How to Register a Charity in Canada

So, you’ve done some research, and confirmed that you should be registering a charity rather than a non profit. You’ve got a big idea, and you know you’re going to change the world. Or, at the very least, make it a better place. That’s fantastic.

Every day, charities around the world and in Canada do exactly that, and we can certainly do with more good in the world.

But when it comes to the actual business of registering a charity in Canada, things get a little more complicated. There are many steps (and several levels of government) involved. Here’s what you need to know to get started:

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Governing Documents

Charities are a special type of organization that exist to help and support a particular organization, group or type of person or animal. But they still have to be legal entities. This is where the mission of the organization, the people who are creating the organization and other legal and practical information like the organizations address are set out.

Unlike other kinds of organizations, where there is usually a predefined type of document used for this purpose, a charity could have one of several types of governing documents, including articles of incorporation, a trust document, a constitution, or letters of patent. Under special circumstances, charities can even be created based on a will or similar document.

There are various forms that this document can take, and it can also vary slightly depending on whether you are planning to create a charitable organization or a foundation (public or private).

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Tax Affairs

Even after you have created your governing document and begun the process, there is still the tax element of creating a charity to be taken care of.

Charities are designated as either charitable organizations, public foundations, or private foundations. Which one you will be depends on what you plan to do, how many people will be involved, how you will be funded and various other factors. All these things also determine what kind of records you will need to keep, the kind of tax returns you will need to submit and more.

It’s important to get this step right. You can request a redesignation if things change later, but that can be just as complex and time consuming! So make sure you have all the information before you set up the structure of your new organization.

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Internal Divisions

Setting up a charity is complicated, but it is even more complex when you will be operating internal divisions.

Internal divisions are branches or sections of a charity that might operate slightly differently, but still fall under the main charity or “head body.” These divisions don’t need to have separate governing documents, but they do have to have a letter of good standing to be formally established.

These divisions can operate separately to the head body, including collecting their own donations and having their own tax account with the CRA, but they still fall under the umbrella of the parent organization.

If you going to operate a charity that will have different branches in different cities, for instance, you will want to set them up as internal divisions.

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Federal, Provincial and Local Requirements

The last important thing that you should know is that registering a charity is not something that is only done at the federal level.

All charities, like any other organization in Canada, must also comply with provincial or territorial regulations, as well as any local requirements that their city or region might have. Which usually means that when you are drawing up your governing documents, you need to take those things into account.

There are a lot of different things that go into registering a charity in Canada, and it can be a daunting process. But there are resources available out there. Various levels of government can help by answering questions, as can the CRA. A professional who works with charities as a legal advisor or CPA can also offer advise on the best way to structure your new charity.

As much as you want to get started doing good in the world, it’s a good idea to take a little extra time on this step, because while you can make changes later, it’s not usually quick or easy. So, you really want to make sure you make the right choices from day one.