Planning on starting a Charity? Here's what you need to consider

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Getting Started

Some questions to think about

What are the main objectives?

If you decide to apply to register the organisation's purposes, it will affect the charity subtypes that it can be registered with.

Why is there a need for a new charity?

What problem are you communicating to your audience to eradicate or cause to help support?

Who are you targeting?

Who are the type of people you are willing to help? What type of people are you planning to reach out to?

How long will it last?

Will it be for a one-off short-term project or an ongoing long-term venture?

The Resources Required

To determine the resources needed and the ongoing costs of a charity, the questions you need to consider are:

Do you have any money or other resources?
What are the required assets? (For example, a physical location, equipment, vehicles)
What ongoing costs will there be? (For example, utilities, rent, licenses, insurance, salaries)
How will you raise money?
Will you need an ongoing income?
Do you need financiers?
Do you need staff or volunteers? How many?

Fundraising Requirements for Charities

Funds and other resources are collected in numerous ways for charities, some of which include:

Membership fees
Public appeals including; social media, public collections, door-knocking and letter campaigns
Movie nights or fun runs
Auctions
Selling goods or services

The ACNC does not regulate fundraising or gaming activities (such as raffles). These activities are regulated by:

State and territory laws
Corporations and consumer laws.

Transferring funds internationally comes with its own risks. Therefore, staying on top to take appropriate actions in reducing these pitfalls from actualising is key in charity work.

For more information, contact the state authorities and regulators in the state or territory that you are collecting funds in.

The Importance of Legal Structure

The legal structure you choose should meet your charity’s needs now and into the future.

Charities have a range of incorporated and unincorporated structures and there may be more than one that works for your charity.

Your charity’s legal structure will affect many things such as:

Its legal identity (whether it can be sued)
Its governance structure (what decisions are made and who makes them)
Who is liable for debts
Its specific responsibilities to government agencies

The ACNC does not register charities according to their legal structure. However, you will be asked what your organisation’s structure is if you apply to register.

Before deciding on the legal structure you think is best for your charity, consider:

The type of tax concessions it will seek.
Size and complexity of the charity’s work.
Whether it will be volunteers or employees running the organisation.
The accountability of the organisation on members and the community.
The potential personal liability of members or office holders for things done by them on behalf of the charity.
Whether the charity will be applying for government grants.
How many states, territories or countries the organisation will operate in.

Having a legal structure allows one to expand their capabilities in terms of renting an office, borrowing money, applying for government grants or taking out insurance in the name of the organisation instead of an individual committee member.

Understanding Your Charity’s Obligations Under the ACNC standards

In Australia, complying with ACNC’s Governance Standards or ACNC’s External Conduct Standards are obligated upon every charitable organisation.

These standards may require your charity to have certain policies, processes or procedures in place to be eligible for ACNC registration.

Who Can Register to be a Charity?

To be a Charity, your organisation must adhere to the following:

Be a not-for-profit
- This type of organisation does not operate for the profit, personal gain or other benefit of particular people. This includes a charity’s board members, those who run it, their friends and relatives. The definition of not-for-profit applies both while the organisation is operating and if it winds up.
Have only charitable purposes that are for the public benefit
- A not-for-profit can make profit but any profit it makes must be used for its purpose.
Not have a disqualifying purpose, and
Not be an individual, a political party or a government agency.
- Charities can still distribute information or engage in debate about the policies of political parties or candidates. Although these activities must be ways of achieving their charitable purposes.

For information on eligibility for charity organisations with ACNC visit our note here.

Registering with ACNC

ACNC is the regulatory body in Australia that lays out the standards and obligations for charities in the not for profit sector.

When you apply to register your charity with the ACNC, you get the added benefits of charity tax concessions. ACNC will send an application for tax concessions on to the ATO, who will decide your organisation’s eligibility for tax concessions.

By registering with the ACNC you can:

Apply for additional tax benefits as a Public Benevolent Institution (PBI), Health Promotion Charity (HPC) or charity for the advancement of religion. To learn when a charity is benevolent, check out our article here.
Apply for certain categories of Deductible Gift Recipient (DGR) status. Some categories of DGR status are only available to registered charities
Receive a range of other concessions, benefits or exemptions available to charities under Commonwealth Law.
Have a free online presence on the ACNC Charity Register where the public, potential donors and funding agencies can find out information about them.
Reduce red tape for charities, including by aligning regulatory requirements for registered charities to streamline reporting requirements.

Charities registered with the ACNC are not required to prepare a directors’ report. This may reduce the cost of a charity audit, as the auditor is no longer required to review the directors’ report to check for inconsistencies with the audited financial report.

For more information on applying for charity registration with the ACNC, checkout our not here.

Getting Ready to Apply

An Australian Business Number (ABN) is mandatory in applying to the ACNC.

The ABN must:

Be Identified with the correct ‘entity type’.
Be the organisation’s ABN and be registered with the same name as stated in the organisation’s governing document.

The naming convention of the organisation must be the same as the name:

Listed on the Australian Business Register (ABR)
Shown in the organisation’s governing document
Registered with other regulators (such as ASIC) if applicable. Check out your obligations dealing with ASIC and ACNC in the charity sector here

The following details of the organisation will be asked:

An Address For Service (an email and postal address)
A business address
A primary contact person and their contact details (this will be the organisation’s contact person after it is registered).
A contact person for the ACNC to speak to about the application while we consider it (this can be the same as the primary contact person).

Once Your Charity Is Registered

Complying with ACNC’s Governance Standards is a must in order to remain registered as a Charity.

Your charity can choose how it meets each of the governance standards, but it must be able to demonstrate its compliance to the ACNC.

See a full list of the Governance Standards here.

Keeping information up to date

Your charity has an obligation to notify the ACNC of changes to its details, including its address for service, its responsible people, and its governing documents. Medium and large charities have 28 days to notify the ACNC of any changes and small charities have 60 days.

ACNC Governance Standards

To remain a registered charity, all charities (except basic religious charities) must comply with the ACNC’s Governance Standards. Your charity can choose how it meets each of the governance standards, but it must be able to demonstrate its compliance to the ACNC.

Annual Information Statement

Every Charity is obliged to submit an Annual Information Statement. Depending on the size of the charity, separate annual financial reports may also be required.
The due date for an Annual Information Statement is six months from the end of your charity’s reporting period.
See more information about the Annual Information Statement.

Planning on starting a Charity? Here’s what you need to consider