CNCA vs. ONCA: What’s the Difference and How Does It Affect Charities and Not-for-Profits?
Are you involved in a charity or not-for-profit organization in Canada or Ontario? If so, you’ve likely come across two important laws: the Canada Not-for-profit Corporations Act (CNCA) and the Ontario Not-for-Profit Corporations Act, 2010 (ONCA). Understanding how these laws differ — and who they apply to — is essential for ensuring your organization stays compliant.
What Is CNCA?
The Canada Not-for-profit Corporations Act (CNCA) is federal legislation that governs not-for-profit corporations that choose to incorporate federally rather than provincially. It provides rules around incorporation, governance, financial reporting, and dissolution of federally incorporated nonprofits.
The CNCA is administered by Corporations Canada, which also issues the Certificate of Incorporation under the CNCA for newly formed federal not-for-profit organizations.
What Is ONCA in Ontario?
The Ontario Not-for-Profit Corporations Act, 2010 (ONCA) is Ontario’s legislation for not-for-profits incorporated in the province. It replaced the old Ontario Corporations Act and aligns much of Ontario’s rules with the federal CNCA, though key differences remain.
ONCA applies only to Ontario-incorporated not-for-profit corporations, while CNCA applies to those incorporated federally. If your organization was incorporated under Ontario law, you must transition to ONCA rules to remain compliant.
What’s the Difference Between CNCA and ONCA?
While both CNCA and ONCA aim to create transparency and good governance for not-for-profits, there are several key differences:
1. Incorporation Requirements
- ONCA requires your registered office to be in Ontario.
- CNCA allows any Canadian province or territory to be your registered office, as stated in your articles.
2. Types of Organizations
- CNCA distinguishes between soliciting and non-soliciting corporations based on funding sources.
- ONCA categorizes NFPs into public benefit corporations (PBCs) and non-PBCs, affecting rules around governance and financial reporting.
3. Board Composition
- Both acts set minimum numbers for directors, but ONCA requires specific rules for PBCs to ensure diverse, qualified leadership.
4. Ex-Officio Directors
- ONCA allows ex-officio directors (board members who serve by virtue of holding another office).
- CNCA does not allow ex-officio directors — all must be elected.
5. Voting Rights for Non-Voting Members
- CNCA gives non-voting members the right to vote on fundamental matters.
- ONCA does not extend voting rights to non-voting members unless specified.
6. Audit Exemptions
- Both acts provide audit exemption thresholds based on revenue and type of organization, but they differ slightly in terms of limits and required approvals.
7. Dissolution Rules
- The CNCA and ONCA have different rules on how assets are distributed when a charity or nonprofit dissolves. Ensuring proper compliance is critical for protecting your organization’s legacy.
Who Does the Canada Not-for-Profit Corporations Act Apply To?
The CNCA applies to federally incorporated not-for-profit organizations in Canada. This includes:
- National organizations that operate across multiple provinces
- Charities that wish to be federally incorporated
- Organizations that receive funding from federal sources or operate internationally
If your corporation was federally incorporated before the CNCA came into force in 2011, you likely had to transition to the CNCA framework.
Who Issues a CNCA Certificate?
Corporations Canada, part of Innovation, Science and Economic Development Canada, is the federal body that administers the CNCA. They issue:
- Certificates of Incorporation
- Certificates of Amendment
- Certificates of Dissolution
You can learn more about this process on the Corporations Canada website or consult a charity lawyer to guide you through incorporation.
Final Thoughts
Understanding the difference between CNCA and ONCA is crucial for staying compliant, especially if you’re involved in setting up or managing a not-for-profit or charity in Ontario or across Canada.
Still unsure which legislation applies to your organization? The legal team at Northfield & Associates specializes in federal and provincial incorporation, governance, and ONCA compliance.
Need help registering or transitioning your Ontario charity or nonprofit?
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Frequently Asked Questions
Get quick answers to common questions about charities and not-for-profit organizations in Canada.
What is the difference between a charity and not-for-profit?
A charity is a specific type of not-for-profit organization that must focus on charitable purposes like relieving poverty, advancing education, or benefiting the community. Charities can issue tax receipts for donations and must register with the Canada Revenue Agency. Not-for-profits include a broader range of organizations like sports clubs, social groups, and industry associations that don’t qualify as charities and can’t issue donation receipts.
What is the difference between a non-profit and a not-for-profit organization?
In Canada, “non-profit” and “not-for-profit” mean the same thing. Both terms describe organizations that don’t exist to make money for owners or shareholders. Any money they earn goes back into running programs and services rather than being paid out as profits. The terms can be used interchangeably.
How to tell if a charity is not-for-profit?
All registered charities in Canada are not-for-profit organizations by law. You can verify if an organization is a registered charity by searching the Canada Revenue Agency’s online charity database. Look for their registration number, which often appears on their website or donation receipts. Registered charities must follow strict rules about how they use their funds and can’t distribute profits to members.
What is the main difference between non-profit and for-profit organizations is how they handle?
The main difference is how they handle money. For-profit organizations aim to make money for their owners and shareholders. Non-profit organizations use any money they earn to support their mission and programs. Non-profits don’t have owners who take home profits, and any surplus funds must stay within the organization to further its purpose.
What is the difference between a non-profit organization and a non-profit company?
A non-profit organization is the general term for any group that operates without making profits for owners. A non-profit company is a specific legal structure that’s incorporated under provincial or federal law. Incorporated non-profits have more formal legal protections and must follow corporate rules like holding annual meetings and keeping records. Some non-profits operate as unincorporated associations instead, which have simpler structures but less legal protection.
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