Reading time: 4 minutes

Are you looking to create a charitable institution? Apart from having a sound concept, the first thing that must be determined is whether the concept is to operate on a large or small scale. As a would-be a philanthropist if you are planning on raising money for your local church, sports team or school, there is little need for you to incorporate an entity for this purpose. However, if you wish your benevolent concept to operate on a larger scale, it may be worthwhile considering incorporating a charitable institution.

Generally speaking, charities are set up and run as companies limited by guarantee (one of those companies that have a “Ltd” or “Limited” at the end of its name as opposed to a “Pty Ltd” or “Pty Limited”). However, incorporating a company that is limited by guarantee does not mean that the company will automatically be recognised as a charity.

Charitable Institution Eligibility

To be eligible to be registered as a charitable institution with the Australian Charities and Not For Profit Commission (ACNC), an organisation must be able to demonstrate that it falls within the definition of a “charity”. To be recognised as a charity an organisation must illustrate that it:

  1. operates as a not-for-profit;
  2. has only charitable purposes that are for the benefit of the public; and
  3. complies with all applicable ACNC governance standards.


A not-for-profit organisation is one that does not operate for profit, personal gain or for the benefit of particular persons i.e. its members or the people who run it. To illustrate to the ACNC that an organisation operates as a not-for- profit it must contain suitable not-for-profit clauses in its governing documents (in the case of a company limited by guarantee, its company constitution). However, having such clauses it not sufficient, the organisation must also demonstrate that its activities are consistent with those clause.

Charitable Purposes

The law recognises numerous charitable purposes. Per sections 12 to 17 of the Charities Act 2013 (Cth) (Charities Act), a company will possess a charitable purpose if its purpose is to advance; education, health, social or public welfare, culture, religion, mutual respect and tolerance between groups that are in Australia. Also, purposes such as human rights, security or safety, environment or to prevent the suffering of animals are accepted. It is possible for an organisation to be recognised as possessing a charitable purpose or purposes even if some of its ancillary activities do not fall within the strict definition of a “charitable purpose”.

For the Benefit of the Public

For a benefit to be in the public interest, it must provide goods, services, education, counselling, spiritual guidance or some other type of benefit to the general public or a particular group of people. While charities do not have to benefit everyone, any restrictions on the allocation and disbursement of benefits must be consistent with the organisation’s charitable purposes. An organisation that allocates benefits in too restrictive a manner can in certain circumstances be regarded as non-charitable, due to the inaccessibility of the benefits it provided to the public.

The Australian Charities and Not For Profit Commission Governance Standards
As well as needing to fall within the legal definition of a “charity” (as outlined above), for an organisation to be registrable as a non-for-profit it must:

  • have an ABN that is valid;
  • work towards its charitable purposes consistently;
  • provide its members with an adequate opportunity to raise concerns about the charity’s governance;
  • not commit serious offences;
  • not breach a law that may result in a penalty of more than $10,200 (being 60 penalty units);
  • ensure its Directors are not disqualified from managing a corporation under the Corporations Act 2001 (Cth)
  • disqualified from being responsible persons of a registered charity by the ACNC Commissioner; and
  • adhere to these governance standards (Part 2.2, Division 45 of the Australian Charities and Non-for-profits Commission Regulation 2013 (Cth))

Maintaining Proper Records

To maintain its registration as a charity an organisation has to notify the ACNC of changes, keep financial and operational records that comply with the relevant standards, and allow audits and report annually on their activities to the ACNC every year.

Disqualifying Purposes

An organisation cannot obtain or maintain charitable status if it has as one of its purposes a “disqualifying purpose” A disqualifying purpose is one which promotes unlawful activities, promotes activities that are against the public interest or promotes or opposes a political party or candidate.


If you would like to know more about the steps involved in setting up, incorporating or running a charity, check the ACNC website.


Construction Contract Essentials

Thursday 12 August | 11:00 - 11:45am

Understand how construction contracts are drafted and how to protect your construction business.
Register Now

Startup 101: Understanding Cap Tables and ESOPs

Thursday 19 August | 11:00 - 11:45am

Cap tables and employee share option plans are essential for fast-growing startups. Learn more with this free webinar.
Register Now

Expanding to NZ: Structuring Your Business For Success

Thursday 26 August | 2:00 - 2:45pm

Launching a business in New Zealand? Understand how to structure your business for success with this free webinar.
Register Now

Preventing Modern Slavery: Your Business’ Legal Obligations

Thursday 9 September | 11:00 - 11:45am

Are you an Australian business with $100m+ annual consolidated revenue? Learn how to determine if you are a modern slavery reporting entity and your obligations under the legislation with this free webinar.
Register Now

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • 2020 Excellence in Technology & Innovation – Finalist – Australasian Law Awards 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice – Winner – Australasian Lawyer 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards 2021 Law Firm of the Year - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer