So you’ve decided to register your charity with ACNC. You are keen to fulfil an important social purpose and are willing to exert effort to this end. What are the steps involved in setting up a legally compliant charity, including business plans and legal structures? In this Insight, we explore this important question and present a useful summary of the key parts of the process.

Where to start

Before applying to be registered, a charity must fulfil the following four eligibility requirements:

  1. The charity must be a not-for-profit: a not-for-profit is an organisation that does not operate for the profit, personal gain or other benefit of particular people. This can be shown through the charity’s governing document, (discussed below).
  2. The charity must have a charitable purpose: the types of charitable purposes are listed in the Charities Act 2013 (Cth).
  3. The charity must benefit the public: there are many ways it may do this including providing goods, services, education, counselling, spiritual guidance, advancing education or religion, relieving poverty and improving the environment.
  4. The charity must comply with the other registration rules:
  • Must have an ABN
  • Must not be an individual, or a partnership
  • Meets the ACNC Governance Standards
  • If any part of its operation is overseas, it must meet the ACNC External Conduct Standards (more information of these standards are outlined in our ‘External Conduct Standards’ article.

If each of the above four requirements are satisfied, the charity can proceed to apply for registration with the ACNC. The application form is to be completed online, requiring details of the charity’s:

  • purposes,
  • resources,
  • legal structure,
  • governance,
  • legal and regulatory issues, and
  • charity management.

Significant penalties apply for providing false information to the ACNC in connection with an application for registration.

Start with a business plan

Developing a viable business plan will help you answer some of the more fundamental questions that the ACNC registration process is designed to test.

Find your ‘why?’ What problem(s) is your charity trying to solve?

Be specific. Be focused. Be practical. Solving world peace is a wonderful aspiration, but it won’t help you to draft your charitable purpose.

What does success look like? Set some SMART goals and work through how you intend to measure your charity’s performance against these goals.

Develop your ‘how’. Charities raise money from donors and deliver goods and services to beneficiaries. Your plan should show how your charity intends to achieve this, setting out the assumptions involved, the risks and how it plans to mitigate the risks. How does your charity intend to address each of its charitable purposes over time? If you plan to operate overseas, ACNC will expect you to formulate a substantive project plan for each country you plan to operate in, covering the operations and risks particular to each jurisdiction. How do you intend to monitor and supervise your overseas operations and protect the human rights of vulnerable people?

You will need to identify how your charity is to be resourced. What human, technological and financial resources will be required? When will these resources be required? What will they cost? You’ll need an annual budget showing income and expenditure and where you plan to be financially over the next few years.

How will your charity be governed, administered and managed? Who will make the strategic decisions, who will administer the charity’s operations? How do you plan to comply with all your charity’s legal obligations? What records will you keep? What financial and management reports will you produce to enable your Board to properly oversee your work and respond to emerging risks and challenges in your operating environment?

Determine what legal structure is required

The legal structure (entity) of a charity acts as the building blocks for your charity to meet its present and future needs. It will affect aspects including your charity’s legal identity, governance structure, liability and responsibility to government agencies.

Do you intend to operate in different states and territories?

This will help to determine the type of entity that may be best suited to operate the charity and in which jurisdictions it needs to be registered.

How will the charity be governed?

As a requirement for registration, a charity must have a governing document (also known as the constitution, rules, articles of association or trust deed). This is a formal document that includes:

  • the organisation’s legal name
  • the organisation’s charitable purposes
  • that the organisation operates on a not-for-profit basis, and
  • the rules and processes that outline the way the organisation makes decisions, the way it governed, and how it is to be wound up

As part of the charity’s governance, a full list of the people responsible for governing the organisation is required. These include the board members, directors, committee members or trustees. You will also need to think about how the organisation is structured. How many levels of supervision are required? If it is to be a national body, will there need to be state based organisations represented in the governing body?

Determine how the charity will be managed

It is vital to consider how the charity will be managed. Who will make the day to day operational decisions and how are those decision-makers to be accountable? Things to be considered include the requirement of a governing body, the rules and practices put in place to govern the charity, whether there will be meetings held for formal decision making etc. A Board Charter will help to set the high-level principles by which your organisation intends to operate. It will reference your mission and purpose, speak to your organisation’s values, how it intends to conduct itself, detail the different roles and responsibilities, approach to managing risk and complying with relevant laws.  Can you represent the different roles within the organisation in an organisational chart covering employee, contractor and volunteer positions, supervision and reporting lines?

Your Board is going to need regular financial reports showing how the charity’s income and expenditure is tracking against your annual budget. It will also need a series of regular management reports to help it understand and supervise your charity’s operations.

Plan to comply with the law

The directors and/or responsible persons have a responsibility to ensure that they and the organisation comply with all Commonwealth and Territory regulatory, legislative and legal requirements, including, but not limited to:

  • Corporations laws;
  • Tax and Revenue laws;
  • Charities laws;
  • Competition, Consumer and Fair-Trading laws;
  • Environmental laws;
  • Criminal law;
  • Employment laws, including those that relate to workplace health and safety;
  • Equal Opportunity and Disability Discrimination laws;
  • Relevant industry codes of practice.
  • Human Rights laws;

If the Charity operates overseas, these requirements also include

  • United Nations Securities Council Resolutions;
  • Australian Autonomous Sanctions laws;
  • Anti-Money Laundering and Counter-terrorism financing laws;
  • Anti-Fraud, Anti-Bribery and Anti-Corruption laws;
  • Anti-Slavery laws;

Develop key policies and registers

You’ll need a series of policies and registers that cover issues as diverse as conflicts of interest, employment practices, volunteering, financial delegations, record keeping, the protection of vulnerable persons, preventing terrorism financing and how your charity intends to manage its income and assets.

Lodge your application

Once you have your key documents ready you can lodge your application to register your charity. You can then expect ACNC will review it and may issue requisitions seeking more detail or supporting material.

So, no matter where you are on the pathway to registering your charity – get in touch for a confidential discussion. As always, the Not-for-Profit team at Birchgrove Legal is here to help to turn your commitment to helping others into a reality.

Birchgrove Legal is a boutique Sydney law firm that specialises in the not-for-practice sector. Its market-leading practice is at the cutting edge of innovative approaches to serving NFP sector organisations across the spectrum of entity types. Get in touch with one of our authors to discuss your needs further.

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