Thinking of starting a charity or a Not For Profit?

Australia is considered a caring country, as evidenced by the extraordinary number of registered charities operating on our shores. The Australian Charities and Not For Profit Commission (ACNC) has over 60,000 registered entities under its remit and would be among the highest percentages in the Western world. This is something we should be proud of.

At Accounting For Good, we are forever amazed at the incredible work that charities and organisations operating in the Not For Profit sector undertake every day.

We know firsthand that this sector is essential for creating a better world.

As a specialist NFP accounting firm, we work closely with organisations in the sector. In this article, we aim to give you a balanced overview of what it takes to establish a charity or NFP and present beneficial alternatives.

Being part of something bigger than yourself is a driving passion that motivates the establishment of most NFPs and charities. They fill gaps that make our society better and more inclusive, help alleviate suffering, and strengthen communities.

By establishing your charity or NFP, you focus 100% on your mission. You build the team, control the reach, and set the agenda. You can cement the brand and what it stands for, including the programs and who or what they impact. After all, you have identified a potential gap in the social fabric, environment, community, or another area that needs assistance.

Of the 60,000-plus registered entities in Australia, approximately 30% generate less than $50K PA in revenue. ACNC research indicates that these entities combined account for less than 1% of the sector’s $200 billion revenue.

There are considerations over and above generating sufficient revenue. New entities must understand the legal structures. Whether to be a limited company, a trust or an incorporated association. The entity will require a constitution or governing documents and rules. It will require a board or management committee to be registered with the ACNC and may need to apply to the ATO for tax exemptions and DGR (Deductible Gift Receipt) status.

Be under no illusion that running an NFP or a charity takes a great deal of work. In the day-to-day, the responsible person is juggling a number of priorities. Compliance, reporting, and governance obligations are combined with managing the finances, risk assessments, and creating or overseeing policies that affect the entity.

Marketing and fundraising are significant functions, and establishing and nurturing relationships with volunteers and donors is incredibly time-consuming. These functions only get more involved the more you grow, and even if you sit in the smaller range, you are still required to submit annual reports and demonstrate a satisfactory level of governance standards.

Competition within the sector is fierce. NFP and charities are constantly competing for funding. Donors are limited, grants are not easy to obtain, and volunteers can only do so much.

As a general rule, the public wants to help; however, as the cost of living increases, the spare dollar becomes more difficult, and many Australians have already contributed to causes close to their heart.

Establishing a new charity or NFP means entering this competitive space and gaining traction in a reasonably saturated market, which takes time and money. With this in mind, supporting or collaborating with an existing entity is a more efficient and effective vehicle for achieving your goals.

There are options if you are passionate and want to make a change.

• Do the research. Take a deep dive into what has been done in the area of interest to you. The ACNC register is a wonderful resource to explore organisations that share your passion.
• Talk to legal and financial professionals. Setting up an NFP or charity does require legal obligations and financial structuring to secure its approval and ensure it is properly safeguarded. Justice Connect has a some excellent links that can guide you on the legal obligations.

https://www.nfplaw.org.au/free-resources/how-to-set-up-your-organisation

https://www.nfplaw.org.au/free-resources/how-to-set-up-your-organisation/social-enterprise

• Ensure you have done sufficient planning. Ask yourself who will do the work and where will the funding come from? Additionally, set out a schedule of what success should be measured against and what it will look like over the first year, then 5 years, and even 10 years.
• Keep in mind that starting your own NFP or charity is only one of many ways you can impact or contribute to a cause close to your heart. You may be able to offer equal or perhaps more by collaborating with an existing organisation offering your expertise, time or even financial assistance.

The NFP and charity sector always seek great people who share their vision and passion. It is highly recommended to do a solid level of research before establishing a new organisation and explore opportunities to work with an existing organisation that would benefit greatly from skill sets.

At Accounting For Good, we work with NFP organisations with a turnover of $1M or more.

Contact us for a free consultation if your organisation needs expert financial guidance. Let us handle your accounting needs so you can focus on what matters most—serving your community and driving positive change.