A group of people formed as a separate organization and which has as a stated purpose some charitable or benevolent purpose either in regards to the public at-large or in regards to the common interests of the members, and which operates as nearly as possible at cost.
Not For Profit
Nomenclature throughout common law jurisdictions has not been consistent in the development of the common law related to independent legal persons (corporations) which are not profit-seeking.
For what at the core is a non-profit corporation, the terms used by jurisdictions include society, not-for-profit, non-profit, association and co-operative.
In a passing-off case which considered the terms society and association, British Diabetic Association v Diabetic Society Ltd. 1995 4 All ER 812, the Court wrote:
"(T)he crucial issue is whether the single word society is sufficiently differentiated from association.... (T)he two ...words ... are very similar in derivation and meaning, and not wholly dissimilar in form.
"There may be background circumstances in which the small difference between the two words might be sufficient - it is, as the authorities emphasize, a question of fact to be decided in all the circumstances of the particular case - but in the end I have reached the clear conclusion that it is not a sufficient differentiation in this case."
In Pro-Campo Ltd. V Commissioner of Land Tax (NSW) 12 A.T.R. 26 (1981), the Australian Court stated, in part adopting words from a previous NSW case:
"The three words "society, club or association" are words in frequent use in our community and societies, clubs and associations are well-known entities. One knows that many organisations which give themselves the title society or association or club are as often incorporated as they are unincorporated.
"Small bodies having few members tend perhaps to remain unincorporated whilst the larger groups tend to become incorporated....
"A society ... is a number of persons associated together by some common interest or purpose, united by a common vow, holding the same belief or opinion, following the same trade or profession. etc: an association.
"A society as thus described, in which the common element pertains to areas concerned with religion, may aptly be described as a religious society....
"I do not think that any relevant distinction in nature exists between the two. It merely seems to have happened that some organisations are called "associations", others are called "societies" but no meaningful difference can be detected between the two."
The government’s act of incorporating creates an independent legal person with limited liability and so it is not done lightly. In regards to non-profit corporations, also known as societies, the Government generally limits the purposes for which a non-profit may be created.
Unincorporated organizations deprive their members of the limited liability that incorporation usually provides. But the unincorporated format involves far less legal paperwork and is in great use for such things as volunteer groups, sports clubs and book review clubs.
For example, within the jurisdiction of British Columbia, which prefers the term "society" to the term used elsewhere in Canada of non-profit or not-for-profit corporation, the enabling legislation, the Society Act, 1996 RSBC Chapter 433, sets out an extensive list, the following edited from the 2007 version of the act.
"A society may be incorporated under this Act for any lawful purpose or purposes such as national, patriotic, religious, philanthropic, charitable, provident, scientific, fraternal, benevolent, artistic, educational, social, professional, agricultural, sporting or other useful purposes, but not for any of the following:
"Carrying on a business, trade, industry or profession as an incident to the purposes of a society is not prohibited by this section, but a society must not distribute any gain, profit or dividend or otherwise dispose of its assets to a member of the society without receiving full and valuable consideration ...."
- the operation of a boarding home, orphanage or other institution for minors ...;
- the ownership, management or operation of a hospital ...;
- the purpose of carrying on a business, trade, industry or profession for profit or gain.
Typically, a society is distinguished from a for-profit corporation in that rather than raise capital by selling shares, the society would sell memberships; and rather than extend voting rights to shareholders, voting rights would be given to those who have bought memberships.
In regards to the non-profit characteristic of a society, Burke-Robertson and Drake, Non-Share Capital Corporations (Thomson-Carswell, 1996):
"That is not to say that such an organization is prohibited from carrying on activities that may realize a profit (for example, a museum may run a bookstore or gift shop), provided that these activities do not constitute the primary activity of the organization and that the funds realized are used for the objects of the organization and not passed on to its members."
The legal history of societies or non-profits was set out by the British Friendly Societies Commission in a 1999 paper entitled Fact Sheet and as follows:
"The origins of friendly societies can be traced back to the time of the Roman Empire when associations known as collegia were formed for a variety of mutual purposes including the payment of burial expenses of members.
"These collegia evolved over the centuries into the craft guilds of the Middle Ages. Members of these guilds usually lived in the same community or engaged in the same occupation. Grants were available to members for relief during periods of financial hardship or sickness and to cover the cost of a decent burial. The guilds eventually disappeared and were replaced by sickness or burial clubs. It was out of recognition of the need to regulate and to legitimise these clubs, or "friendly societies", as they became known during the 18th century that the Friendly Societies Act 1793 was born.
"During the 19th century societies grew rapidly as they were effectively the only means by which the working population was able to protect itself against loss of income through sickness or to make provision for retirement."
Categories & Topics: