Incorporation of an NPO

What is an NPO?

A non-profit organization (NPO) is a group of individuals with a moral objective and no intention of generating profits for distribution among its members. A not-for-profit organization may carry out non-profit activities in a variety of fields, including cultural, social, philanthropic, national, patriotic, religious, charitable, scientific, artistic, sporting, educational and similar areas.

For example, a non-profit organization may be a school, a professional association, a sports club, an activity club that works to improve local infrastructure, recreation or entertainment.

Unlike a corporation, whose shareholders receive dividends (the company’s profits), the members of a non-profit organization receive no financial benefit.

A non-profit organization may generate income through paid activities or contracts. However, all profits made within the organization must be reinvested in the non-profit organization.

Why incorporate an NPO?

Incorporation gives the NPO a legal status distinct from that of its members. This means that the NPO will be able to enter into contracts, buy land, borrow money and have bank accounts in its own name. A not-for-profit organization can be incorporated federally or provincially. In Quebec, a minimum of 3 founding directors is required. At the federal level, no minimum is required.