Registered charities and non-profit organizations (NPOs) both operate on a non-profit basis, however they are not the same.
Registered charities are charitable organizations, public foundations, or private foundations that are created and resident in Canada. They must use their resources for charitable activities and have charitable purposes such as:
Non-profit organizations
Non-profit organizations are associations, clubs, or societies that are not charities and are organized and operated exclusively for social welfare, civic improvement, pleasure, recreation, or any other purpose except profit.
| Topic | Registered Charity | NPO |
| Purposes | - must be established and operate exclusively for charitable purposes | - can operate for social welfare, civic improvement, pleasure, sport, recreation, or any other purpose except profit - cannot operate exclusively for charitable purposes |
| Registration | - must apply to the CRA and be approved for registration as a charity | - does not have to go through a registration process for income tax purposes |
| Charitable registration number | - is issued a charitable registration number once approved by the CRA | - is not issued a charitable registration number |
| Tax receipts | - can issue official donation receipts for income tax purposes | - cannot issue official donation receipts for income tax purposes |
| Spending requirement (disbursement quota) | - must spend a minimum amount on its own charitable activities or as gifts to qualified donees | - does not have a spending requirement |
| Designation | - is designated by the CRA as a charitable organization, a public foundation, or a private foundation | - does not receive a designation |
| Returns | - must file an annual information return (Form T3010) within six months of its fiscal year-end | - may have to file a T2 return (if incorporated) or an information return (Form T1044) or both within six months of its fiscal year-end |
| Personal benefits to members | - cannot use its income to personally benefit its members | - cannot use its income to personally benefit its members |
| Tax exempt status | - is exempt from paying income tax | - is generally exempt from paying income tax - may have to pay tax on property income or on capital gains |
To qualify for registration as a charity, an organization must:
The Canada Revenue Agency considers common law (court decisions) to determine what is charitable at law. During the review process, we examine both the purposes and activities of an organization. The following factors will prevent an organization from being registered as a charity:
Organizations established and resident outside Canada will not qualify for registration.
Organizations established for the purpose of making a profit will not qualify for registration. To qualify for registration, an organization must be non-profit and have purposes (also called objects) that are charitable at law. To be charitable at law, an organization must have purposes that fall under one or more of the four heads (categories) of charity:
The last category is limited to purposes that have been determined by the courts to be charitable at law. For more information and examples, go to Charitable purposes.
Organizations that gift funds or resources to organizations that are not qualified donees will not qualify for registration.
A registered charity can only use its funds and resources in two ways:
Individuals and most organizations outside Canada are not qualified donees. For more information, see Guidance CG-002, Canadian registered charities carrying on activities outside Canada.
Organizations that provide personal benefits (directly or indirectly) by making any part of their income payable to or available to any of their members, shareholders, directors, or trustees will not qualify for registration. This does not include providing benefits to persons who qualify as legitimate recipients of a charitable program.
Examples of personal benefits
Note
An organization may be allowed to pay for services provided by its members, shareholders, directors, or trustees. It may also be able, to incur and pay other expenses that are associated with the normal operation of the organization.
Organizations created to benefit a particular individual or a private group, are considered to be created for private benevolence and will not qualify for registration. To qualify for registration, an organization must show that its purposes and activities provide a tangible benefit to the public as a whole or a significant section of it.
Examples of private benevolence
For more information, see CPS-024, Guidelines for registering a charity: Meeting the public benefit test.
Organizations that devote any part of their resources to the direct or indirect support of or opposition to any political party or candidate for public office will not qualify for registration.
A charity may publicly agree or disagree with a decision or position of a Government, but in doing so, must not support or oppose any political party or candidate for public office. As a general guideline, a charity’s communications should focus on the policy issue under discussion, and not refer to any candidate or political party.
For more information, see Guidance CG-027, Public policy dialogue and development activities.
Organizations created to primarily operate a commercial activity (revenue-generating) with the intent to earn a profit will not qualify for registration.
Charitable organizations and public foundations may carry on related business activities that accomplish or promote their charitable purposes. A related business activity is a commercial (revenue-generating) activity that is either related to a charity's purposes, or substantially run by volunteers.
Private foundations cannot carry on any business activities.
For more information and examples, see Policy statement CPS-019, What is a related business?
Organizations that take part in illegal activities (for example, fraud, or money laundering) will not qualify for registration.
Organizations with activities that go against Canadian public policy will not qualify for registration. A public policy would be found in an act of Parliament, or a regulation.
Organizations that make their resources available either directly or indirectly to further terrorism will not qualify for registration. This is according to the 2001 Anti-terrorism Act.
For more information, see Charities in the International Context.
Click on the Charity Button below to begin the registration application process.
