Doing Good, By the Book: How to Start a Charity (Properly) - Part 2

This is the second instalment of the two-part series on how to start a charity, the first of which was published in August 2025.

While the first part explored the foundational questions and legal considerations involved in establishing a charitable organisation, this article clarifies the multi-stage process of establishing a charity in Australia: a process often underestimated in its complexity and length. From incorporation to registration with the ACNC, and complying with ongoing obligations, each step requires careful planning, documentation, and alignment with regulatory expectations.

We outline the practical steps involved in setting up a charity including incorporation requirements, registration timelines, and the information applicants must provide - such as program details and financial forecasts. It will also cover ongoing obligations such as reporting, fundraising compliance (which varies by state), and procedures for amending governing documents when changes arise.

Having a clear vision and mission is essential for any successful charity, but these attributes alone are not enough when it comes to starting a charity in Australia. Establishing a registered charity is more complex and time-consuming than many expect, requiring careful navigation to avoid the common pitfalls and detours. If you are considering applying to register a charity with the Australian Charities and Not-for-profits Commission (ACNC), this article provides a practical ‘roadmap’ as we shift from the legal and conceptual foundations we covered in Part 1 to the ‘practical’ step-by-step process in this Part 2.

What is the process for starting a charity in Australia?

Broadly speaking, there are three main steps involved in starting an Australian charity, each of which involves its own timeframe and particular requirements.

1. Incorporation of organisation

This step involves setting up the legal and governance arrangements of the organisation which you intend to register as a charity. This will commonly involve registering a public company limited by guarantee with ASIC and applying to the Australian Business Register for an Australian Business Number (ABN). To incorporate the company with ASIC, the organisation will require a constitution (i.e. governing document) which clearly defines its charitable purpose and addresses any Deductible Gift Recipient (DGR) requirements (if applicable). Once the company has been registered with ASIC and has received its Certificate of Registration with its Australian Company Number (ACN), it will then be required to obtain its ABN with the Australian Business Register.

For Cleardocs customers who purchase the Cleardocs Public Company Limited by Guarantee product, we strongly recommend that you select the “Lawyer assisted’ option to ensure that we can integrate the bespoke drafting requirements of the constitution. We take particular care to ensure that the intended ‘purposes’ of the organisation align with the ACNC’s expectations and are accurately reflected in the governing document, along with any ancillary legal drafting. Without seeking legal input, it is possible that the purpose of the organisation will not be accepted by the ACNC, resulting in further delays.

This process typically takes between two to three weeks to seek your instructions and to finalise the constitution, followed by an additional two weeks to receive incorporation confirmation from ASIC and the ABN.

2. ACNC application

After incorporation and being issued with an ABN, the next step is to submit an application to register the company with the ACNC as a charity.

A charity applicant must establish that their company:

• is a not-for-profit entity;
• has rules, procedures and processes in place to ensure that it will comply with prescribed charity governance standards and, if the charity operates outside of Australia, external conduct standards;
• has an ABN; and
• is not subject to a government ruling that the entity supports terrorist or other criminal activities.

The ACNC requires applicants to complete a detailed online questionnaire via the ACNC portal, which is designed to cover the organisation’s operations, structure, and procedures. This questionnaire then forms the basis of the ACNC’s assessment of the prospective charity in accordance with the relevant legislation.[1]

We strongly recommend that you develop responses to the ACNC’s questions before submission, as the ACNC places greater weight on established processes rather than aspirational goals or planned activities. For example, your organisation will need to consider any strategic planning, forecasted revenue planning and other governance arrangements, including a Conflict of Interests Policy and, if your organisation intends to operate overseas, an External Conduct Policy (which aligns with the External Conduct Standards). If your organisation intends to partner with other organisations, details of these partnerships including any contracts are also required.

Once the organisation’s ABN has been issued, it typically takes between two to three weeks to collect the information required to submit the ACNC application. The timing of the ACNC’s assessment can vary significantly depending on its resourcing and workload. In peak periods, it can take up to 12 weeks for an application to be allocated to a reviewer within the ACNC. Once allocated, it can then take the ACNC between approximately 3 weeks to over 12 months to provide an outcome, depending largely on the quality and completeness of the initial application. In our experience, the more detail and planning that goes into this process, the greater the likelihood that we can anticipate any queries from the ACNC and proactively provide the required information.

In completing a charity registration application, the applicant also has the opportunity to indicate that it wishes to be granted tax concessions and, if it is eligible, DGR endorsement. Charity tax concessions include income tax exemption, fringe benefits tax exemption or rebate (depending on the charity’s type) and GST concession. The ACNC will pass the application directly to the Australian Tax Office (ATO). This means that there is no need to prepare a separate application.

3. DGR application (if applicable)

If the organisation is successful in obtaining charity registration from the ACNC and is also eligible to apply to the ATO for endorsement as a DGR, the application process to the ATO can take place following registration with the ACNC.

Certain categories of DGR endorsement can be applied for automatically as part of the ACNC application, following which the ACNC will automatically on-forward the charity’s application to the ATO for consideration. This includes charities registered as a Public Benevolent Institution or as Health Promotion Charity. For other DGR endorsement categories, a separate application will need to be lodged with the ATO and a Schedule of information may be required. Depending on the endorsement category, this process typically takes between two to four weeks following charity registration.

For more detail on eligibility requirements for DGR, please read our Part 1 article in this series.

What are the reporting requirements for Australian charities?

Once registered with the ACNC, charities are subject to ongoing reporting obligations under the ACNC Act. These obligations are designed to ensure transparency and accountability across the sector and vary in complexity and burden depending on the size of the charity.

Charities must submit an Annual Information Statement (AIS) to the ACNC each year. The AIS provides a snapshot of the charity’s activities, finances, and governance arrangements. In addition to the AIS, charities may also be required to lodge financial reports, depending on their annual revenue:

• Small charities (revenue under $500,000) are not required to submit financial reports unless specifically requested;
• Medium charities (revenue between $500,000 and $3 million) must submit reviewed or audited financial reports; and
• Large charities (revenue over $3 million) must submit audited financial reports.[2]

Charities are also required to maintain accurate financial and operational records for a minimum of seven years.[3] These records must be sufficient to demonstrate compliance with ACNC requirements and support the preparation of financial statements. Failure to meet these reporting obligations may result in regulatory action, including warnings, directions, or – in serious cases – revocation of charity registration.[4]

What are fundraising requirements?

It is common for charities to undertake fundraising activities fund their ongoing work. However, while the ACNC oversees charity registration and governance, it does not regulate fundraising activities.

Instead, the practice of fundraising is regulated on a State and Territory level. This means that there may be specific governance differences across states and territories in Australia, including in relation to reporting, disclosure requirements and restrictions on fundraising methods.

It is strongly recommended that charities obtain tailored legal advice on their fundraising obligations. This is especially the case because a charity registered in Australia must comply with the fundraising legislation of the states or territories it raises funds in, not just the state or territory where the charity is located.

What if you have to make changes?

During the registration process, the ACNC may request clarifications or amendments to a charity’s governing documents or application material. These requests may relate (among other things) to:

• the clarity of the organisation’s charitable purpose and governing document;
• the structure of its governing body;
• the adequacy of its policies and procedures; or
• its relationships with third parties or other organisations.

Where changes are required, the charity must ensure that any amendments are made in accordance with its constitution and relevant corporate law requirements. For example, if the charity is structured as a public company limited by guarantee, changes to the company’s constitution must be approved by the members and subsequently lodged with ASIC.[5] Legal advice is strongly recommended when making changes to governing documents or responding to ACNC queries. This ensures that the charity remains compliant with both ACNC requirements and broader corporate governance obligations, and that its charitable purpose is clearly and accurately articulated.

At Maddocks, we are well positioned to attend to all of your queries, and provide you with an array of charitable advice to ensure that your organisation is appropriately structured for success. Please contact our Charities team for more information.

More information from Maddocks

For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of the Commercial team.

[1]Australian Charities and Not-for-profits Commission Act 2012 (Cth) (ACNC Act) and the Charities Act 2013 (Cth) (Charities Act).

[2] ACNC Act, section 205-25(1)-(3); Australian Charities and Not-for-profits Commission Regulations 2022 (Regulations); section 205.1.

[3] ACNC Act, section 55-5(7).

[4] For more detail, see ‘Part 4–2 – Enforcement powers’ in the ACNC Act.

[5]Corporations Act 2001 (Cth) section 136.