Types of non-profit organisations - Tax basics for non-profit organisations

Charity

The characteristics of a charity are:

• it is an entity that is also a trust fund or an institution
• it exists for the public benefit or the relief of poverty
• its purposes are charitable within the legal sense of that term
• it is non-profit, and
• its sole purpose is charitable.

Briefly, purposes will be charitable if they are to benefit the community, or a section of it, through the following activities.

The relief of poverty or sickness or the needs of the aged, including through public benevolent institutions, hospitals and nursing homes, relief agencies, youth and women’s refuges, drug rehabilitation services, disability services, refugee welfare centres, soup kitchens, and organisations that support disadvantaged Indigenous people or supply furniture, clothing and low-cost housing to the poor.

The advancement of education, including through schools, colleges, universities, research and scientific institutes, scouts and similar organisations, scholarship trusts, school building funds and parents and citizens associations.

The advancement of religion, including religious congregations such as churches and synagogues, seminaries, religious orders, organisations for building or repairing religious buildings, and organisations for supporting clergy and for spreading religious doctrine and practice.

Other purposes beneficial to the community, including:

• promoting health – for example, through educating the public about a particular disease
• providing community facilities – for example, museums, libraries, halls, botanical gardens, migrant resource centres, neighbourhood centres and community radio stations
• promoting art and culture through means such as music and drama
• helping to maintain defence and public order and providing emergency services
• relieving distress due to natural disasters such as floods or bushfires
• providing social welfare through activities such as counselling, child care, and family or marriage support services
• helping people cope with the problems of unemployment
• promoting scientific research
• advancing commerce, agriculture and industry through activities such as research and resource development
• protecting animals, and
• preserving historic buildings.

This list is not exhaustive. Other purposes may be charitable where they are intended to provide benefits of social value to the community or a section of the community.

Institutions and funds whose purposes are not charitable include:

• sporting, recreational and social clubs
• organisations run for the profit of their members
• organisations run for their members’ common interests (this includes professional or trade groups)
• community service organisations that have a significant membership purpose, such as traditional service clubs
• political parties and lobbying groups
• commercial or business enterprises operated for fundraising, and
• government departments and instrumentalities carrying out the ordinary functions of government.

For more information refer to Is your organisation a charity? To obtain this publication, see More information.

Public benevolent institution

A public benevolent institution (PBI) is a non-profit institution organised for the direct relief of poverty, sickness, suffering, distress, misfortune, disability or helplessness.

The characteristics of a PBI are:

• it is set up for needs that require benevolent relief
• it relieves those needs by directly providing services to people suffering them
• it is carried on for the public benefit
• it is non-profit
• it is an institution, and
• its dominant purpose is providing benevolent relief.

Examples of PBIs are non-profit organisations that:

• provide hostel accommodation for the homeless
• treat sufferers of disease
• provide home help for the aged and the infirm, or
• rescue people who are lost or stranded.

To be a PBI, your organisation must be a charity – see Charity.

For more information refer to Is your organisation a public benevolent institution? To obtain this publication, see More information.

Health promotion charity

A health promotion charity is a non-profit charitable institution whose principal activity is promoting the prevention or control of diseases in human beings.

Examples of activities that can promote the prevention or control of disease include:

• providing relevant information to sufferers of a disease, health professionals, carers and the public
• researching how to detect, prevent or treat diseases, and
• developing or providing relevant aids and equipment to sufferers of a disease.

To be a health promotion charity, your organisation must be a charity – see Charity.

For more information refer to Is your organisation a health promotion charity? To obtain this publication, see More information.

Charitable institution

A charitable institution is an institution that is established and run solely to advance or promote a charitable purpose. An organisation’s purposes can be found from its governing document/s and from its activities, history and control.

A charitable institution may be an organisation established by will or instrument of trust. It may also have the legal structure of an unincorporated association or a corporation. However, incorporation is not enough on its own for an organisation to be a charitable institution – what the organisation does is also relevant. An organisation established, controlled and operated by family members and friends would not normally be a charitable institution.

To be a charitable institution, your organisation must be a charity – see Charity.