Money can’t (always) buy happiness

Dean Ray Koontz said: « We are an arrogant species, full of terrible potential, but we also have a great capacity for love, friendship, generosity, kindness, faith, hope, and joy ».

Q: What legal status should you choose for your start-up if you are not seeking profit?

You have two options: a Non-profit corporation or a cooperative. How to choose from these two options? Read up, we are (almost) telling you all about it.

These two organizational modes are similar. For example, both of them are moral persons. Thus they could potentially be brought to justice if they had committed a wrongful act. Moreover, one person cannot found a non-profit corporation or a cooperative. Indeed, a minimum of 2 people (5 in the case of a cooperative) has to be involved. The more you are, the easier it is going to be for you to meet your goal, subject to a solid internal organization.

Q: How are the decisions taken?

Non-profit corporations and cooperatives function according to democracy. Indeed, each member involved in either one of these two entities has a vote. Kind of cool, no?  However, we have to clarify some things.

Firstly, the goal of these two structures is different. A cooperative is an enterprise that answers to its members. Thus, in this type of organization, humans are more important than capital and are at the heart of the cooperative’s strategy. Desjardins is the typical Quebec example of what a cooperative is, being the second largest cooperative in the world since 2014.

On the other hand, a non-for profit is a moral person composed of individuals who want to come together in order to foster the common good by offering services to their community, without seeking profit. Closer to home, there is L’Esplanade, a non-profit who gather a community of social entrepreneurs in a coworking space.

Q: What about profits?

That is the big question distinguishing a cooperative from a non-profit corporation. The first one will redistribute its profits as dividends amongst its members and proportionally to their operations. Those profits will be used to ensure the internal financial health, develop the activities proposed by members and invest in the development of the cooperative.

A non-profit doesn't grant to its members any right to the assets or revenues obtained. If there are any profits, they will be reinvested into the association's development.

Q: What does the law say?

Cooperatives are regulated by Quebec’s Cooperatives Act. Non-profits are subject to Part III of Quebec’s Companies Act. For more details, consult the comparative chart made by the Cooperative de Développement Régional. Do you still have doubts or questions? Don't hesitate to contact us and we’ll put you in touch with a lawyer, at a flat rate.

Laetitia Barrère

 

 

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