To be or not to be a Not-for-profit?
Image of Youth Justice Coalition community space in South Compton Los Angeles (taken by K. Lallo, 2023).
There comes a time when many community groups consider setting up a formal legal structure to become a not-for-profit organisation.
Usually this is prompted by a growing volunteer base, the need to seek funding, or the desire to diversify projects.
Becoming a not-for-profit can be difficult for a small, low resourced group and may not always lead to the desired result. Before starting the process your group should ask the following:
Why do we want to (become a not-for-profit, get DGR status, etc)?
Can we conduct our activities without a formal legal structure?
If we created a legal structure, do we have enough people to sustain the reporting obligations?
Is there another way to achieve the same result?
For example, your group might want to apply for project funding that requires DGR status, but getting DGR status (explained below) can be challenging. You could end up spending a lot of time trying to meet all the requirements, taking focus away from your actual project. Instead, consider partnering with another organisation that does similar work and can auspice your project, saving your group valuable time.
Proper strategic planning, or creating a theory of change, may help you navigate the decision to set up a legal structure. If your group decides to start the process, here are some helpful links:
Setting up a Not-For-Profit: (example - incorporating your association)
Justice Connect Not-for-profit Law is a free service with a range of resources to help you navigate the process of incorporating, including a Getting Started Tool that helps you determine what legal structure is best for your organisation and the steps required to get there.
Getting charity status
Your organisation may want to apply for charity status in order to access various tax concessions. Charities are registered with the Australian Charities and Not-for-profits Commission (ACNC), visit the ACNC website for information on how to get started.
Getting Deductible Gift Recipient (DGR) status
Many small not-for-profit organisations seek Deductible Gift Recipient (DGR) status to apply for certain types of funding and donations.
Applying for DGR can be confusing and difficult but there are some helpful tools available. Use the Justice Connect Not-For-Profit Law DGR Tool and DGR Guide.
