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An unincorporated association is one type of legal 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 have 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, something which can lead to legal risk for those members.

This page contains guidance on applying to register an unincorporated association as a charity with the ACNC, as well as information relevant to the Responsible People of unincorporated associations.

Choosing an unincorporated association as your charity's legal structure

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 that have recently formed and are small – such as early start-ups – may choose to be unincorporated associations.

And while they may take any structure, organisations such as religious communities, animal welfare groups and cultural groups sometimes also choose to be structured as unincorporated associations.

In order to register as a charity with the ACNC, all charities must meet the eligibility criteria. Once registered, charities have ongoing obligations to the ACNC they must meet to maintain their registration.

See our guidance about legal structures for information about the other structures that charities can choose to register with.

One benefit of the unincorporated association structure is the ease and cost-effectiveness to establish an unincorporated association. Another benefit is flexibility.

However, there are challenges which come with the unincorporated association structure.

Personal liability

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, this structure may not be appropriate for an organisation that does work carrying inherent risk, or one that manages high value assets.

Often the governing rules of an unincorporated association contain a clause ’indemnifying’ committee members for personal losses unless they’ve been fraudulent or haven’t been acting fairly.

    Contracts and assets

    • 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 involves one party (the trustee or trustees – 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.

    While these clauses and mechanisms can help manage risk, they may not always protect the members of an unincorporated association, which it is important to seek legal advice on these matters.

    Potential breaches of ACNC obligations

    Unincorporated associations may also be at a higher risk of non-compliance with ACNC obligations. These can occur due to a number of reasons, many of which are linked to the way an association is governed.

    Some of the risks for unincorporated associations, which may also affect other types of charities, are that they may:

    • have or wish to appoint Responsible People who don’t understand their responsibilities
    • appoint Responsible People who are disqualified (such as through bankruptcy)
    • conduct insufficient research to find Responsible People and then fail to be clear about the responsibilities of the role
    • fail to keep the ACNC Charity Register updated with correct contact information
    • only have one person actively involved in running the charity
    • allow its Responsible People to mix charity and personal money together.

    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 Australian Charities and Not-for-profits Commission Act 2012 (Cth) (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 the ACNC 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 our Governance Standards. If your charity complies with the standards, this will help protect it.

    Visit our Governance Hub for helpful governance resources.

    Ensure your Responsible People are appropriate, and are aware of their duties

    Governance Standard 4 requires charities to take reasonable steps to be satisfied that its Responsible People 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 People 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.

    Ensure your governing document and policies include risk management measures

    While, legally, an unincorporated association is not required to have a written governing document, it is a requirement for registration as a charity with the ACNC. A governing document assists the association to demonstrate it complies with ACNC requirements.

    It helps to have a governing document 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 set out the objects or purposes of the association, and have suitable not-for-profit clauses, financial controls and rules for managing issues, such as conflicts of interest and how to handle complaints.

    Your charity may be able to use our template rules for charitable unincorporated associations when preparing its governing document.