Introduction
Many community clubs and associations often question whether their activities qualify them to be registered as a charity. Registration with the Australian Charities and Not-for-profits Commission (ACNC) hinges on a critical distinction: whether an organisation’s main purpose is to benefit its members or to serve a broader public good.
Achieving status as a registered charity provides significant advantages, including potential income tax exemption, but requires meeting strict legal tests. This guide will explain the core requirements for charity registration, focusing on the concepts of ‘charitable purpose’ and ‘public benefit’ under the Charities Act 2013 (Cth), and clarify why many hobby and community service organisations do not meet the threshold for ACNC registration.
Understanding Key Differences Between a Charity & a Not-for-Profit Organisation
A not-for-profit organisation is an entity that does not operate for the profit, personal gain, or other benefit of its members or founders. While it can earn a profit, any surplus funds must be used to further the organisation’s purposes and cannot be distributed to individuals.
A charity is a specific kind of not-for-profit organisation that must meet additional legal requirements. To be formally recognised, a charity must be registered with the ACNC and have a charitable purpose that is for the public benefit.
While all charities are not-for-profit, not every not-for-profit organisation can be registered as a charity. The primary differences relate to:
| Aspect | Description |
|---|---|
| Main Purpose | A charity must be established exclusively for a recognised charitable purpose that benefits the public. Other not-for-profits can have a main purpose benefiting the community alongside an independent, non-charitable purpose (e.g., member recreation). |
| Regulation | An organisation must register with the ACNC to be legally recognised as a charity and is subject to its ACNC governance & compliance standards. Not-for-profits that are not charities interact directly with the ATO for tax matters. |
| Tax Status | Registered charities must be endorsed by the ATO for income tax exemption and other concessions. Some not-for-profits (e.g., community service clubs) can self-assess their eligibility for an income tax exemption directly with the ATO. |
This distinction explains why many hobby groups and social clubs are considered not-for-profits but not charities. Their main purpose is often to provide facilities and social opportunities for their members, which is not a recognised charitable purpose for the public benefit.
If an organisation’s purposes are entirely charitable, it cannot self-assess as income tax exempt and must apply for charity registration with the ACNC.
Request a Free Consultation with one of our experienced Lawyers today.
Get Your Free Initial Consultation
The ACNC’s Core Requirements for Charity Registration
Being a Not-for-Profit Entity
To be registered as a charity with the ACNC, an organisation must first be a not-for-profit (NFP) entity. This means it does not operate for the profit, personal gain, or other benefit of its members or the people who run it.
While an NFP organisation can make a profit, any funds generated must be reinvested to further its charitable purposes. This not-for-profit character must be legally binding and is most clearly demonstrated through the organisation’s governing document, such as its not-for-profit constitution or rules.
This document must contain specific clauses that outline its NFP status, including:
| Clause Type | Purpose in Governing Document |
|---|---|
| A not-for-profit clause | Specifies that the organisation’s income and assets are used solely to advance its objectives. |
| A dissolution clause | Ensures that if the organisation winds up, any surplus assets are transferred to another charity with similar purposes, not distributed among members. |
Having a Charitable Purpose for the Public Benefit
A central requirement when applying for ACNC charity registration is that the organisation must have a charitable purpose that is for the public benefit. An organisation’s purpose is what it is set up to achieve, and all of its purposes must be charitable, except for those that are merely incidental or secondary to its main charitable mission.
In addition to having a recognised charitable purpose, this purpose must benefit the public in general or a sufficient section of it. While some purposes, such as relieving poverty or advancing education, are presumed to be for the public benefit, the ACNC assesses this on a case-by-case basis.
A charity can restrict its services to a specific group, like a food bank helping people who cannot afford food. However, it cannot impose unreasonable restrictions, such as those based on appearance.
Avoiding Disqualifying Purposes
Certain purposes will automatically prevent an organisation from being registered as a charity, regardless of any other beneficial activities it undertakes. The ACNC will not register an organisation if its purpose is to engage in or promote activities that are unlawful or contrary to public policy. This includes things like tax evasion or educating people in illegal activities.
Furthermore, an organisation cannot be registered as a charity if its purpose is to promote or oppose a political party or a candidate for political office.
Other entities that are ineligible for registration include:
- A political party itself
- A government entity
- An individual or a partnership
- An organisation listed by a government agency as engaging in or supporting terrorist or other criminal activities
100% Obligation-Free
Speak to one of our Experienced Lawyers Today
What is a Recognised Charitable Purpose
The 12 Recognised Charitable Purposes Under the Charities Act
For an organisation to be registered as a charity, its mission must align with a legally recognised charitable purpose. The Charities Act 2013 (Cth) specifies twelve distinct categories considered charitable. Upon approval, the ACNC assigns one or more charity subtypes reflecting the organisation’s main purpose, which can affect income tax exemption eligibility.
The twelve recognised charitable purposes include:
| Charitable Purpose | Description & Examples |
|---|---|
| 1. Advancing health | Preventing and relieving sickness, disease, or human suffering. Examples include hospitals, medical research bodies, and family support services. |
| 2. Advancing education | Includes formal schooling, vocational training, publicly available research, and less formal education for developing life skills. |
| 3. Advancing social or public welfare | Relieving poverty, distress, or disadvantage, and caring for children, the aged, or individuals with disabilities. |
| 4. Advancing religion | Promoting beliefs, principles, and standards of conduct associated with a particular religion. |
| 5. Advancing culture | Promoting or fostering culture and preserving Australian heritage. Examples include museums, fine arts societies, and organisations promoting Indigenous culture. |
| 6. Promoting reconciliation, mutual respect, and tolerance | Aiming to reduce conflict and eliminate discrimination between groups within Australia. |
| 7. Promoting or protecting human rights | Monitoring abuses, educating the public, and seeking redress for victims, as defined by specific international conventions. |
| 8. Advancing security or safety of Australia or the Australian public | Includes volunteer emergency services, neighbourhood watch programs, and organisations supporting armed forces welfare. |
| 9. Preventing or relieving animal suffering | Includes animal shelters, wildlife protection societies, and organisations caring for endangered species. |
| 10. Advancing the natural environment | Protecting native flora and fauna, rehabilitating habitats, and providing environmental conservation education. |
| 11. Other similar purposes beneficial to the general public | Covers court-recognised charitable purposes, allowing for the evolution of new charitable purposes over time. |
| 12. Advancing public debate | Promoting or opposing changes to law or policy, where such changes must support one of the other recognised charitable purposes. |
Request a Free Consultation with one of our experienced Lawyers today.
Get Your Free Initial Consultation
Why Most Hobby Groups Don’t Qualify as Registered Charities
The Issue with Social & Recreational Clubs
Many social and recreational clubs are not recognised as having a charitable purpose because their primary focus is on benefiting their own members. The ACNC requires an organisation’s main purpose to be for the public benefit, which is a standard that groups established for private social interaction typically do not meet.
An organisation is unlikely to be registered as a charity if its main activities are for the social and recreational enjoyment of its members, a determination that can be clarified with a charity lawyer. This is because the purpose is not considered altruistic or for the welfare of the broader community.
Examples of groups that often fail this test include:
- Clubs that provide a social forum for retired professionals to pursue common interests
- Dinner clubs established for members to socialise and try new restaurants
- Book clubs where the main purpose is social interaction among members who share an interest in reading
- Residents’ committees formed to represent the interests of people in a specific retirement village or residential area
While these organisations may contribute positively to their members’ lives, their activities are not directed at a recognised charitable purpose for the public benefit.
An exception exists if a social club’s main purpose is genuinely charitable, such as helping socially isolated individuals, with the social activities being the method to achieve that charitable end.
When a Sporting or Cultural Group’s Main Purpose is Member Benefit
Similarly, sporting, cultural, and professional groups are generally not considered charities if their main purpose is to serve the interests of their members. The ACNC distinguishes between activities that benefit the public and those that primarily provide advantages or recreational opportunities to a private group.
A sporting or recreational organisation is typically not a charity because its main purpose is to provide facilities and activities for its members. However, it may qualify if its primary purpose aligns with a recognised charitable purpose. For instance, a sports club could be a charity if its main mission is to provide activities for people with disabilities, thereby advancing social or public welfare.
The same principle applies to cultural groups. An organisation that promotes culture may be charitable, but not if it functions mainly as a social club for members who share a cultural interest. The key is whether the main purpose is to make culture accessible to the public, rather than simply providing recreational enjoyment for its members.
How Your Governing Document Defines Your Main Purpose
The ACNC primarily determines an organisation’s main purpose by examining its governing document, such as its constitution, rules, or trust deed. This document formally outlines the organisation’s objectives, its not-for-profit nature, and how it operates, serving as the primary evidence of its intentions.
When you apply for charity registration, the ACNC will scrutinise the ‘objects’ or ‘purpose’ clauses in your governing document. If these clauses state that the organisation’s main purpose is to provide social or recreational facilities for members, it is unlikely to be registered as a charity. This holds true even if the organisation undertakes some secondary fundraising or community activities.
To meet ACNC charity registration eligibility, all of an organisation’s purposes must be charitable. If it has an independent, non-charitable purpose—such as providing social events for members—it will not meet the legal definition of a charity. Therefore, ensuring the governing document clearly and exclusively reflects a charitable purpose for the public benefit is essential for any group seeking ACNC registration.
Conclusion
To be registered as a charity with the ACNC, an organisation must be a not-for-profit with a recognised charitable purpose that serves the public benefit. This key distinction is why many hobby, social, and recreational groups do not qualify, as their main purpose is typically to provide benefits for their members rather than the broader community.
If your organisation needs to clarify its status or ensure its governing document meets ACNC requirements, contact the expert team at our not-for-profit law firm, LawBridge. Our specialised legal advice can provide the clarity and direction needed to navigate the complexities of charity registration.
