In Australia, there is close to a million not-for-profit organisations. These organisations come in various forms and sizes. A common type of not-for-profit organisation is an incorporated association, and these are set up and managed by the laws of each state or territory. You may also come across the organisation type called an ‘unincorporated association’.
For example, to register an incorporated association in Queensland, you must have at least seven members who operate and run an unincorporated association. Additionally, all associations must comply with the Queensland Associations Incorporation Act and the Associations Incorporation Regulation. There are similar acts and requirements in other states and territories.
Once an association is incorporated, it becomes a legally separate entity with the same powers as a person. This means the association can buy and own land, sign leases and appear in court. Incorporated associations are required to have their financial records audited and verified each year and lodge these financial statements with the Australian Charities and Not-for-profit Commission and/or the state or territory’s regulator (usually called the Office of Fair Trading or alike).
To incorporate an association, an unincorporated association must hold a general meeting whereby:
- the association (by way of motion) agrees to incorporate
- a name is chosen
- the incorporation fee is approved for payment
- the incorporate establishes an address in Queensland
- a President, Secretary, Treasurer and other management committee is elected, and
- a set of operating rules are adopted – also known as a constitution or a ‘set of rules’.
Some time and thought should go into drafting the incorporated association’s governing rules. The rules should address the following:
- what the objectives are for the association,
- how the association will operate,
- what rights are available to members and how does a person become a member,
- how the management committee will work, how elections will be held and what the roles will entail, and
- how meetings will run and how technology will be used.
Most state and territories provide a free set of model rules for use by organisations looking to set up an incorporated association. However, the team at Bolter recommend engaging a legal professional to help tailor the set of rules to how your association will be run. There is nothing worse than being stuck with rules that just don’t practically make sense.
In terms of cost, there is generally an application fee payable to the state or territory regulator when you lodge your association’s application for incorporation. It can be anywhere between $100 to $300 dollars. It can take up to a month for the regulators to process your application.
After your association is incorporated, the management committee should consider:
- the legal requirements to obtain a common seal for the association (an old school rubber stamp required to execute documents as the association).
- whether they need to open a bank account and who the signatories will be (if any).
- whether insurance coverage for the association is required, such as public liability insurance, and
- whether there are any assets or liabilities that need to be transferred over to the new entity’s name.
Running an incorporated association should be held to the same standard as running a private company. The management committee needs to act with due care and diligence when handling the association’s money or entering into contracts on the association’s behalf. Equally, the management committee should not trade insolvently or place the association in a situation where the liability outweighs the assets. There are plenty of helpful resources and information made available to not-for-profits to help them succeed and foster the great sense of community that Australia is known for. When it comes to not-for-profits, we can help with advice on their legal requirements and setting up or winding down. Just reach out to the team at Bolter to kick start your association’s impact in Australia!