Starting a charity in Australia is a meaningful way to give back, create social change, and rally community support behind a cause you’re passionate about. But while the motivation to make a difference is crucial, transforming your vision into an official charity requires a clear understanding of legal requirements – especially what "charity" means under Australian law and how to ensure your organisation meets the right standards from the start.
If you’re dreaming about launching a not-for-profit or just want to know what makes an organisation a charity in the eyes of regulators, you’re in the right place. This guide covers the core question: charity defined – what it means in Australia, how to create a proper charitable purpose, and what steps you need to take to set up a registered charity with confidence. We’ll break down key concepts, legal steps, documents you’ll need, and where to go for help.
Whether you’re just exploring the idea or are ready to start, keep reading for a clear, practical approach to getting your charity up and running the right way.
What Is a Charity? How Is Charity Defined in Australia?
Let’s start with the question at the heart of it all: how is “charity” defined when it comes to Australian law?
A charity in Australia isn’t just any group with good intentions. To be officially recognised – and to access tax benefits, fundraising privileges or grant opportunities – your organisation must meet the legal definition under Australian law, specifically as set out by the Australian Charities and Not-for-profits Commission (ACNC) and relevant Acts like the Charities Act 2013 (Cth).
In essence, charity is defined in Australia as:
- an organisation that is not-for-profit (does not operate for the profit, personal gain, or benefit of particular people such as members or shareholders);
- has all purposes that are charitable as recognised by law (see below); and
- is for the public benefit.
Being “charitable” means your organisation must have a charitable purpose – for example, advancing education, relieving poverty, promoting health, protecting the environment, or another recognised area of charity work.
The Charities Act sets out twelve charitable purposes. These include:
- Advancing health;
- Advancing education;
- Advancing social or public welfare;
- Advancing religion;
- Advancing culture;
- Promoting reconciliation, mutual respect and tolerance;
- Promoting or protecting human rights;
- Advancing the security or safety of Australia or the Australian public;
- Preventing or relieving the suffering of animals;
- Advancing the natural environment;
- Other purposes beneficial to the community.
It’s important that every activity your organisation undertakes relates directly to these purposes, and that private interests or personal benefit don’t take priority.
Key point: Just “doing good” isn’t enough – you must fit the charity definition under law to get registered and access the benefits reserved for charities.
Why Does the Charity Definition Matter for New Charities?
Understanding how charity is defined is the foundation for building a legally compliant organisation. It matters because:
- Registration: You need to clearly show your charitable purpose when registering as a charity with the ACNC.
- Tax and fundraising benefits: Only registered charities (with the right purposes) can apply for tax concessions, deductible gift recipient (DGR) status, and many grants or donations.
- Compliance and transparency: Registered charities face extra rules to ensure they remain not-for-profit and continue to direct resources to the public good.
If you don’t get the definition right from day one, you could hit roadblocks at registration, miss out on funding, or even have your not-for-profit deregistered down the track.
That’s why it’s so vital to be clear – for yourself, your team, and the public – on how your charity’s purpose meets the legal definition and how your activities will fulfil it.
How Do I Set Up a Charity? Step-by-Step Guide to Getting Started
Once you understand the broad requirements around “charity defined,” what’s actually involved in setting up a new charity in Australia? Here is a step-by-step outline of the key stages from idea to registration.
Step 1: Define Your Charitable Purpose
Start by getting crystal clear on what your charity exists to do. Write a purpose statement that:
- Matches one or more of the twelve charitable purposes recognised under Australian law;
- Shows how your work will deliver public benefit, not private gain;
- Can be backed up by the planned activities of your organisation.
For example: “To relieve poverty by providing food and support services to people experiencing homelessness in Sydney.” Make sure all other activities can be directly linked back to this purpose.
Step 2: Plan Your Structure and Operations
Consider important practical questions at this early stage, such as:
- Who will run and govern the charity (board, committee, trustee)?
- How will you fund your activities (donations, fundraising, grants)?
- Where and how will you operate (local, national, online, physical premises)?
- Will you employ staff or rely on volunteers?
This planning lays the groundwork for legal structure and compliance, so document these details as you go. If you’re not sure where to start, working through a basic business planning process can be very helpful – just adapt it for charity goals and compliance.
Step 3: Choose a Legal Structure
The next step is deciding on the right legal structure for your charity. There are a few options, each with its own pros and cons:
- Incorporated Association: A popular, low-cost structure for local or state-based charities. Gives your group a legal identity separate from members and a management committee. Registration is with your State or Territory regulator (like NSW Fair Trading or Consumer Affairs Victoria).
- Company Limited by Guarantee: Registered as a public company with ASIC (Australian Securities and Investments Commission). Offers greater flexibility and is suited to larger, more complex or national charities. Directors govern the company, and members agree to contribute (usually a nominal amount) if the company winds up. Read more about company limited by guarantee structure.
- Charitable Trust: Less common for new charities, trusts can be useful for specific purposes (like managing charitable funds or endowments), but require careful setup and ongoing compliance.
Your structure choice affects everything from governance to reporting to eligibility for tax benefits. It’s worth seeking advice at this stage – public company registration comes with extra responsibilities.
Step 4: Draft a Governing Document (Constitution or Trust Deed)
Every charity needs a core document, like a constitution, rules of association, or trust deed, that:
- Spells out your charitable purpose (matching the legal definition);
- Sets rules for operations, meetings, membership, and management;
- Guarantees your not-for-profit character (i.e. profits and assets must be used solely to further the charitable purpose, not distributed to members/founders).
You’ll need to submit this document when registering with regulators and the ACNC. It’s crucial to get this right to avoid delays or issues down the track. Read more about incorporating an association and drafting constitutions.
Step 5: Register Your Charity
- Register your legal entity: If you’re an incorporated association, register with the relevant state/territory body. For companies, register with ASIC. Trusts require a formal trust deed.
- Apply for an ABN: All charities require an Australian Business Number.
- Apply to the ACNC: Once your legal entity is established, you must register as a charity with the Australian Charities and Not-for-profits Commission. This step requires detailed information about your organisation’s purpose, structure, governing documents, and planned activities.
Registration with the ACNC is mandatory to access federal charity status, charity tax concessions, and public recognition as an official charity. Be prepared to show how you meet the legal criteria for a charity defined under law.
Step 6: Apply for Tax Concessions and (if eligible) Deductible Gift Recipient (DGR) Status
Once registered with the ACNC, you can apply to the Australian Taxation Office (ATO) for charity tax concessions (such as income tax exemption, GST and FBT concessions) and, if eligible, for DGR status (so donors can make tax-deductible donations). Not all charities are entitled to DGR status – your purpose and activities must fit into specific categories, so check carefully.
Step 7: Comply with Ongoing Legal and Reporting Obligations
It’s not a set-and-forget process! Registered charities must meet ongoing legal and reporting requirements at both the state and federal level, including:
- Submitting annual reports to the ACNC (including financial statements);
- Maintaining your not-for-profit character and using assets for your charitable purpose;
- Complying with fundraising laws and privacy/consumer laws (see below for more on this);
- Making sure board members and staff act within the law and in the best interests of your charity.
Failing to meet these responsibilities can risk your charity’s registration, funding, or even expose you (and your board) to legal liability.
What Laws and Regulations Must Charities Follow in Australia?
Once you understand “charity defined” and how to register, it’s vital to know the key legal areas that charities must comply with – both at setup and beyond.
Registration and Governance Law
Depending on your structure, you’ll need to comply with state/territory associations legislation, the Corporations Act 2001 (for companies), or trust law (for trusts). This covers board duties, meetings, managing conflicts of interest, and reporting obligations. You must follow your constitution or deed and make sure your charity’s activities stay aligned with your registered charitable purpose.
Charity Regulation (ACNC)
Once registered with the ACNC, you must meet the ACNC’s Governance Standards, which ensure charities are well-governed, solvent, and working for the public benefit. You must also submit annual information statements and, for larger charities, financial reports.
Fundraising Laws
If you plan to raise funds from the public – including online fundraising – you’ll likely need to comply with state-based fundraising laws, which often require permits, transparency in how funds are used, and accurate public reporting. The specific rules differ by state, so check where you'll operate or seek advice.
Australian Consumer Law (ACL)
Charities that provide goods or services to the public (even for fundraising) must comply with Australian Consumer Law. This covers fair trading, advertising, product safety, refunds, and consumer rights.
Employment Law
If your charity employs staff, you’ll need to comply with Fair Work Act requirements around employment contracts, pay, workplace health and safety, and leave entitlements. Volunteers are not employees, but best practice is to have volunteer agreements and policies in place.
Privacy and Data Protection
Collecting donation or supporter information? You have legal obligations under the Privacy Act regarding storage, use, and protection of personal data. Most charities will need a Privacy Policy (especially if you interact with people online).
Intellectual Property Law
If you have a unique name, logo, resources, or campaign materials, consider registering your trade marks and copyright to protect your brand and ensure no one else can misuse your identity or materials.
Don’t let compliance worries hold you back – with the right planning and legal support, you can focus on making a difference.
What Legal Documents Will My Charity Need?
Solid legal documents are essential for any charity – protecting your mission, managing risk, and giving confidence to donors and the public. Here are the key documents you’ll likely need:
- Governing Document (Constitution or Trust Deed): Sets out your purpose, structure, membership, and rules – absolutely mandatory for registration.
- Board/Committee Agreements: Outline roles, standards, and responsibilities for your leadership. Helps clarify decision-making and confidentiality expectations.
- Employment Agreements: Legally define roles and obligations for staff members. Employment contracts are required under Australian law when hiring employees.
- Volunteer Agreements: Clarify expectations, rights, and policies for volunteers, even if they aren’t legally employees.
- Privacy Policy: Explains how you collect, use, and protect supporter or client data. A must-have for online fundraising or emailing supporters. Learn about Privacy Policies.
- Fundraising Policies and Terms: Set clear guidelines for how funds are raised, held, and used. Important to demonstrate compliance with fundraising rules and to build public trust.
- Child and Vulnerable Person Safeguarding Policies: If working with children or at-risk groups, extra legal and ethical policies are required.
- Service Agreements: If your charity provides services to clients/beneficiaries (such as counselling, education, or aid), you’ll want a Service Agreement outlining terms clearly.
- Intellectual Property Agreements: For your logo, resources, or programs – protects your brand and resources.
Not every charity will need all these documents, but most will need at least a governing document, privacy policy, and agreements for staff/volunteers. Having them professionally prepared or reviewed is a smart investment to avoid issues down the track.
Other Considerations: Is an Incorporated Association or Company Limited by Guarantee Best?
Choosing the best structure for your charity comes down to your size, location, purpose, and ambitions:
- Incorporated Association: Ideal for smaller, local charities. It’s cheaper to register and simpler to run, but may be limited to operating within one state or territory.
- Company Limited by Guarantee: Better for larger or national charities, complex operations, or those seeking greater public trust and large-scale fundraising. More reporting and compliance is required, but it often makes sense for sustainability and growth.
There’s no single “right answer” – get tailored advice about your circumstances and goals. You can compare the features in more depth in our guide to charity structures.
Key Takeaways
- For legal recognition, a charity in Australia must be not-for-profit, have a recognised charitable purpose, and deliver public benefit.
- Your governing document (constitution or trust deed) must reflect your charitable purpose, not-for-profit status, and internal rules.
- Choosing the right legal structure (incorporated association, company limited by guarantee, or trust) is essential for setup, governance, and future growth.
- Registration with the ACNC is mandatory to access tax concessions and public fundraising benefits.
- Ongoing compliance with laws like fundraising, privacy, employment, and consumer law is essential to protect your charity and achieve your mission.
- Well-drafted legal documents help minimise risk, clarify roles, and demonstrate credibility to donors and regulators.
- Getting legal advice early can save time and prevent headaches as your charity develops.
If you’d like to speak with a legal expert about setting up a charity or understanding “charity defined” in practice, reach out to us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
