Firstly, Foundations, Social Enterprises, not-for profit Societies and Charities must be incorporated federally.

A Foundation provides funding to other charities so if you setup a society you can get funding from these organizations and government.

One way to make a Society more than a not for profit is to start an arms length or related Social enterprise corporation.  While it doesn’t have charitable status it can give receipts to individuals and companies. The receipts would be written off under advertising or promotions.

It takes 5 directors to start a society. It needs bylaws, purpose and a charter. Once it is approved you can apply for charitable status. It takes months to years to get charitable status to be able to issue charitable receipts.

Charity, in the legal sense, describes four areas.

A charitable corporation must be set up to carry out activities in one or all of these areas. They are:

  • Relief of poverty;
  • Advancement of education;
  • Advancement of religion; and
  • Other purposes beneficial to the community, as determined by the courts, but not falling under any of the above.

It is important that the object clauses clearly describe the activities the corporation will carryout. It is not acceptable simply to reproduce the four principal areas of charity.

Clearly the society you want to setup would be the latter. A charity must benefit the community or a large part of the community – not only a few people. For example, raising funds for one person who suffers from a disease is not considered charitable because it provides a benefit only to that person. Raising funds for disease research is considered charitable because, while only the people who suffer from the disease benefit directly from research, the community as a whole benefits from decreased health care costs and decreased risk of contracting the disease.

The cost of setting all this up is the same as incorporating, $400 if you do it yourself and $1000 if you have a lawyer in Canada to do it.

Grounds for refusing applications for charitable organizations
The following are some of the reasons for which the Public Guardian and Trustee may refuse to approve an application to incorporate a charitable organization:

  • Objects are not wholly and exclusively charitable
  • Objects are too broad or are vague
  • The power clauses include a purpose which is not legally charitable
  • There are concerns that the proposed charity will not be properly administered, considering a previous failure of the incorporators to comply with the law relating to charities
  • The organization has been operating as an unincorporated association and its financial documents show that a disproportionate amount of charitable funds are being used for non-charitable purposes or administrative expenses
  • The name of the organization does not reflect the purposes set out in the application
  • The organization is primarily promoting private members’ interests or benefits
  • The organization is pursuing political purposes
  • The organization’s liabilities exceed its assets

Some examples of non profit societies

  1. Paul Brainerd, a former journalist who founded the desktop publishing program PageMaker, he started the Brainerd Foundation, which focuses on environmental protection in the Pacific Northwest, in 1995. From there, he founded Islandwood, a 250-acre outdoor learning center that brings kids from urban neighborhoods to Bainbridge Island, Wash., to educate them about the environment.
  2. Bill Neukom and Scott Oki (both formerly of Microsoft) to create Social Venture Partners. It’s a nonprofit philanthropic organization that applies the tactics of venture capitalism to tackling social and environmental issues.
  3. Pierre Omidyar, founder of eBay, chose a similar model. He launched the Omidyar Network in 2004. He called the organization a mission-based investment group, which means they fund for-profits and nonprofits that promote equal access to information, tools and opportunities; connections around shared interests; and a sense of ownership for participants.

Social enterprises are social mission driven organizations which trade in goods or services for a social purpose. Their choice to deliver on financial, social and environmental performance targets is often referred to as having a triple bottom line.

An example of social enterprise include Greyston Bakery (produces ingredients for Ben & Jerry’s ice cream).It hires mentally challenged adults to produce their products. Profits are plowed back to the enterprise to use in its operation. Money can also be sent to the foundation overseeing the operation.

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4 Comments

  1. Rather insightful article. Never thought that this was this straightforward after all. I just have exhausted a good amount of my time frame seeking for anyone to describe this subject matter easily and you are the only one that ever did that. Congrats to u

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