On this page:
Overview of not-for-profit organisations
Advantages
Disadvantages
Overview of not-for-profit organisations
Under a company structure, not-for-profit organisations or charitable organisations will generally be registered as public companies that are limited by guarantee. Limited by guarantee means that the members guarantee to pay a fixed but small amount in the event of the liquidation of the company.
Registration of a company creates a legal entity separate from its members. Companies are registered under the Corporations Act 2001, which is Commonwealth legislation administered by the Australian Securities and Investments Commission (ASIC). A company's registration is recognised Australia wide and the company can hold property and can sue and be sued.
More information can be found on the ASIC website about:
- registering a not-for profit company
- the responsibilities of a not-for-profit company.
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Advantages
Some advantages of not-for-profit organisations are:
- shareholders or owners have no responsibility for the debts of the company unless they signed personal guarantees
- companies can be owned and operated by one shareholder and director
- directors, managers and employees have no personal responsibility for debts unless they caused the debts recklessly, negligently or fraudulently
- operators can use titles like Managing Director, Chairman or Chairwoman
- a company may operate in all states.
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Disadvantages
Some disadvantages of not-for-profit organisations are:
- companies are expensive to establish
- companies have higher compliance costs.
Information for non-profit organisations on tax laws and concessions can be found on the Australian Taxation Office (ATO) website. For more information contact the ATO.
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More information
On this site
Charities
Set up a community organisation
Managing a community organisation
Resources for community organisations
Aboriginal community organisations
Frequently asked questions about community organisations