This page outlines some general advice for those interested in establishing a not-for-profit organisation to receive donations from the public and to deliver charitable services to the community.
Please note this information should not be relied upon. You will need to seek independent legal advice.
We recommend carrying out a feasibility study or other research in order to determine whether there is a genuine community need for the services you intend to provide, and whether there is sufficient funding potential for your organisation to survive.
It is important to remember that there are already more than 600,000 not-for-profit groups in Australia and that in many cases, they are competing for a limited amount of funding.
The first step is to make sure you are not duplicating resources and activities that are already being carried out in your area. It may be more useful to join or volunteer for an existing organisation than to start a competitor.
If you intend to start an intermediary organisation that will both seek funding from grant-makers or the general public, and make grants to other organisations, it is particularly necessary to determine your fundraising potential. Bear in mind the majority of grant-making foundations prefer to directly fund projects they consider worthy, rather than making grants to other grant-makers.
If you are a not-for-profit organisation already and are thinking of establishing a perpetual foundation for the benefit of your organisation, we recommend conducting a feasibility study into whether it will be financially viable to divert resources into the setup and maintenance of a separate legal entity.
It is important to note that you cannot expect to source all, or even a large percentage, of your funding from philanthropic trusts and foundations. Most charitable organisations can expect less than 10% of their funding to come from the philanthropic sector.
Starting a not-for-profit organisation will involve various degrees of effort depending on the organisation’s intended activities, and may also involve some expense in the establishment phase. Start-up funding is often difficult to access from trusts and foundations, as in general, grant-makers are less likely to fund a new organisation than one with an established track record of delivering successful programs.
You may have more success if you can prove that the projects you are interested in undertaking have been piloted successfully, that another organisation is not carrying out the same work in your area, and that you have a detailed and realistic plan to ensure the future financial stability of your organisation. However you should also be prepared to fund the start-up phase internally or try crowd funding.
As a not-for-profit organisation you are governed by laws and must comply with them. The key areas of not-for-profit law are as follows:
Please refer to the Our Community help sheets for more information on the above.
Ian is the President at Community Foundations of Canada (CFC), the national network that connects the country's 191 community foundations
If you want to find out more about our consultancy services - or if you're interested in joining the Philanthropy Australia Consultant Team - please contact Chris Wootton.