Why the new federal NFP Act is important to PSOs

Published February 28, 2012

Provincial Sport Organizations (PSOs) may be hearing about the “NFP Act” or the new not-for-profit corporations’ legislation that every nationally-incorporated sport organization is currently addressing. Just because this is a federal law doesn’t mean that Provincial organizations can simply ignore it. There are too many implications for PSOs.

Most amateur sports are governed, at the top, by a national body that oversees the provision of that sport in the entire country. Soccer Canada, CanoeCayak Canada, Canada Basketball, etc. Each of these NSOs has a membership structure that usually includes provincial governing bodies in each province. Baseball Manitoba, Hockey New Brunswick, Rowing BC, etc.

The PSOs have a defined relationship with their NSO – which tends to differ by the sport. In Baseball, each PSO is an “Active Member” of Baseball Canada and has one vote, and each PSO sends a representative Director to sit on Baseball Canada’s Board of Directors. Contrast that arrangement to Swimming Natation Canada, which has nine classes of membership (including athletes and coaches) and does not allow elected members of PSOs to serve on the national Board of Directors.

Though NSOs have different operating structures, they are all incorporated (currently) under Part-II of the Canada Corporations Act. This has now changed, and NSOs are required to transition to incorporation under the new Canada Not-for Profit Corporations Act.

Parts of the new legislation describe standard governance principles that all NSOs must now adopt - and your relationship with your NSO will soon change.

As NSOs work to comply with this new legislation, they may need to alter their relationship with you. At your next AGM, they may ask you to vote on any of the following things:

  • new governance structures and Board composition
  • new processes for voting
  • new (fewer) membership classes
  • new procedures to elect directors
  • new ways/dates to hold an AGM or special meeting
  • new financial record keeping

Many NSOs are (quite rightly) setting up governance subcommittees to handle the transition and educate PSOs and members about the necessity of the changes. Some NSOs are taking this opportunity to overhaul their entire relationship with their membership. Other NSOs may (with great risk, we feel) choose to simply edit their bylaws to try and become compliant with the new legislation. PSOs cannot ignore the process happening at the National level. The changes will likely take place at your AGM this year and if not, definitely at next year’s AGM. The deadlines are approaching quickly.

Even though PSOs are not incorporated under the same legislation, comparisons can be made between the operation of the NSO and the PSO.  In many cases, depending on the sport, PSOs operate with a similar membership structure (local clubs make up the voting members) or similar governance.  What works at the National level may not always work at the Provincial level – but good governance principles can certainly trickle down.

Lastly, PSOs in Ontario and BC will soon be undergoing the exact same transitionary phase as NSOs at the National level.  In Ontario, PSOs (and even some large local clubs) are incorporated under the Ontario Corporations Act and will soon (within three or four years) be required to become compliant with the new Ontario Not-for-Profit Corporations ActIn BC, the provincial government is currently receiving comments on its own proposed changes for its Societies Act, with the intention of updating the legislation.

The changes at the provincial level may not be exactly the same as the changes at the National level (i.e., it is unlikely that smaller organizations will require major overhauls) but they will be significant enough to require educating your membership and passing changes at your Provincial AGM.

Observing, and participating in, the process at the National level can only serve to help your Provincial organization when it comes time to make your own required transition.

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