Navigating the Non-Profit Scene in Alberta
The Charity and not-for-profit sector is a vital and growing part of the Canadian economy. In 2017, economic activity in the non-profit sector totalled $169.2 billion, representing 8.5% of Canada's GDP. Despite the large impact non-profit corporations have on the Canadian economy, the organizational legislation for non-profit corporations has been largely unaltered in Alberta since the 1920's. This has led to a fragmented and potentially confusing landscape for keen social entrepreneurs looking to make their mark in the not-for-profit scene.
This article will attempt to demystify the process of incorporating a non-profit in Alberta by outlining the different options a new organization has to incorporate.
Different Ways of Creating a Non-Profit Organization in Alberta
Depending on the purpose of the organization, an applicant may choose from any of the following pieces of legislation to incorporate a non-profit in Alberta:
(i)Companies Act, RSA 2000, c C-21;
(ii)Societies Act, RSA 2000, c S-14;
(iii)Canada Not-for-Profit Corporations Act, SC 2009, c 23;
(iv)Business Corporations Act, RSA 200, c B-9; or
(v)Cooperatives Act, SA 2001, c C-28.1.
There is no single, universal best way to incorporate a non-profit. The path a start-up non-profit takes will depend on its unique objectives and needs.
The sheer amount of options that an applicant has can lead to confusion. In order to offer some clarity, the features, advantages, and disadvantages of incorporation under the Companies Act, Societies Act, and the Canada Not-for-Profit Corporations Act (the three most common ways of incorporating a non-profit) will be further outlined.
(i)Incorporation under the Companies Act
Non-profits corporations created under the Companies Act are formed to promote art, science, religion, charity or other similar endeavors or for promoting recreation for their members.
A non-profit corporation can operate in almost any way; however, it must operate on a cost-recovery basis and cannot distribute profits to its shareholders or members.
There are two types of non-profits that exist, (a) private, and (b) public.
a.Private non-profit corporation
This structure places limits on the number of shareholders / members, the number of shares or membership transfers, and puts restrictions on inviting members of the public to subscribe for shares in the company.
b.Public non-profit corporation
Under this structure there are no restrictions with respect to the number of shareholders / members. However, there are continuous reporting obligations. These organizations typically obtain most of their financial support through donations received from the public.
The main disadvantage of the Companies Act is that it is more complex than the Societies Act. A company must decide if it will act as a private or public company. If it does operate as a public company it faces more extensive financial reporting requirements.
(ii)Incorporation under the Societies Act
A society is an incorporated group of five or more people who share a common recreational, cultural, scientific, or charitable interest. According to the Government of Alberta it is the most used method of incorporating a non-profit, likely due to the fact that it is the simplest and cheapest way to incorporate.
The major advantages of a society are that:
i)a member of a society may not be held responsible for the debts of the society;
ii)the society can enter into contracts as an entity; and
iii)a society is able to apply for government grants.
The major disadvantage of a society is that it is not allowed to engage in any type of ongoing business operations. An organization must consider if part of its model will include engaging in a trade or business, such as a second-hand store. A society also cannot distribute property among its members during its lifetime.
(iii)Incorporation under the Canada Not-for-Profit Corporations Act
A start-up may determine that it wishes to incorporate federally rather than provincially. If it wishes to do so, it can incorporate under the Canada Not-for-Profit Corporations Act ("NFP"). This is typically only advised for companies which wish to operate nationally and require name protection across Canada. Even if a company intends to operate in more than one province, it can still incorporate as a non-profit in Alberta and then register in the other provinces it intends to do business in. This is often the simpler and quicker option rather than incorporating federally.
Similar to the Companies Act, the NFP distinguishes between two types of not-for-profit corporations: (a) Non-soliciting corporations, and (b) soliciting corporations. A company will be designated as a soliciting corporation if it receives revenues from public sources in excess of $10,000. Non-soliciting corporations is the residual category which every other corporation falls under in the Act.
 David G Roberts, "Charitable and Non-Profit Corporations in Alberta - an update on legal and tax issues" (1989) 27:3 Alberta L Rev 476 at 477.
 Companies Act, RSA 2000, c C-21, s 200(1)
 Ross Swanson, "Incorporating a Not-For-Profit Organization" Duncan Craig LLP (17 January 2018), online (blog): < https://dcllp.com/blog/2018/01/17/incorporating-a-not-for-profit-organization/>.
 Societies Act, RSA 2000, c S-14, s 3(1).
 Alberta, Culture and Tourism, Incorporation and Other Options - Supplemental Handout Package (Alberta: Culture and Tourism, 2015) at 5, online: <http://boardleadershipcalgary.ca/wp-content/uploads/2015/04/Handouts-BL-Calgary-Incorporation.pdf>.
 Supra Note 6.
 Ibid, s 4(1).
 Ibid at 10.
 Canada Not-for-Profit Corporations Act, SC 2009, c 23, s. 5(1).
 Wayne D Gray, "A Practitioners Guide to the New Canada Not-for-Profit Corporations Act", (2010) 89 Can B Rev 141 at 145.
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