NPO (non-profit organization)

A non-profit organization (NPO) is an organization created to fulfill a social, community, or cultural mission, and not to enrich owners. When it generates a surplus (more money coming in than going out), this money is reinvested in its mission. It has its own accounting and tax obligations.

Brief

An organization (a group) with a social mission, without owners to enrich
Its surpluses (the money remaining at the end) are reinvested in the mission
It has its own accounting statements and obligations.
Not to be confused with a registered charity (one that can issue tax receipts for donations)

Why does this matter?

Many people believe that an NGO has "nothing to declare" because it doesn't seek profit. This is false. A sports club, a daycare, or a community organization must file tax returns, sometimes manage GST (the 5% federal tax) and QST (the 9.975% Quebec tax), and maintain rigorous accounting to be accountable to its members and funders. Note: a non-profit organization is not automatically a registered charity (the only type that can issue tax receipts for donations). Bankeo will connect you with a free, audited accountant/CPA experienced in the community sector, and we'll be there to support you every step of the way.

Frequently asked questions

What exactly is a non-profit organization?

It's an organization (for example, a neighborhood association, a minor hockey league, a community center) that operates for a cause, not to make money for the benefit of individuals. If it has money left over at the end of the year, it is used for its mission; it is not distributed to owners.

Does a non-profit organization pay taxes?

Generally, an NGO is exempt from income tax related to its mission. However, it still has obligations: it must file its tax returns and may have to invoice and remit VAT depending on its activities.

Are non-profit organizations and charities the same thing?

No. A registered charity can issue official receipts for donations and follows stricter rules; an NGO pursues a non-profit mission without necessarily having that status. Bankeo provides you with a free, audited accountant/CPA to ensure the security of your financial statements and reporting, at no cost to the organization, and we remain by your side throughout the process.