Structuring Charitable Sports Programs: A Compliance & Fundraising Guide

Introduction

In Australia, the intersection of community sports, charity, and philanthropy presents both significant opportunities and complex challenges. While sport and fitness programs are powerful tools for community engagement, the promotion of sport is not, in itself, recognised as a charitable purpose under the Charities Act 2013 (Cth). This distinction often creates confusion for not-for-profit organisations seeking to leverage sporting activities for social good.

This guide provides essential clarity on how to structure sports-based programs to align with Australia’s legal framework for charities. By explaining the process for linking sporting activities to a recognised charitable purpose, we offer a pathway for organisations to navigate their compliance responsibilities, enhance their philanthropic efforts, and successfully harness the power of sport for community benefit.

Understanding the Legal Position of Sports & Charitable Status in Australia

Why Promoting Sport is Not a Recognised Charitable Purpose

Under Australian law, the promotion of sport is explicitly excluded from the definition of a charitable purpose. The Charities Act 2013 (Cth) does not recognise promoting sport as a standalone charitable activity, which can create confusion for many community sports organisations.

This legal position holds true regardless of the potential public benefits that sport can provide. Arguments are often made that sport leads to a healthier community and reduces pressure on the healthcare system. Despite these valid points, the Explanatory Memorandum to the Charities Act 2013 (Cth) clarifies that a purpose that is essentially sporting is not charitable.

Consequently, if an organisation’s primary objective is simply to promote sport, it will not be eligible for registration as a charity with the Australian Charities and Not-for-profits Commission (ACNC).

The Role of Sporting Activities in Furthering a Charitable Purpose

While promoting sport itself is not a charitable purpose, sporting activities can play a legitimate role within a registered charity. An organisation can include sports and fitness programs without jeopardising its charitable status, provided these activities are conducted to achieve a broader, recognised charitable purpose.

The key is that the sporting activity must be a means to a charitable end, not an end in itself. For a sporting activity to be considered acceptable, it must further a recognised charitable purpose.

For example, a charity could use sport to further several recognised purposes, including:

• Advancing health: Organising fitness programs to improve community health outcomes
• Advancing social or public welfare: Using team sports to engage at-risk youth or improve the quality of life for people with disabilities
• Advancing education: Incorporating physical activities into educational programs

To illustrate, a club whose purpose is to support participation in sport for people living with a disability may be considered a charity. In this context, the sport is the method used to achieve the charitable purpose of improving their quality of life.

Key Steps for Structuring Your Charitable Sports Program

Defining a Clear Charitable Purpose in Your Governing Documents

When structuring a charitable sports program in Australia, your organisation’s governing documents serve as the foundational element. Executives, boards, and other responsible persons must ensure these documents clearly articulate a recognised charitable purpose. Any sporting or fitness activities mentioned must be explicitly and directly linked to achieving that primary purpose.

For organisations seeking to become registered charities, it is crucial to:

• Present a consistent narrative to the ACNC about your charitable purpose
• Ensure alignment between your governing document and all other materials
• Maintain consistency across your business plan, annual reports, and website content

This comprehensive approach eliminates any ambiguity about the role of sport in your charitable process.

The ACNC’s Holistic Approach to Assessing Your Charity’s Purpose

The ACNC does not assess an organisation’s purpose based solely on its governing documents. Instead, it employs a holistic approach to determine if an organisation’s objectives are genuinely charitable, as outlined in the Charities Act 2013 (Cth).

This comprehensive assessment involves reviewing several key areas to understand the true nature of the organisation. The ACNC will consider:

• The organisation’s governing rules and purpose clauses
• The actual activities the organisation undertakes in practice
• Any other relevant matter or supplementary information provided

Through this thorough process, the ACNC can determine whether community sports events function as an independent, non-charitable purpose or as a legitimate means of furthering a recognised charitable goal. In some cases, the ACNC may contact an applicant directly to better understand why certain sporting activities are conducted and how they contribute to the overall charitable mission.

A Case Study on ACNC Approval for a Community Sports Program

How Fundraising for Other Charities Justified Sporting Events

A de-identified decision summary from the ACNC provides a practical example of how sporting activities can align with charitable purposes. In this case, an organisation applied for charity registration under the subtype of ‘advancing culture,’ with its governing document stating an object to host cultural events for an ethnic community.

A potential issue arose because the organisation’s governing document also included the creation of “community sports events.” This raised a concern for the ACNC, as promoting sport is not recognised as an independent charitable purpose. To resolve this, the ACNC requested more information to determine if the sports events constituted a standalone, non-charitable objective.

The organisation clarified that its involvement in community sports was specifically to support other charities. It explained that it would participate in and promote fundraising appeals for other registered charities in the health sector, which used sporting events to raise money for hospitals and medical research.

Based on this clarification, the ACNC concluded that the organisation did not have an independent purpose of promoting sport. Instead, the sporting activities were a means to a charitable end, justifying the approval of its charity registration.

Lessons for Your Not-for-Profit on Aligning Activities with Purpose

The ACNC’s decision highlights a crucial lesson for all not-for-profit organisations: purpose is paramount. The regulator takes a holistic approach, looking beyond the words in a governing document to assess what an organisation does in practice.

Your activities, business plan, and even your website must all tell a consistent story that supports your stated charitable purpose. For organisations seeking to become a registered charity, it is vital to ensure that:

• Your application materials clearly connect any activities, like community sports, to a recognised charitable purpose
• Every aspect of your operation reinforces this primary goal

If your organisation is already a registered charity, its purpose should act as a guiding star for all strategic decisions. When considering new programs or collaborations, the leadership team should:

• Regularly refer back to the core charitable purpose to ensure all activities remain aligned
• Make any changes to your purpose with care and ideally with professional legal advice

Exploring Philanthropic Fundraising for Australian Sports

Accessing Tax-Deductible Donations Through the Australian Sports Foundation

Sporting clubs, national and state sporting organisations, and eligible athletes in Australia can access tax-deductible donations through the Australian Sports Foundation (ASF). This is achieved by using the ASF’s existing Deductible Gift Recipient (DGR) status, which allows organisations to offer tax deductibility to their supporters.

The ASF simplifies this process by handling the associated administrative and regulatory compliance matters on behalf of these sporting bodies. Furthermore, the ASF has established the ASF Charitable Fund, granting the Australian sporting community access to charitable status.

This development creates a significant opportunity to generate more funds for Australian sport. It allows access to funding from Private and Public Ancillary Funds, providing a new avenue for philanthropic engagement and investment in sports programs across Australia.

Overcoming Barriers to Philanthropic Giving in Community Sports

Despite the available avenues for fundraising, several key barriers hinder the growth of philanthropic giving to community sports. Research indicates that simply having access to tax deductibility and charitable status is not enough to materially increase donations.

The primary challenges that need to be addressed include:

Barrier	Description
Lack of Resources & Expertise	The sporting community often lacks the necessary resources and skills to run effective philanthropic fundraising campaigns.
Limited Understanding	Sporting organisations have a limited understanding of the Australian Sports Foundation (ASF) and the implications of its charitable status for fundraising.
Lack of Philanthropic Acceptance	The philanthropic community may not view sport as a valuable vehicle for achieving social and community investment outcomes.

Meeting Your Governance & Compliance Responsibilities

Adhering to the Five ACNC Governance Standards

As a board member or responsible person for a charity in Australia, you must ensure your organisation meets its NFP charity governance & ACNC compliance obligations, which include adhering to the five standards set by the ACNC. These standards promote public trust and confidence in the sector.

The five core governance standards include:

Governance Standard	Description
1. Purpose and not-for-profit nature	The charity must consistently work towards its stated charitable purpose and operate on a not-for-profit basis, using all profits and assets to further its mission.
2. Accountability to members	The charity must be accountable to its members, providing them with adequate opportunities to raise governance concerns and keeping them informed about finances and operations.
3. Compliance with Australian laws	The charity must follow all applicable Australian laws, including regulations related to taxation, workplace health and safety, and fundraising.
4. Suitability of responsible persons	Individuals managing the charity must be suitable for their roles and not be legally disqualified from governing a charity.
5. Duties of responsible persons	Responsible persons are required to carry out their duties with reasonable care and diligence, acting honestly and always in the best interests of the charity.

Managing Finances & Reporting Obligations for Your Charity

A charity’s financial reporting obligations to the ACNC depend on its size, determined by total annual revenue. Maintaining accurate financial records ensures transparency and is critical for compliance.

Reporting requirements are categorised by charity size:

Charity Size	Annual Revenue	ACNC Reporting Obligations
Small	Under $250,000	Must submit an Annual Information Statement. Financial reports are optional and do not require review or audit if submitted.
Medium	Between $250,000 and $1 million	Must submit an Annual Information Statement and a financial report that has been either reviewed or audited.
Large	$1 million or more	Must submit an Annual Information Statement and a comprehensive, formally audited financial report.

Conclusion

Structuring sports programs for community engagement in Australia requires careful alignment with a recognised charitable purpose, as promoting sport alone does not qualify for charity status. By clearly defining your objectives, meeting governance standards, and leveraging philanthropic avenues, your organisation can successfully navigate the legal framework.

To ensure your community sports program meets its compliance responsibilities and maximises its philanthropic potential, contact the not-for-profit and charity lawyers at LawBridge. Our specialised services provide the trusted expertise needed to guide you through the process and enhance your community engagement efforts.

Frequently Asked Questions