The Law Handbook 2024

Chapter 6.6: Community organisations 611 It is important to know whether your group is eligible to be registered as a charity with the ACNC. Registering with the ACNC can provide access to charity tax concessions and other benefits (see ‘Tax concessions’, below). ‘Rules’ or ‘constitution’ A not-for-profit organisation’s rules (sometimes called a ‘constitution’) govern the internal affairs of the organisation. This is a written document covering how the organisation operates – including an organisation’s purpose, membership, meetings, governance, use of funds and winding up. Some legal structures, like incorporated associations, have minimum legislative requirements that must be dealt with in an organisation’s rules. Types of community organisations The main types of community organisations are: • unincorporated associations; • incorporated associations; • companies limited by guarantee; • Indigenous corporations; and • co-operatives. There are advantages and disadvantages to each type of community organisation. For more information and free resources (including a web-based decision-making tool to help you work out which legal structure best suits your group), see Not-for-profit Law’s website (www. nfplaw.org.au/free-resources/getting-started) . 1 Unincorporated associations Groups are free to decide against registering a formal structure. In the eyes of the law, such groups remain simply a collection of individuals; the law (generally) does not recognise the group as a separate entity. This might mean very little to the people in the group, as in their eyes they readily identify the existence of the group and its operation separate to the individuals who form it. However, it means that the unincorporated association’s office holders or committee members are personally liable for the association’s obligations (although it is possible to reduce this risk if each of them obtains insurance). Although unincorporated associations do not have formal legal structures, most groups choose a collective name and adopt rules that set out the association’s aims, membership qualifications, any subscription fees, management of meetings, financial matters, dissolution and amendment of the rules. The advantages of unincorporated associations are that their organisational structure is very flexible and usually the least costly and time consuming of the organisational structures. The disadvantages of unincorporated associations are: • the office holders or committee members may be personally liable for the association’s debts (and actions in tort; for example, where a person is injured because of negligence) – this can be concerning for groups that run higher risk activities; • there is no perpetual succession – unless a trust is established, all property acquired by the association belongs to the individual members and therefore, every time the members (or at least the office holders) change, alterations may need to be made to documents relating to the association’s property (e.g. a lease); • there can be some complexity when gifts or trusts in wills are made to unincorporated associations; • the association generally cannot sue or be sued; • members may have difficulty enforcing the association’s rules when those rules are not being complied with; this is because courts have sometimes considered that the arrangement between members of an unincorporated association is private in nature and not one that a court should enforce; and • members may not have clear contractual or proprietary rights in relation to the association (this can make obtaining insurance or leasing an office or meeting space difficult). The rules of an unincorporated association may set out the duties of the office holders or committee members (e.g. the duty to act honestly in the best interests of the group and to manage any actual or potential conflicts of interest). For more information about these duties, see www.nfplaw.org.au/governance. It is unclear to what extent these duties are imposed on the office holders or committee members