What is a Not-for-Profit Organization? | Nava Wilson LLP

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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:

  1. A corporation has perpetual existence,
  2. It exists separate and apart from its shareholders or members,
  3. It may hold real estate in its own name,
  4. It can sue, be sued and contract in its own name as a separate entity, and
  5. 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:

  1. not-for-profit corporations are without share capital and have members rather than shareholders,
  2. in a not-for-profit corporation, the members are prohibited from receiving any pecuniary gain, and
  3. 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!