Our Grants and Legal Eligibility guide provides you with descriptions of common not-for-profit terminology and definitions used across the not for profit sector.
Certain grants require applicants to have particular legal status. Here’s our explainer on some of the main statuses, legal structures and associated bodies for not-for-profits.
NFP – Not For Profit Organisation
An organisation not operating for the profit or gain of its individual members, either directly or indirectly.
ACNC Australian Charities and Not-for-profits Commission
The Australian Charities and Not-for-profits Commission (ACNC) is the national regulator of charities. The ACNC was established in December 2012 to achieve the following objects:
- maintain, protect and enhance public trust and confidence in the Australian not-for-profit sector
- support and sustain a robust, vibrant, independent and innovative not-for-profit sector
- promote the reduction of unnecessary regulatory obligations on the sector.
Deductible Gift Recipient (DGR1)
Most philanthropic grant-makers require grant applicants to have DGR1 status. This means their grants are tax deductible. Due to the legal structure of many trusts and foundations, they are legally required to give only to DGR1 charities.
Tax Concession Charity (TCC)
Charities that are registered with the ACNC can receive charity tax concessions from the ATO. TCC status exempts charities from having to pay income tax. A large proportion of philanthropic grant-makers require both DGR1 and TCC status of their applicants.
ACNC Registered Charity Charities registered with the Australian Charities and Not-For-Profit Commission are often referred to as ‘registered charities’. ACNC Charities are beholden to charity legislation. A large proportion of grant-makers require applicants to be ACNC registered. Charities must be registered with the ACNC to be eligible for TCC status. Some DGR categories require ACNC registration.
Public Benevolent Institution (PBI)
Public Benevolent Institutions are charities focussing mainly on relief of poverty or distress. It is an ACNC charity registration subtype.
An incorporated association is a legal organisational structure separate from its members, requiring registration under state/territory legislation. It generally requires a committee, annual meetings, and certain documentation and publications like an annual statement.
An unincorporated association is not a separate legal entity from its members. An unincorporated association can register with the ACNC if it has acceptable governing documents, committee members, and ability to meet ACNC governance standards. There are a limited range of funders who grant to unincorporated groups.
groups who don’t have the resources or legal eligibility to undertake a grant agreement by themselves, but which are operating as a nonprofit, can apply for some grants if they are auspiced by a larger organisation that does have DGR1 or incorporated status. The Auspicing organisation enters the funding agreement on behalf of the smaller organisation, and often manages the money and is the body legally accountable to the grant-maker. Some funders will not provide funding via auspicing arrangements.
There is no legal structure or registration process to operate as a social enterprise in Australia. They can be operated by for-profit or not-for-profit entities. Social Enterprises are regarded as businesses or activities carrying out profit-making activities helping achieve or fund a mission, or creating a public benefit. There are a growing pool of funders and initiatives in Australia that provide seed funding and grants specifically for social enterprises.
501(c)3 or equivalent
Most US based funders require their applicants to have the American nonprofit status 501(c)3, or their country’s equivalent. In Australia the equivalent is ACNC Registration and DGR1 status. Charities can also register with the Charities Aid Foundation (CAF), which acts as an auspicing body providing 501(c)3 to vetted organisations, who can then accept tax deductible donations from American donors.
ABN Australia Business Number
Look up an ABN on the register
Grants and Legal Eligibility
That’s our list of Grants and Legal Eligibility definitions for you. If you have questions about any of the above and would like further clarity, don’t hesitate to contact us. One of our Client Managers would love to talk about your requirements.