How to Create a Not-for-Profit Corporation in Canada

A Guide to Starting Your Not-for-Profit Corporation

Creating a not-for-profit corporation in Canada can help you achieve charitable, social, cultural, or community goals while providing legal protections and credibility. This guide outlines the key steps for establishing a not-for-profit corporation and highlights compliance requirements to help you get started smoothly.

What is a Not-for-Profit Corporation?

A not-for-profit corporation is an organization incorporated for purposes that do not include making a profit for distribution to members, directors, or officers. Instead, any revenue is used to support the organization’s mission and activities, such as promoting social causes, education, arts, or environmental projects.

Benefits of Incorporating a Not-for-Profit

Incorporating your not-for-profit offers several advantages:

• Legal Protection: Limits personal liability for the organization’s debts and obligations.
• Credibility and Trust: An incorporated status can increase trust with donors, stakeholders, and government agencies.
• Access to Funding: Certain grants and funding opportunities are only available to incorporated not-for-profits.
• Continued Existence: As a separate legal entity, an incorporated organization can continue beyond the involvement of its original founders.

Steps to Create a Not-for-Profit Corporation

Step 1: Define Your Organization’s Purpose

The purpose of your organization must align with not-for-profit objectives, such as:

• Advancing education, the arts, or cultural awareness
• Supporting charitable activities or social services
• Promoting environmental preservation
• Providing community services

Clearly defining your purpose ensures compliance with Canadian regulations for not-for-profit status and sets a strong foundation for your mission.

Step 2: Choose a Name for Your Corporation

Your not-for-profit’s name must be unique and meet Canadian naming requirements. You have two naming options:

• Distinctive Name: A name that represents your mission and is unique, helping you stand out from other organizations.
• Numbered Name: A government-assigned number, which is a quicker option if branding is not a priority.

If selecting a unique name, you’ll need a NUANS (Newly Upgraded Automated Name Search) report to verify its availability.

Step 3: Prepare and File Your Articles of Incorporation

The Articles of Incorporation set out your organization’s foundational details, including:

• Organization’s Name: As chosen in Step 2.
• Purpose: A description of the not-for-profit activities your corporation will carry out.
• Initial Directors: Names and addresses of the individuals who will serve on the initial board.

Corporations Canada provides templates for filing Articles of Incorporation, making it easy to get started. These documents should be completed carefully to ensure compliance and accurate record-keeping.

Step 4: Establish Bylaws for Governance

Bylaws outline the rules and procedures for operating your organization, covering areas like:

• Roles and responsibilities of directors and members
• Meeting procedures and voting rights
• Financial management and reporting requirements

Establishing comprehensive bylaws ensures transparency and good governance, helping your organization function smoothly and remain compliant with legal standards.

Step 5: File Your Incorporation Application

Submit your incorporation documents and pay the required fee to Corporations Canada. Applications can often be completed online, and the approval process typically takes a few business days. Once approved, you’ll receive your Certificate of Incorporation, officially establishing your organization as a federal not-for-profit corporation.

Step 6: Obtain a Business Number (BN) from the Canada Revenue Agency (CRA)

After incorporating, register for a Business Number (BN) with the CRA. This number is required for tax purposes and allows you to open a corporate bank account, apply for funding, and manage payroll if your organization has employees.

Additional Steps for Charitable Status

If your organization plans to issue tax-deductible donation receipts, you’ll need to apply for charitable status with the CRA. Charitable registration is separate from incorporation and requires meeting specific criteria set by the CRA.

Maintaining Your Not-for-Profit Corporation

To keep your corporation in good standing, ensure ongoing compliance with the following:

• Annual Filings: Submit an annual return to Corporations Canada, updating any changes to your organization’s information.
• Board Meetings: Hold regular meetings and maintain minutes to document key decisions.
• Financial Reporting: Keep accurate financial records, file taxes as required, and prepare any additional financial statements needed for government reporting or fundraising.