About Member-funded Societies
Under the Societies Act there are two kinds of societies: ordinary societies and member-funded societies.
Member-funded societies exist primarily for the benefit of their members and have the following statement in their constitution:
This society is a member-funded society. It is funded primarily by its members to carry on activities for the benefit of its members. On its liquidation or dissolution, this society may distribute its money and other property to its members.
Compare the Two Kinds of Societies
A member-funded society may, on its winding up, distribute its money and other property to its members, and is subject to fewer accountability measures than an ordinary society. Here are the differences:
|Member-funded societies||Ordinary societies|
|Distribution of assets on winding up||No restrictions – assets could go to members||Assets can only be distributed to certain entities (such as, non-member-funded societies, registered charities or community service cooperatives)|
|Number of directors||One director is sufficient – no residency requirements||At least three, one of whom is ordinarily resident in B.C.|
|Composition of board of directors||No restrictions on number of board members who are employed by or under contract with the society||Majority of board must not be employed by or be under contract with the society|
|Financial statements||No public right to copies||Public has right to obtain copies|
|Disclosure of remuneration||No disclosure of remuneration required||Financial statements must set out remuneration paid to directors and to highly paid /contractors|
|Conversion to company||Can convert||Not possible|
How to Become a Member-funded Society
A new society indicates if it wants to be a member-funded society at the time of incorporation.
An existing society indicates if it wants to become member-funded at the time of transition or must obtain court approval to become a member-funded society after transition. In either case, the society must obtain a special resolution of its members to become a member-funded society.
Becoming a member-funded society is a choice. Even if a society qualifies to be a member-funded society, it is not required to become one. Member-funded societies are not eligible for some types of government funding – such as community gaming grants.
Can Your Society Be a Member-funded Society?
The Societies Act (Section 191) and Societies Regulations (Sections 12 and 13) describe the conditions that preclude a society from being a member-funded society.
Basically, member-funded societies cannot
- Receive a significant amount of public donation or government funding (see information below)
- Be a type of society prohibited by the Act or regulation from being member-funded such as
- Registered charities
- Student societies
- Hospital societies or societies licensed to operate community care facilities
Please refer to the Societies Act and Regulation for details.
Not sure if your society can be a member-funded society? Answer a few questions to determine if your society can be member-funded.
Public Donations and Government Funding
A society cannot be a member-funded society if, in a two-year financial period, it receives in public donations and government funding, or a combination of both, the greater of
- $20,000 and
- 10% of the society’s gross income for that period.
Public donations – Gifts in kind count as public donations. However, donations made by someone within the society (voting member, director, senior manager, employee, or a spouse or relative of such person) are not considered public donations.
Government funding – This includes grants, interest free loans and similar funding. It does not cover fees that societies earn or income received under service contracts or other contracts.