The selection of a legal structure for a social enterprise should be informed by vision, mission, business strategy, and other management considerations. Choosing a structure that does not support these factors can be detrimental to an organization, so it is essential to seek expert legal advice before incorporating or selecting a legal structure for a social enterprise. However, sometimes, business models can adapt over time, unforeseen circumstances can arise, and change can become necessary.
For those wishing to embark on social enterprise, there is a lot to consider. There is no designated legal structure for a social enterprise and the structural options and set up costs for all entities vary from province to province. Since there are multiple incorporating statutes in Alberta, and since tax status is governed federally, it is confusing for enterprising charities and nonprofits to understand the restrictions surrounding their ability to earn revenues or generate profits.
If your nonprofit organization is incorporated under Part 9 of the Companies Act, you will want to get up to speed on a number of changes that were proclaimed into force on March 29, 2021.
“If I were to go out and create a nonprofit organization today, I would make sure that social enterprise was baked in – it’s a missed opportunity if you don’t. We might be considered as “nonprofit”, but we are really “for impact”. You can make money and do good. It is possible.” ....Laura Istead, Executive Director, Two Wheel View
The pandemic has had devastating impacts on the nonprofit sector as a whole, especially on the financial stability of many nonprofit and charitable organizations. With increased demands for services, and funding from donations and government sources drying up, what can nonprofit organizations do to remain sustainable? One option is to consider social enterprise.
When a major storm approaches the captain of a ship has two choices. In short, a ship can turn and run, or it can sail directly into to the storm. Both options come with risks. Either choice requires deliberate action and preparation to have a chance of success.
From my years of being an auditor for many nonprofits, I encountered numerous tales of nonprofit organizations that exposed themselves to unnecessary risks, at times with disastrous consequences. I offer a few of them to you as a way of helping you evaluate the risk profile in your nonprofit.
As the pandemic wears on without imminent relief, the risks that all nonprofits are facing are continuing to shift. Unfortunately, we can’t afford to wait until things calm down, we need to expend resources preparing for these emerging risks now. Robust discussions with your Board and staff on the top risks will be a worthwhile investment in your future.
While risk management planning had been prioritized at multiple levels of the organization, the culture that guided the process was primarily focused on documentation; doing it so that we could say it was done, and reporting the “completion” of our plans back up the chain. Despite significant effort and resources expended, we never reached the point of a comprehensive risk management plan coordinated across departments, that could be collectively and collaboratively implemented when needed.
We are living in unprecedented, challenging times. However, the COVID-19 pandemic and its impact on our organizations and our communities is not the first crisis that we have experienced; and unfortunately, it won’t be our last. But should we have seen it coming? Could we have been better prepared? How can we prepare for an uncertain future and whatever the next disruption will can we be. The time for paying attention to your organization’s risk management practices is now.
Earlier this year, when the COVID-19 crisis began, the Government of Alberta responded with a Government order that included a suspension of deadlines for nonprofits governed by Alberta law to hold their annual general meetings and allowed for holding of meetings through remote means. However, it is important for Alberta nonprofits to be aware that this Government order has now lapsed.
As organizations move from the initial response to the crisis to begin to visualize and plan strategically for the future, some may decide that they want to seek out other organizations to “get together with” to maximize impact on the communities they serve and the resources that are available.
While the world economy is facing unprecedented challenges, and the unemployment rate in Canada and many other countries is soaring, there are still reasons to be hopeful ... I suggest that this is a time in which nonprofit and charitable organizations can also pivot their operations and explore opportunities to diversify their revenue sources.
There is little doubt that we are in a crisis. Our lives, both personally and professionally, confront this reality daily. At home and in our organizations, the stresses and challenges of working and living in a seemingly unending pandemic are manifold. Crisis has come to define much of our existence. As we enter month two of this reality, our modes of working are settling into a new norm. While we know that this state of crisis cannot last, the roadmap for moving forward remains unclear.
The past weeks have been a whirlwind for nonprofits. In a matter of days, the pandemic changed both the ways we work and the environment we work within . . . . But in any disaster or wide-scale public emergency, there is a period when organizations and the community as a whole move from response to recovery.
“I am the Executive Director of a nonprofit in Red Deer that provides programs and services for immigrant families. I know that there were some recent changes to the Alberta OHS Act. What are the changes and how do they affect my organization?”