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Know The Difference Between A Registered Charity And A Non-Profit Organization

 
 

Although charities and non-profit organizations are often referred to as “non-profits,” understanding the differences between the two structures will help you make wiser giving decisions. 🧠

Registered Charity, Non Profit Organization - Know The Difference

It’s not uncommon to associate a charity as a non-profit organization. But, while charities may also operate on a not-for-profit basis, they are not considered non-profits. In fact, this article sets out to highlight the several differences between a registered charity and a non-profit organization (NPO), all for the sake of helping you make better giving decisions.

A Registered Charity

To be a registered charity in Canada, an organization must apply and be approved for registered charity status with the Canadian government. Meeting the requirements entails that an organization operates as a charitable organization, public foundation, or private foundation created for a charitable purpose that falls within these categories:

Registered Charities, Non Profit Organizations - Types

Here, operating for a charitable purpose refers to assisting those in need. 

Once approved as a registered charity, the organization is included in the Canada Revenue Agency’s database of registered charities. They must follow a series of annual financial requirements for the duration of their registered life, like spending a minimum amount on their activities each year, among a host of other conditions. 

As of 2018, there were more than 86,000 of these registered charities operating in Canada.

What Are The Pros Of Giving To A Registered Charity? 

While a donation can be issued to just about any organization, regardless of their charitable status, contributing to a registered charity has two main positives:

  1. Registered charities can issues donation tax receipts

  2. Financial information is made public

Once registered, an organization is eligible to issue donation tax receipts that you can then use to claim against your income taxes at the end of the year. 

Charities that are registered with the Canadian government are featured on the CRA’s database. On the CRA’s database donors can access information about the status of a charity's registration (i.e., revoked, annulled, suspended, etc.), their contact information, general activities, and perhaps most importantly, their financial information for the last five years. 

Having an organization’s financial information can help you make better giving decisions, especially when considering new charitable organizations to add to your giving routine.

READ MORE: EVERYTHING YOU SHOULD KNOW ABOUT CHARITABLE DONATION TAX CREDITS 🌟

Registered Charity, Non Profit Organization - Know The Difference

A Non-Profit Organization

A Non-profit organization is an association, club, or a society that does not have to be registered with the Canadian government. Although they must operate for issues that fall within the following categories: 

  • Social welfare

  • Civic improvement

  • Pleasure

  • Recreation

  • And any other purpose except profit

Unlike charities, non-profit organizations cannot operate exclusively for charitable purposes. 

What To Watch Out For

Since non-profits do not have to register with the Canada Revenue Agency, donors have little transparency on the organization’s operations or financial records. Consequently, extra precautionary measures should be taken when considering a new donation to a non-registered organization. 

To date, we do not know the official number of non-profits operating in Canada, but some speculate that there are between 80 to 100,000.

 
catherine dionne