Which legal structure should I choose for my charity?
The legal structure you choose for your charity should meet your charity’s needs, and allow for future development. Charities have a range of structures, incorporated or unincorporated, and there may be more than one that works for your charity. For example, charities can be incorporated under Commonwealth or state or territory laws.
Your charity's legal structure will affect many things, such as its legal identity (whether it can be sued), its governance structure (who makes certain decisions), who is liable for its debts and its specific responsibilities, such as reporting or other compliance obligations.
Your decision on legal structure will need to take into account:
- the size of your charity, and how complex its activities will be
- whether your charity will have employees or volunteers
- the accountability your charity will have to its members (if any) and the community
- the potential personal liability of members or office holders for things done by them on behalf of the charity
- whether your charity will be applying for government grants
- whether your charity will want to operate in more than one state or territory, or even overseas
- your charity’s eligibility for tax concessions.
The advantage of having a formal (incorporated) legal structure is that you can do things such as rent an office, borrow money, apply for government grants or take out insurance in the name of the organisation (rather than, for example, in the name of an individual committee member).
Each structure has advantages and disadvantages – it is important to balance these against your charity’s circumstances. This is an important decision, so consider getting legal and other professional advice early, and make sure it is specific to your situation.
The most commonly used incorporated legal structures for charities (and other not-for-profits) include:
- incorporated associations (the most common type) – the name will be something like ‘XYZ Incorporated’ or ‘XYZ Inc’
- companies limited by guarantee (the next most common structure) – for example, ‘XYZ Limited’ or “XYZ Ltd’
- non-trading co-operatives – the name must include the words ‘Cooperative’ and ‘Limited’ or ‘Ltd’, and
- Indigenous corporations – for example, ‘XYZ Aboriginal Corporation’.
If your charity is not incorporated, it could be:
- a trust (for example, ‘XYZ Fund’, or ‘XYZ Foundation’), or
- an unincorporated association (a less formal structure, with no separate legal identity).
What will the ACNC ask for when I apply to register?
We do not register charities according to their legal structure, but you will be asked to describe your organisation’s legal structure (as set out in its governing documents) in the application form. There are different types of legal structure. The table below sets out the different structures of organisations that can apply to be registered as charities and the correct ABR type for each legal structure. There are other structures which may be able to be registered. It is very important that the entity type your organisation has recorded on its entry on the Australian Business Register (ABR) matches its governing document.
Legal structure of applicant
Correct ABR type
ACT incorporated association
Other Incorporated Entity
Trust (including testamentary trust created in a Will)
Discretionary Investment Trust OR
Australian Public Company (does not have Pty in its name)
Australian Public Company
Australian Private Company (has Pty in its name)
Australian Private Company
Other Unincorporated Entity
Individuals, sole traders, government entities and partnerships are ineligible to register as charities.