Charitable Registration vs Non-profit Status

Organizations known as charities and those that are non-profit organizations without charitable status both fall under the larger description of the voluntary, community-based, non-profit, or third sector. Designation as either a charity or non-profit organization can mean a difference in the way an organization operates, pay income taxes, issues tax receipts and conducts activities. There are three designations for voluntary organizations:

• charitable status
• incorporation under provincial legislation
• incorporation under federal legislation

Non-profit corporation status through provincial legislation is the most common designation for voluntary organizations, followed by charitable status, and finally, federal non-profit corporation status. Many organizations that have charitable status are also incorporated under provincial legislation.

View an information kit from the Government of Canada’s Strategis website for information about federally incorporated organizations.

How to know which is best?

The best way to determine how your organization should proceed is to identify your mission, goals, activities, sustainability, and future plans. For instance:

Will your organization want to issue income tax receipts to donors?
You must be a registered charity to issue an income tax receipt.

Will your organization be engaging in any political activity?
Charities are restricted in the political activities they can carry out, including persuading the public to adopt a particular view on a social issue.

Is your organization concerned about limited liability?
This is the main reason that organizations become incorporated.

Will your organization be applying for funding?
Many funding agencies require proof or incorporation or charitable status.