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13 Min. Read

How to Start a Nonprofit Organization in Canada

How to Start a Nonprofit Organization in Canada

Have you been looking into starting a nonprofit organization in Canada? You might already operate a sole proprietorship or a partnership but are looking for ways to give back. Nonprofit organizations are able to provide goods and services that can benefit a community or a group of people.

Basically, as a nonprofit you emphasize giving back to the community around you instead of your board of directors or members. For example, local organizations such as the Salvation Army or the United Way are nonprofits giving back to the community around them.

And if you have been thinking about committing to giving back to your community, there are some important things to know. Starting a nonprofit organization isn’t the easiest thing to do. But the good news is this article is going to cover everything that you need to know.

Let’s dive into everything that you need to know for how to start a nonprofit organization in Canada.

Here’s What We’ll Cover:

What Is a Nonprofit Organization in Canada?

Why Should You Incorporate a Nonprofit?

Are There Any Fees for Starting a Nonprofit Organization?

Steps to Establish Your Nonprofit Organization

Steps to Incorporate Your Nonprofit Organization

Key Takeaways

What Is a Nonprofit Organization in Canada?

A nonprofit corporation is a separate legal entity from your usual members and directors. Nonprofits get formed with the purpose of not generating a profit for themselves. While they still earn a profit, the profit then gets used to fulfil the goals of the corporation, not to pay dividends to members.

As a nonprofit, you must form your corporation based on both federal and provincial laws. Several different types of nonprofits are out there today. For example, a church or church association, research institute and museum can all be nonprofit corporations. As well, a school, charity, sports association or volunteer services organization can all be nonprofits.

It’s worth noting that nonprofits are distinct and completely separate from regular corporations. Those corporations get formed to generate a profit and then distribute that profit to shareholders.

Typically, you are going to need a minimum of three directors to incorporate a nonprofit organization. That said, Nova Scotia and British Columbia require you to have at least five individual directors. It’s also incredibly important to understand that only physical persons can be a director. You can’t have a corporation act as a director.

Why Should You Incorporate a Nonprofit?

Incorporating your nonprofit isn’t a mandatory step for you to take, but it could provide you with some benefits. If you incorporate, your nonprofit will then have legal status. The biggest decider depends on the type of activities, the nature of those activities and the type of organization.

As a legal entity, you would get recognized as having certain rights and responsibilities within the legal system. Plus, as an incorporated organization, you can enter into contracts, borrow money and purchase land, among other things.

Here are some of the biggest advantages to incorporating a nonprofit corporation in Canada.

  • There is limited liability, so your members aren’t personally liable for any debts
  • You can ensure continuity of your organization even if your membership changes
  • You can bring legal action should you think it’s necessary
  • You could have better chances in receiving government grants since incorporating shows stability

On the other hand, an unincorporated organization is basically just an agreement between a few individuals. It doesn’t have any type of legal status and members will most likely be personally liable for any debts.

For example, an unincorporated nonprofit can’t sue or get sued by another corporation. But, the members of the unincorporated nonprofit can either sue or get sued personally.

Are There Any Fees for Starting a Nonprofit Organization?

Before getting too far into the steps needed to start your nonprofit organization, there are a few things worth getting into first. There’s going to be a cost associated with starting a nonprofit and it’s going to depend on your jurisdiction. Plus, there can be different delays and expedited processing times.

Take a look at the table below. It breaks down the jurisdiction, government fee and processing times for starting a nonprofit in Canada.

Jurisdiction/Province

Government Fee

Standard Processing Time

Expedited Processing Time

Federal

$250

30 days

N/A

Alberta

$75

10 days

5 days

British Columbia

$100

40 days

20 days

Manitoba

$100

30 days

15 days

Newfoundland

$70

30 days

N/A

New Brunswick

$62

30 days

15 days

Nova Scotia

$40

30 days

N/A

Ontario

$155

30 days

15 days

Quebec

$158

26 days

12 days

Saskatchewan

$65

30 days

15 days

Yukon Territory

$245

-

-

On top of all of that, there’s a bit more to know if you wanted to incorporate a federal corporation. If that’s the case, you also need to register extra-provincially. Basically, there are extra fees you’re going to have to pay in addition to the fees outlined in the table above.

This is how the extra-provincial registration fees would work.

Jurisdiction

Extra-Provincial Registration Fee

Alberta

$220

British Columbia

$100

Manitoba

$100

Newfoundland

$260

New Brunswick

$100

Nova Scotia

$252

Northwest Territories

$100

Ontario

$100

Prince Edward Island

$250

Quebec

$34

Saskatchewan

$115

Yukon Territory

$30

Steps to Establish Your Nonprofit Organization

If you have already established your organization, you can skip these steps and head right to incorporating. But, if you still need a little assistance or aren’t sure of a few things, the steps outlined below will cover everything you need to know.

1. Figure out what goods or services you’re going to offer

The best thing that you can do for this step is to take a look at the group of people or community around you. What do they need? What can make their lives better? Here are some tips to help:

  • Research other nonprofits in your area and see what they’re doing. You can identify opportunities and areas where needs still have to get met.
  • Determine how you’re going to provide your goods or services to the community around you. You can also figure out what type of resources you’re going to need.

For example, let’s say that you want to provide clean water to your community. You might decide to hand out water bottles, water filters or provide education on basic water filtration methods.

2. Create a mission statement

What does your organization stand for? How are people going to know what you do and how you do it? A mission statement is going to outline all your charitable purposes for both potential donors and the general public. Your mission statement doesn’t need to be super long or in-depth, just make sure it’s not vague.

It can be anywhere from a few paragraphs to one page to multiple pages long. It’s all going to depend on the main focus of your nonprofit and what you want to accomplish with it. That said, it can be helpful to try and keep it under a page long.

3. Create an action or business plan

Your business plan is going to set the foundation for your nonprofit and outline its direction. It should go into detail about how your organization is going to fulfil its mission statement. Plus, it will outline where you’re going to get your resources and the organizational structure of your nonprofit.

Here are some tips to help you create your business plan:

  • Try and be as specific as possible when it comes to the goods or services you’re going to offer. You should also outline how much it might cost to operate your nonprofit.
  • Generate ideas and opportunities to raise funds for your organization. This can include things like fundraising events or social media campaigns. Be sure to include realistic projections in regards to how much funding you think you can receive through these activities.

The business plan that you develop doesn’t have to be extremely long or detailed. But, at some point down the road, you’re going to have to provide more details. This can be if you're seeking sponsorship or investment from other established organizations.

4. Select your board members

Now that you have gone through the process to establish who your organization is going to be, you can select your board members. Try and choose board members that are best suited to help reach the goals that you have outlined.

It can be helpful to try and select people who have the same type of passion for your nonprofit that you do. But, it can also be helpful to select people who have operational expertise to help your nonprofit succeed.

Once you select and have your board members in place, set an informal meeting to discuss the mission statement and business plan. You can get your board members' input and make sure that everyone is in agreement when it comes to the nonprofit's plan and purpose.

5. Explore the possibilities of fiscal sponsorship

You have everything ready to go and you’re prepared to hit the ground running. But, what do you do if you put in all this work and still don’t have sufficient resources? You can consider sponsorship opportunities from another established nonprofit.

Educational institutions and for-profit businesses are also worth looking into. Just make sure that their mission and vision align with your cause. For example, the Tides Canada Initiatives Society is dedicated to offering fiscal sponsorships.

If you aren’t able to get a sponsor or sort out another type of arrangement, you might have to be as active as possible. This can mean trying to raise money at the grassroots level for weeks or months. Ultimately, this can help get your nonprofit off the ground and allow you to deliver on your objectives.

Steps to Incorporate Your Nonprofit Organization

Now that you have your mission statement and purpose, you can incorporate your organization. Take a look through the steps below to get your nonprofit up and running.

1. Choose a corporate name

This can be an incredibly important step since this is how your organization is going to be known. You want your corporate name to reflect your nonprofit and what you stand for. But, you have two choices when it comes to choosing a corporate name.

You can either use a numbered name or an actual word. If you decide to use a word name, make sure it’s unique to your nonprofit organization. If you decide to choose a numbered name, you will have a number assigned to your organization when you go through the incorporation process.

In order for you to get a word name, you will have to order a Nuans corporate name search. You can order either a federal report or one that’s more specific to a province or territory. However, if you’re incorporating in Quebec, British Columbia, Newfoundland and Labrador, or Nunavut, you don’t need a Nuans report.

Basically, the Nuans report certifies that your nonprofit name is uniquely yours and it doesn’t infringe on other trademarks. If you decide that you want to trademark your name, you will have to add certain protections against other organizations.

2. Determine if you’re going to incorporate on the provincial or federal level

As a nonprofit organization operating in Canada, you can either incorporate on the provincial or federal level. So, if you’re only going to operate at a local level in your community, then it would be best to incorporate in your province or territory. But, if you plan on operating all across Canada, then you should incorporate at the federal level.

Keep in mind that there are some extra fees you are going to have to pay if you want to incorporate on the federal level. The full breakdown of fees is listed above.

3. Draft your Articles of Incorporation

This is where you’re going to compile all your nonprofit’s information. Articles of Incorporation include the details of your nonprofit and how you plan on operating. It will include the name and address of your nonprofit and the names and addresses of your board members. Plus, it’s going to include other information that’s relevant to the establishment of your organization.

4. Incorporate your nonprofit organization on the provincial level

If you plan on only operating your nonprofit where you’re located, just visit the website for your province or territory. It will break down all the documents that you are required to submit and outline any other information that’s relevant to that location.

The fee that you have to pay is also going to depend on your province or territory. For example, it will cost around $40 to incorporate in Nova Scotia compared to over $150 to incorporate in Ontario. To get the most accurate and up-to-date information, take a look at your province or territory website.

You can also use the table that’s outlined above to get a general sense as to some of the fees and processing times depending on your location.

5. Incorporate your nonprofit on the federal level

Are you thinking of incorporating on the provincial level and then the federal level? Or are you thinking of just incorporating on the federal level right away? To create a federal nonprofit organization, you simply head to the Corporations Canada website.

Once there, you can select the Incorporate button to start the process. Make sure that you have digital copies of:

  • Articles of Incorporation, Form 4001
  • Initial Registered Office Address and First Board of Directors, Form 4002
  • The Nuans name search report

6. Draft and file your nonprofit bylaws

So, you have now gone through the entire process to get your nonprofit up and running. After you become fully incorporated, you will have your first official meeting with your board of directors. During this meeting, you are going to draft the bylaws for your organization.

Bylaws must get filed with the corporate registrar within 12 months of getting confirmed by the board of directors. These are basically going to be guidelines for your nonprofit to follow.

Key Takeaways

It can be a very exciting time to start a nonprofit organization in Canada. But, there can be a lot to know and understand. Before you get started, a good thing you can do is determine if you want to incorporate on the federal or provincial level. This will give you a good sense as to the fees and processing times.

As a nonprofit, one of the most important elements to your organization is the goods or services you are going to offer. Once you know that information, you can move forward and create your mission statement and business plan. These documents will outline who your organization is, how it will operate and the objectives you plan to achieve.

Finally, you’re going to select your board members and determine if you are going to seek out any fiscal sponsorship opportunities. From here, you can then go through the steps outlined above to incorporate your nonprofit organization in Canada. If you incorporate on the federal level, be sure to have digital copies of Form 4001, Form 4002 and your Nuans name search report.

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