How To Start a Not-for-Profit Organisation: A Guide to Helping People

by Zoe Spanos

January 23, 2023
Blog, Startup

If you have ever wanted to help people, a not-for-profit organisation (NFP) may be one of the best ways to provide support for people in need.

Examples of well-known NFPs include Beyond Blue, The Smith Family and World Vision.

Not-for-profit organisations in Australia are a great business idea. However, there are particular obligations you have to meet when starting a business. In this article, we’ll provide an overview of the essential elements you’ll need to start your non for profit organisation.

What is a Not-for-profit Organisation

A not-for-profit organisation in Australia exists for a purpose and not for commercial gain. They include both charities and other organisations such as sporting clubs and professional associations.

What’s the difference between a NFP and Charity?

Charities are a particular subset of NFP’s and are regulated by the Charities Act 2013 (Cth). In addition to this the Australian Charities and Not-for-profits Commission (ACNC) also regulates what charities can and cannot do and ensures their compliance with the legislation.

Getting Started : The Pre-Planning Steps

Doing some effective research, even before you establish a business plan for your NFP will really help you set the foundations of the orginisation early on.

That’s why we recommend a few important steps to consider—we call them the pre-planning steps.

Costs

Cost is a major factor particularly when setting up a NFP and hence having a working knowledge of spends—big and small is key. As a Non-for-profit organisation managing your finances will be a critical step to ensuring viability of your idea. You should think about:

What resources you will need;
how you want to help people; and
how will you execute your idea.

Develop a Not-for-Profit Orginisation Plan

Excellent planning often leads to success. Using your research, you should develop a formal orginisation plan to guide your organisational needs. This should include your:

Orginisation objectives and goals —how far you want to take your business, what will be the right goals for your business and how you will achieve them
Target market—who is the ideal customer for your business?
Competition- who is your competition
Marketing strategy – how will you promote your business?

You can always seek assistance from a professional accountant or business lawyer to assist you with this, if you aren’t confident in developing a orginisation plan yourself. It’s important to revisit and review your orginisation plan regularly.

Find a Organisation Name

Now you need to decide on an organisation name. Once you decide on your name, you can check the availability of the organisation name you have chosen.

If the name is available, you can then register your organisation as a trademark to ensure that you have the exclusive rights to your business name throughout Australia.

Determining your Legal Structure

When you apply to the Australian Charities and Not-for-profits Commission (ACNC), you will need to choose your structure. You can choose to operate as an;

Unincorporated association – is not a separate legal entity from its members.
Incorporated association – more effective for smaller organisations, creating a separate legal entity is easier and simpler than setting up as a company.
Company – creating a separate legal entity from its members.
Cooperative – are able to carry out some for-profit ventures.
Indigenous corporation – support the education, land, recognition and housing needs of Aboriginal and Torres Strait Islanders.
Trust – When registering as a charity, a trust must meet the requirements of a charitable trust.

The advantage of having a formal structure is having the ability to do things such as rent an office, borrow money, apply for government grants or take out insurance in the name of the organisation instead of a person’s name.

You should contemplate which structure will work best for your organisation goals. It is important to know what the legal ramifications are of each structure and how they can affect how you operate.

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Registering your Not-for-Profit Organisation

You need to register for a few things in order to make your NFT official. For instance:

A orginisation name.
An Australian Business Number (ABN) to help the Australian Tax Office (ATO) and customers identify your business.
It would be good practice to also register your business as a company (ACN) so you can benefit from limited liability.
Register your Tax requirements.
Ensure that all relevant licences or permits are valid.

Marketing your Not-for-Profit Business

To be competitive, you need to effectively promote your business. As a start, it would be helpful to:

Set up and maintain a website which should contain key information about your business including your contact details. It is also important consider any website terms and conditions to ensure that your customers are safe;
Set up and maintain a social media presence such as a Facebook and Instagram page;
Use traditional physical marketing methods including newspaper advertisements and flyers; and
Promote through suppliers who sell air conditioning equipment.

Having an online presence is important even for construction companies. Using websites like Shopify or GoDaddy can help you create a well-established business so that your customers can easily find you.

Considering the Law

When you are a Not-for-Profit you will need to operate in a particular way to ensure you are complying with the relevant legislation.

Is your organisation not for profit?

Firstly, to register with the ACNC your organisation must be not-for-profit. This can be shown in the governing documents of the company with a non-for-profit clause and by ensuring the organisation acts consistently with this policy.

How would your governing documents look?

An incorporated association – articles of association
A company limited by guarantee or also a company under the Corporations Act 2001 (Cth) – A company constitution (you can also use the replaceable rules in the Corporations Act.
A trust – trust deed.
An unincorporated association – rules.

Does your non-for-profit have a charitable purpose?

To be a charity, all of your activities must be toward charitable purposes; however, this does not mean your charity cannot turn a profit.

This must align with the reason for your not-for-profit set up, except purposes that are ‘incidental or ancillary’ to the overarching charitable purpose. This a vital step in setting up your charity, answer the following questions to outline your purpose.

Who will benefit from your activities?
What is your charitable organisation trying to achieve?
What activities will you conduct?
Who is your target audience?
Is there a need for your organisation, or similarly, is there an organisation that already operates with the the purpose of your NFP?

What is a Charitable Purpose?

The Charities Act 2013 (Cth) lists 12 charitable purposes that your not-for-profit charity has to fit within. They are as follows;

Advancing health
Advancing education
Promoting social or public welfare
Advancing religion
Advancing culture
Promoting reconciliation, mutual respect and also tolerance between groups of individuals that are in Australia
Promoting or protecting human rights
Advancing the security or safety of Australia or the Australian public
preventing or relieving the suffering of animals
Advancing the natural environment
Promoting or opposing a change to any matter established by law, policy or practice in the Commonwealth, a state, a territory or another country, (where that change furthers or opposes one or more of the purposes above) and
Other similar purposes ‘beneficial to the general public’ (a general category).

There are at present approximately 56,000 charities operating in Australia, for example:

St Vincent’s Aged Care: Providing a holistic approach to aged care
Steward House: Children’s respite care charity
RSPCA: The Royal Society for the Prevention of Cruelty to Animals: Providing animals with care, shelter, education, medical attention and love

Does your not-for-profit benefit the public?

Above all, your not-for-profit must benefit the public. You will need to establish how your organisation can provide goods, services, education, counselling or spiritual guidance, or also improve the environment to benefit the public.

Ensuring your charity complies with the rules of registration

Your charity must have an ABN, meet the legal definition of a charity, meet governance standards and not be an organisation that cannot be registered. If your organisation is registered as a company, you must also appoint directors and ensure they uphold their duties.

Tax Concessions

Given your organisation is operating as a NFT, a perk is that there are tax concessions. If your organisation fits within the following categories you can apply for an income tax exemption.

registered charities;
community service organisations;
cultural organisations;
educational organisations;
employment organisations;
health organisations;
resource development organisations;
scientific organisations; and
sporting organisations.

How Lawpath Can Help

At Lawpath, we can help guide you through starting your own Not-for-Profit Organisatin. One of our Experienced Lawyers can provide you with all the legal information and requirements necessary for your business to succeed.