How to Start a Not-for-Profit Organisation in Australia: A Legal & Compliance Guide

If helping others is your calling, you may have wondered how to start a not-for-profit (NFP) organisation in Australia. As an entity whose entire purpose is to help rather than profit, an NFP is a great way to give back to your community. 

That said, NFPs come with many legal caveats and requirements. When starting an NFP, you’ll need to meet a wide range of compliance obligations. In this guide, we cover the various structures, legal details, and compliance must-haves to run your NFP in Australia. Let’s get started! 

Understanding what a not-for-profit organisation is and isn’t

A not-for-profit organisation (NFP) has a purpose other than generating profit for its members or owners. If it earns any surplus through fundraising or commercial activities, the organisation must reinvest it to support its mission and can’t distribute it as dividends. 

NFPs must provide benefits to the members, communities, or society at large. And, under specific circumstances, you can run an NFP as a charity. 

Every charity is an NFP, but not every NFP is a charity. To qualify, your organisation must cover a charitable purpose listed under the Charities Act 2013 (Cth). Charities must register with the Australian Charities and Not-for-profits Commission (ACNC) and meet stricter governance and reporting standards.

Another way you can benefit society is through a social enterprise or business with a social purpose. In this case, you don’t run an NFP and can earn a profit. But the main part of your mission is to use that profit to support social goals. 

Unlike an NFP, owners or investors can still receive profits. A social enterprise blends commercial and charitable aims, while an NFP must fully reinvest its income.

Here is a quick summary of how these types of organisations differ: 

Type	Profit Distribution	Main Purpose	Registration Authority
Not-for-Profit	No profit distribution	Social, community, or member benefit	State regulator or ASIC
Charity	No profit distribution	Charitable (public benefit)	ACNC + ATO
Social Enterprise	May distribute limited profits	Social impact and revenue generation	ASIC (as a business)

Choosing the right legal structure for your not-for-profit

Your legal structure determines how your NFP operates, reports, and interacts with regulators. Four main options exist in Australia.

Unincorporated association

An unincorporated association is the simplest model typically used by small, local groups, such as sporting clubs or volunteer initiatives.

Pros:

• Simple and inexpensive to establish
• Easy to manage for small community groups

Cons:

• No separate legal identity—members may be personally liable.
• Cannot easily hold property or enter into contracts.

Incorporated association (state-based)

Larger undertakings may consider forming an incorporated association, particularly if you plan to operate within a single state. 

Each state and territory regulates incorporated associations, providing a separate legal identity under legislation such as the Associations Incorporation Act 2009 (NSW).

Pros:

• Limited liability for members
• Straightforward, low-cost setup (around $150–$200)
• Simple internal governance

Cons:

• Must primarily operate within one state or territory
• State-based compliance requirements

Company Limited by Guarantee (CLG)

Larger, national NFPs tend to register with ASIC as a company limited by guarantee. These organisations are more complex with higher registration and reporting requirements. 

You’ll want to choose a CLG if your NFP plans to operate across multiple states or apply for national fundraising and grants.

Pros:

• National legal recognition
• Strong governance framework and credibility
• Suitable for fundraising or grant applications.

Cons:

• Higher setup and reporting costs (~$500–$1,000)
• Must comply with both ASIC and potentially ACNC reporting

Co-operatives

A co-operative is an association of members who share a common goal, such as community housing or farming co-ops. 

An example of a co-operative would be a community-run grocery store where members collectively own and govern the business to secure better pricing and service for themselves.

Pros:

• Democratic “one member, one vote” governance
• Profits can be partly shared among members if the rules allow

Cons:

• Complex compliance and registration through the state-based Co-operatives National Law
• Less suited to charities focused on public benefit.

Let’s review each type of structure and its purpose at a glance: 

Structure	Legal Identity	Setup Cost	Reporting	Best for
Unincorporated	No	<$100	Minimal	Small, informal groups
Incorporated	Yes (State)	$150–$200	State-level	State-based clubs
CLG	Yes (National)	$500–$1,000	ASIC + ACNC	National NFPs, charities
Co-operative	Yes (State)	$300–$600	Co-op registrar	Member-based ventures

Step-by-step: How to start a not-for-profit organisation

Now that you have a basic idea of what NFPs are and how you can structure one, let’s take a look at the practical steps you’ll need to take to start one. 

1. Define your purpose and NFP model

Start with a clear purpose that delivers a public benefit. Your mission statement should explain why your organisation exists and who benefits from its work. Clarity here will guide your governance structure, funding model, and eligibility for charitable status.

An example of an NFP mission statement by an educational charity would be: “To empower disadvantaged youth in Western Sydney through mentorship and skills-based training, fostering pathways to employment and community leadership.”

2. Choose a legal structure

Once you know what it is you want to achieve, you need to decide on your legal structure. As we discussed earlier, you can choose to operate as an: 

• Unincorporated association 
• Incorporated association 
• Company Limited by Guarantee 
• Co-operative 

Additionally, you have some alternatives: 

• You can opt to run a business with a social purpose by registering a company. 
• You can establish a charitable trust, but you must meet specific requirements. 
• You can start an indigenous corporation that supports the education, land, recognition, and housing needs of Aboriginal and Torres Strait Islander peoples. 

The legal structure you choose for your organisation will impact the requirements you need to follow. 

3. Draft a constitution or governing rules

Once you’ve set up your legal structure, you’ll need to draft specific documents to govern your NFP. The constitution, for example, defines how your NFP operates. It must include:

• Purpose: A not-for-profit and public-benefit statement
• Winding-up clause: Specifies that remaining assets go to another NFP or charity
• Membership: Rights, responsibilities, and admission rules
• Governance: Board or committee structure
• Financial management: Auditing and reporting provisions

Make sure to write the constitution in a legally binding and compliant manner. For support with legal NFP documents, check out Lawpath’s library of legal templates.

4. Appoint your board or committee

Your board oversees strategic direction and compliance. Under the ACNC Governance Standards, responsible persons must:

• Act in good faith in the best interests of the organisation.
• Exercise duties with care and diligence.
• Prevent misuse of funds.
• Ensure the NFP meets all financial and reporting obligations.

5. Register your organisation (ASIC or state regulator)

Once you have done all the planning, the next step is to register your NFP. You need to register for a few things to make your NFP official. For instance:

• Give your organisation an official name.
• Obtain an Australian Business Number (ABN) to help the Australian Tax Office (ATO) and customers identify your business. 
• Register your tax requirements. 
• Ensure that all relevant licences or permits are valid.
• If your NFP qualifies as a charity, you may also choose to register with the ACNC (more on this below).

Depending on legal structure, you’ll need to register either through the ACNC or a state authority. Here are some useful links: 

• ACNC.gov.au
• NSW Fair Trading
• Consumer Affairs Victoria

You can expect the entire process to take a few weeks. 

6. Apply for an ABN and TFN

All NFPs should apply for an Australian Business Number (ABN) and Tax File Number (TFN) through the Australian Business Register.

You’ll need your proof of registration (certificate, rules, or constitution), as well as the details of authorised contacts and your business address, to register. 

7. Register as a charity (optional)

If your NFP has exclusively charitable purposes and provides a public benefit (for example, relieving poverty, advancing education, religion, health, culture or the environment), it may qualify to register as a charity. 

Your governing documents must clearly reflect these purposes, and your activities must align with them.

Registering as a charity with the ACNC can unlock significant benefits like: 

• Access to Commonwealth tax concessions 
• Eligibility for Deductible Gift Recipient (DGR) endorsement so that donors can claim tax deductions. 

To register

1. Apply through the ACNC charity portal.
2. Submit governing documents.
3. On approval, the ACNC forwards information to the ATO for tax endorsements.

8. Apply for tax concessions or DGR status

Once your organisation is set up (and registered as a charity, if applicable), you can apply to the ATO for charity tax concessions. These include: 

• Income tax exemption
• Fringe Benefits Tax (FBT) rebates
• Goods and Services Tax (GST) concessions

These concessions help your not-for-profit stretch its resources further and improve your ability to attract and retain staff and volunteers.

If you want donors to claim tax deductions for their gifts, your organisation will also need DGR endorsement. You can apply for DGR endorsement through the ATO.

9. Set up financial, record-keeping, and reporting systems

The next step is to make sure that all your finances are in order. NFPs face stringent government requirements, so maintaining a good record-keeping system is crucial. 

The type of reporting you’ll need to deliver will depend on where you fall on the ACNC size tiers:

• Small: Revenue under $500,000 – basic reporting.
• Medium: $500,000–$3 million – reviewed financials.
• Large: Over $3 million – audited financial statements.

You’ll also need to:

• Open a bank account (board minutes + ID for signatories).
• Record all income, donations, and expenses.
• Maintain board minutes and member registers.

10. Create key legal documents

Across the entire NFP journey, strong documentation ensures compliance and reduces risk. You’ll need the following essential documents:

• Privacy policy
• Volunteer agreement
• Fundraising or sponsorship agreements
• Data handling and confidentiality policy

This is in addition to the previously mentioned constitution, board minutes, and member registers. 

Ongoing compliance obligations for not-for-profits

Australian NFPs must uphold legal and reporting duties to remain in good standing.

Core requirements include: 

• Meet ACNC Governance Standards.
• Lodge annual financial reports (to ACNC or state regulator).
• Maintain accurate records for seven years.
• Ensure that directors act with care, in good faith, and in compliance.
• Report changes (e.g., address, board members) within the prescribed timeframes.

Here is a quick compliance summary by organisation type: 

Entity Type	Annual Report	Regulator	Typical Obligations
Incorporated Association	Yes	State regulator	Annual statements and financials
CLG (Charity)	Yes	ACNC + ASIC	Dual reporting + director duties
Co-operative	Yes	State Co-op Registrar	Audit + member reporting
Unincorporated	Optional	None	Internal governance only

Fundraising and grant rules in Australia

If your NFP intends to raise money from the public, you may need a state fundraising licence. Each jurisdiction has its own requirements. 

Each state and territory has its own licensing process. Here are some key organisations to look up: 

• NSW – Charitable Fundraising Authority
• VIC – Fundraising registration via Consumer Affairs
• QLD – Collections licence via Office of Fair Trading

Grant funding often requires:

• Transparent financial reports
• Evidence of expenditure aligned with the grant purpose
• Public disclosures for government-funded initiatives

Additionally, online fundraising (crowdfunding, digital donations) must comply with relevant state laws in each state where donors reside.

Costs of starting a not-for-profit (breakdown)

The cost of starting your NFP will vary depending on purpose, size, state, and legal structure to choose. Here is a quick guide on the types of costs to consider and how much they might add up to: 

Item	Estimated Cost (AUD)
State incorporation fee	$150–$220
ASIC (for CLG) registration	$495
Charity registration (ACNC)	Free
Fundraising licence	$60–$400 (depending on state)
Legal documents + constitution	$300–$800
Accountant/auditor setup	$500–$2,000 annually

Common mistakes to avoid when starting an NFP

Starting an NFP is not a straightforward process. Here are some critical mistakes that you’ll need to mitigate if you want to deliver true value through your organisation: 

• Choosing the wrong structure: Limits growth potential and increases administrative burden.
• Missing ACNC registration requirements: Can delay grants or tax concessions.
• Poorly drafted constitution: Leads to governance disputes or ineligibility for charity status.
• Weak financial controls: Creates a risk of fraud or loss of public trust.
• Failing to document governance rules: Breaches of duty may expose directors to liability.

Checklist: Start your not-for-profit organisation

Avoid the mistakes above by following this comprehensive checklist: 

• Define purpose and clarify public benefit.
• Choose an appropriate legal structure.
• Draft constitution or governing rules.
• Appoint board/committee members.
• Register with ASIC or a state regulator.
• Apply for ABN and TFN.
• Register as a charity (if eligible).
• Apply for tax concessions and DGR.
• Set up financial records and a bank account.
• Prepare key legal documents.
• Obtain fundraising licences.
• Maintain ongoing compliance and reporting.

FAQs

What is the difference between a charity and a not-for-profit?

A charity has a formally recognised charitable purpose and public benefit status under the ACNC, while an NFP can serve members or communities without necessarily meeting that definition.

Can I pay employees in a not-for-profit?

Yes. Employees and contractors can receive fair compensation, but profits cannot be distributed to members or directors.

What are the legal requirements for NFPs?

The primary legal requirements include registration, compliance with governance standards, maintaining accurate financial records, and submitting annual reports to either the ACNC or state regulators.

How long does it take to start a not-for-profit in Australia?

Typically, it takes 4 to 8 weeks, depending on structure, documentation, and regulatory processing times.

Where can I get legal documents for my not-for-profit?

Platforms like Lawpath provide ready-to-use templates, including constitutions, volunteer agreements, and fundraising contracts.

How Lawpath can help your not-for-profit

Lawpath offers a comprehensive legal and compliance platform for Australian NFPs. Our services include:

• ABN/ACN registration through guided workflows
• Constitution templates aligned with ACNC requirements
• A legal document library for volunteer, sponsorship, and privacy policies
• On-demand legal advice from experienced lawyers
• Compliance alerts and automated reminders to track annual reports
• eSignature and document storage tools for board and membership records

Start for free with Lawpath and access the essential documents and legal support to set up your NFP the right way.