Non-profit and not-for-profit

[makew0rld]

These two terms are not interchangeable, and mean different things. Both are used in the handbook. Ideally we would only use one.

My current understanding is that "not-for-profit" is a specific type of corporation that can be formed in Ontario. and not one that is covered by the Co-operative Corporations Act. Instead it is covered by the Not-for-Profit Corporations Act which has no relevance to us. By not having share capital, we are very similar to a not-for-profit, but legally are not the same thing.

My current understanding is that "non-profit" is mainly a tax term, and so if the CRA considers you a non-profit then you can benefit from tax-exempt status etc. We are currently considered a non-profit in the eyes of the CRA.

My premature conclusion here would be that we should remove all reference to "not-for-profit" in the handbook, and instead mention our "without share capital" status when needed.

Resources:

• https://www.mondaq.com/canada/charities--non-profits-/742606/co-operatives-as-charities-and-not-for-profits
• https://github.com/user-attachments/files/15806728/STR06_For.Profit.and.Not.for.Profit.Co-ops.pdf
  • I contend this document misuses the term "not-for-profit" in a way that has no legal basis. We should probably stop linking to it.
  • It is in fact not on the ontario.coop website anymore, but it's unclear why
• https://www.ontario.ca/laws/statute/90c35

cc @LexaMichaelides as she may be interested in this :)

[makew0rld]

From the co-op act, section 143:

Where the Minister is of the opinion that the business and affairs of the co-operative are not being conducted on a co-operative basis, the Minister may, after giving the co-operative an opportunity to be heard,
[...]
issue a certificate of amendment changing the co-operative into a corporation subject to the Not-for-Profit Corporations Act, 2010 and, where necessary for the purpose, changing the co-operative into a corporation without share capital. 2019, c. 15, Sched. 8, s. 8.

To me this makes it extremely clear that any co-op created under the co-op act cannot be a not-for-profit in the Ontario corporation sense of the word.

[makew0rld]

The relevant line in the handbook is this one:

Instead, we are a not-for-profit co-operative.

[makew0rld]

Updated related document from ontario.coop: Co-ops are different from Non-Profits.pdf

The title using the term "non-profit" which is very frustrating and confusing, but the text of the document makes clear to me that co-operatives are completely distinct from "not-for-profit".

Another tricky section in this document:

Under certain circumstances, it is possible
for a co‑op to operate carry on business
as a NFP from a tax perspective (i.e. under
the Income Tax Act).

I suspect this is incorrect, and they mean that it's possible for a co-op to operate as an NPO (non-profit organization) or just non-profit under the Income Tax Act. "not-for-profit" doesn't seem to appear anywhere in the Income Tax Act document, so it's hard for me to see this paragraph as correct.

Overall, I think this document supports my position that we should stop describing ourselves as "not-for-profit".

[makew0rld]

And yet... ISED (federal gov) appears to completely contradict me by saying "not-for-profit co-operative" multiple times: https://ised-isde.canada.ca/site/cooperatives-canada/en/understanding-co-operatives-how-they-work-types-and-contributions