Types of NFP Entities

Incorporated Association

This entity is established under State legislation (the Associations Incorporation Act) and is regulated by the provisions of that Act.

The advantages of an Association are that it is inexpensive (less than $100) and, for smaller entities, the reporting requirements are more relaxed. If you intend to apply for Deductible Gift Recipient (DGR) status, then the model rules, supplied with the incorporation kit, will need to be amended to emphasize the cultural objectives, establish a Gift Fund, and amend the winding-up clause.

The disadvantage (for some) is that the management committee has to put itself up for re-election annually and there is the possibility that you and your committee may not be re-elected and that a new committee may change the artistic direction of the Association.

Company Limited by Guarantee

A company limited by guarantee is established under Federal legislation and these entities, through the Board of Directors, report to the Australian Securities and Investment Commission (ASIC).

The advantage of this structure is that you can control the appointment of Directors and hence the ongoing direction of the company. The Constitution (equivalent to the Model Rules for an Association) will need to be drawn up to satisfy DGR and ITEC requirements, as above.

The disadvantage is that it is more expensive to set up (around $1000), and the ASIC reporting requirements â€“ and the auditing requirements â€“ are more onerous.

Aboriginal Corporations

These are Associations established under the provisions of the federal Corporations (Aboriginal & Torres Strait Islander) Act and have similar reporting requirements for a Company Limited by Guarantee. As would be obvious, they are intended for use by Aboriginal persons and groups; some would consider the regulatory oversight to be more rigorous than for other types of structures

Types of NFP Entities

Search

On the Road