How To Start a Not-for-Profit Organisation: A Guide to Helping People

Learning how to start a not-for-profit in Australia comes down to five things: a clear purpose, the right legal structure, a governing document that meets the rules, the correct registrations, and a plan to stay compliant. A not-for-profit (NFP) is an organisation that runs for its purpose rather than to make money for its members, owners or directors. Any surplus goes straight back into the cause.

Here’s the part most people get stuck on. Starting the organisation is the easy bit. The trap is setting up the wrong structure, or skipping a registration you didn’t know existed, then paying to untangle it later. Get the foundations right the first time and the rest is mostly admin you can stay on top of.

What is a not-for-profit, and is it the same as a charity?

A not-for-profit is any organisation set up to pursue a purpose other than private profit. Think Beyond Blue, The Smith Family or your local surf club. The defining feature is simple: the money stays in the organisation. It can pay staff, run programs and build reserves, but it can’t hand profits to the people who run it.

Now the distinction that trips up almost everyone. A charity is a type of not-for-profit, but a not-for-profit isn’t automatically a charity. To be a charity, your organisation has to have a charitable purpose that benefits the public, and it has to register with the Australian Charities and Not-for-profits Commission. Plenty of legitimate NFPs (sporting clubs, professional associations, social clubs) sit outside charity status entirely.

Why does this matter so much? Because the charity-or-not question decides who regulates you and what you lodge each year. Charities answer to the ACNC and the ATO. Non-charitable NFPs self-assess their tax position with the ATO and lodge a return to prove it. Get this wrong at the start and you can end up registered with the wrong body, or taxable when you assumed you were exempt.

How do you start a not-for-profit in Australia?

There are seven practical steps. You don’t have to do them in a rigid order, but each one builds on the last, so working through them in sequence saves rework.

1. Nail your purpose, and write it down properly

Your purpose is the single most important decision you’ll make. It drives your structure, your tax treatment, your eligibility for charity status, and even your name. Vague purposes cause problems later, so get specific now.

Want charity status? Your purpose has to fit one of the twelve charitable purposes set out in section 12 of the Charities Act 2013 (Cth):

1. Advancing health
2. Advancing education
3. Advancing social or public welfare
4. Advancing religion
5. Advancing culture
6. Promoting reconciliation, mutual respect and tolerance between groups of people in Australia
7. Promoting or protecting human rights
8. Advancing the security or safety of Australia or the Australian public
9. Preventing or relieving the suffering of animals
10. Advancing the natural environment
11. Promoting or opposing a change to the law, policy or practice (where that change supports one of the purposes above)
12. Other purposes beneficial to the public that are similar to the eleven above

Where founders go wrong is drafting a purpose that’s too narrow or too commercial. Write it too tightly and you box yourself in the first time your programs evolve. Make it sound like a business and the ACNC may question whether you’re really charitable. The fix is to describe the change you want to see in the world, not the specific activities you’ll run this year. The ACNC’s free charity registration tool is a good sense-check before you commit.

2. Choose your legal structure

Few decisions carry a longer tail of consequences. Your structure sets where you can operate, who regulates you, how much reporting you’ll do, and how protected your members are. The main options:

• Incorporated association. A separate legal entity registered with your state or territory regulator. Cheaper and simpler, and the go-to for community-based groups that operate mostly in one state.
• Company limited by guarantee (CLG). A national entity registered with ASIC under the Corporations Act 2001 (Cth). The most common company structure for charities and the right call if you’ll operate across state borders.
• Unincorporated association. The simplest option, with no separate legal entity. Fine for a small, low-risk group, but members can be personally on the hook for the group’s debts.
• Co-operative or trust. Less common for NFPs. A charitable trust can work where you’re holding and distributing funds rather than running programs day to day.
• Indigenous corporation. Registered with the Office of the Registrar of Indigenous Corporations, built for Aboriginal and Torres Strait Islander organisations.

For most new NFPs the real decision is incorporated association versus company limited by guarantee. We unpack exactly how to choose between them further down, including a side-by-side table.

3. Draft your governing document

Your constitution (or rules, for an incorporated association) is the rulebook for how your NFP runs: purpose, membership, meetings, the board, and what happens to assets if you wind up. It isn’t a box-ticking exercise. The ATO now requires non-charitable NFPs that self-assess as income tax exempt to have two specific things in their governing document: clauses that stop income or assets being paid to members, and a dissolution clause that sends any leftover assets to another not-for-profit when you close.

This is the deadline to circle. The ATO gave NFPs until 30 June 2026 to update governing documents that don’t yet have these clauses. If yours is missing them, fixing it isn’t optional anymore. A not-for-profit constitution template built for a company limited by guarantee already includes the non-distribution and dissolution wording, which is the single most common gap we see in DIY governing documents.

4. Register your not-for-profit

Now you make it official. Depending on your structure and your plans, you’ll register some or all of the following:

• The entity itself. An incorporated association registers with your state or territory regulator. A company limited by guarantee registers with ASIC. If you want charity status, you register with the ACNC as well (and if you’re a CLG, you register with ASIC first, then the ACNC).
• An Australian Business Number (ABN). You need one to open a bank account, issue receipts and register as a charity. A non-charitable NFP must have an ABN once its GST turnover hits $150,000.
• Your organisation’s name. Register a business name if you’ll operate under anything other than your legal name. It’s also worth checking whether you can register it as a trade mark to protect your identity.
• Tax and licences. Register for GST if required, plus any licences or permits your activities need (fundraising permits are a common one, covered below).

5. Sort out your tax position

Here’s where being an NFP pays off, and also where the new compliance rules bite. Run the two paths separately, because they don’t work the same way.

If you’re a registered charity, the ATO endorses you for income tax exemption and other concessions. You don’t lodge an income tax return or the NFP self-review return. Instead you submit an Annual Information Statement to the ACNC each year.

If you’re a non-charitable NFP (a sporting club, say, or a professional association), you self-assess whether you’re income tax exempt against the categories in Division 50 of the Income Tax Assessment Act 1997. Since 1 July 2023, if you have an active ABN you also have to lodge the ATO’s NFP self-review return every year, due by 31 October, to confirm that exemption still holds. It takes about ten minutes, but plenty of clubs were caught off guard when it first landed. Miss it and your NFP can be treated as taxable for the year.

Two more concessions worth knowing. GST registration is only compulsory once your NFP’s turnover reaches $150,000 (double the $75,000 threshold that applies to ordinary businesses). And deductible gift recipient (DGR) endorsement, which lets donors claim a tax deduction for giving to you, is separate again. It isn’t automatic, you apply to the ATO, and many DGR categories require ACNC charity registration first.

6. Set up your governance

Your board or committee carries real legal duties: to act in good faith, in the organisation’s best interests, with care and diligence. Appoint people who bring the skills you lack, not just friends who said yes. An incorporated association needs a committee (usually a minimum of three, including office-holders like a president, secretary and treasurer) and a public officer as the contact point with the regulator.

Put a conflict-of-interest process in place from day one. It’s an ACNC governance standard for charities, and it’s the kind of thing that looks like paperwork until a board member’s outside interest collides with a decision and there’s no record of how you handled it. A short policy and a register of interests cover most of the risk.

7. Stay compliant year-round

Setup is a moment. Compliance is a habit. Lock your reporting dates into a calendar now so nothing slips: the NFP self-review return or ACNC Annual Information Statement, your AGM, financial statements, and any officeholder changes you have to notify. Review your governing document once a year, and any time your structure or activities change in a meaningful way. Future you, mid-grant-application, will be grateful.

Incorporated association or company limited by guarantee: which do you actually need?

This is the decision that gets re-litigated most often, usually because someone picked the structure that sounded most impressive rather than the one that fit. Here’s the honest version: if you’re a community group operating in one state, an incorporated association is almost always the cheaper, simpler choice. If you’ll operate nationally, sign larger contracts or chase serious funding, a company limited by guarantee earns its extra cost in credibility and reach.

	Incorporated association	Company limited by guarantee (CLG)
Best for	Smaller, locally focused groups operating mainly in one state or territory.	Organisations that operate nationally, want to scale, or need strong governance credibility for funders.
Who regulates it	Your state or territory regulator (for example, NSW Fair Trading or Consumer Affairs Victoria). Rules vary by state.	ASIC, under the Corporations Act 2001 (Cth). If it registers as a charity, most reporting shifts to the ACNC.
Members needed	Minimum 5 in NSW and Victoria, 6 in WA, 7 in Queensland. Check your own state.	At least 1 member, at least 3 directors, and a company secretary.
Governing document	Rules or a constitution that meet your state’s requirements.	A constitution that reflects NFP status and (if relevant) charitable purpose.
Where you can operate	Mainly your home state. Operating across borders means registering separately in each state, or registering as a Registrable Australian Body with ASIC.	Anywhere in Australia, out of the box.
Watch-outs	Not suited to groups under the member minimum. Harder to operate across multiple states.	More setup cost and, if you’re not registered with the ACNC, full Corporations Act obligations and higher penalties for getting it wrong.

Still on the fence? That’s normal, and it’s exactly the point where a quick chat with a professional saves money. You can talk to a not-for-profit lawyer or accountant to pressure-test your choice before you lodge anything. For a deeper comparison, our guide on choosing the right not-for-profit structure walks through the trade-offs.

What does it cost to start a not-for-profit?

Less than most people fear, and the biggest variable is how much you do yourself versus hand to a professional. The rough shape of it:

• Charity registration with the ACNC is free. There’s no application fee to register as a charity. The cost is the time and care it takes to get your purpose and governing document right.
• Incorporated association. A modest state lodgement fee to register, plus an annual reporting fee. Exact amounts vary by state and change periodically, so check your state regulator.
• Company limited by guarantee. An ASIC registration fee up front and an annual review fee. NFP companies whose constitution bars distributions to members and director fees can qualify as a “special purpose company” and pay a much lower annual review fee. ASIC indexes these fees on 1 July each year.
• Governing documents. A template costs little to nothing. A bespoke constitution drafted by a lawyer typically runs into the low thousands, which can be money well spent for a complex or DGR-seeking organisation.

The pattern we see is founders over-spending on bespoke legal drafting they don’t yet need, or under-spending and ending up with a constitution that fails the ATO clause requirements. Match the spend to the complexity. A single-state community group and a national charity seeking DGR status are not the same job.

Common mistakes when starting a not-for-profit

Most of the pain in the NFP world isn’t dramatic. It’s small setup decisions that cost time and money to reverse. The ones that come up again and again:

• Assuming “not-for-profit” means “charity”. They’re not the same, and the difference changes who you register with and what you lodge. Decide which you are before you register anything.
• Picking the structure for the wrong reason. A CLG sounds more serious, but a single-state community group rarely needs one. Choose for your footprint and funding, not for the letterhead.
• Writing a purpose that’s too narrow. Tie yourself to one activity and your first pivot becomes a governance headache. Describe the outcome you want, not this year’s program.
• Forgetting the NFP self-review return. Non-charitable NFPs have to lodge it annually now. It’s the most common new trap since 2023.
• Treating DGR status as a given. Donors love tax deductibility, but DGR is a separate ATO endorsement with its own criteria. Don’t promise it before you have it.
• Skipping fundraising permits. Public fundraising is regulated state by state. Running a raffle or appeal without the right permission is a quick way to attract the wrong kind of attention.

How do not-for-profits raise funds and stay visible?

An NFP lives or dies on its funding model, and the smart ones don’t rely on a single source. The usual mix:

• Grants. Government and philanthropic grants are a lifeline, but they come with reporting strings attached. A clear purpose and tidy governance from day one makes your applications far stronger.
• Donations. Individual and corporate giving, made easier if you hold DGR status so donors can claim a deduction.
• Fundraising events and appeals. Effective, and regulated. Public fundraising rules differ in every state and territory, so check whether you need a permit before you sell a single ticket.
• Membership and program fees. Sporting clubs, professional associations and arts bodies often fund themselves this way. Charging a fee doesn’t stop you being an NFP, as long as the surplus stays in the cause.

On visibility, the basics still win. A clear website that states your purpose and contact details, an active social presence, and consistent messaging across both. Set up your structure first, then build the public face of it. Supporters give to organisations they trust, and trust starts with looking like you have your house in order.

Frequently asked questions

Can you be a not-for-profit without being a charity?

Yes. Every charity is a not-for-profit, but plenty of not-for-profits aren’t charities. Sporting clubs, professional associations and community groups are common examples. To be a charity, you need a charitable purpose that benefits the public and registration with the ACNC.

How long does it take to set up a not-for-profit?

It varies by structure. Registering a company limited by guarantee with ASIC can take a few days. An incorporated association with a state regulator usually takes a few weeks. Charity registration with the ACNC takes longer again, depending on how complex your application is.

Do not-for-profits pay tax in Australia?

Many don’t, but it isn’t automatic. Registered charities are endorsed by the ATO for income tax exemption. Non-charitable NFPs self-assess against set categories and must lodge an annual NFP self-review return to keep the exemption. If you don’t qualify or don’t lodge, your NFP can be taxable.

Can a not-for-profit make a profit?

Yes. The name is about where the money goes, not whether you make any. An NFP can run a surplus and should aim to. The rule is that the surplus has to be reinvested in the organisation’s purpose, never paid out to members, owners or directors.

What is the NFP self-review return?

It’s an annual return that non-charitable NFPs with an active ABN lodge with the ATO to confirm they still qualify as income tax exempt. It’s been required since 1 July 2023, takes about ten minutes, and is due by 31 October each year. Registered charities don’t lodge it.

Do I need an ABN for my not-for-profit?

You must have an ABN once your GST turnover reaches $150,000, and you need one to register as a charity. Even below that, an ABN is worth getting. It lets you open a bank account, deal with funders and issue receipts cleanly.

Which is better, an incorporated association or a company limited by guarantee?

Neither is better in the abstract, they suit different jobs. An incorporated association is cheaper and simpler for a single-state community group. A company limited by guarantee suits national operations and organisations that need governance credibility for larger funders. Match the structure to your footprint.

Do I need a lawyer to start a not-for-profit?

Not always. A straightforward single-state group can often use templates and the right registrations. Legal help pays for itself when you’re seeking charity or DGR status, operating nationally, or drafting a constitution that has to meet specific ATO and ACNC requirements.

Start your not-for-profit the right way

If this feels like a lot, that’s because the rules genuinely changed in the last couple of years, and most older guides haven’t caught up. You’re not behind. Thousands of Australians start a not-for-profit every year with no legal background, and the ones who get the foundations right spend almost no time thinking about compliance afterwards. Take it one step at a time, starting with your purpose and your structure.

When you’re ready to make it real, Lawpath puts the structure, the governing document and the registrations in one place, so you can sort your not-for-profit setup without chasing five different providers. Start your not-for-profit constitution today.