When thinking about money and your organisation, some of the key questions include:
- What accountability systems are in place?
- Who controls the money?
- Whether to fundraise, and if so, whether registration is required
- Ability to seek deductible gift recipient status and/or other tax exemptions
- GST implications
- Laws regulating fundraising activities in each State and Territory
The structure that your organisation chooses can affect its tax status, the duties that it owes to members/supporters, and how it transacts business.
Having an unincorporated, loosely structured organisation may mean that individuals who represent the interests of the organisation in business dealings may be held personally financially liable for the group’s actions.
For example, if you intend to raise donations, the money could be considered income in the hands of group members and may attract personal income tax.
Alternatively, if the group is incorporated, it could be characterised as income of a non-profit organisation that may or may not attract tax.
Having a very loosely structured organisation may also mean that the public and businesses are reluctant to deal with your organisation because they are not willing to take the perceived risk.