An overseas aid organisation is an Australian-based charity that provides international aid, often working with overseas partners to do so. Like other charities, they can receive tax deductible gifts if they have deductible gift recipient (DGR) status. To gain this status, the overseas aid organisation must complete three steps:
- Register as a charity;
- Apply to become an approved organisation with the Department of Foreign Affairs and Trade (DFAT) under the Overseas Aid Gift Deduction Scheme (OAGDS); and
- Apply to the Australian Taxation Office (ATO) for endorsement.
This article provides an overview of each step to explain how your overseas aid organisation can apply for DGR status.
Step One: Register as a Charity
Your fund or organisation must first register with the Australian Charities and Not-For-Profits Commission (ACNC) as a charity. To register as a charity, your organisation must have charitable purposes, and its objectives and activities must be directed solely towards those purposes.
To support its registration, your organisation should also show its charitable purposes in its:
- governing documents (the constitution or rules of association);
- annual reports;
- website; and
You will also need to give the ACNC some additional information:
|Information Needed to Register||Description|
|ABN||Australian Business Number|
|Details of your organisation’s ‘responsible persons’||Your organisation’s directors, members and committee members|
|Your organisation’s beneficiaries||The people to whom you will be providing aid|
|Your organisation’s ‘charitable subtype’||An ACNC classification that reflects the aid you provide; for example, advancing health, social welfare, human rights or education|
Step Two: Apply to Become an Approved Organisation
This step is important because without being approved under the OAGDS, you may not be able to apply to the ATO for DGR endorsement. The OAGDS enables approved Australian organisations to issue tax deductible receipts for donations made to support their overseas aid activities.
The requirements for being an approved organisation include:
- having a voluntary governing board;
- being registered as a charity with the ACNC and comply with the ACNC Governance Standards; and
- being established solely for the relief of people in a country declared by the Minister for Foreign Affairs to be a ‘developing country’.
To determine the last point, the Minister for Foreign Affairs may assess your organisation against four criteria:
- The organisation delivers overseas aid activities
- The organisation has the capacity to manage and deliver overseas aid activities
- Overseas aid activities are delivered in partnership with in-country organisations, based on principles of cooperation, mutual respect and shared accountability
- The organisation manages child protection and terrorism risks
The Organisation Delivers Overseas Aid Activities
DFAT usually equates overseas aid activities with humanitarian and development activities. Some examples include:
- humanitarian assistance in response to a crisis or to meet an immediate need (with an exit strategy);
- development activities that provide fair distribution of aid;
- development activities informed by local people; and
- delivering sustained or lasting benefits.
Generally, DFAT considers some activities to be ineligible, including:
- activities that provide partisan political support; and
- activities associated with a particular religion that support or include adherence to that religion.
However, DFAT may allow your organisation to conduct these activities as long as you keep them separate from the overseas aid. For example, a church may provide overseas aid if it separates the aid from its religious activities through separate budgets, expenditure reports and communications with supporters.
Capacity to Deliver Overseas Aid
DFAT may consider a number of factors to determine whether your organisation has the capacity to manage and deliver overseas aid activities.
|Capacity Factor||Practical Explanation|
|Planning and appraisal||Activities are documented in a project plan and regularly reviewed|
|Budgeting||Activities are budgeted and there is a process for approving expenses|
|Financial management||Expenditure is regularly reviewed and reported on|
|Implementation||The organisation works closely with project partners to deliver optimal outcomes|
|Assessment, monitoring and tracking of activities||The organisation reviews the success or failure of its activities and implements lessons learned|
Delivered in Partnership with In-country Organisations
DFAT wants overseas aid to be delivered through partnerships with local organisations. This helps ensure that aid goes directly to people who need it most. To assess this, DFAT may generally look at the organisations that you work with to deliver aid, but may also consider:
- whether your organisation has in-country partners;
- whether your organisation works with partners to contribute and add value to the delivery of aid activities; and
- whether your partnership agreements outline the roles and responsibilities of each partner, including financial management arrangements.
Managing Child Protection and Terrorism Risks
To manage child trafficking and terrorism risks, DFAT may consider whether your overseas aid organisation has:
- discussed child protection risks with project partners, including developing management procedures;
- ensured project partners have procedures in place to promote child protection and child-safe practices;
- processes for screening funding recipients; and
- a counter terrorism and sanctions policy.
Step Three: Apply to the ATO
The third step is for your overseas aid organisation to apply to the ATO to establish a public fund. The ATO may declare your public fund to be a developing country relief fund. In doing so, the ATO may assess whether your fund:
- is governed by a constitution or set of rules with a clear, sole purpose of providing relief to people in developing countries; and
- has a name reflecting the fact that it is a developing country relief fund.
The ATO may also require that your governing rules contain clauses that state that your organisation:
- keeps gifts to the relief fund separate from other funds;
- issues receipts in the name of the relief fund;
- invites the public to contribute to the relief fund;
- operates the fund on a not-for-profit basis;
- upon winding up, transfers any surplus money or assets to another DGR fund qualifying under the OAGDS; and
- will advise the ATO of any changes to the governing documents.
The ATO may also require that the governing rules set out who is eligible to sit on the fund’s management committee. Generally, the Assistant Treasurer of the ATO guides your organisation through the process of setting up the fund once DFAT gives their approval. Once the AFO approves your public fund, and all other steps are complete, you’ll receive DGR status.
Gaining DGR status as an overseas aid organisation takes three steps:
- Register with the ACNC;
- Apply to be an approved organisation with the DFAT; and
- Set up a fund for DGR endorsement with the ATO.
After completing all three you’ll be able to receive tax deductible gifts to support your overseas aid. However, working through these separate application processes can be lengthy and complex. If you need further guidance to ensure you get it right, see the factsheet on the ACNC website.
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