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Charities & Not-For-Profits Law in Australia

Starting a Charity or Not-for-Profit

Posted in General, Tax Exemptions & DGR Status

Starting a Not-For-Profit or Charitable Organisation

Are you thinking about starting an organisation, charity, club, association, social enterprise, co-operative or some other kind of not-for-profit group? If so, this information may be helpful.

What’s the Difference between a Charity and a Not-For-Profit?

There are approximately 600,000 Not-For-Profits in Australia and approximately 60,000 are registered as charities.

Charities are entitled to a range of tax concessions that are typically not available to other Not-For-Profit organisations. These may include Income Tax Concessions, Fringe Benefits Tax, GST concessions and endorsement as a Deductible Gift Recipient (DGR).

Typical examples of Not-For-Profit organisations include sporting clubs and community groups.

In comparison, to be registered as a charity, an organisation must be ‘Not-For-Profit’ and must also fall within one (or more) charitable purposes.

These charitable purposes broadly are:

  • relieving poverty, sickness or the needs of the aged;
  • advancing education;
  • advancing religion; or
  • other purposes beneficial to the community.

The Charities Act 2013 codified the above charitable purposes into 14 categories, however, the future of the legislation is currently unclear.

What is a Deductible Gift Recipient (DGR)?

A DGR is an entity with tax status that entitles a donor to a tax deductible receipt to the value of the donation or gift. DGR status also entitles the organisation to receive funds from particular types of grant makers and philanthropic bodies that are only able to give money to organisations that have DGR status.

DGR status is not available to all charities, but is available to charities that fall within one of the DGR categories. For a full list of DGR categories click here.

Typically, organisations seek DGR status as it makes charitable giving more attractive to donors. However, it is worth noting that DGR status is not essential in order to fundraise, and some government entities, philanthropic organisations and members of the public are happy to provide funding or give donations to organisations without DGR status.

If you are undertaking fundraising activities for charitable purposes (irrespective of whether your organisation is endorsed as a DGR) you need to apply for a fundraising licence in each of the States and Territories where fundraising is undertaken. This requirement does not apply to religious institutions in some states.

Is my Organisation Eligible for DGR Endorsement?

We would be pleased to assist you with determining whether your organisation should register for DGR endorsement, and recommend that you review the comprehensive Guide to Deductible Gift Recipient Status published earlier this month by Justice Connect.

More information

Please do not hesitate to contact Bill d’Apice and Anna Lewis of this office for assistance with the establishment of a Not-For-Profit or charitable organisation including the drafting of a relevant governing document and applying for relevant tax concessions.