It is so sad to see so many Ontario non-profits spending months or years working on draft documents and then coming to a law firm “for a quick review” that, unfortunately, results in the Ontario non-profit being told that the group needs to redraft almost everything. Some groups are using the completely wrong precedents; others are taking ONCA precedents but not adjusting them to their particular circumstances. Dozens or hundreds of hours are completely wasted. If you value your time at $10 per hour, then you have wasted hundreds or thousands of dollars. If you value your time at $50 per hour, you may have wasted many thousands of dollars of time.
There are practical steps that Ontario non-profits can take even if they will be working with a law firm, but drafting new articles and by-laws is probably not one of them. Yes, there are some very small organizations that are not going to be able to afford a law firm to help with this transition, but I am even seeing big charities who are preparing documents in-house and then realizing after discussion with a non-profit or charity lawyer that the approach is wrong and the documents are not appropriate.
If you want to save time and costs before you approach a lawyer, make sure that you obtain your company key from the Ontario government. Make sure that you have copies of your corporate documents available. Perhaps work on updating the Ontario Business Registry (OBR) so that you don’t have old directors listed. Perhaps also update home addresses on the OBR to an address for service like the charity’s address.
Consider whether your objects are still appropriate. Identify areas in which you need greater breadth or new areas for your objects. Probably, if you are a charity, it is best not to try to draft new objects unless you really understand CRA’s guidance on purposes. That is a task better left to a charity lawyer. When a charity approaches CRA with new objects, one needs not only new objects but also a detailed statement of activities. It is the statement of activities that we find that clients are better at drafting as they know more about their organization and the types of programs that they wish to do.
Then, have a discussion with a lawyer about important issues such as membership, and then when one has a strategy as to how one is going to proceed, it is much simpler at that point to prepare the corporate documents needed.
If there are, say, ten documents needed for an ONCA transition, we are finding that preparing those ten documents (minus the objects) takes about 10 – 20 % of the time needed for the transition.
For charities, the ONCA transition is particularly difficult because it involves both corporate and charity law issues. It is easier to make big, costly and time-consuming mistakes.
If your non-profit or charity needs to deal with ONCA, we have helped many groups with ONCA compliance or, in some cases, moving to the Canada Not-for-profit Corporations Act (“CNCA”). This is a once in 120-year change that is far more complicated than many realize. The best and most efficient is to have a consultation as quickly as possible with a law firm that is knowledgeable about non-profit law as well as charity law issues if you are a charity.