8 Issues To Consider When Setting Up A Charity

Are you interested in establishing a charity?

Have you got a checklist to help you?

This article outlines some general information for those interested in establishing a not-for-profit organisation to receive donations from the public for charitable purposes.  Planning ahead ensures that goals are achieved and assists in identifying possible challenges and risks.  Below is a checklist identifying what needs to be considered before starting a charity.

Research

The first step, before setting up a charity, should be to ensure that setting up a new charity is the best way forward to enable you to reach your objectives. It is important to research whether there are existing charities or not-for-profits that could, in fact, take on board your ideas and support them.  Registering a charity does have benefits such as the ability to apply for charity tax concessions, but there are also ongoing obligations that registered charities must adhere to.

Charity’s Purpose

The purpose of the charity must be a “charitable purpose” and the exact purpose will also have implications at the time of registration.  Prior to setting up a charity clearly list the charity’s objectives, what activities it will undertake to achieve these objectives, the services that will be provided and the target audience.  It is important to identify the beneficiary of the charity’s activities, services and programs and why a need for this charity exists.  Another important question to have answered prior to setting up the charity is whether there will be a time limit for the charity and if so what this time limit will be.

Required Resources

The setting up and ongoing costs of a charity must be considered well in advance.  This will ensure that there aresufficient funds and resources to set up and start running the charity.  It will also assist with planning and prioritisation including allowing you to assess the viability of engagingstaff and volunteers.

Fundraising and Charity Tax Concessions

Depending on where money is being raised, fundraising regulations of that state or territory will apply.  In Victoria, fundraising is regulated by the Consumer Affairs Victoria and the Victorian Commission for Gambling and Liquor Regulation.  There are many different ways to raise money, this includes, charging membership fees, door to door and public appeals, highway collections and organising events and auctions.  Ideally, for a charity to ensure that it is in conforming with the applicable law, a specialist lawyer should be consulted to advise on what laws and regulations need to be adhered to and advise on the potential implication of tax concessions.

Charity’s Legal Structure

The legal structure should meet the charity’s needs not only at the start but also inthe long term.  There are different structures, both incorporated and unincorporated, that a charity may opt for.  When deciding on the ideal legal structure for a charity, it is important to consider the likely size of the charity and the complexity of its activities, whether the charity will employ staff or operate with just volunteers, potential personal liability of members, potential application for government grants and whether the charity will operate in one or more state or territory.  It is strongly recommended that specialist advice is sought, at an early stage, to ensure a good understanding of the advantages and disadvantages each option affords.

Legal and Regulatory Issues to be Considered

There are several legal implications when setting up a charity.  It is strongly recommended that you seek specialist advice to assist you with your options. Things that would need to be considered for legal and regulatory purposes include: where the charity will operate from and whether this will be across state or territory borders, whether the charity will be eligible for charity tax concessions and what other legal obligations will apply including employment and fundraising laws.

Management of Charity

Prior to setting up a charity, it should be decided where the organisation will operate from, whether the charity will need a governing body such as a board or committee, or trustees and what rules and practices will be governing the charity.

Promotion of the Charity

The promotion of the charity and how it will reach out to the public is important to the charity’s success.  The organisation should plan how it will get promotional information out to the target audience and in which ways it will publicise its information.  Depending on which communication tools the charity will opt to use, terms and conditions of use may be required.

Contact Allied Legal

The content of this article is an overview of what should be considered when setting up a charity.  Allied Legal’s lawyers in Melbourne can help, support and assist you with these and other issues.  We provide free 30-minute initial consultations to help understand your needs.  Please contact us when you are ready to seek specialist advice: http://alliedlegal.com.au/contact/.