Planning to set up a charity but don’t know where to start? Below is an 8 step checklist for some key areas you should consider before you start your charity!
Research Your Industry
Before you register your charity, research your charity’s industry first. What do you ultimately want out of your charity? And what can you do to achieve these goals? Before starting on this journey, it is important that you look at other charities to see what they do and how they do it. You should read through not-for-profit resources that you can find online or even contact other existing charities to see whether your goals align with theirs and whether they may be willing to support your project! It is important that you know what is out there, the work involved and whether a charity is a right avenue for you to pursue your goals.
Consider Your Purpose or Mission
Set up a business plan for your charity which includes your desired purpose or mission. Consider timelines as well so that you can work to achieving your desired goals promptly. Other areas you should consider in your plan include:
- What are the main activities of the charity?;
- Who is the charity’s target audience?;
- Who are the beneficiaries of the charity?;
- Why is there a need for this charity?;
- How do you plan on raising money for the charity?;
- How long do you plan on operating the charity? i.e. is it is a long term venture or short term?
You must also ensure that your charity has a charitable purpose. By the Charities Act 2013 (Cth), there are 12 charitable purposes available. These include advancing: (a) health; (b) education; (c) social or public welfare; (d) religion; (e) culture; and (f) the natural environment; promoting (g) reconciliation, mutual respect and tolerance between groups of individuals; (h) /protecting human rights; (i) /opposing a change to any matter established by law, policy or practice within the Commonwealth, state, territory or another country; and (j) advancing the security or safety of Australia or the Australian public; (k) preventing or relieving the suffering of animals; and (l) other similar purposes ‘beneficial to the general public’.
What Resources Will You Need?
What is the initial set up and ongoing costs of operating your charity? Will you need staff or volunteers? It is important that you understand this from the outset so that you can ensure that you can operate your charity meaningfully and efficiently once established. We also recommend obtaining legal and financial advice to ensure you are on the right track!
What are you Fundraising Requirements?
Charities raise money for their purpose in many different ways. This can include:
- Charging weekly or monthly membership fees;
- Selling goods and services;
- Running events;
- Campaigns through social media, post and door knocking; and
- Fundraising and gaming activities.
You should research each of these methods well before setting up your charity to ensure you understand your legal obligations in raising funds and how to reduce risks that may be involved.
Set Up the Correct Legal Structure
It is really important to get advice on your chosen legal structure prior to setting it up. This is because doing it right the first time will assist in avoiding unnecessary costs if you decide the structure does not quite suit your needs in the future. This can happen for many reasons.
Charities have a range of structures which include an incorporated structure and an unincorporated structure. The structure of your charity will affect many things including its legal identity, its governance structure, the liability for debts and its obligations and responsibilities. To determine the best structure for your charity, you will need to consider:
Your charity goals and purpose including the size of your charity and its activities;
- Whether your charity will be using employees or engaging volunteers;
- What level of accountability the charity will have to the community and its members;
- Whether the charity will be utilising / applying for government grants;
- Where your charity will be operating (i.e. in different states or territories or overseas);
- Whether your charity is eligible for tax concessions; and
- Potential personal liability aspects for office holders and members.
Having an incorporated charity structure is advantageous as it means that the entity can enter into agreements with third parties rather than an individual. Types of incorporated charities include: (a) incorporated associations; (b) companies limited by guarantee; (c) non-trading co-operatives; and (d) indigenous corporations.
Understand the Legal and Regulatory Issues involved with Running a Charity
Just like setting up any new business, there is a wide range of legal implications in settling up a charity. This includes complying with Commonwealth, state and territory law, complying with tax obligations and fundraising, workplace health and safety and employment law.
It is important that you obtain the right legal and financial advice from the start to avoid any nasty surprises that you may not have been aware of when setting up your charity!
How will the Charity be Managed?
Your charity will need to managed one way of another. This can be done through either a board or committee or even trustees and you will need to have formal processes for meetings and decision making. You will also need to determine where your charity will operate from.
How will you Market your Charity?
Marketing is an important and vital step in getting your charity’s message out there! It should clearly set out your charities purpose and mission and encourage people to get involved. You should consider your target audience and the best and most cost-effective marketing strategies before setting up your charity.
There is a lot of background work involved in setting up a charity but with the right team of advisors, you can ensure you that you get it done right from the start. If you require any legal assistance with setting up your charity or expanding your charity, please contact LegalVision today.