DIY, or use an Accountant when setting up a Charity?
(hint: Use an Accountant)
One of the best things about Australians is that we are a generous bunch. We give to all sorts of worthy cases and volunteer on committees and clubs.
What if you were so passionate about a cause that you wanted to do more. For insistence you want to start a charity or benevolence to promote and fund your cause.
In this article we will
- Explain your organisation structure options.
- Help you to understand the requirements you will need to comply with to make your organisation a success.
- Give you some resources to help you to set up your organisation.
- Outlines why your time is better spent on planning and the organisation’s promotion.
- Focuses on the set up and the structure.
- Provide a real-life example of a charity we have successfully set up for a client.
The simplest structure is an “Unincorporated Association”.
An example of this type of structure is a few friends that get together and arrange fund raising activities.
The benefits of this structure are:
- easy to set up.
- you can start raising your funds straight away.
Unfortunately, disadvantages of this structure are:
- your organisation is very limited in how it can interact with the wider community.
- all the members of the group are legally liable for the actions of each other.
An preferred structure that provides:
- the organisation legal protection.
- allows more opportunity to interact with the wider community is an Incorporated Association.
Steps to an Incorporated Association in Victoria (like consumer Affairs Victoria)
- Arrange at least 5 members for your organisation.
- Ensure your organisation doesn’t operate for the profit of your members.
- Choose a name for your organisation that reflects the purpose of the organisation.
- Check your chosen name is not identical to a name already registered with ASIC.
- Prepare the organisation constitution and purpose document.
- Hold a meeting of the members of the organisation to vote to complete & approve the constitution and purpose.
- Lodge an application on my CAV.
- Pay lodgement fee by VISA or MasterCard.
- Download and print certificate of incorporation.
If your organisation is going to receive funds from its members and find naming clients you could stop here and go do your good work.
However, if your organisation wants to receive donations from the public, government grants or access external funding then it will need to become a charity fund.
Additionally, it can apply for Deductible Gift Recipient (DGR) status. This has it’s own set of requirements and you must apply via the Australian Charities and Not for Profit (ACNC) commission.
The first item the ACNC will need for your application is the Association’s ABN.
Once you receive the ABN return to the ACNC website and register your Incorporated Association.
Keep In Mind:
The application process is very detailed. So you should allow at least a full afternoon to complete it. Don’t forget to save the application. (We did!)
The ACNC application contains 12 pages, page 8 contains the conclusions that your association is applying for and page 9 is where you apply for deductible gift recipient status. As a part of the DGR status register. You will need to decide in which category your association falls into out of 40 possible types. Please note that each DGR category also comes with a separate application process with the DGR status process.
Throughout this article we have included many resources to provide you with additional resources and reading on this topic.
If you are going to apply to the ACNC yourself; Then you need to read the ACNC registration application guide in full before attempting to complete the application. The guide will give you an overview of what will be requested in your application.
Why you should get the Accountant to set up your charity.
The application and registrations detailed above are are detailed and the responses require more than a ‘yes’ or ‘no’ answer. Therefore, if you don’t have a business or legal background it is our recommendation that you don’t try to complete these applications and registration yourself.
Apart from the time required to complete all the questions.
Other Issues could include:
- you do not complete the details correctly.
- there are not enough details to complete the application.
- you do not meet the criteria to become a PBI.
These delays may adversely affect the time required to register your charity.
If you delegate the set up to your accountant, the committee members can use the time to plan items like:
- define the organistations goals.
- building the organisations marketing.
- running fund raising activities.
Consider the impact to the organisation if the Committee members used their time to attract high net worth benefactors, instead of spending it setting up the charity?
Complete Accounting setup a charity called Boneyard Equipment.
To read the case study about how we setup the charity, please click here.
Feeling Charitable?
In conclusion, If you are feeling charitable why not click on this link https://the.boneyard.asn.au
To see what our clients charity is up to.
