THE NON PROFIT I AM A BOARD MEMBER OF IS A CHARITY – RIGHT? NOT NECESSARILY

To determine if the non profit is a charity, here are some things to review as a Board Member.

A.       Formation

-            All enterprises in Canada are in some form.  For example a for profit can be a sole proprietorship, partnership, corporation, etc..  Non Profits also  must be set up in some form within the Province they operate, and sometimes federally.

Types of Non Profits formats include:

Societies

Corporations

Foundations

 -            As a Board Member you should review the Non Profit’s Governing Documents.  The documents will show what was registered and the type.  Many non profits are created as Societies.  It is a requirement that, when elected the  Board Members are listed in the registration documents, or amendments.  So good idea to check if the registration has been updated with the new board members.

B.      Charitable Status

-            The formation of a non profit does not automatically make it a Charity.  Charitable status is granted by the Canada Revenue Agency (CRA), and non-profits must apply for it. 

-            The application must show the Non Profit  is operating for 1 of 4 Charitable purposes:

Relief of Poverty - Non Profit operations relieve poverty, provide basic necessities

Advancement of Education - operating school or training, Scholarships

Advancement of Religion - Preach and advance spiritual teachings, Maintain the spiritual doctrines

Beneficial to the community - Other - need to confirm with CRA if it qualifies

-             If the non profit in its governing documents has an application,  Notice of Registration and CRA charitable #, then it is a charity.

C.      Protect the Charitable Status – no revocation notices

-            If after review, you determine the organization is  a non profit and a Charity – protect that charitable status.  As a Board Member your job is governance and ensuring the operations comply with regulation.   A Charity can lose or have its charitable status revoked. 

-            So ensure there are no issues, and that CRA has not issued a revocation notice.

See blog post Adequate Books and Record or visit the CRA Charities website for more information.

https://www.canada.ca/en/services/taxes/charities.html