Factsheet: Unincorporated associations and ACNC registration

This factsheet tells you:

  • what to do before you decide to start a small charity that is unincorporated
  • what you need when you apply to register a charity
  • the benefits and limitations of unincorporated associations
  • how to protect your association, and
  • your ongoing legal and reporting obligations to the ACNC as a registered charity.

Who is this information for?

The page tells you what you need to know if you:

  • want to apply to register an unincorporated association as a charity with the ACNC, or
  • are a responsible person of an unincorporated association that is registered as a charity with the ACNC.

What to consider before you start a charity

There are a number of benefits of registering your association as a charity with the Australian Charities and Not-for-profits Commission (ACNC), including charity tax concessions.

Read more about the benefits of registration

Applying for registration is optional, but needed for certain charity tax concessions from the ATO. 

If you are starting a new charity, make sure you do some background research – there are a number of decisions you will need to make, including whether to start a new charity or support an existing one, what its purpose will be, what legal structure you will choose, and other issues such as managing risk and meeting legal obligations.

More information

Before you start a charity

External information

ATO's guidance on getting started

Not-for-Profit Law’s guidance on getting started

Who can register with the ACNC?

The ACNC can only register charities. ‘Charity’ has a special legal meaning.  A charity can be structured in a range of ways, for example as an incorporated or unincorporated association, a company or a charitable trust. An individual cannot be a charity.

A charity is a not-for-profit that:

  • has solely charitable purposes that are for the benefit of the public
  • has no disqualifying purposes (such as to promote unlawful activities)
  • is not a political party or government body, and
  • meets other ACNC rules for registration.

Read more about who can register with the ACNC

How do we register with the ACNC?

Use the ACNC’s online registration application to apply. Use our checklist to make sure you have everything you need before you start, including:

  • an ABN and publishable legal name
  • governing documents (such as the ACNC Template rules for a charitable unincorporated association), with the appropriate not-for-profit, charitable purpose and winding up clauses (with others relevant to your association)
  • details of your association’s committee members
  • an understanding of the ACNC governance standards, which charities must meet to be and remain registered
  • an understanding of what charity tax concessions you may be seeking, and the eligibility requirements.

Read more about applying to register with the ACNC and charity tax concessions.

What is an unincorporated association?

An unincorporated association is one type of organisational structure for a charity.  

Unlike an incorporated structure, an unincorporated association is not a separate legal entity from its members.  It is simply the group itself, of people who has agreed to come together to pursue a common purpose, such as to establish a faith community.  Therefore, an unincorporated association cannot enter into contracts in its own name, or own land, or employ people, or sue or be sued. The members of the unincorporated association do these things on behalf of the association. The members may each have individual legal liability for the association’s debts and defaults. This is what can lead to legal risk for those members – see below.

Read the ATO's guidance on different legal structures for not-for-profits.

What kinds of groups choose to be unincorporated associations?

The unincorporated association structure is generally suitable for small, simple groups or organisations with minimal assets, who do work that has minimal risk, and who are not intending to incorporate. Groups who have recently formed, and are small, such as early start-ups, may choose this type.
While they may take any structure, the following groups sometimes also choose to be as an unincorporated association:

  • religious communities
  • animal welfare groups, and
  • cultural groups.

These types of associations can only be registered as charities if they have a charitable purpose and meet other requirements of registration.

Attention - Important information!Only unincorporated religious charities (that also meet other criteria) can fit within the limited group of charities the ACNC calls ‘basic religious charities’.

What is the benefit of having an unincorporated association?

Because these structures are not incorporated, they are easy and cost effective to establish and operate.  They are also flexible to use.    

What are the risks of having an unincorporated association?

There are some challenges for those choosing an unincorporated association:

  • If the organisation is not able to pay its debts, the members of an unincorporated association can be required to make up the difference from their personal assets.  Therefore the structure may not be appropriate for an organisation that does risky work or that manages high value assets.  

This is a complex issue so we recommend you get legal advice on this clause.

  • The association cannot enter into contracts in its own name (including to employ people) because the organisation is not a separate legal structure. 
  • The association cannot hold assets in its own name, again because it is not a separate legal structure. 

Unincorporated associations sometimes deal with this by organising for a few people to hold assets ‘on trust’ for the association or its charitable purposes. A trust is a legal concept. It involves one party (the trustee(s) – an individual or group of people) holding assets for the benefit of others (in this case, the association’s charitable purposes). Trustees have very specific duties and obligations when managing trust property. If you are thinking of setting up a trust to manage property, find out more in the ATO guidance on trusts and get legal advice on your situation.

While these clauses and mechanisms (like trusts) can help manage risk, they may not always protect the members of an unincorporated association, which is why getting legal advice on these aspects is important.

Aside from the legal risk set out above, from the ACNC’s experience, unincorporated associations are also often a high risk for non-compliance with ACNC obligations, for a variety of reasons, many of which are to do with how the association is governed (led).

Some of the risks for unincorporated associations (and other types of charities) are that they may:
  • have or wish to appoint responsible persons (committee members) who don’t understand their responsibilities
  • appoint responsible persons who are disqualified (such as through bankruptcy)
  • do insufficient research to find responsible persons and then fail to be clear about the responsibilities of the role
  • fail to keep the ACNC Register updated with correct contact information
  • only have (in reality) one person running the charity
  • allow its responsible persons to mix charity and personal money together.

More on risks for not-for-profits from Our Community.

How to protect your unincorporated association

Ensure it meets ACNC and other legal requirements

The ACNC was established, in part, to promote and maintain public trust and confidence in charities. The ACNC Act requires charities to meet several duties, such as remaining eligible for registration, being accountable by providing information in a timely way, and meeting governance standards.

Establish good governance in your association

Governance refers to the processes, activities and relationships of your charity that make sure it is effectively and properly run. It includes how decisions are made and communicated, the roles and responsibilities of people in the charity, including the management committee, and how it ensures that the charity’s mission, or purpose, is the focus.  
The ACNC requires a minimum standard of governance, as set out in the governance standards. If your charity does what the standards require (and more, if appropriate) this will help protect it.
Find out more about the ACNC governance standards and read our guide, Governance for good.

Make sure you choose appropriate committee members (responsible persons) and that they are aware of the particular duties they have

Governance standard 4 requires charities to take reasonable steps to be satisfied that its responsible persons are not disqualified from managing a corporation or a charity.

Governance standard 5 requires charities to take reasonable steps to make sure that the following duties apply to responsible persons and that they follow them. The duties can be summarised as follows:

  • to act with reasonable care and diligence
  • to act honestly and fairly in the best interests of the charity and for its charitable purposes
  • not to misuse their position or information they gain as a responsible person
  • to disclose conflicts of interest
  • to ensure that the financial affairs of the charity are managed responsibly, and
  • not to allow the charity to operate while it is insolvent.

Read more about the duties of responsible persons

Have written governing documents and policies that include managing risk

While, legally, an unincorporated association is not required to have written governing documents, many do because they are helpful practically and will greatly assist the association to demonstrate it complies with ACNC requirements. 
It helps to have governing documents that clearly set out rules about how the association will be run, and cover issues such as decision-making, liability, management of resources and membership. The format these documents may take and what they will cover depends on the size of your association. At a minimum, it is important to have financial controls (like rules around who can handle money) and rules for managing issues such as conflicts of interest and how to handle complaints.

Attention - Important information!If it is appropriate to your association, you can also download and adapt the ACNC Template rules for charitable unincorporated associations

More information

Find out more about:

What obligations do registered charities have to the ACNC?

Unincorporated associations registered with the ACNC have ongoing obligations under the ACNC Act. These include to:

  • maintain their eligibility to be registered
  • notify us of changes to charity details when these change (such as responsible persons being appointed or leaving their role or charity contact details changing)
  • keep records
  • report to us each year, and
  • comply with governance standards and external conduct standards, where applicable.

Unless we or another government agency tell you otherwise, if your association has obligations to another government agency (such as to submit reports or meet certain standards) then it must continue to meet these obligations.

Related resources

External resources

Attention - Important information!This page contains links to external websites. Any external links used by the ACNC are inserted for convenience and do not constitute an endorsement or recommendation of any material at those sites. Information and resources provided by the ACNC is for general information only and is not intended to be a substitute for professional advice regarding your charity's particular circumstances.

Contact the ACNC

Phone: 13 ACNC (13 22 62)
Email: advice@acnc.gov.au
Mail: Advice Services, Australian Charities and Not-for-profits Commission, GPO Box 5108, Melbourne VIC 3001
Fax: 1300 232 569


 

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