Under Australian law, not-for-profit organisations can take on various forms, including self-declared not-for-profits and registered charities. While both types of organizations operate with the aim of benefiting the community, there are significant differences between the two.
A self-declared not-for-profit is an organisation that states it operates for the benefit of the community without seeking to make a profit. This type of organization does not need to be registered with the government and does not have access to the same tax benefits as registered charities. Self-declared not-for-profits can still engage in fundraising activities but are not subject to the same levels of scrutiny and regulation as registered charities.
A registered charity, however, is a not-for-profit organization that has been recognised by the Australian Charities and Not-for-profits Commission (ACNC) as a charitable organisation. To be registered as a charity, an organisation must demonstrate that it operates solely for charitable purposes and provides a public benefit. Registered charities can access a range of tax concessions, including tax-deductible gift recipient (DGR) status, which allows donors to claim tax deductions for their donations.
In addition to tax benefits, registered charities must also meet governance and reporting obligations to maintain their status as a charity. They must provide annual reports to the ACNC, detailing their activities and finances, and comply with the ACNC’s governance standards.
The key difference between a self-declared not-for-profit and a registered charity in Australia is the level of regulation and access to tax benefits. While both types of organizations operate for the benefit of the community, registered charities are subject to greater levels of scrutiny and have access to a range of tax concessions.
In conclusion, when considering whether to register as a charity or operate as a self-declared not-for-profit, it is important to consider the benefits and obligations of each option. For organisations seeking to maximise their impact and access to funding, registering as a charity may be the better choice. However, for smaller organizations with limited resources, operating as a self-declared not-for-profit may be a more practical and cost-effective option.
If you would like to know more about which structure best suits your organisation’s needs, or are interested in registering a charity, please contact Warlows Legal for a free consultation