Differences between a registered charity and a non-profit organization

Registered charities and non-profit organizations (NPOs) both operate without the intention of making a profit, but they are not the same.

Registered charities

Under the Income Tax Act, registered charities are a type of qualified donee that are allowed to issue official donation receipts. They are established and operated for exclusively charitable purposes. They do not pay income tax.

Charitable purposes fit within these categories:

A registered charity must use all of its resources for charitable activities that advance its charitable purposes.

Examples of types of registered charities based on charitable purpose

Relief of poverty

  • Food banks
  • Soup kitchens
  • Low-cost housing units

Advancement of education

  • Colleges
  • Universities
  • Research institutes

Advancement of religion

  • Places of worship
  • Missionary organizations

Purposes beneficial to the community

  • Animal shelters
  • Libraries
  • Volunteer fire departments

If you are interested in becoming a registered charity, go to Apply to become a registered charity.

Non-profit organizations

NPOs are associations, clubs, or societies that are organized and operated exclusively for social welfare, civic improvement, pleasure, recreation, or any other purpose except profit. An NPO is not a type of qualified donee and cannot issue official donation receipts.

Examples of types of non-profit organizations

Social, recreational, or hobby groups

  • Gardening clubs 
  • Chess clubs 
  • Book clubs

Certain amateur sports organizations

  • Hockey associations 
  • Baseball leagues 
  • Soccer leagues

Certain festival organizations

  • Parades 
  • Seasonal celebrations

As an NPO, you may be exempt from paying income tax. For more information, go to Non-Profit Organizations.

If you are operating as a charity, you cannot be considered an NPO. 

Differences between a registered charity and a non-profit organization

Topic Registered charity NPO
Purposes
  • Established and operated exclusively for charitable purposes
  • Organized and operated exclusively for social welfare, civic improvement, pleasure, sport, recreation, or any other purpose except profit
  • Cannot operate exclusively for charitable purposes
Registration
  • Must apply to become a registered charity
  • Is not registered with the CRA
Charitable registration number
  • No registration number
Tax receipts
  • Can issue official donation receipts 
  • Cannot issue official donation receipts
Spending requirement (disbursement quota)
  • Must spend a minimum amount each year on its own charitable activities or on qualifying disbursements 
  • No spending requirement
Returns
  • Must file Form T3010, Registered Charity Information Return 

May have to file an annual:

  • Form T1044, Non-profit Organization Information Return
  • T2 Corporation Income Tax Return or T3 Trust Income Tax and Information Return 
Personal benefits to members
  • Cannot use its income to personally benefit its members
  • Cannot use its income to personally benefit its members

Exception: An NPO may choose to provide its resources to a proprietor, member or shareholder that is a club, society or association that has the primary purpose and primary function of the promotion of amateur athletics in Canada 

Tax exempt status
  • Exempt from paying income tax
  • Generally exempt from paying income tax
  • May have to pay tax on property income or capital gains
GST/HST
  • Must pay GST/HST on purchases
  • May claim a partial rebate of GST/HST paid on eligible purchases only if it receives significant government funding
  • Few supplies made by NPOs are exempt
  • Calculates net tax the regular way

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