With the estimated 57,984 registered charities in Australia and the number of new organisations growing rapidly, here are the top tips for people to consider before deciding to start a charity or not for profit organisation.
Before you start a charity, ask yourself these questions:
1. Research on Charity?
What do you want to achieve? There may be an existing charity or not-for-profit that already does what you want to do or that may take on your idea as a project that it can support. Search the ACNC Charity Register to find registered charities that you could support or work with on a project.There are benefits that come with registration (such as charity tax concessions), but registered charities also have ongoing obligations.
2. Determine charity’s purpose?
Write down in detail what you want to achieve with your charity – this will affect how you set it up and what you need to put in place to meet these goals. For example, who will the charity benefit and how? Outline the main activities, services or programs you intend to provide, your target audience, do a need analysis of the charity and succession planning.
To be registered as a charity with the ACNC, your organisation must be a not-for-profit with a charitable purpose that benefits the public. The charity purpose affects the registration subtypesand has a consequence on the tax concessions and deductible gift recipient status endorsements from ATO.
3. What resources are needed?
You may need to cover start-up as well as ongoing costs. It may be worth getting financial and business advice. Some of the resources you may need to plan for include: getting others involved (volunteers or staff), assets (such as an office, IT and other equipment), ongoing costs (such as utilities, rent, licences, insurance and supplier costs) and promotion.
4. Options on fundraising?
Charities raise money in many different ways, including charging membership fees, holding fundraising events and selling goods. Many fundraising activities are regulated by state and territory governments and you may need a permit before you start. Find out more about your local state or territory regulator before you start fundraising.
5. Charity tax concessions?
There are a number of tax concessions available to charities. Your charity must be registered with the ACNC before it can receive Commonwealth charity tax concessions. Some charities may also be eligible to apply for deductible gift recipient (DGR) status with the Australian Taxation Office. You can check your charity registration and charity tax concessions through the ACNC website or making direct application to ATO.
6. Importance of legal structure?
Your charity’s legal structure incorporated or unincorporated (if it is incorporated, or a trust, for instance) will affect many things, such as its legal identity (whether it can be sued), its governance structure (who makes decisions and how), its responsibility for debts, and specific responsibilities to government agencies.
There are pros and cons for each structure and no one size fits all for charities.
The advantage of having a formal (incorporated) legal structure is that you can do things such as rent an office, borrow money, apply for government grants or take out insurance in the name of the organisation (rather than, for example, in the name of an individual committee member).
This is an important decision, so consider undertaken research and getting legal and other professional advice if needed.
7. Consider other legal and regulatory issues?
There are many legal implications in setting up a charity, and it may have to comply with a wide range of laws. You may want to get professional (including financial and legal) advice to assist you with things such as such as multi-state or territories, charity tax concessions, workplace health and safety laws, insurance and employment laws.
8. Who will manage your charity?
Running a not-for-profit organisation, while rewarding, can be very time-consuming. Having more people helps share the load, making it more effective and sustainable. Having good processes for decision-making, and other good governance practices, will protect you and your charity and help it to achieve its goals. This is tied to its legal structure. For example, it may need a board to be appointed.
If you are thinking about employing volunteers, remember to check what legal requirements you have to meet. For example, like any employer you need to provide a safe work environment.
9. Plan how to promote your charity and its work?
Look at your charitable purpose, and think about the kind of involvement you would like from the public and potential investors/donors. How will you reach your target audienceto promote your charity’s work and encourage people to get involved?
10. Understand your charity’s obligations under the ACNC standards and seek more information?
To become and remain registered with the ACNC, your charity must comply with the ACNC’s Governance Standards, and if it operates overseas, the External Conduct Standards as well.
These standards may require your charity to have certain policies, process or procedures in place to be eligible for ACNC registration.
The ACNC website is full of resources to guide and prepare you to register your organisation as a charity, and to understand your obligations to the ACNC and other Commonwealth, state and local regulators.
