Managing charity money guide - keep your charity status

To remain eligible to be registered as a charity, your charity must continue to be not-for-profit and pursue charitable purposes that are for the public benefit.

Generally, to maintain your status as a not-for profit, you must ensure your charity is not operating for the profit or gain of individual members. This is the case whether the gains would be direct or indirect. Your charity must also operate this way when it ‘winds up’ (closes down). Any money received or profit made by your charity should go back into the operation of the organisation to carry out its purposes, and not be distributed to any of its members.

This guide will later look at some of the most common questions charities have (and some myths) about not-for-profit status, such as generating profit (surplus), keeping money in reserve, investing, private benefit and undertaking commercial activities.

Find out more about how to keep your charity status at acnc.gov.au/staycharitable

What is a not-for-profit?

Generally, a not-for-profit is an organisation that does not operate for the profit, personal gain or other benefit of particular people. This can include its members, the people who run it or their friends or relatives. The definition of not-for-profit applies both while the organisation is operating and if it winds up.

Not all not-for-profits are charities

There are many not-for-profit organisations that do not meet the definition of charity. These include some community service organisations, sports clubs and professional associations.

These not-for-profits are not regulated by the ACNC, but are likely to be regulated under other laws and by other Commonwealth, state or territory government agencies. Much of the information contained in this guide will still be useful to these types of not-for-profits.

Demonstrating that your charity is not-for-profit

It is not enough merely to look like a not-for-profit – your charity must also behave like one. This will include the activities it undertakes, how it deals with money and any potential benefits to its members.

When applying to register with the ACNC, an organisation must be able to show that is not-forprofit. This can be done by having clear clauses in its governing documents and following these in its operations (including if it winds up ).

The two main clauses, and examples of how they can be worded, are:

The not-for-profit clause

This clause sets out how the organisation’s assets and income are to be used and distributed:

The two main clauses, and examples of how they can be worded, are:

The not-for-profit clause

This clause sets out how the organisation’s assets and income are to be used and distributed:

Example: ‘The assets and income of the organisation shall be applied solely to further its objects and no portion shall be distributed directly or indirectly to the members of the organisation except as genuine compensation for services rendered or expenses incurred on behalf of the organisation.’

The dissolution clause:

This clause sets out what happens to the organisation’s assets if it winds up:

Example: ‘In the event of the organisation being dissolved, the amount that remains after such dissolution and the satisfaction of all debts and liabilities shall be transferred to another organisation with similar purposes which is not carried on for the profit or gain of its individual members.’

Find out more about demonstrating not-forprofit status at acnc.gov.au/notforprofit