LEGAL FOUNDATIONS
Some Deserve A Reserve
O
By Adam Aptowitzer
bviously, one of the defining features of a not-forprofit organization is that it indeed operates without the intent to pursue profit. Unfortunately, this often results in confusion for the directors, as they seek to understand the exact application of this idea in the context of pricing their services. There is a clear tension between the ability to charge more for goods or services provided by the organization, if for no other reason to put some money in the bank for a rainy day, and this most fundamental qualification of a notfor-profit. The question then arises as to whether or not such a corporation can amass assets and if so, how much? The question is somewhat complicated by a number of factors. While it is difficult to rank the importance of these, the most practically difficult is the requirement that the directors act in a reasonable manner to safeguard the finances of the organization. Clearly then, the bias would be to amass as large as a fund as
The CRA’s rule was that it considered one year of operating reserve to be a baseline test. 36
FOUNDATION Magazine
January/February 2020
foundationmag.ca
