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How to Register a Not-For-Profit Organization

20 October 2023

How to Register a Not-For-Profit Organization

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We also offer Business Name Renewal services.

To initiate your Business Name Registration process, please visit our online form.

Meanwhile, please visit here to register your company.

What are Not-For-Profit Organizations?

Not-For-Profit Organizations are organizations that operates without the objectives of generating profits, personal gains nor other benefits of the individual(s) running it.

An example of this is ShareTheMeal, a fundraising company backed by the United Nations (UN) which provides platforms for users to make small donations to specific WFP projects and to track its progress.

There are two broad categories under Not-For-Profit Organizations (in Australia, at least), consisting of:

- Charity (the most common category)

- Non-Charity (e.g. Sporting and Recreational Clubs, Community Service Organisations)

Not-For-Profit Organizations in Australia are governed by the Australian Charities and Not-For-Profits Commission (ACNC), and all Not-For-Profit Organizations should observe all regulations and laws outlined by the ACNC.

Please visit ACNC for further details.

It is, however, important to note that, unlike a typical Private Limited Company or Partnership, different procedures and structures are applicable for not-for-profit organizations in Australia, all of which will be discussed in depth here.

Should you be interested in setting up a Not-For-Profit Organization with Company123, please contact us at (03) 9832 0660 or support@company123.com.au to discuss further.

Why set up a Not-For-Profit Organization?

Perhaps you’re wondering: what's the point of setting up an organization if it won’t generate any profits?

It is essential to understand that Not-For-Profit Organizations, paradoxically, actually make profits.

Despite its nature, they are still organizations after all, and can (or should we say must) employ people and pay them.

The generic ways profits are generated are through membership fees, selling or leasing properties, investing in shares and receiving dividends, or receiving grants or other payment schemes from the government (the latter is usually applicable for "larger" Not-For-Profit Organizations).

However, the profits generated will not be kept by those running the organization; while profits will be used to ensure the longevity of the organization, they will also be allocated to support the purpose of the establishment of the organization itself.

Now, going back to the first question, there are a handful of reasons why you should set up Not-For-Profit Organizations:

(1) Improving Public Image

You’ve definitely seen those celebrities making generous donations to support certain causes.

Some even went to greater lengths by setting up their own foundations and charities.

One major advantage of doing so is to boost your public image.

Setting up a Not-For-Profit Organization improves your (or your company’s) credibility, goodwill, trustworthiness, and impact, and these generally help you gain competitive advantage in the industry.

You will also indirectly broadcast a message saying that you are different from those typical businesses driven by the desire to generate profits only and that you actually care about certain causes and the overall well-being of society.

(2) Tax Exemptions or Rebate

Yep, you heard that right.

As per the ATO, you may be eligible for a fringe benefits tax (FBT) exemption or rebate if your Not-For-Profit organization provides fringe benefits to its employees (or their associates).

FBT concessions for Not-For-Profit Organizations apply as follows:

- FBT-exempt organizations (exemption up to a capping threshold)

o Public benevolent institutions ( a type of charity) and health promotion charities registered by the Australian Charities and Not-for-profits Commission and endorsed by the ATO

o Public and not-for-profit hospitals

o Public ambulance services

- FBT rebatable employers – certain non-government not-for-profit organisations eligible for an FBT rebate of 47% of the gross FBT payable (up to a capping threshold)

- Religious institutions – exemptions for benefits for religious practitioners, live-in carers and domestic employees

- Non-profit companies that provide care for elderly or disadvantaged people – exemptions for live-in carers

As well as these concessions specific to not-for-profit organisations, there are exemptions and concessions that apply more broadly (such as exemptions for work-related items and minor benefits). These exemptions and concessions also apply to the not-for-profit sector.

For further details, please visit here.

Should you have further tax or legal questions, please book a consultation with us.

(3) Increasing Net Value

As discussed in the first point, setting up a Not-For-Profit Organization shows that you are supporting the development of certain causes and/or societies.

One benefit of doing so is to improve your/your company’s goodwill, which is defined as the value (intangible) of a company obtained from its brand, reputation, and customer base.

Imagine a scenario where you’ve decided to set up a Not-For-Profit organization under your company, and loads of people are actually part of that organization.

Wouldn’t it make your company more attractive and lucrative in the eyes of potential investors?

Wouldn't it be easier to generate more revenue, both for your company and the Not-For-Profit Organization?

The answer is yes!

(4) Achievement of Personal Goals

An important aspect which is, unfortunately, often overlooked when setting up a Not-For-Profit Organization.

Perhaps you’re a religious person who simply wants to set up places of worship for your fellow worshippers or is aspiring to make the world a better place.

By setting up a Not-For-Profit organization, you are actually taking a huge leap to achieve your personal aspirations!

Should you be interested in setting up a Not-For-Profit Organization with Company123, please contact us at (03) 9832 0660 or support@company123.com.au to discuss further.

Key Considerations Before Setting Up a Not-For-Profit Organization

Before actually diving straight into registering your Not-For-Profit Organization, some key aspects should be considered:

(1) Purpose of the Organization

The key component.

Do us a favour: grab a pen and a piece of paper, and write down, in detail, what you are trying to achieve when setting up a Not-For-Profit Organization.

Not only this is a mandatory step when generating all the necessary paperwork to register your organization, but doing so will give you a clear direction on where your organization is heading and what should be done to ensure those purposes will be achieved in the future.

(2) Constitution

Also known as the set of rules and regulations that should be observed by everyone involved in your organization operations.

This document is a legal requirement to set up a Not-For-Profit Organization.

In addition, please ensure that your constitution complies with the Australian Charities and Not-for-profits Commissions (ACNC) Governance Standards.

Please contact us at (03) 9832 0660 or support@company123.com.au to discuss further.

We can provide you with a legal expert who can assist you with Constitutions.

(3) ABN and GST Registrations

Just like an ordinary organization or company, Not-For-Profit Organizations will need to register for ABN and GST.

However, this is only mandatory if the annual turnover of the organization exceeds $150,000.

Please contact us at (03) 9832 0660 or support@company123.com.au to discuss further.

(4) Organization Structure

Not-For-Profit organizations will need to have a clear structure to ensure effective operations.

Members and board of directors/management committee will be required.

A membership base will also be needed to keep the organization running.

Meanwhile, as previously mentioned, there are two distinct legal structures for Not-For-Profit Organizations: Charity and Non-Charity.

Please ensure that you have correctly registered your Not-For-Profit Organization under the appropriate legal structures to avoid any legal issues.

(5) ACNC Registration & Reporting

If you have registered a Not-For-Profit Organization as a charity, you’ll have to register it with the Australian Charities and Not-for-profits Commissions (ACNC), and may need to perform additional reporting to comply with their obligations.

Please proceed to ACNC for further details.

(6) Fundraising

Despite its nature, you’ll need to work out on how to raise funds for your Not-For-Profit Organization to keep it running.

Generic ways include membership fees, donations, or obtaining grants.

However, there are different regulations governing different states for fundraising activities.

Please seek legal advice to ensure compliance with the existing regulations.

How to Start a Not-For-Profit Organization in Australia?

Before diving into the legal aspects to kick-off your registration, let’s briefly touch on the non-legal requirements:

(1) Ensure that everyone involved/will be involved is aware that the organization is a Not-For-Profit

(2) Please revisit the previous points regarding the Key Considerations before setting up a Not-For-Profit Organization

Now, going to the legal side:

(1) Constitution

Notice how many times we’ve mentioned Constitution in this blog post (and you're probably bored of it by now)?

Shows how important it is, not only for Not-For-Profits, but for every organization in general.

A company constitution is a legally binding agreement between your company and its internal members that defines rules related to corporate governance, business activities, and rights and obligations of its internal members.

Please ensure that your constitution complies with the Australian Charities and Not-for-profits Commissions (ACNC) Governance Standards.

Due to its relatively complex nature, it is advisable to seek legal help to establish your Constitution.

Alternatively, we can provide you with a legal expert who can assist you with Constitutions.

Please contact us at (03) 9832 0660 or support@company123.com.au to discuss further.

(2) Registering with ASIC

Once you’ve got your hands on a Constitution, you’ll then need to proceed to ASIC to register your Not-For-Profit Organization.

Your Not-For-Profit Organization will be registered as a Public Company Limited by Guarantee.

What are the differences between a Private Company and a Public Company?

A Private Company can be set up with just a single member, and once a Private Company is set up, operations can kick-off straight away.

A Public Company, on the other hand, will undergo a somewhat more intensive procedure when setting it up.

While at least two members will be required, it will need to wait for necessary certifications to arrive from Companies House before it can jump into business.

What is a Public Company Limited by Guarantee?

The term “Limited by Guarantee” simply means that the member(s) of the Public Company will be provided with financial protection.

As a result, member(s) have limited personal liability for the debts of the enterprise.

Why Not-For-Profit Organizations Must Be Registered as a Public Company Limited by Guarantee?

Since Not-For-Profits Organizations will not generate any profits to its member(s), all profits generated can only be used to fund the organization’s operations set out in the Constitution.

Simultaneously, when a Not-For-Profit Organization is wound up, its assets must not be distributed to its member(s). Instead, the aforementioned assets must be provided to an entity with the same or similar objectives of the organization.

(3) Registering With ACNC

Upon completion of the previous steps, you will then have to register your Not-For-Profit Organization with the Australian Charities and Not-For-Profits Commission (ACNC).

What is ACNC?

As its name suggests, the ACNC is the governing authority for charities and Not-For-Profit organizations within Australia.

All Not-For-Profit Organizations will have to comply with all existing ACNC regulations.

Please visit ACNC for further details.

Note:

The ACNC does not regulate fundraising; Fundraising is regulated by different bodies across different states.

Please ensure that your Not-For-Profit Organizations comply with the state’s fundraising regulations.

(4) Register Deductible Gift Recipient (DGR) with the ATO

Last but not least, you will need to register your Not-For-Profit Organization for Deductible Gift Recipient.

What is Deductible Gift Recipient (DGR)?

It is a status that allows everyone who makes donations to the organization to claim their donations as tax reductions.

For your Not-For-Profit Organization to have a “Deductible Gift Recipient” status, you must:

o Fit within one of the categories set out in subdivision 30-15 of the Income Tax Assessment Act 1997; and

o Meet other requirements

For further details, please visit ATO.

Meanwhile, please visit here for a more detailed explanation on the steps to register a Not-For-Profit Organization.

Disclaimer:

The aforementioned are the steps we at Company123 (and most company/business registration agencies) will have to undergo to set up a Not-For-Profit Organization.

Since these steps are mandatory, there will be no way to skip nor fast-track the process.

Should you be interested in setting up a Not-For-Profit Organization with Company123, please contact us at (03) 9832 0660 or support@company123.com.au to discuss further.

Case Study: Sustainability Victoria

Sustainability Victoria is a Not-For-Profit Organization based in Melbourne with an ambitious and exciting agenda to achieve net zero emissions, reducing waste and building climate-resilient communities across Victoria by 2050.

More job creations in the clean energy and waste recovery sectors, more homes sharing renewable energy, and an increase in net zero carbon homes and schools are some of Sustainability Victoria’s vision.

Sustainability Victoria have been building partnerships with government departments, councils, businesses, schools, universities, and the wider community to achieve the aforementioned agenda.

As of now, the Victorian Government’s 2030 targets Sustainability Victoria is working towards are:

- Reduce greenhouse gas emissions by 45-50% from 2005 levels

- Ensure 50% of Victoria’s electricity comes from renewable sources

- Reduce total waste generation by 15% per capita

- Reduce organic material by 50% going to landfill

- Increase waste recovery to 80% of collected waste

- Reduce recycling contamination with 100% of households having access to food and organic waste services or composting

Meanwhile, there are three main Focus Areas Sustainability Victoria to achieve the targets:

(1) Investment and Innovation

Sustainability Victoria is currently and consistently partnering with industry to create jobs and invest in new projects.

Sustainability Victoria is also providing financial and non-financial incentives and services to encourage private investment in infrastructure and other projects.

Other activities includes funding or designing finance mechanisms to leverage private investments into the net-zero circular economy infrastructure in Victoria, expanding provision of business advisory services, changing behaviour and product design thinking to reduce waste generation, and conducting research and developments to improve awareness on zero carbon circular economy programs.

(2) Behaviour Change and Education

Sustainability Victoria’s behaviour change and education programs were established to inspire individuals, groups and entire communities to change and take action towards a net-zero future.

Their campaigns spread messages to promote changes to attitudes and behaviours and to help Victorians take the next step.

Other activities include enabling renewable energy capture and storage through solar gardens through the 5-star school standard, creating a virtual research centre for various behaviour change and education purposes, and designing training modules to share knowledge on clean economy and sustainability.

(3) Community Action

Sustainability Victoria empowers communities while ensuring their advice meets the unique needs of local industry and works with local decision-makers.

Sustainability Victoria’s Community Power Hubs help small communities save and store their power in various ways, such as community batteries and solar panels.

Thus far, these actions have been proven effective, as there have been improvements in terms of costs, greenhouse gas emissions, and attracting private investments.

Other community action activities include facilitating and supporting local workshops, developing new business ecosystems and enabling SV Data and Intelligence Systems for smart tracking of distributed network growth across locations and sectors.

To date, Sustainability Australia has won numerous accolades, most recently being the winner of the Government, Education and Not-For-Profit category in the 2023 AFR BOSS Best Places to Work list.

Please visit Sustainability Victoria to read more on their agenda.

Sustainability Victoria’s $4.5m Funding to Divert Hazardous Waste

Recently in June 2023, Sustainability Victoria announced a $4.5m funding through the Circular Economy Infrastructure Fund (CEIF) Hazardous Waste stream to increase the recovery and local reprocessing of hazardous waste and reduce the amount and impact of waste going to landfill.

Funding was made with the aim of supporting industry and local government infrastructure projects focused on safe management and high value recovery of low-level contaminated soils, Reportable Priority Wastes (RPW) and specified priority wastes.

For further details, please visit here.

Sustainability Victoria’s Winning Formula for Workplace Culture

As per an interview conducted by the Financial Review on April 2023, Matt Genever, the current interim chief executive of Sustainability Victoria, shared the organization’s recipe for establishing and maintaining a desired workplace culture.

Genever outlined that the COVID pandemic was the catalyst for change in Sustainability Victoria and began focusing more on its staff’s wellbeing.

One remarkable action that was taken was the introduction of a menstruation and menopause policy, which is the first for a Victorian government department or agency, to support staff who suffer from the symptoms while providing them with extra flexibility.

The other is having a clear sense of purpose.

Sustainability Victoria, as mentioned by Genever, “knows why it exists”, and “knows what they are trying to achieve in terms of really significant changes that need to happen across the economy”. Doing so not only attracts more like-minded people into the organization but also helps retain its current staff by keeping them motivated and excited with what they are doing and heading towards.

Genever concluded by outlining how important culture and retaining workplace traditions established in the past is to ensure a “go strong” organization.

Please visit here to access the full story.

Final Thoughts

At this point, you should be able to see and understand why people set up Not-For-Profit Organizations, mainly due to its benefits.

While the “benefits” are non-monetary, the fact that Not-For-Profit Organizations were generally established to improve living conditions should further convince you.

And, as proven by Sustainability Victoria’s case, from an employee’s point of view, working for a Not-For-Profit Organization is, in fact, no different from working for a “normal” corporation. It may actually be even better, considering the causes you are working on achieving.

It must be remembered, however, that there will be certain requirements and procedures that differentiate the process of setting up a Not-For-Profit Organization from a generic organization/company.

We strongly encourage you to think and revise thoroughly, and if necessary, seek legal advice.

We are, unfortunately, living in a non-idealistic world.

The world is always evolving. Everything these days seems unpredictable and somewhat unstable.

As a result, more and more problems are arising, most of which can be solved should more people provide more helping hands.

By establishing a Not-For-Profit Organization, you are taking the first, essential step to empowering society, and while it is a far stretch, with consistent contributions, you will definitely achieve your goals in the future, if not the near future.

Should you be interested in setting up a Not-For-Profit Organization with Company123, please contact us at (03) 9832 0660 or support@company123.com.au to discuss further.