The Not-For-Profit Motive: Your guide to starting a charity

Wondering what it takes to start a charity? Here’s what we learned from people who’ve done it

Rick Hansen established a charity to carry on what he’d started with his Man in Motion World Tour to raise awareness about people with disabilities. For AG Hair co-founder Lotte Davis, a charitable organization was the most effective way to fund girls’ education in Africa. The Bosa family wanted to give back to the communities in which they build housing developments.

Most founders of non-profits in British Columbia are “people who have a really good idea whose vision it is to do good in the world,” says Martha Rans, legal director of the B.C. non-profit Pacific Legal Education and Outreach Society. “[That’s] not to say that you have to incorporate as a non-profit to do it or become a charity, but rather to say it’s not about the money,” she explains.

Rans is a Vancouver-based lawyer who advises non-profits and charities. She also founded Law for Nonprofits to offer support and services to the non-profit sector across B.C. on complying with the province’s new Societies Act by the November 2018 deadline.

“When you talk about non-profits, you’re talking about everything from the daycare to the curling club to the fly fishers to the seniors centre,” Rans says. “The diversity is astonishing. There’s groups of model train enthusiasts that have incorporated as a society. You have organizations in the business community that are non-profits. The reality is they’re just not set up to make money.” B.C. has more than 26,000 non-profits, and the sector is larger than the province’s fisheries and mining industries combined, according to StepUp BC, an HR resource for non-profit organizations.

It’s easy to start a non-profit, Rans maintains, but “it is time-consuming and not quite so easy to make an application for charitable status. It’s quite another thing to raise money that warrants getting a charitable status.”

First steps

Not-for-profits—called societies in B.C. because their governing legislation is the Societies Act—aren’t required to incorporate. When they do, it’s usually to access funding or to open a bank account, Rans says. “There’s also a perception, very much like in the for-profit world, that incorporation gives you a certain legitimacy.”

The first step is sending a name approval request to BC Registries and Online Services. Then you need three directors; a constitution outlining the purposes for creating the society; and bylaws, which can be modelled on the ones attached to the Societies Act. Input the information to the Societies Online application on the B.C. government website, press submit, and you’re good to go.

Becoming a charity

To issue tax receipts, a society will need to apply to the Canada Revenue Agency for charitable status. That’s a separate application, and it’s not for the faint of heart, Rans warns. “While lay people can do it, it is one of those areas you would be well advised to get legal advice because you’ll save yourself some headache down the road,” she recommends. And it could take a year from the date of the application to finding out whether you get charitable status.

The CRA designates charities under three categories: charitable organization, private foundation or public foundation. (See glossary below for details.) Often a public foundation will be the fundraising arm of a charitable organization, explains Lana Quinn, managing partner at Vancouver’s QuinnMcCauley, which helps high-net-worth clients create giving plans that reflect their personal interests and values. Private foundations are often created by families.

“It can be everything from relations to employees, but primarily it’s members of a family,” Quinn says. “They’re all related, and they’re all officers. The other thing is where the money comes from. More than 50 per cent comes from those same people that make up the officers of the foundation.” It’s a misconception that starting a private foundation requires a million dollars in the bank, she observes.

Words of warning

Quinn cautions that maintaining a foundation involves time and expense. “Once the money goes into the foundation, it’s not really your money anymore,” she explains. “It’s the foundation’s money. So CRA is pretty strict and has very strong regulations on the diligence that has to be done to maintain a foundation and charity.” There will also be expenses for legal fees, accounting and possibly advisers.

Something else to keep in mind: raising money is hard work, lawyer Rans notes. One of her clients who formed a charity to build a treatment centre has turned to funding other charities’ programs instead. “It’s one thing to start with $50,000, which sounds like a lot of money to most people,” Rans says. “It’s another thing to build something that costs $5 million.”


Arm’s length 
A relationship where persons act independently of each other or are not related.
Charitable organization
A registered charity that mostly carries on its own activities but may also gift funds to other qualified donees and generally receives its funding from a variety of arm’s-length donors. More than 50 per cent of its governing officials must be at arm’s length from each other.
Non-profit organization
An association, club or society operated exclusively for social welfare, civic improvement, pleasure, recreation or any other purpose except profit. It is not a charity and cannot issue tax receipts.
Not-for-profit corporation
An organization incorporated under the Canada Not-for-profit Corporations Act. Not-for-profit corporations are not automatically considered registered charities or non-profit organizations, so they may not be exempt from paying regular corporate taxes. They are free to conduct the same business activities as business corporations and can make a profit.
Private foundation
A registered charity that carries on its own charitable activities and/or funds other qualified donees. It may have 50 per cent or more of its governing officials not at arm’s length from each other, and it typically receives most of its funding from a donor or a group of donors that are not at arm’s length.
Public foundation

This type of registered charity generally gives more than 50 per cent of its income annually to other qualified donees, but it may carry out some of its own charitable activities. More than 50 per cent of its governing officials must be at arm’s length from each other, and it usually receives its funding from a variety of arm’s length donors.

Qualified donee
An organization that can issue official donation receipts for gifts it receives from individuals and corporations. It can also receive gifts from registered charities.

Registered charity
A charitable organization, public foundation or private foundation registered with the Canada Revenue Agency. It is exempt from paying income tax and can issue tax receipts for donations it receives. It must be established and reside in Canada, use its resources for charitable activities and have charitable purposes that fall into one or more of the following categories: the relief of poverty, the advancement of education, the advancement of religion or other purposes that benefit the community.

A not-for-profit corporation created and run in B.C. Societies may be formed for any lawful purpose or purposes, including agricultural, artistic, benevolent, charitable, educational, environmental, patriotic, philanthropic, political, professional, recreational, religious, scientific, social and sporting. If a society is seeking funding or grants, or charitable status from the federal government, there may be a requirement to incorporate

Glossary sources: CRA + B.C. Government