Have you ever wondered what the real difference is between a nonprofit and a charity here in Canada? While the two terms are often conflated and used interchangeably there is a distinction and your organization can only meet one definition, not both. Let’s break it down in simple terms so next time you hear these terms, you’ll be nodding along with the best of them.
Understanding the Basics:
Nonprofits in Canada include a wide range of organizations like sports clubs, cultural associations, and community service groups that operate without aiming for personal profit.
Charities are special kinds of nonprofits that have been given a approval and a charitable registration number from the Canada Revenue Agency (CRA). This means they can do things like issue tax receipts for donations they receive, which is a big bonus for fundraisers.
Key Differences:
- Tax Benefits:
- Nonprofits: They’re not in the tax receipt game.
- Charities:They can give donors tax receipts, which helps in attracting more generous donations.
- Regulatory Oversight:
- Nonprofits: They play by the rules set in their local area, which can vary.
- Charities: They follow the federal rules laid out by the CRA, keeping everything above board with detailed reports and strict spending guidelines.
- Purpose and Scope:
- Nonprofits: These can range from your neighborhood soccer league to a regional arts council.
- Charities: These are the folks working in traditional charity zones like helping those in need, advancing education, or supporting community causes. (E.g. Animal shelters, food banks, places of worship etc.)
If you’re thinking about getting involved with or starting up one of these organizations, knowing the differences is important. Nonprofits offer flexibility in their activities, while charities can leverage tax benefits but with more rules to follow.
