Changes re: public benefit vs. non–public benefit corporations, charities

Public benefit corporations vs. non–public benefit corporations

In the ONCA, “not-for-profit corporations” means organizations without share capital — that is, where members don’t own a part of the organization through shares. This includes trade associations, clubs, and other member benefit organizations, as well as the community organizations and charities that we commonly call “nonprofit.”

The ONCA introduces a new term, public benefit corporation (PBC), and outlines special requirements for PBCs as compared to non–public benefit corporations. While all registered charities automatically become public benefit corporations under the ONCA, some public service groups choose not to, or are not able to, become registered charities.

The ONCA’s requirements for PBCs are different in several ways from the requirements that charity law and the Canada Revenue Agency (CRA) set for registered charities. Registered charities should be aware that charity law and CRA regulations trump ONCA requirements.

Whether you are defined as a public benefit corporation under the ONCA depends on your funding each year. Under the ONCA:

  • All registered charities incorporated in Ontario are automatically public benefit corporations, no matter what funding they receive.
  • If you are not a registered charity, but you receive more than $10,000 from the government or from donations from people who are not members, employees, or closely related to your members or employees, then you must follow the requirements for PBCs for the next three years starting with the annual meeting following the receipt of $10,000 or more from the “third party.”
  • If you are not a registered charity, and you don’t receive more than $10,000 in public funds, then you are a non–public benefit corporation for that year and must follow the requirements for non–public benefit corporations.

Public benefit corporations face special requirements for reviewing and reporting their finances. Also, they must have at least three directors, and only one-third of their directors can be employees of the organization. If PBCs close down, they must distribute their assets to a similar charity or public benefit corporation, not to their members.

If you aren’t a charity, you could jump back and forth between different sets of requirements every three years, based on whether you received public funds in the previous three years.

Keep in mind that funders might have different requirements than those included in the ONCA. You will need a way to keep track of their requirements, too.

Consider whether your nonprofit is likely to move between public and non–public benefit corporation status in different years. Decide how you will keep track of and respond to the different requirements. As the requirements for PBCs are higher, you can choose to meet the requirements of a PBC every year.


Some nonprofits will revise their articles of incorporation when they prepare for the ONCA. Until the regulations are published, we cannot know exactly what will be required. However, the ONCA requires different things in articles than were required in the old letters patent.

When registered charities incorporated in Ontario make changes to their articles, they must submit them to the Canada Revenue Agency (CRA) and to Ontario’s Public Guardian and Trustees (PGT) for approval.

Many nonprofits became charities and were approved by the PGT or the CRA many decades ago. Interpretation of charity law has changed over the years. Stating your purposes in the wrong way, or adding purposes and activities you didn’t have when you registered as a charity, could cause your nonprofit serious problems. It’s possible that submitting new articles could put a nonprofit’s charitable status at risk or restrict and limit what you want to accomplish as an organization. If you need to change your purposes, you should probably get legal advice.

Charities need to take great care when they describe their purposes and activities in their articles and should consult a lawyer if they need to make changes.

Reviewed: May 2014