The terms “non-profit,” (or “not-for-profit”) and “charity” are frequently used interchangeably. However, from a legal viewpoint, they are very different entities.
The term “non-profit” typically refers to
· social clubs;
· professional groups;
· golf and other recreational clubs;
· sporting clubs;
· fraternal organizations;
· trade groups;
and the like.
The term "charity" or “charitable organization” refers to entities whose objects promote:
· Providing care to disadvantaged members of society.
Many registered charities are incorporated as non-profits, but they need not be. Canadian charities can also be trusts, partnerships, or unincorporated associations.
To be registered as a charity in Canada, the charity must be operated on a not-for-profit basis. However, not all non-profit organizations are charitable.
Benefits of Charity registration
While both not-for-profits and charities may qualify for exemption from income tax, being a registered charity provides the extra incentive that it can offer donors with charitable receipts.