision-making and how the business of the corporation should be conducted.
Call us for more information on setting up your Not-for-profit Oorganization!