Key points:

  • The word 'charity' has a technical legal meaning as defined by Australian law and covers many organisations often not thought of as charities, such as universities and hospitals.
  • Charities, of which there are about 57,000 registered in Australia, are a subset of not-for-profits. Small charities make up the majority of those registered in Australia (65%).
  • The ACNC registers charities under one or more 'subtypes'. These reflect the organisation’s charitable purpose.

What is a charity?

The legal meaning of charity encompasses organisations that many people may not ordinarily think of as charities, such as universities, surf life-saving clubs, and senior citizens’ organisations.

In short, a charity is an organisation that:

  • is not-for-profit
  • has only charitable purposes that are for the public benefit
  • does not have any disqualifying purposes (for example engaging in or promoting activities that are unlawful or contrary to public policy, or promoting or opposing a political party or candidate for political office), and
  • is not an individual, political party or government entity

What is a small charity?

The ACNC Act defines a small charity as one that has an annual revenue below $250,000. The majority, approximately 65%, of registered charities in Australia are small.

Around half the charities classed as 'small' under the ACNC Act have annual revenue of $50,000 or less.

The Charities Act and charitable purposes

To be registered as a charity, an organisation must have a purpose that is charitable. The Charities Act 2013 (Cth) provides a statutory definition of 'charity' and 'charitable purpose' under Commonwealth law. When registering organisations as charities, the ACNC must apply this law.

The Charities Act restates the existing common law in modern language and provides 12 charitable purposes. The full list can be found at: www.acnc.gov.au/charitablepurpose.

There are also two existing special charity categories (or ‘subtypes’):

  • Health Promotion Charity – an institution whose principal activity is to promote the prevention or the control of diseases in human beings
  • Public Benevolent Institution – an institution that has benevolent relief as its main purpose, and that relief is provided to people in need.

Charity legal structures

Charities registered with the ACNC can carry a variety of legal structures – for example, companies limited by guarantee, incorporated associations, co-operatives, charitable trusts and Indigenous Corporations.

It is important to note that an organisation’s basic legal structure is separate from its ability to be granted any specific tax concessions or different reporting requirements.

These are separate legal conditions which exist on top of a charity’s basic legal structure. The ACNC has a number of factsheets on the types of charities and their various reporting requirements.

The difference between a charity and a not-for-profit

There are about 57,000 charities in Australia. They make up a small part of Australia’s not-for-profit sector, estimated in the hundreds of thousands of organisations.

Generally, a not-for-profit is an organisation that does not operate for the profit, personal gain or other benefit of particular people (for example, its members, the people who run it or their friends).

A not-for-profit can make a profit, but any profit made must be used for its purpose(s). It can keep profits as long as there is a genuine reason to do so, and that reason is linked with its purpose.

While all charities must be not-for-profit in nature, it is important to note that not all not-for-profits are charities.

Not-for-profits that do not have solely charitable purposes (as listed in the Charities Act) will not be eligible for registration as charities. Common examples include:

  • social clubs
  • sporting and recreational organisations, and
  • professional and trade groups.

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