Starting a new charity is an exciting time to make a positive difference, but the legal side of things can be confusing.
Whether you’ve just got an idea, or already working in your community, if you’re looking for guidance on how to get your legals right, you’ve come to the right place!
Part I of the series covered how to choose the right legal structure for your charity.
Now that you’ve chosen a legal structure, in this Part II we’ll take you through how to get your charity registered and up and running.
1. Assemble the team for your charity
The constitution of a charity sets out the rules for the organisation.
It is a very important document that covers the charity’s mission, member’s rights and responsibilities, appointing officers, how to conduct meetings, winding up, and so on.
It is essential to make sure your constitution has all the elements required for compliance with the Australian Charities and Not-for-profits Commission (ACNC) and the Australian Taxation Office (ATO). Having a properly worded charitable purpose is especially important to get through the compliance hurdles.
The good news is, the government has made available some model constitutions to make it easier to set up charities cost-effectively.
That being said, we highly recommend you seek professional advice if you are unsure about the suitability of the model constitutions for your legal structure – please get in touch with us if you need help drafting your constitution.
2. Incorporate your charity
Once you’ve drafted your constitution, the next step is to incorporate the entity with the relevant government body.
For a Public Company Limited by Guarantee, you’ll need to do this with ASIC. In the case of Incorporated Associations, each State will have its own government body that will take care of this (eg in NSW, Fair Trading regulates Incorporated Associations).
Whether you’re setting up a Public Company Limited by Guarantee or an Incorporated Association, the general process will involve the members agreeing on the constitution, filling out the relevant forms, and applying to the government body by paying the relevant fees.
It might be a good idea to have a kick-off meeting with the prospective members to discuss the process, organisational structure, and the roles that each member will take.
3. Get an ABN
Once a legal entity is set up, the charity will be able to apply for an Australian Business Number (ABN). You’ll need an ABN to register with the ACNC as well as to get a bank account.
You can apply for an ABN online, and its free! However, it’s important to get this step right (including applying for the correct structure).
4. ACNC registration
You’ve now got a legal entity for your charity and obtained an ABN. The next step is to get registered with the ACNC.
The ACNC is the national regulator of charities and takes care of registering organisations as charities. This is the last hurdle you have to clear before officially becoming a “charity”.
You can do the application online, but it is a fairly lengthy form. Before you get stuck into it, there’s a helpful checklist on the ACNC website to prepare you for the application.
If you’re also seeking to get tax concessions from the ATO, you can do this through the ACNC form – the next section will set out more details on this…
5. Charity tax concessions
There are a number of tax concessions available to charities.
Depending on your structure, you may be entitled to income tax exemption, fringe benefits tax (FBT) exemption or rebate, GST concessions, deductible gift recipient (DGR) endorsement and refunds of franking credits.
These charity tax concessions will all be taken care of as part of the ACNC application and the ATO will assess it once you submit your application.
Your eligibility for these concessions will depend on your legal structure, charitable purpose and the way your constitution is drafted, so we highly recommend you get professional advice if you’re not sure about anything.
6. Ongoing charity reporting
You’ve completed all of the above steps and your charity is up and running. Now, you and your team have the responsibility to make sure that your charity meets all of the corporate governance requirements, including holding AGMs and reporting to the relevant government entity.
The specific reporting requirements will depend on whether you are a Public Company Limited by Guarantee or an Incorporated Association. If you’re after more specific advice on your charity’s reporting requirements, feel free to ask us!
Ready to go? Hopefully this series will help guide you through the legals, so that you can focus on making the most of your charity and giving a voice to your cause.
If there’s anything you’re unclear about, don’t forget that Sprintlaw can help you with your legals as we have expert lawyers that specialise in advising charities and not-for-profits. If you would like more information about charities and not-for-profits, don’t hesitate to contact us here.
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