There are many issues to consider when setting up a Social Enterprise or adding a Social Enterprise to an existing organisation like starting any new business. It is important to deal with them at the outset to save you time, money and effort later on! This article will guide you through the key issues to consider at the initial stages of setting up a Social Enterprise.

Initial Questions

  • Who is going to set up your Social Enterprise? Is it going to be new or added to an existing organisation?
  • What will be the social or environmental mission of your Social Enterprise? What approach will you take to achieve that mission
  • When will it be set up? Now or in the future?
  • Where will it be set up? Will it be in a physical location or online?
  • Why are setting up your Social Enterprise? What issue will your Social Enterprise address?
  • How will you set up the Social Enterprise? What structure will you choose and how will it be funded?


It is crucial to identify the source/s of funding you will use to set up your Social Enterprise dependent on whether the enterprise will be for-profit, not-for-profit or a combination of both. You should consider your own circumstances when deciding on the complexity of the funding sources which may include:

  • Equity;
  • Debt;
  • Donations;
  • Grants;
  • Crowdfunding;
  • Donations; and/or
  • Membership Fees.

For-profit, not-for-profit or both

There are a number of factors to consider when choosing between incorporating as a for-profit or not-for-profit entity as it will impact on the way you will be able to run and fund your Social Enterprise. For example, it will affect the:

  • Sources of funding available to your Social Enterprise and whether you can attract investors for funding;
  • Tax concessions that your Social Enterprise may be eligible for;
  • Ongoing reporting and governance requirements you must meet; and
  • Registering as a charity.

Registration as a Charity

A Social Enterprise which operates as a not-for-profit entity can register to become a charity, and if eligible, the enterprise can register as a charity with the Australian Charities and Not-for-profits Commission (ACNC). According to the ACNC, an eligible enterprise must:

  • Meet the definition of a charity;
  • Have an Australian business number (ABN);
  • Meet the Commission governance standards; and
  • Not be an organisation that cannot be registered, such as political parties, government entity or being engaged in, or supporting terrorist or other criminal activities.

There are a number of benefits to becoming a charity that you should consider which include:

  • Deductible Gift Recipient (DGR) endorsement;
  • Federal tax concessions; and
  • Searchable on the register of charities.
  • There are also a number of limitations which you should also be aware of including:
  • Charity members cannot receive any benefit;
  • Activities of the charity are limited by their charitable purpose; and
  • Details of directors are publicly available on the register of charities.

A Case Study: Fair Trade Coffee Company

The Fair Trade Coffee Company is a subsidiary company of Palms Australia, which is a not-for-profit entity. Palms Australia is an overseas development agency so the Fair Trade Coffee Company does not pay tax on their earnings. They were also in a unique position to self-finance the start-up costs associated with opening the Fair Trade Coffee Company, which allowed Palms Australia to be thoughtful and selective about the location of the café which has played a major part in their success. This success has enabled Palms Australia to complement their skill exchange program by offering internships to students from a Timor Leste vocational school.


Are you thinking about setting up a Social Enterprise and want to know what business structure to choose? Learn more in Part 3 of our Social Enterprise series or contact one of our business lawyers on 1300 544 755.

COVID-19 Business Survey
LegalVision is conducting a survey on the impact of COVID-19 for businesses across Australia. The survey takes 2 minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey 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. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Rachel Amiri
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.

  • By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.
Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer
Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at

View Privacy Policy