In Australia, there are already hundreds of thousands of nonprofits, so before you begin a new one, it’s a good idea to determine if there is a genuine need for one. Since starting an NFP is quite costly, and comes with several restrictions, there are times when both you and the public would be better served by directing your talents and funding to an existing organisation. The ACNC Registry is one of the resources that you can search to try to locate an existing charity or other nonprofit that seeks to accomplish the same goals that you would set should you form a nonprofit.

You can also search for nonprofits and additional pro-bono groups via Google or another search engine. In this way, you can gain a better idea of whether an existing group is already working on the problem or other need that your group would like to resolve.

Once you’ve conducted your research, if you still want to create your own NFP, you will then need to determine what legal structure you will use to organise your group. Charities and other NFPs are the two most common types of nonprofit groups because these types of organisations qualify for the most preferential tax treatment. Despite the benefits, there are some drawbacks as these types of groups also have the most requirements and legal obligations for their boards and other key members of their organisations.

What is an NFP?

NFPs are broadly divided into two groups: charities, and other nonprofits that organise to provide services for the public good, such as a club, sporting association, professional group or other service group that is built around a common need or interest and acts in the public interest.

Establish a Solid Foundation

Once You have decided on which legal structure you will organise under, you will need to begin the start-up process of your organisation. This means creating your first board of directors and sitting down with them to establish your mission and define your values. To do this, you will need to have a clear vision of what you want your organisation to achieve, and what values you will uphold as you move forward on creating an impact and making a difference in your community.

Your board should work together to determine its strategic plan and goals, along with creating the policies and practices that assist them in their governance, oversight and fiduciary duties. Your organisation will need to determine its target audience, it’s funding needs, fundraising strategy, budget, along with plans to minimise risk and strategy to help build and grow support for the organisation so that it can achieve sustainable growth and development.

It Pays to Know Your Purpose

To be able to organise as a charity, you will need to clearly define the purpose or reason why your organisation exists. Unless it is an incidental reason, all the reasons why your group exists must be charitable, that is, they serve the public good.

If your organisation qualifies as a charity, then it must register with the ACNC to receive preferential tax treatments such as tax concessions and to receive deductible gift recipient (DGR) status in specific categories. An exemption or refund of the Fringe Benefits Tax, concessions on the Goods and Services Tax, refund of Franking Credits and income tax exemptions are some of the most common and popular tax concessions for NFPs. Once an NFP receives DGR status, it not only opens the door to favourable tax treatment for the NFP, it also allows any donors to be able to deduct their contributions from their taxes, which encourages greater giving!

Other NFPs that are endorsed by the ACNC may obtain DGR status, and, are sometimes able to self-assess whether their income is exempt from certain taxes and qualify for particular concessions on their taxes.

Organising as an NFP requires Additional Registration

Regardless of whether you classify as a charity or other NFP, your group may also be required to register for an Australian business number (ABN), get an AUSkey, and will likely need one or more permits, licences, and registrations to operate legally. Charities and other NFPs are usually required to also register for the Goods and Services Tax (GST), Fringe Benefits Tax (FBT) and Pay As You Go (PAYG) withholding.

If you would like to learn more about this topic, the Australian Tax Office offers a great deal of helpful information for groups wanting to start a nonprofit on their website!