How to create a nonprofit organization in Canada.

Creating a nonprofit organization in Canada isn’t as complicated as you might think. But, there are a few mandatory steps you need to follow. This article dives into the mandatory steps—but it doesn’t touch on all the optional steps such as:

• Branding your nonprofit.
• Promoting your nonprofit.
• Setting up your nonprofit’s social media presence.
• Finding a fundraising platform.

Okay, so now that we know what’s not in this article. Let’s talk about what is in here.

Whether it's supporting students to reach their full potential, providing support for the underserved, or caring for neglected animals, you’ll be more effective if you have your own NPO (nonprofit organization) and a useful, highly rated, 100% free fundraising platform, like Zeffy. (Okay, enough with the shameless plugs.)

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Let’s start by defining what a nonprofit organization in Canada acutaly is.

In Canada there are “registered charities” and nonprofit organizations, and they are not the same thing.

Registered charities in Canada are defined as:¹

Charitable organizations, public foundations, or private foundations that are created and resident in Canada. They must use their resources for charitable activities and have charitable purposes that fall into one or more of the following categories.
- Government of Canada

Here are possible categories for aregistered charity:

• the relief of poverty
• the advancement of education
• the advancement of religion
• other purposes that benefit the community

Non-profit organizations:¹

Non-profit organizations are associations, clubs, or societies that are not charities and are organized and operated exclusively for social welfare, civic improvement, pleasure, recreation, or any other purpose except profit.
- Government of Canada

Because we think that that definition is a bit vague… Here are some examples:

• social, recreational, or hobby groups (bridge clubs, curling clubs, and golf clubs)
• certain amateur sports organizations (hockey associations, baseball leagues, and soccer leagues)
• certain festival organizations (parades and seasonal celebrations)

You cannot be both a registered charity and a nonprofit organization, you have to choose one. But, both registered charities and nonprofit organizations can qualify for tax-exempt status if the Canada Revenue Agency (CRA) decides your organization qualifies.

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Before starting a nonprofit in Canada: laying a solid foundation.

Before launching your nonprofit organization, it's important to build a strong foundation in order to maximize the impact and differentiate your nonprofit.

Start by asking yourself what the purpose of your organization will be and who or what you will serve.

Chances are, there are probably other NPOs that already operate in a similar capacity to your organization. This can make it challenging to differentiate your organization and, crucially, to raise funds. But, it can also make it a bit easier to spot a need or niche that isn’t being met yet. Try to identify a specific challenge you feel is unaddressed in your community or identify a new solution that hasn’t been tried before. This will help your organization stand out and hopefully bring more attention to your cause.

For example, there is probably at least one organization combating food insecurity in your area. Creating another food bank or soup kitchen could be redundant if there are already established organizations providing this service. But, your organization can still stand out in terms of the solution it offers. Maybe your nonprofit will be the first to work with local farmers to provide free meals and combat food waste. Maybe you will focus specifically on people with limited means of transportation by delivering meals rather than collecting food.

While the problems we face are clear, the solutions often are not. Don’t be afraid to try something new or innovative to assist in your mission, appeal to donors, and stand out.

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Naming your nonprofit.

Once you’ve identified your mission and target population, the next step is to name your organization.

There are around 170 thousand charities and nonprofit organizations in Canada.² So, if you want your organization to stand out then a clear, concise, and catchy name (that communicates to the outside world the mission or activity of your nonprofit organization) is a must.

Okay, now for the less creative part. When incorporating your organization in Canada, the name of your organization must contain a few mandatory components.³

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Nonprofit naming laws in Canada:

So, your nonprofit organizations name must:$^3$

• Be distinctive: The Center for Adult Literacy VS. The Center.
• Not cause confusion with any existing corporate names, business names or trademarks. (Resources like the registraire des entreprises can help you ensure the name you’ve chosen isn’t already in use.)
• Not contain any prohibited terms.
• Not suggest governmental or institutional sponsorship or control.
• Not be misdescriptive.
• Contain a mandatory term: association, center, centre, fondation, foundation, institut, institute or society.

If you are incorporating in Quebec, then language laws must be respected. This means your name must have either a French name or a French version of your organization name.⁴ More information on naming and incorporating an NPO in Quebec can be found here.

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Incorporating your Nonprofit.

You’ve defined your mission and chosen a name. Now comes the fun part—incorporating your organization. Joking. There is seriously nothing fun about incorporating. But, if you want a legal nonprofit organization in Canada, you have to incorporate.⁵

Incorporating gives your organization certain rights, such as the right to use your name across Canada, limited liability, and better access to capital and grants.

The application for the incorporation of an NPO is made by filling out the RE-303 form or the Non-Profit Incorporation Form. You can incorporate online at the Innovation, Science and Economic Development Canada’s Online Filling Centre.

In order to complete the application, you will need the English and French (if necessary) names for your organization. You will also need the signatures of all other applicants, along with their addresses and professions.

We know this probably isn’t what you want to hear, but—when it comes to incorporating—we do recommend getting help from a specialist.

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After you’ve incorporate your nonprofit organization, there’s a few more steps to keep in mind.

So, once you’ve incorporated, you need to establish how your nonprofit is going to work, AKA the internal organization. According to the Canada Not-for-profit Corporations Regulations (NFP Regulations), you need to call a “First Directors Meeting” to:⁶

• Make by-laws.
• Maintain corporate records and issuing debt obligation certificates.
• Authorize the issuance of debt obligations.
• Appoint officers.
• Appoint an interim public accountant.
• Issue memberships.
• Make banking arrangements.

If all that seems daunting, we get it. Lucky for you, the Canada Not-for-profit Corporations Act provides default rules. You have the option of overriding many of these rules by setting out your own rules in the by-laws. In some cases, the Model By-laws provide alternate rules to the default ones.⁷

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Creating a nonprofit organization in Canada really ins’t that bad. But, you can still ask for help.

We know, we know. We’ve mentioned this already, but it’s probably worth it to ask for a bit of help. The Business Development Bank of Canada (BDC) is a really good place to start.