Guest blog by BlueRock Partners
Charities are everywhere. We generally consider all organisations that act with a benevolent purpose to be charitable. With such an influx of these organisations in Australia and overseas it has become increasingly difficult to determine which of these organisations are in fact reputable charities.
A charity can be formed out of an Australian company (limited by shares or by guarantee), an incorporated association, or even a trust. However, a charity—like a company—is a distinct legal entity which needs to satisfy a number of tests prior to satisfying the registration requirements. These requirements arise from a number of different pieces of legislation. Therefore, aspiring charities should be aware of the relevant legislative requirements and framework.
There are four key factors that determine whether or not an organisation will be considered for registration as a charity. The organisation must:
The benefits of registering as a charity include:
In order to be a registered charity, an organisation needs to be a not-for-profit organisation. This does not mean that the organisation cannot make a surplus, but any surplus must be kept to satisfy the future aims of the organisation. A not-for-profit will also be required to have appropriate provisions in their Constitution to prove that they are in fact a not-for-profit (e.g. winding-up clauses, typical rules adopted by not-for-profits, demonstrating that they are a not-for-profit etc.).
It is important not to confuse charities with not-for-profits. A charity must be a not-for-profit, but a not-for-profit may not always be a registered charity. In Australia, there are approximately 600,000 not-for-profit organisations, and only 60,000 of these are registered charities.
A registered charity’s purpose must be charitable and for the public benefit. Alternatively, if they are not explicitly charitable purposes, this requirement will be satisfied if they fulfil the furtherance of a purpose incidental to one or more of the 12 charitable purposes in the Charities Act 2013 (Cth).
The non-exhaustive list of charitable purposes are:
There are a number of further requirements that must be satisfied under each of these purposes.
The organisation is required to benefit the public. Certain purposes (such as education, religion, combatting poverty) are inherently in the public benefit, subject to evidence to the contrary.
Finally, in order to qualify for charity status, the organisation must:
Excluded organisations include political parties, government entities, and organisations noted as engaging in terrorist or criminal activities.
Additionally, not-for-profits with a ‘disqualifying purpose’ will also not be capable of being registered as a charity. The Charities Act 2013 (Cth) defines a ‘disqualifying purpose’ as “engaging in or promoting activities which are unlawful or contrary to public policy, or promoting or opposing a political party or candidate”.
Navigating your way through the legislative requirements can be both complicated and confusing. If you would like assistance with registering your organisation as a charity, contact BlueRock Partners on 03 8682 1111 or firstname.lastname@example.org or CCASA on 08 9340 9400 or email@example.com for more information.
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