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Non Profits

Big Changes are Coming To Ontario Not-For-Profits

Volunteering your time for a non-profit organization is a noble pursuit. Whether they’re supporting children, protecting animals, saving the environment, assisting medical research, or any other host of noble causes – not-for-profit corporations are generally set up specifically to support the public good. 

As these corporations do not turn a profit, they generally operate on a lean portion of dollars raised – enough to support usually a small but determined staff, some sort of office space (sometimes, not always), and the minimal resources required to keep the organization running. Some not-for-profits have larger budgets to work with, others are much leaner, but most are set up to be beneficial to their members.

There have been major changes to not-for-profit law in Ontario in recent years, and there are another round of changes coming down the pipeline the Fall of 2023.

Is your not-for-profit corporation ready?

The latest changes

During the COVID-19 pandemic, board meetings for both private corporations and not-for-profit corporations changed significantly. Without the ability to gather collectively in person, organizations were pressed to find workable virtual solutions that brought everyone together in an effective manner that still let them run an efficient meeting. 

Now, even though lockdown restrictions have been lifted and are unlikely to return, online meetings and video conferences are still a popular way of conducting business. During the pandemic lockdowns, the provincial government amended Ontario’s Not-for-Profit Corporation Act, commonly known as ONCA, to reflect the situation. 

The rules were amended to allow boards of not-for-profit corporations to hold their meetings online or by telephone, even if the organization’s own by-laws did not approve a virtual format. Many by-laws pre-date effective virtual communication, and the change in the law allowed these corporations to deviate from their own regulations without penalty.

Now, however, the rules are changing again, and this time organizations are being pushed to uopdate their by-laws into compliance. 

What do the rules allow not-for-profits to do now?

Now many of the changes that were pushed by COVID have now been made permanent. As of October 1, 2023, a nonprofit:

  • can hold in-person digital, phone, and hybrid meetings by default, including allowing members to vote in any of these fashions (unless the organization opts to revise their by-laws to disallow this);
  • does not need to list a physical location for online board meetings so long as login and voting instructions are provided; 
  • cannot hold meetings solely via email in order to allow for immediate two-way communication; 
  • can give virtual access to records for those who have a right to access that information.

Bringing articles and by-laws into compliance

What was once an ad-hoc solution is now becoming permanent, which means that organizations across the province will be required to amend their by-laws to bring them into compliance with the new laws. 

There are also additional changes coming with not-for-profit’s Articles of Incorporation, the organization’s founding documents (similar to any for-profit Corporation’s). For example, ONCA has now created new rules about members’ voting rights – which will now need to be listed in the not-for-profit’s Articles of Incorporation rather than its by-laws. 

Under previous legislation, certain powers had to be expressly given to not-for-profit corporations in their by-laws. The ONCA changes now automatically provide not-for-profits with powers similar to for-profit corporations, such as the ability to borrow money, sell assets, or enter into contracts, unless expressly limited in the organization’s Articles of Incorporation. While these organizations generally run through board approval, if the board or members want to restrict the powers of the not-for-profit to do any of these things, that should be done through the Articles of Incorporation. 

Lastly, ONCA has now implemented different categories of not-for-profit corporations, such as public benefit corporations, charitable corporations, and non-public benefit corporations, each of which have unique rules and requirements that must be met. 

ONCA states that as of October 18, 2024 organizations that are not in compliance with these new changes will be deemed to be in compliance, which creates a bit of a legal gray zone. However, not-for-profit corporations should conduct a thorough review with external counsel well ahead of that deadline.

So, What’s Next?

Not-for-profits can be complicated organizations, with members, directors, and staff each playing unique roles in making the organization run smoothly. Directors and key staff (if any) usually each have some degree of understanding of the organization’s Articles of Incorporation and by-laws, but both are ultimately responsible for keeping a not-for-profit running smoothly.

Consulting with external counsel can help ensure that everything is being done properly, and that the organization is in line with the latest legal changes. Otherwise, there may be serious risks to the organization for non-compliance, such as fines, penalties, or even dissolution of the corporation. 

We routinely assist our not-for-profit clients throughout the Cambridge, Kitchener, and Waterloo Regions with reviewing Articles of Incorporation and by-laws to help ensure that operations remain compliant. Contact us today to set up a consultation.