Paying Directors of an Ontario Not-for-Profit (Non Share Capital Corporation)


Conventional wisdom, espoused by many Ontario lawyers and NFP practitioners, has often postulated that it is not lawful for an Ontario Not-for-Profit Corporation to pay remuneration to Directors for serving as such.

But this is incorrect.

In the case of a Not-for-Profit Corporation that is not a charity, there is no restriction preventing payment to Directors for their services as Directors, unless a restriction to that effect is expressly found in the Letters Patent, Supplementary Letters Patent or the By-laws.

Note the universal caveat - that actions taken by the Directors must be in the best interest of the Corporation - applies just as much to this issue as to any other.

If there is no restriction in Letters Patent or Supplementary Letters Patent: all that is required is a bylaw, enacted by the Directors and approved by the members, that authorizes such payment.

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How Long Does It Take To Register a Charity?


According to the Charities Directorate, a straightforward application for Charity Registration takes 2 months (see here). In reality, this turnaround time is seen in only about 1% of charity applications.

For the vast majority of Charity applications, where the CRA (Charities Directorate) has follow up questions, the stated turn-around time is 6 months, though in reality it is closer to 8-10 months.

If you are hiring a lawyer to file your charity application, it is critical to ask him/her how long it will take, from the date he/she is retained, to file the application with the CRA. We have heard from clients, who originally retained other law firms, how their application took many months until being filed, despite much importuning to hurry and submit the application for review. 

This is very unfortunate, as Charities who are not registered may not issue tax receipts, thereby limiting their fundraising options and limiting their opportunity to provide assistance to others.

If you want your Charity Application submitted super fast, generally within 1-3 weeks of being retained, call us today at 416.900.0379 or email: 

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How to Best Structure your Charity?


Charities are generally structured in one of two ways. Below are some of the pros and cons of each structure:

The form of a charity will generally be:

1. an unincorporated association;

2. a Not-for-Profit corporation incorporated under either federal or provincial legislation.

Considerations in determining which structure to use

Formality: Corporations are more commonly recognizable entities, where directors and potential donors are more comfortable with their structure.

Dissolution: It is easier, quicker, and less costly to dissolve an Association than it is to dissolve a NFP corporation.

Liability: Directors of a NFP corporation are generally protected from liability (they should nonetheless purchase director’s insurance), whereas Directors of an Association are exposed to being sued.

Contracts: Contracts with a NFP corporation are entered into in the name of the corporation, whereas contracts entered into with an Association, must bear the names of the members of the Association.

Real Estate – Generally, a charity which holds real estate must be incorporated. Further, an Association cannot hold real estate in its own name, but in the name of it’s Trustees. At the passing of the Trustees or when they resign, the property would have to be re-registered.

Procedures: There are established administrative procedures for Not-for-Profit corporations in connection with their creation and ongoing administration whereas Associations do not have established guidelines in relation to their creation and administration.

Governance: The law governing corporations is established and legislated, whereas the laws related to Associations are a lot less established and most lawyer are unfamiliar with the relevant laws.

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A By-laws Checklist


Q. At minimum, what should a comprehensive Not-for-Profit bylaws look like?

A. Non-Profit By-laws should cover the following:

  • The organization’s purpose

  •  A description of the membership

  •  A description of the board composition and governance structure

  •  Location of head office

  •  Terms of office for board members

  •  Number of meetings held by the board, including Annual General Meetings

  •  Special meetings and in-camera meetings

  •  The number and a brief description of any standing committees and the process for appointing a committee chairperson

  •  Description, title and responsibilities of Executive Directors (if applicable)

  •  The election and voting process

  •  Details about quorum

  •  Filling board vacancies

  • Removal of directors

  •  Senior staff positions

  •  Making amendments to bylaws

  •  Required reports and legal filings

  •  Charitable status

  •  Details about fiscal year

  •  Bank accounts, financial obligations, funders

  •  Conflict of interest

  •  Indemnification

  •  Disbanding the organization and disbursement of funds and capital assets

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Charity Registration when Providing a Public Amenity


Organizations established to provide public amenities can qualify for registration.

However, they must generally restrict their activities to providing and maintaining the facility.

Although it may organize some of the activities taking place therein, if the applicant is mainly involved in planning the activities, it becomes a provider and promoter of those activities. In that case, for the organization to qualify for registration as a charity, all of the activities it offers must be furthering a charitable purpose.

When receiving such an application, the CRA will require clarification regarding:

·         the programs the applicant intends to carry out itself;

·         their frequency (in comparison to the frequency of renting out space to third party organizations);

·         a detailed breakdown of the associated expenses (and corresponding revenue where applicable);

·         a sample schedule of programs/events.

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ONCA is Coming! What Should We Do?


Not-for-Profit Corporations in Ontario facing the prospect of ONCA coming into law in the next couple of years have 3 options at the Present:

  • Wait for ONCA to come into force and then make the necessary changes. This is what most Ontario Non-Profits will do;

  • Make changes now and update the governance documents. The problem with going this route is that further changes will likely be required once further details of ONCA are released and the legislation comes in force.

  • Move from the Ontario corporate jurisdiction to the Federal corporate jurisdiction.

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Will an Organization offering Career Counseling be Registered as a Charity?


Activities which

  1. relieve unemployment of individuals who are unemployed or facing a real prospect of imminent unemployment; and

  2. are shown to need assistance

may be charitable if they directly further one or more of the charitable purposes. Examples of activities that relieve unemployment include:

  • providing employment-related training;

  • providing career counseling

  • providing assistance with resumes;

  • preparing for job interviews establishing lists of available jobs.

Providing employment-related training can also be charitable.

Generally, employment related training must not be limited to a specific employer, because this could result in an unacceptable private benefit to the employer.

However, exceptions may be possible in areas of social and economic deprivation. Examples of employment related training activities for eligible beneficiaries include:

  • employability training;

  • entrepreneurial training;

  • and on-the­ job training.

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Qualify as a religious Charity


To qualify as a religious charity, an organization must advance religion in the charitable sense.

This is understood by the Charities Directorate to mean that the charity is involved in advancing religion in the following three ways:

1. a doctrice that there is a god(s), or supreme being(s) (a theistic doctrine);

2. a doctrine that adherents must worship or revere that god or supreme being (a worship doctrine);

3. a particular and comprehensive system of faith and worship;

Not all activities conducted in the name of religion advance religion in the charitable sense. 

Activities that directly further an advancement of religion purpose must be:

1. clearly and materially connected to the religion's teachings, doctrines, or observances; and

2. constitute a targeted attempt to manifest, promote, sustain, or increase belief in the religion to or by adherents or the public.

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T3010 Filing Reminder


The CRA sent out the following email last week to tens of thousands of charities with filing deadlines of June 30th:

The deadline for filing your charity’s information return is fast approaching! It is due at the latest on June 30, 2018. If you have already sent your return, disregard this email.

The Income Tax Act requires that registered charities file a complete Form T3010, Registered Charity Information Return, and financial statements within six months of its fiscal period end. This requirement applies whether your charity was active or not during this fiscal year.


In the last two years, over 1,200 charities lost their registration status because they did not file their information return. If your charity’s return is not filed on time, its registration could also be revoked.

For more information about the information return and the filing obligations, go to

If your charity no longer wants to be registered, it must send a letter to the Canada Revenue Agency (CRA) asking to revoke its registration. For more information, visit our website.

Mail to:Charities Directorate
Canada Revenue Agency
Government of Canada
Ottawa ON K1A 0L5

Fax to:613-957-8925

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When can a health-oriented organization be registered as a Charity?


The courts have held that the promotion of health can be charitable. The promotion of health in the charitable sense means directly preventing or relieving mental or physical health conditions. 

As an example, to qualify under the promotion of health, an organization can carry on activities that involve diagnosing and treating identified health conditions. In addition, all health care services and products provided by a registered charity must meet the applicable requirements relating to effectiveness and quality and safety.

In most cases, to be considered effective, health care services or products must be shown to: 

  • eliminate the presence of or

  • reduce the symptoms of an identified health condition or

  • or prevent injury or

  • prevent loss of life.

To demonstrate effectiveness, an organization must show that the service or product has been clearly recognized by Canadian provincial, territorial, or federal health authorities or by the Canadian Medical Association. Or, the health care service or product must be recognized by at least three licensed physicians who are certified in a related area of medicine and who are not connected to the organization. The quality and safety requirement, on the other hand, consists of the standards normally expected to be met by a health care provider in Canada or standards normally applied to health products.

In regards to providing health care services, services that are eligible for coverage under the Canada Health Act or for coverage under any provincial or territorial medical insurance service plan in Canada will generally be considered to be charitable. If not, health care services will be recognized as furthering a charitable purpose only if the organization can show that they directly prevent or relieve a physical or mental health condition and meet the applicable requirements relating to effectiveness, and quality and safety. 

For more information, see Here

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Should a Charity incorporate as a Not-for-Profit?


Q: When considering the organizational structure of my new charity, what factors should I take into consideration regarding the decision to incorporate the charity or not?

A: Charities can operate within different structures:

  • As an incorporated entity under federal legislation

  • Operate under a specific provincial incorporating act

  • Chartered by a special act of Parliament or of a provincial legislature.

  • Operating without incorporating.

The appropriate organizational structure for each charity will depend on its specific needs, circumstances, and activities.

Deciding on the organizational structure is an important decision that each group needs to weigh carefully. Before proceeding with a final decision on organizational structure, it is advisable to consult with a lawyer who has experience in corporate matters relating to charities, and who can advise whether formal incorporation or another form of organizational structure would be more appropriate.

Here are some issues to consider:

  • The corporation is a separate legal entity. It is an artificial person having an independent existence distinct from that of its members. The corporation owns property in its own name; acquires rights, obligations, and liabilities; enters into contracts and agreements; and has the capacity to sue and be sued as would a natural person.

  • As a separate legal entity, a corporation is not affected by changes in its membership and its existence continues in perpetuity unless its members or the government take steps to dissolve it.

  • Incorporation also offers certainty as to ownership of assets because, being a separate legal entity, it has the right to own property in its own name. In unincorporated charities, ownership vests in the name of individual trustees or in some cases, the “membership.” This may give rise to confusion or conflicts when it comes to selling or transferring property if those individuals are not clearly defined or agreed upon.

  • Since an incorporated charity is a separate legal entity, its obligations and liabilities generally do not become those of its members.

  • In addition, incorporation does not immunize a director from exposure to personal liability if he or she fails to meet their legal duties and standard of care as fiduciaries.

  • A charity that is incorporated must meet certain requirements under the incorporating law. These may include the requirement to file returns with the appropriate incorporating authority.

  • In addition, an incorporated charity may be required to appoint an external auditor to prepare audited financial statements on an annual basis.

  • The fees to incorporate are generally higher than if the charity is organized as an Association.

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Who may serve as a Director of a Charity?


One of the most commonly overlooked mistakes in completing the Form t2050 Charity Application is appointing an ineligible individual to the Applicant’s Board of Directors.

The Income Tax Act states that the CRA may refuse to register a charity that has applied for registration as a registered charity if an ineligible individual is a director or manages the charity, whether directly or indirectly.

What is an ineligible individual?

Subsection 149.1 (1) of the Act defines an "ineligible individual," as an individual who, at any time, has been convicted of a relevant criminal offence.

"Relevant criminal offence" means:

a. relates to financial dishonesty, including tax evasion, theft and fraud, or

b. in respect of a charity, is relevant to the operation of the charity.

It is thus critical that before setting up your Board of Directors, that you ascertain that all those in positions of authority in the Charity be squeaky clean of any crimes which could jeopardize your application.

If you are unsure about whether a specific crime disqualifies one of your directors, give us a call at 416-900-0379 or email us at and we will gladly advise.

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Operating Youth Charities


Q. What do I need to show on the t2050 charity application when applying to become a Youth charity?

A. Young people are not automatically recognized as charitable beneficiaries solely because they are young, as not all youth are in need of assistance.

To qualify for registration as a charity, organizations providing services to youths must be established to address and prevent the specific problems that youths face, such as

  • juvenile delinquency;

  • substance abuse;

  • eating disorders;

  • teen pregnancies;

  • depression;

  • family conflicts; or

  • suicide.

To show that an activity directed towards youth provides a sufficient public benefit, an organization must show that the activity has

a. sufficient structure; and

b. focus to actually address or prevent the specific problem that youth face.

An organization established with a purpose of helping youth deal with identified problems, but that only provides activities that are not structured and focused on addressing those problems, cannot qualify for registration.

For example, simply providing a space for youth to gather and keeping them off streets would not further a charitable purpose.

Without monitoring, teaching, or some sort of structure and focus, it would be difficult to show that an activity is addressing or preventing identified problems in the charitable sense. For more information, please click here.

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Basic requirements to be eligible for Charitable Registration in Canada


Q: What are the fundamental requirements that determine if an organization may apply for status as a Charity?

A:  To take advantage of special tax privileges given charities under the Income Tax Act — the most significant one being the ability to issue tax receipts to donors — charities must first register with the CRA. To do so, an applicant organization must:

  • Devote its resources to charitable purposes and activities;

  • The organization's purposes must be exclusively and legally charitable;

  • It must be established for the benefit of the public or a sufficient segment of the public.

An organization's purposes are considered legally charitable only if they fall within one of the four categories of charity set out in the 19th century decision, Commissioners for Special Purposes of Income Tax v. Pemsel.

Pemsel categories include:

  • Purposes for the relief of poverty;

  • Purposes for the advancement of education;

  • Purposes for the advancement of religion;

  • Other purposes beneficial to the community in a way the law regards as charitable.

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Q. We are a charity that has been registered for several years... Half our board of directors are new (less than a year) and three have been here for several years. However, none of us have experience on a board, and have been following the lead of the founder / Executive Director. As a board, we feel it is prudent to have some sort of legal counsel to ensure all of our books, policies and procedures are in compliance. 

How can you help us?


1. Review your Minute Book.

2. Ensure that your corporation has all of its correct and complete letters patent and supplementary letters patent, including order microfiche from the Ontario government and arrange for it to be scanned or printed if there are documents missing or to ensure a complete record.

3. Ensure Membership structure meets organizational objectives and legislative requirements, including multiple membership Classes, Admission of new members, and Removal of Members.

4. Review your current by-law. Do you need amendments to your by-laws?

5. Ensure that the records that the Ontario government has in their database are up-to-date.

6. File form 1s, to update information about the corporation, including registered head office address, addresses and names of directors and officers, which is required to be filed within 10 days of change.

7. Work with the Not-for-Profit to create an appropriate governance framework, including the degree to which members make certain changes vs. directors, and the role of officers.

For an excellent overview by Corporations Canada of Directors Rights and Responsibilities, please click on the following link:

Do you need help with your Not-for-Profit or Charity? Please feel free to reach out to us by phone, 416.900.0379 or email at

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Tips for keeping minutes of Charity in order


Q: Are there any tips for keeping the minutes of my Charity Organization in order?

A: Here are a few points to keep in mind regarding keeping the minutes of your charity organization in order.

  • Make sure that any motions made to change policies are recorded in the board minutes. These should ultimately be publicized as appropriate and the new policies should be integrated into the policy manual.
  • Ideally, keep at least two years’ worth of minutes in your office in a set, safe location.
  • If you do not have enough room in your office to keep these records, then after every annual general meeting, remove the oldest minutes to make room for the next year’s AGM minutes.  Before removing them, note any policy decisions in the Policies and Practices records in your office.
  • Keep minutes together with copies of any reports and additional information that was filed at the meeting.
  • Even if your charity records the minutes digitally, it is always recommended that you keep a hard copy in your office in a set, safe location.
  • Minutes do not need to be kept for all committee meetings. It is only necessary for key committees, such as fundraising and finance committees. Keep formal minutes and make formal reports to the board on key decisions!

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Qualifications of Board Members of a Registered Charity


Q: What are the guidelines for selecting the board members of my charity organization? Are there any laws regarding who is eligible to fill such a position?

A: A charity generally requires a board of at least 3 individuals who are not related to each other, who will not receive any form of payment for their services to the charity (there are exceptions to these rules, which are beyond the scope of this Q&A).

  • If the group will be incorporating, these individuals will be the first directors.
  • If the organization will become an unincorporated charitable trust, then the board members are called trustees and not directors.

It is generally considered to be an honor to be a board member of a charity. But along with such a privilege come important responsibilities and potential liabilities! A board member should bear in mind that:

  • Board members, officers, and members of the organization do NOT beneficially own the charity.
  • Individuals who fill the above mentioned positions do not have any right of ownership to any particular asset of the charity.
  • The charity may not be operated for pecuniary gain of its members, board, members or officers.

The following is a sample of qualities that would disqualify an individual from eligibility for the position of director, trustee, officer or any similar position of a charity:

  • A person with an unpardoned criminal record for an offence related to financial dishonesty.
  • A person who has controlled or managed a registered charity, in any capacity, during which time the person engaged in conduct which seriously breached the requirements of registration, resulting in the revocation of the charity’s registration within the preceding five years.
  • A person who was a promoter of a tax shelter, for which a charity’s registration was revoked within the previous five years.

Keep in mind that such offences are not required to have been committed in Canada in order to disqualify an individual from eligibility. Every charity is required to search for any evidence that would disqualify potential candidates for said positions.

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Q: What is the role of the Secretary in regards to the minutes of my Non-For-Profit organizations meetings?

A: The Secretary is responsible for taking the minutes. The Secretary's responsibilities lie in three areas:

  • What must be done before the meeting;
  • during the meeting;
  • and following the meeting.

Before the meeting, the Secretary must:

  • Determine the method by which the minutes will be recorded. Written form remains the most common method. However, technology-reliant methods, such as the use of recording devices, are increasing in usage.

During the meeting, all members must be seen and heard by the Secretary in order to keep accurate records. The Secretary is responsible for:

  • recording attendance.
  • numbering agenda items. The minutes will identify the item number and the agenda should then be attached to the minutes and the two should be filed together.
  • recording as much detail as possible. The amount of detail required to ensure due diligence is determined by the board.
  • recording the names of the person who moved and seconded motions as determined by the organization's policy.
  • recording votes and lists of votes. This reduces member liability.
  • clearly stating and describing all motions and decisions. The Secretary should also record if the decisions were unanimous.
  • possibly maintaining a motion sheet, if motions were particularly lengthy in nature.

After the meeting, the Secretary should:

  • prepare a final draft of the minutes as soon as possible after the meeting.
  • ensure that the draft is reviewed for accuracy by the Chairperson.
  • distribute the final version within one week after the meeting.
  • remind members of their commitments.

At subsequent meetings, the Secretary will also present the minutes for approval. Corrections can be made, but the content must not be debated. A motion to accept the minutes must receive a majority vote. The Secretary should add a statement at this point to the current meeting that the minutes of the past meeting were approved or approved as corrected. 

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We would like to start a Scholarship Fund and provide charity receipts to our donors.

Q. What will the CRA be looking for in our charity  application, and what should we include in the application to ensure that our application is approved and the charity is registered? 

The provision of scholarships, bursaries, awards and prizes, whether inside or outside of Canada, is generally charitable under the charitable head of “advancement of education”.

In determining whether the provision of scholarships or bursaries is charitable at law, the Charities Directorate (Charities arm of the CRA) will review:

A.    whether the charity maintains sufficient direction and control over the provision of the awards; and

B.     the element of “Public Benefit”.

The Public Benefit requirement is satisfied by the process used to select the recipients of the scholarships.

·        Many scholarships are awarded on the basis of

·        scholastic achievement;

·        financial need;

·        on the basis of excellence in extracurricular activities.

These criteria are generally acceptable and will be registered as a charity.

To make sure it meets the necessary element of public benefit, an applicant must provide all the following information:

-          the eligibility and selection criteria it uses in distributing such prizes;

-          the composition of the selection committee;

-          how and where the award is advertised;

-          the amounts it will award;

-          how it will distribute the funds.

In most cases, a scholarship fund set up to help any of the following will not qualify as charitable:

-          a named individual or individuals;

-          employees of a company;

-          relatives;

-          members of a private club, a trade union, or a co-operative.

A scholarship can be limited to groups, such as:

·        students of a school

·        persons of the same gender; or

·        people of specific ethnic backgrounds.

On the other hand, awarding scholarships based on criteria such as membership in an organization (other than an educational institution) would typically not be acceptable.

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Q: What basic items should be recorded in the minutes of my Non-For-Profit organization’s meeting?

A: Here is a checklist of basic items that should be recorded in the minutes. The order in which they appear will vary based on the needs of your Not-for-Profit.

·         Date, time, and place of the meeting;

·         Name of the person in the chair, and any changes in the chair;

·         Number of members present and their names;

·         A statement that at the outset of the meeting the quorum was present and a statement, based on fact, that the quorum was maintained throughout the meeting;

·         All rulings made by the chair and the nature and result of an appeals that arise from those rulings;

·         All motions properly moved, including the name of the mover and seconder (if required);

·         A list of all reports and documents introduced during the meeting (copies of these should all be attached to the official copy of the minutes);

·         A summary of significant points raised during discussions regarding the motions (note: this does NOT imply a verbatim record of speeches);

·         Any commitments made by any people present at the meeting;

·         The time of adjournment; and

·         The signature of the meeting Secretary. (Even if unsigned, minutes are considered evidence in common law.)

Alert: To fulfill the legal requirements for a charity or a not-for-profit, minutes for your meetings must be clearly recorded and maintained as long as the organization is registered.  

If the charity is revoked, minutes must be retained for two years after the revocation date.

These are important documents to maintain, because:

  • they are the records of the proceedings of any meeting;
  • minutes capture the actions of the organization while fulfilling its legal duties;
  • minutes demonstrate how decisions were made and who committed to acting upon them;
  • they assist new members to understand the organization;
  • minutes can be used as an evaluation tool of the work of the organization.

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