Starting your own charity is a noble pursuit, but you need to look before you leap. Choosing the right legal structure, creating a governance document, registering your new business, and applying for tax concessions can be complicated. Here are six steps to get you started.
1. Consider your costs
Depending on the scope of your organisation, you may need to cover a range of startup and ongoing operational costs. These may include paying for business premises, support staff, a website, and fundraising or event promotion. The good news is that many businesses offer special grants to support charities. Crowdfunding is also becoming an increasingly popular way to raise the capital you’ll need.
2. Choose a legal structure
Individuals, sole traders, and partnerships are generally not eligible to register as a charity. An incorporated association is the most common legal structure for charities, or you may choose to set up as an unincorporated trust. Legal structures can become quite complex, so it’s best to speak to an accountant about which structure best suits your specific needs.
3. Apply for an Australian business name and number
Your charity will need an Australian business number (ABN) to register with the Australian Charities and Not-for-profits Commission (ACNC). You’ll also need to apply for a business name on the Australian Business Register (ABR). Find out more about applying for an Australian business name and number.
4: Create a governance document
This is a formal document that sets out the rules and processes that will govern the operation of your charity. It should include your charity’s legal name and a description of its charitable purposes. It should also detail the operational guidelines for your organisation and list your board members or trustees.
Step 5: Register your organisation as a charity
Once you’ve ticked all formal documents off the list, it’s time to register your new business with the Australian Charities and Not-for-profits Commission (ACNC). You’ll need to create an account on the ACNC Charity Portal, then log in to register your charity.
Step 6: Apply for tax concessions
As a registered charity, your organisation may be eligible for a number of tax concessions. These could include income tax exemptions, goods and services tax (GST) concessions, and fringe benefit tax (FBT) rebates. You may also be eligible for endorsement as a deductible gift recipient (DGR), which means donations made to your organisation will be tax deductible for your supporters. You can apply for tax concessions as part of your ACNC registration, but seeking advice from accountant about which tax concessions you may be eligible for will be well worth the investment.