The organisation must be required to transfer the following surplus assets to a gift deductible fund, authority or institution when it is wound up or its endorsement is revoked (whichever occurs first):
- gifts and deductible contributions made to the organisation for its principal purpose
- money received by the entity because of such gifts and contributions.
For DGRs that are registered charities, the transfer must be to another DGR, with similar objects, which is charitable at law.
This requirement may be set out in a law, in an organisation's constituent documents or in separate rules governing an organisation's activities.
Example 1: Sample clause 1 – DGRs not registered with the ACNC
If the organisation is wound up or its endorsement as a deductible gift recipient is revoked (whichever occurs first), any surplus of the following assets shall be transferred to another organisation to which income tax deductible gifts can be made:
- gifts of money or property for the principal purpose of the organisation
- contributions made in relation to an eligible fundraising event held for the principal purpose of the organisation
- money received by the organisation because of such gifts and contributions.
Example 2: Sample clause 2 – DGRs registered with the ACNC
If the organisation is wound up or its endorsement as a deductible gift recipient is revoked (whichever occurs first), any surplus of the following assets shall be transferred to another organisation with similar objects, which is charitable at law, to which income tax deductible gifts can be made:
- gifts of money or property for the principal purpose of the organisation
- contributions made in relation to an eligible fundraising event held for the principal purpose of the organisation
- money received by the organisation because of such gifts and contributions.
The winding up requirement for surplus gifts and contributions will also be met where the organisation's winding up clause requires all surplus assets to be transferred to another DGR. In this case, the DGR must have a separate rule regarding distribution of surplus gifts and deductible contributions in the event of revocation of DGR endorsement.
While most DGRs endorsed as a whole are not required to maintain a gift fund, all gifts and deductible contributions made for the principal purpose must be used for that purpose. All DGRs must maintain records that explain all transactions and other acts relevant to status as a DGR.
For more information see Record keeping for not-for-profits.
From 1 January 2024 organisations seeking DGR endorsement for the following DGR categories will be endorsed as a whole if eligible, and are required to maintain a gift fund for the principal purpose of the organisation:
- cultural organisations (item number 12.1.1)
- environmental organisations (item number 6.1.1)
- harm prevention charities (item number 4.1.4)
- developing country relief organisations, that are not operating a public fund, (item number 9.1.1)
Registered charities, operating a developing country relief fund, under item number 9.1.1, will be endorsed for the operation of a public fund.
If your organisation is seeking to be endorsed as a whole under one of the above categories, the following acceptable clause should be included in your constituent documents or governing rules in order to meet the winding up and revocation requirement:
Acceptable clause
If the organisation is wound up or if the endorsement (if any) of the organisation as a deductible gift recipient is revoked, any surplus assets of the gift fund remaining after the payment of liabilities attributable to it, shall be transferred to a fund, authority or institution to which income tax-deductible gifts can be made.
End of exampleIf your organisation is a registered charity, the clause must state that the surplus assets of the gift fund shall be transferred to a charity (fund, authority or institution) with a similar charitable purpose to which income tax-deductible gifts can be made.
Your organisation does not need to meet this requirement if it is established by an Act or the Commonwealth Parliament, and that Act, or another Act, does not provide for the winding up or termination of your organisation. A gift fund is still required.