A Guide for Charities and Not-for-Profits
In the not-for-profit world, collaboration is key. Many great ideas for community impact begin with small, unincorporated groups or passionate individuals who may not yet have the legal structure to access grants, insurance, or enter contracts. That’s where auspice agreements come in – a practical way for charities and not-for-profits to help new initiatives get off the ground, particularly for short-term projects or community initiatives.
What Is an Auspice Agreement?
An auspice agreement is a formal arrangement where a legally incorporated organisation (usually a charity or not-for-profit) agrees to take a smaller, unincorporated group or project “under its wing.” In this relationship, the auspicing organisation (Auspicor) manages the legal and financial responsibilities of the project, while the auspiced party (auspicee) runs the project or activity itself. Typically, charities that offer tax concessions (such as DGR charities) are sometimes good to create an auspice agreement with.
In a way, the auspicee is like the sub-contractor of the auspicor, where the auspicor applies for funding or sponsorship for a project on behalf of the auspicee.
This allows community projects to operate using the auspicing organisation’s legal status to:
- Receive grants and funding
- Access public liability insurance
- Use administrative systems
- Benefit from governance support
Why Are Auspice Agreements Useful?
Charities and not-for-profits often act as auspicing bodies to help:
- Support community-led initiatives aligned with their mission
- Enable pilot programs or short-term activities
- Foster innovation without requiring new legal entities
- Provide mentorship and oversight to emerging leaders or groups
For funders of the organisation that wants to run the program, auspicing offers assurance that grants will be managed responsibly by an experienced organisation.
What is Typically Included in an Auspice Agreement?
A well-drafted auspice agreement should clearly outline:
- Responsibilities: The auspicing body is responsible for receiving and administering funds, complying with legal obligations, and ensuring accountability.
- Project Management: The auspiced party usually maintains creative or operational control, but must report to the auspicing organisation.
- Financial Arrangements: How funds will be handled, including budgeting, record-keeping, and any administrative fees charged by the auspicing organisation.
- Insurance and Risk: Who holds what insurance, and how risk and liability will be managed.
- Reporting Requirements: For both the funder and between the two parties.
- Termination Clauses: How the agreement can be ended and what happens to any remaining funds or assets.
Benefits for Both Parties
For the Auspiced Party:
- Quick access to funding and insurance
- Governance and administrative support
- Credibility when engaging with funders and stakeholders
For the Auspicing Organisation:
- Ability to support aligned initiatives without taking on long-term commitments
- Opportunity to mentor emerging leaders or groups
- Greater community impact through partnerships
Risks to Watch Out For:
While auspice agreements are valuable, they should be entered into thoughtfully. Key risks include:
- The auspicing organisation being held liable for financial mismanagement or misconduct by the auspiced party
- Confusion over roles, responsibilities, or decision-making
- Reputational risk if the project doesn’t go as planned
To minimise these risks, both parties should:
- Ensure alignment of values and expectations
- Have a clear and comprehensive agreement in writing
- Maintain open communication throughout the partnership
So what does this look like in real life?
An auspice agreement can be used to create many initiatives. Here’s an example of one scenario where one may be used:
Pop-Up Art Exhibition for Emerging Creatives
A collective of emerging artists from diverse backgrounds wants to host a pop-up art exhibition to showcase their work and promote cultural inclusion. They’ve found a space and are planning community workshops alongside the exhibition.
They apply for a local arts grant – but soon realise they need an incorporated entity to receive the funds and hold insurance.
A local community arts organisation steps in as an auspicing body, managing the grant and providing the necessary public liability coverage. The artists retain creative control, while the organisation ensures compliance and financial oversight.
The result? A vibrant, inclusive arts event that builds community – made possible through auspicing.
Auspice agreements are a fantastic way for established charities and not-for-profits to support grassroots change. Whether you’re a community group with a vision, or a charity looking to expand your impact, auspicing provides a legal, flexible framework for doing good together.
If you’re considering becoming or engaging an auspice organisation, it’s wise to seek legal advice to ensure your agreement is robust, fair, and tailored to your needs. Get in contact with Warlows Legal today using the contact information below.
