Ontario stalls while charities are left hanging
It’s been six years since legislation was passed to update the Ontario Not-For-Profit Corporations Act (ONCA) and charities have been left hanging in “no man’s land” because it hasn’t been enacted, says Toronto charity lawyer Taras Kulish.
“At the time they said it would be enacted by June 2013 to give the not-for-profits and the charities time to prepare their paperwork and to ensure compliance,” says Kulish a senior associate with Steinberg Title Hope & Israel LLP. “But there’s been nothing and it’s very frustrating, both for the charities and not-for-profits and the counsel who advise them. It’s really beyond the pale, bordering on the ridiculous, and no real reason has been given.”
Kulish says comprable federal legislation that was introduced around the same time has long since been updated and enacted without issue.
The Ontario government website says the ONCA is being “updated” and though it doesn’t give a date for enactment, it was last updated in November 2016.
The changes are designed to simplify the incorporation process, clarify governance rules and increase accountability, define fundraising better, allow the use of a “review engagement" in place of an audit and give members more rights to access records and challenge directors’ decisions, according the web page.
“We’ve been advising clients not to incorporate under the old Ontario Act because they’ll only incur more expenses transitioning to the new one, but there is no new one officially as of yet so clients are really being left in no-man’s land here,” he tells AdvocateDaily.com. “For those looking to update their bylaws or objects, for example, they can’t go forward under the new legislation. Any changes under the old legislation would still need to confirm to the new legislation once enacted.”
Where possible, Kulish says , charities and not-for-profits are being advised to incorporate federally if a new entity is to be established. However, for existing charities and not-for-profits who might consider continuing under the federal act, it’s a move fraught with difficulty because it triggers, in effect, a full audit at the Canada Revenue Agency (CRA) which can be expensive.
“In my view the Ontario government is giving charities and not-for-profits the mushroom treatment,” says Kulish. “They’ve kept them all in the dark for six years.
"They’ve essentially handcuffed the entire charity sector, especially those who are 20, 30 or even 40 years old and want to update and modernize their papers," he says.
The Ontario government web page also says the enactment isn’t going to happen anytime soon, despite the six-year delay.
“We are working to bring ONCA into force as early as possible, but that cannot happen until the Legislative Assembly passes a number of technical amendments to the legislation and related acts,” the post on the Ontario government website notes, “and technology is upgraded to support these changes and improve service delivery. We will give not-for-profit corporations at least 24 months’ notice before ONCA comes into force and a three-year transition period.”
"Why should it take six years for this legislation to be enacted?”, Kulish asks. “Has someone dropped the ball? The charity sector deserves a proper accounting and not only should we be kept informed, but serious efforts should be made to bring closure to this issue.”