The Canadian Charity Law Podcast

This episode offers practical advice for individuals considering founding a Canadian nonprofit organization.

It emphasizes the importance of self-reflection regarding motivations and ensuring a genuine need exists for the proposed organization.

The discussion highlights key considerations such as developing a sound business plan, exploring various organizational structures, and understanding the differences between nonprofits and charities.

It also addresses the realities of the commitment involved, including administrative burdens and the need for self-care.

Furthermore, the episode outlines the incorporation process, essential documents, post-incorporation requirements like bylaws and board development, and ongoing legal and financial obligations.

Finally, it touches upon the challenges of "Founder's Syndrome" and provides a self-assessment checklist to help potential founders determine their readiness.

This episode is jointly sponsored by B.I.G. Charity Law Group Professional Corporation, a Charity Law Firm exclusively serving charity and not-for-profit clients in Toronto, Ontario and across Canada with registration and governance, and B&H Charity Accounts Group, a bookkeeping firm serving Canadian charities in Ontario with all their financial and tax filing needs.

https://www.charitylawgroup.ca/
P: 416-488-5888

https://www.charityaccountingfirm.ca/
P: 289-301-8883

Creators and Guests

DJ
Producer
Dov Goldberg, J.D.
Dov Goldberg is a manager partner at B.I.G. Charity Law Group Professional Corporation, a Charity Law Firm Providing Services Exclusively to Charities Across Canada

What is The Canadian Charity Law Podcast ?

Exploring the ins-and-outs of Canadian Charity Law in a way that can be understood by the layperson, including Charity Registration, Not-for-Profit Incorporation, Charity Governance, Charity Fundraising, Tax Receipting, and much more!

David:

Hey, everyone. Welcome back. Today, we're taking a deep dive into the world of Canadian nonprofits. We're gonna be looking at this guide Okay. Starting a Canadian nonprofit, A founder's practical guide.

David:

Right. And you know what's funny, actually? One of the first things that surprised me

Sara:

Okay.

David:

When I was reading this guide was that they actually suggest that sometimes it makes more sense to collaborate Right. With an existing organization rather than going out Yeah. And starting your own.

Sara:

That's interesting. Yeah. The guide actually really digs into that and talks about the power of collaboration Yeah. And how effective it can be, particularly when you're first starting out.

David:

So, like, why would somebody I guess, why would someone choose to go that route instead of just launching Yeah. Their own brand new nonprofit?

Sara:

You know, think about it this way. You're passionate about, let's just say, literacy in your community. Well, there might already be an organization that's doing some fantastic work in that area. So by joining forces, you can combine resources, expertise, and reach a much wider audience Yeah. Creating a bigger impact together.

David:

That makes sense. I guess my thinking is that it would just be so much easier Yeah. To just do your own thing and build it from the ground up. Yeah. You know?

David:

Exactly how you envision it.

Sara:

And, you know, that's that founder spirit Yeah. Talking right. And the guide goes into this in detail, looking at that founder's role

David:

Right.

Sara:

And this whole thing called founder syndrome.

David:

Okay. Founder syndrome. That sounds a little bit ominous. Yeah. What is that?

David:

What's the deal with founder syndrome?

Sara:

Well, you know, it's actually pretty common.

David:

Okay.

Sara:

You know, imagine you pour your heart and soul into building something from scratch. You're deeply connected to that mission, to that vision, every little detail.

David:

Right.

Sara:

But sometimes that intense attachment Yeah. Yeah. Can actually make it difficult to kind of let go and allow that organization to grow Yeah. And maybe go in directions that you hadn't even anticipated.

David:

So it's like you might miss opportunities to evolve and adapt because you're so focused on your initial vision.

Sara:

Exactly. And the guide shares this story about a founder who learned this the hard way.

David:

Okay.

Sara:

She was so determined to do everything herself. She was convinced that no one else could do it right.

David:

Right.

Sara:

And she ended up burning out and nearly jeopardized Oh. The entire organization.

David:

Can you tell me a little bit more about that? What happened?

Sara:

Well, she started this nonprofit providing support for families that were affected by a rare disease. And her passion was incredible. She's incredibly hands on. Yeah. But as the organization grew, she just refused to delegate.

Sara:

Oh. Micromanaged her staff, resisted any suggestion for change

David:

Mhmm.

Sara:

And it eventually led to a mass exodus of staff and volunteers.

David:

Wow. That's a tough lesson. And it really shows, I think, the importance of recognizing that founder syndrome early on

Sara:

Absolutely.

David:

And figuring out how to address that.

Sara:

Yeah. And that's why, you know, the guide really encourages founders to build a strong support network, seek mentorship, maybe even consider stepping back from those leadership roles

David:

Yeah.

Sara:

As the organization matures. It's really about putting the organization's needs first

David:

Right.

Sara:

Even if it means letting go of some of that control.

David:

Okay. So I'm really starting to see now the wisdom and collaboration. Yeah. You get support, diverse perspectives Mhmm. Maybe even avoid some of those founders' syndrome Yeah.

David:

Pitfalls. Yeah. So let's say you've weighed the options, and you've decided you wanna start your own nonprofit. Go ahead. What's next?

David:

I'm assuming it's not quite as simple as just having a good idea.

Sara:

You're telling me. And one of the first things that the guide tackles is this whole question of structure.

David:

Okay.

Sara:

And it might surprise you to learn that there is this whole world beyond registered charities.

David:

Wait. Really? I thought that nonprofit and charity were basically the same thing.

Sara:

Not quite. In Canada, there are several different structures for nonprofits, each with its own legal and financial implications. You got your classic registered charities, of course, which can issue those tax receipts to donors.

David:

Yeah. Like, when they're always doing the fundraising drives, and they're like, your donation is tax deductible.

Sara:

Exactly. But then you also have nonprofit organizations that aren't registered charities. They might not be eligible to issue tax receipts.

David:

Okay.

Sara:

But they have more flexibility in terms of their activities and how they use their funds. Funds.

David:

So choosing the right structure Yeah. Is kind of a big deal. What factors should a founder consider

Sara:

Yeah.

David:

When they're making that decision?

Sara:

Well, it really depends on their mission and their long term goals.

David:

Okay.

Sara:

Do they wanna be primarily funded by individual donations?

David:

Right.

Sara:

Then status might be the way to go. Are they more focused on grassroots activism

David:

Okay.

Sara:

Or social enterprise?

David:

Yeah.

Sara:

Then a different structure might be a better fit.

David:

Got it. So you need to really understand the pros and cons

Sara:

Yeah.

David:

Of each structure before you dive in. What about incorporation?

Sara:

Right.

David:

That seems like a pretty serious step.

Sara:

It is a big step, and the guide actually recommends exploring those partnerships and collaborations.

David:

Right. For jumping into incorporation, remember, working with an existing organization Yeah. Might be a much more efficient way to achieve your goals, especially in those early stages.

Sara:

I can see that. Yeah. You could kinda kinda hit the ground running that way. But let's say you've considered all that and you've decided Okay. Yes, I do wanna incorporate my nonprofit.

Sara:

What are the advantages of going that route?

David:

Well, incorporation provides that legal framework for your organization, separating it from you personally. So it offers liability protection

Sara:

Okay.

David:

Which means that your personal assets are shielded

Sara:

Got it.

David:

From any debts or legal issues the organization might face.

Sara:

It's like a little bit of a safety net

David:

Right.

Sara:

To protect you from personal financial risk.

David:

Exactly. And it can be really helpful A lot of funders, especially those larger foundations

Sara:

Mhmm.

David:

And government agencies prefer to support Yeah. Incorporated organizations because it adds a layer of legitimacy and accountability. That makes a lot of sense.

Sara:

Mhmm.

David:

So if you're thinking long term incorporation seems like a smart move, what are the different options

Sara:

Yeah.

David:

For incorporating?

Sara:

Well, you can incorporate federally or provincially. Yeah. So if your organization operates across Canada Right. Federal incorporation is the way to go. But if you're just focused on a single province

David:

k.

Sara:

Provincial incorporation might be a bit simpler and more cost effective.

David:

Alright. So let's say you've navigated that incorporation maze.

Sara:

Right.

David:

What are some of the other kind of essential things

Sara:

Yeah.

David:

That founders need to think about?

Sara:

Well, the guide highlights three often overlooked but absolutely crucial elements.

David:

Okay.

Sara:

And that's bylaws.

David:

Okay.

Sara:

Membership and the board of directors.

David:

Alright. Let's break those down one by one.

Sara:

Okay.

David:

Bylaws. I have to admit that doesn't sound terribly exciting.

Sara:

Sure.

David:

What's the big deal with bylaws?

Sara:

Well, think of your bylaws as your organization's operating manual.

David:

Okay.

Sara:

It outlines the rules of the game, how decisions are made, who has authority, how conflicts are resolved. It essentially ensures that everyone's on the same page, and it prevents chaos down the line.

David:

So setting those clear expectations and boundaries right from the get go.

Sara:

Exactly. And the guide emphasizes the importance of creating bylaws that are comprehensive but also flexible

David:

Right.

Sara:

Allowing your organization to adapt as it grows.

David:

So you're building a really solid foundation but leaving some room

Sara:

Exactly. For

David:

those future changes. Okay. What about membership? Why is that important in a nonprofit context?

Sara:

Well, members are the lifeblood of a lot of nonprofits. Yeah. They provide that base of support.

David:

Yep.

Sara:

They can contribute their skills and expertise, and they also hold the organization accountable.

David:

So it's about more than just fundraising.

Sara:

Absolutely.

David:

It's about building a community around your mission.

Sara:

Absolutely. And the guide stresses the importance of clearly defining those membership roles

David:

Okay.

Sara:

Responsibilities and benefits. It's about creating a structure that encourages active participation and ensures that everyone feels valued.

David:

Okay. So you've got the bylaws that are setting the ground rules. You've got the membership that's providing that

Sara:

Yeah.

David:

Base of support. What about the board of directors? What role do they play?

Sara:

The board. They're the guardians of the organization responsible for its overall well-being. They make those strategic decisions.

David:

Okay.

Sara:

They oversee finances, ensure legal compliance

David:

Wow.

Sara:

And hold the executive director accountable.

David:

It's a lot of responsibility. So they're kinda like the steering committee

Sara:

Exactly.

David:

Guiding the organization's overall direction.

Sara:

Exactly. And the guide emphasizes the importance of having that diverse board.

David:

Okay.

Sara:

With a range of skills and perspectives.

David:

Right. So you need people who are passionate about the mission, but who also bring other expertise

Sara:

You got it.

David:

Whether it's finance or law.

Sara:

Yep.

David:

So it's about finding that sweet spot between passion Okay. And practicality. And it's not just about recruiting the right people. It's also about providing them with the support and training they need to actually be effective.

Sara:

Absolutely. The guide highlights the importance of board member orientation and ongoing professional development, especially around governance best practices. Remember Yeah. The board's role is to govern, not to manage day to day operations.

David:

Right. That's a crucial distinction. So we've covered a lot of ground already in this first part of our deep dive.

Sara:

We have.

David:

Talking about collaboration, founder syndrome, organizational structure, the importance of bylaws Right. Membership, a strong board. What would you say is, like, the key takeaway you want our listener to walk away with from this part of the conversation?

Sara:

I think it's this. Starting a nonprofit is this multifaceted endeavor that requires

David:

Yeah.

Sara:

Careful consideration of so many different factors. It's not just about having a great idea.

David:

Mhmm.

Sara:

It's about building that solid foundation for long term success and sustainability.

David:

Very well said. And stay tuned for part two as our deep dive where we'll explore the nitty gritty of nonprofit management, including financial planning, legal compliance, and strategies for achieving lasting impact. Welcome back to our deep dive into the world of Canadian nonprofits. In part one, we tackled some of the big picture stuff, you know, collaboration founder syndrome, that kind of thing. Now let's roll up our sleeves and get into nitty gritty of actually running a nonprofit.

David:

Right. So we're talking finances, legal stuff, the whole nine yard.

Sara:

That's right. We're moving from the conceptual to the practical. Okay. Really exploring those day to day challenges nonprofit leader faces.

David:

And let's be real. One of the biggest challenges for a lot of nonprofits is funding. It's not always easy to secure the resources you need to fulfill your mission.

Sara:

Sustainable funding is the lifeblood of any nonprofit, and the guide offers some really insightful advice on developing a solid financial strategy.

David:

Okay. Lay it on me.

Sara:

Right.

David:

What are some key things that founders should keep in mind when it comes to, you know, nonprofit finances?

Sara:

One of the biggest mistakes that new nonprofits make is putting all their eggs in one basket.

David:

Right. You're relying too heavily on a single funding source.

Sara:

So, like, if you're solely dependent on government grants

David:

Right.

Sara:

And that funding stream dries up, then you're in trouble.

David:

Exactly. The guide stresses the importance of diversification.

Sara:

Okay.

David:

Explore a mix of individual donations, grants from various foundations Mhmm. Corporate sponsorships, even earned income opportunities if they align with your mission.

Sara:

Earned income. That's interesting. What would be an example of, like, how a nonprofit would generate earned income?

David:

Sure. Let's say you're a nonprofit that provides job training for marginalized youth.

Sara:

Okay.

David:

You could create a social enterprise Mhmm. Where the youth that you train produce and sell handcrafted goods

Sara:

Okay.

David:

Generating revenue for the organization while also providing valuable work experience.

Sara:

So it's kinda like a win win.

David:

Exactly.

Sara:

Supporting your mission, but also creating a sustainable income stream.

David:

Exactly. It's about thinking creatively Yeah. And exploring all those possible avenues for financial support.

Sara:

So diversification is key. What about the actual management of funds? Any tips, you know, for how to keep things running smoothly on the financial side of things?

David:

The guide really stresses the importance of transparency and accountability.

Sara:

Okay.

David:

Donors and funders need to know that their money is being used wisely and ethically.

Sara:

So it's not just about balancing the books.

David:

Right.

Sara:

It's about building trust and demonstrating that you're a responsible steward of the funds How's that? That have been entrusted to you.

David:

Precisely. Keep meticulous records. Create clear financial reports.

Sara:

Okay.

David:

And make sure you have strong internal controls in place. Okay. And don't be afraid to seek expert advice from Right. Accountants or financial advisers.

Sara:

Yeah. That makes sense. Get the experts to help you Yeah. Navigate that side of things.

David:

They can help you navigate those complexities Yeah. Of nonprofit finances and ensure that you're complying with all the applicable regulations.

Sara:

Speaking of regulations, let's talk about the legal side of running a nonprofit. It seems that there's a lot to keep track of Yeah. Employment laws, privacy regulations, all that kind of stuff. You're not wrong. And the guide delves into some of the key legal considerations for nonprofit founders.

Sara:

And one thing it emphasizes is understanding your obligations as an employer.

David:

Okay. So if you're hiring staff or even working with volunteers

Sara:

Right.

David:

There are specific laws that you need to be aware of.

Sara:

Absolutely. You need to be aware of minimum wage laws, overtime regulations, workplace safety standards, human rights legislation.

David:

Mhmm.

Sara:

And if you're handling personal information like donor data or client records, you need to comply with privacy laws.

David:

It sounds pretty complicated. What advice would you give to our listener in terms of, you know, how to stay on top of all of this legal stuff?

Sara:

The guide recommends consulting with a lawyer Okay. Who specializes in nonprofit law.

David:

Got it.

Sara:

They can help you set up the right legal structures, draft contracts, and ensure you're complying with all those regulations. It's an investment worth making.

David:

But it's about getting that expert advice to avoid those potential legal headaches. So we talked about finances and the legal considerations. Yeah. What about the day to day operations

Sara:

Right.

David:

Of a nonprofit? Any insights from the guide on how to keep things running smoothly?

Sara:

One of the key things that the guide emphasizes is building a strong team.

David:

Okay.

Sara:

You can't do everything yourself.

David:

Right.

Sara:

Surround yourself with competent staff and dedicated volunteers who share your passion for that mission.

David:

Okay. So delegation teamwork are crucial. Any tips on how to attract and retain talented people Yeah. In the nonprofit sector? You know, it's not always easy to compete with for profit salaries and benefits.

Sara:

That's true. But nonprofits can offer something unique.

David:

Okay.

Sara:

The opportunity to make a real difference in the world.

David:

So it's about appealing to people's sense of purpose

Sara:

Exactly.

David:

And their desire to contribute to something Exactly. Make it themselves.

Sara:

Clearly articulate your mission and values. Create a positive and supportive work environment.

David:

Okay.

Sara:

And offer opportunities for professional development and growth. People are more likely to stay with an organization where they feel valued and appreciated.

David:

It's about creating a culture where people feel inspired Absolutely. And motivated to do their best work. And let's not forget about the founder's well-being

Sara:

Yes.

David:

Something we touched on in part one. Mhmm. This world can be incredibly demanding. Absolutely. And burnout is a real risk.

Sara:

The guide dedicates an entire section to self care and sustainability for nonprofit leaders. It emphasizes setting those boundaries Yeah. Prioritizing your physical and mental health

David:

Right.

Sara:

And building a support network.

David:

I love that the guide acknowledges that human side of running a nonprofit. It's not just about

Sara:

Right.

David:

Spreadsheets and strategic plans.

Sara:

Exactly.

David:

It's about taking care of yourself so that you can effectively lead and serve others.

Sara:

Exactly. You can't pour from an empty cup.

David:

Yeah.

Sara:

Taking care of yourself allows you to show up as your best self

David:

Right.

Sara:

For your team, your organization, and the community that you serve.

David:

Okay. So we've covered a lot of ground in this part of our deep dive talking about financial planning, legal compliance.

Sara:

Mhmm.

David:

Building a strong team and that crucial importance of self care. Any final thoughts

Sara:

Yeah.

David:

For our listener before we move on to the next part of our exploration?

Sara:

I'd say this running a nonprofit is a marathon, not a sprint. It's a journey that's filled with both challenges and rewards. Embrace the challenges.

David:

Yeah.

Sara:

Celebrate the victories and never lose sight of the difference that you're making in the world.

David:

Beautifully said. Now get ready for part three of our deep dive where we'll explore the nuances of founder syndrome

Sara:

Okay.

David:

Discuss strategies for building a sustainable funding model Alright. And delve into the art of measuring impact. Okay. We are back for the final part of our deep dive into starting a Canadian nonprofit. We've covered so much ground already from collaboration to the legal stuff to finances, but I think now we need to get into some of the more Right.

David:

Nuanced and maybe even a bit psychological aspects of leading a nonprofit Right. Especially when it comes to this idea of founder syndrome that we were talking about earlier.

Sara:

It's fascinating how our passion can sometimes become a stumbling block.

David:

Yeah. It's, like, counterintuitive. Right?

Sara:

Yeah.

David:

You pour your heart and soul into building something amazing. Yeah. But then you might actually get in the way of its success. So how can founders

Sara:

Right.

David:

Like, how can they recognize these tendencies in themselves before it becomes a real problem?

Sara:

The guide offers some great questions for self reflection. Things like

David:

Okay.

Sara:

Do I find it difficult to delegate tasks?

David:

Right.

Sara:

Am I overly resistant to feedback or new ideas? Mhmm. Honest answers Yeah. To those questions can be very illuminating.

David:

It's almost like holding up a mirror to yourself and maybe Exactly. Not always liking what you see.

Sara:

And that's where having a trusted mentor or adviser Yeah. Can be so valuable. Someone outside of the organization who can offer that objective perspective Right. And help objective perspective Right. And help you navigate those tricky emotional dynamics.

David:

So self awareness, mentorship, key Absolutely. Ingredients there. What about practical strategies for avoiding it? Like, if you're a founder and you're really struggling with letting go of control, what can you do?

Sara:

Well, one technique that the guide suggests is focusing on building a strong and empowered board of directors.

David:

K.

Sara:

Intentionally recruit people with diverse skills

David:

Right.

Sara:

And perspectives, and then truly trust them to make decisions.

David:

Oh, it's shifting that mindset from I need to do everything to I have this amazing team who can handle this.

Sara:

Exactly. And that can free you up to focus on your strengths

David:

Right.

Sara:

Whether that's fundraising program development or building relationships with stakeholders.

David:

Working smarter, not harder. Exactly. Okay. Well, speaking of working smarter

Sara:

Yes.

David:

Let's talk about building a sustainable funding model. We talked about diversification earlier, but what are some more Right. Specific strategies for securing that long term financial support?

Sara:

One thing that the guide emphasizes is cultivating those strong relationships Mhmm. With individual donors.

David:

Okay.

Sara:

You know, grants and corporate sponsorships are important. Yeah. But individual donors are often your most loyal and passionate supporters.

David:

It's about building those personal connections. Yeah. Making them feel like they're really a part of the mission.

Sara:

Exactly. Communicate with your donors regularly. Share stories of impact. Invite them to events.

David:

Okay.

Sara:

Make them feel valued and appreciated, and they'll be much more likely to stick with you for the long haul.

David:

It's like you're building a community

Sara:

Yes.

David:

But a community of supporters who are also financially invested

Sara:

Absolutely.

David:

In your success. That's a

Sara:

great way to put it. And the guide also encourages nonprofits to explore

David:

Like

Sara:

creative funding models like crowdfunding

David:

Right.

Sara:

Or social enterprise ventures.

David:

Thinking outside the box Absolutely. And not being afraid to experiment with new approaches.

Sara:

The world of fundraising is constantly evolving. Yeah. So it's important to stay informed about those new trends and strategies.

David:

So all this hard work. Right? Yeah. The fundraising, the program development, the board meetings. It's all ultimately about Absolutely.

David:

Making a difference. But how do you actually measure that difference?

Sara:

Right.

David:

How do you know if you're truly achieving your mission?

Sara:

That's where impact measurement comes in.

David:

Okay.

Sara:

It's about going beyond just counting those outputs Right. Like, how many people you served or how many events you hosted.

David:

It's about outcomes, not just activities. It's about the actual changes that are happening as a result of your work.

Sara:

Exactly. What difference are you making in people's lives? Are you improving their health

David:

Right.

Sara:

Their education, their economic opportunities?

David:

And how do you actually gather that information? Because it can't always be easy to measure Yeah. These, well, sometimes intangible things like empowerment

Sara:

Right.

David:

Or social change.

Sara:

It does require a thoughtful and strategic approach.

David:

Yeah.

Sara:

And the guide recommends a mix of quantitative data

David:

Okay.

Sara:

Like surveys and statistical analysis Right. But also qualitative data, like stories

David:

Oh, yeah.

Sara:

And testimonials.

David:

So it's about capturing the numbers, but also

Sara:

Yes.

David:

That human impact of your work.

Sara:

Exactly. And it's an ongoing process. Yeah. Not a one time event. Regularly evaluate those programs.

David:

Okay.

Sara:

Gather feedback from your stakeholders. Oh, great. And be willing to adapt based on what you learn.

David:

It's about embracing that culture of continuous learning and improvement.

Sara:

That's the heart of it. And that's what ultimately makes the journey of leading a nonprofit so rewarding.

David:

Well, I think that's a perfect note to end on. Starting a nonprofit is a huge undertaking. But as we've learned today, with careful planning a strong team and a good dose of self awareness, it's definitely possible to make a real and lasting difference in the world. So to all those aspiring nonprofit founders out there, we hope this deep dive has given you the knowledge and the inspiration to take that next step. Thanks for joining us, and we'll see you next time for another deep dive into a fascinating topic.