Innovation 101 Ep 8: Organisation Structure - Not For Profit

Summary

This video discusses the various structures available for not-for-profit organizations, emphasizing the importance of legal and tax advice. It covers options such as unincorporated associations, co-operatives, incorporated associations, and companies limited by guarantee, highlighting their liabilities, compliance requirements, and operational flexibility. The video also mentions the necessity of registering as a charity with the Australian Charities and Not for Profit Commission to obtain tax exemptions. Overall, it encourages keeping organizational structures simple to focus on achieving goals rather than becoming overwhelmed by legalities and compliance issues.

Takeaways

• 😀 Not-for-profit organisations have distinct considerations compared to for-profit organisations.
• 💡 It's essential to seek separate legal and tax advice when choosing the structure of a not-for-profit.
• 📋 An unincorporated association is a simple structure that lacks formalities but exposes members to full liability.
• ⚠️ Members of unincorporated associations cannot obtain insurance to cover their activities, increasing personal risk.
• 👥 Co-operatives are suitable for specific community activities but are less ideal for raising awareness or assisting disadvantaged groups.
• 🔍 Co-ops operate with low liability for members, usually limited to their membership fees.
• 🏢 An incorporated association limits member liability but comes with compliance requirements.
• 🌍 Incorporating as a company limited by guarantee allows for national operations, unlike state-based incorporated associations.
• ⏱️ Companies limited by guarantee can be incorporated quickly (within 2-3 days), while incorporated associations may take up to 2 months.
• 📄 To operate as a charity, organisations must register with the Australian Charities and Not for Profit Commission (ACNC) for tax exemptions.

Q & A

What is the primary difference between not-for-profit and for-profit organizations?

Not-for-profit organizations focus on achieving specific missions or community goals rather than generating profit for owners or shareholders.

What is an unincorporated association?

An unincorporated association is a simple structure where individuals come together for a specific purpose or activity, but members have personal liability and cannot obtain insurance for the group's activities.

What are the liabilities associated with unincorporated associations?

Members of unincorporated associations are fully liable as individuals for any debts or legal issues, meaning they risk personal assets.

In what scenarios are cooperatives suitable?

Cooperatives are suitable for specific community activities such as food co-ops or clothing pools, but they are less appropriate for broader awareness campaigns or targeting specific disadvantaged groups.

What is the liability of members in a cooperative?

Members' liabilities in a cooperative are typically limited to the value of their membership fee, making it a lower-risk option.

What is an incorporated association?

An incorporated association is a not-for-profit structure that limits the liability of its members and requires compliance with certain regulations.

What are the compliance requirements for incorporated associations?

Incorporated associations have specific compliance requirements and their activities are limited to the state in which they are registered.

What is a company limited by guarantee?

A company limited by guarantee is a structure that can be established for not-for-profit purposes, offering greater flexibility and faster incorporation compared to an incorporated association.

What steps must be taken to operate as a charity in Australia?

To operate as a charity, an organization must register with the Australian Charities and Not-for-Profit Commission (ACNC) to gain tax exemptions and the ability to apply for deductible gift recipient status.

Why is it important to keep the business structure simple?

A simple business structure helps organizations focus on achieving their goals rather than becoming bogged down by compliance, legal, or financial issues.