Community sheds must be run in a specific way to be eligible for deductible gift recipient (DGR) endorsement under the community shed category.
We're seeing some organisations apply for DGR endorsement as a community shed when they are not eligible. By checking a few details before you begin to apply, you can avoid wasted time and frustration.
Here's what you need to know.
What is a community shed?
Community sheds (such as men's sheds and women's sheds) provide a range of activities for their members with the purpose of advancing mental health and preventing or relieving social isolation.
To be eligible for DGR endorsement, a community shed must meet all the following criteria:
- have an active ABN
- be located in Australia
- be registered as a charity with the Australian Charities and Not-for-profits Commission (ACNC)
- have the characteristics of a community shed
- have a DGR winding up and revocation clause.
Characteristics of a community shed
Before you apply for DGR as a community shed, check that your community shed meets all the below characteristics:
- Its dominant purposes are advancing mental health and preventing or relieving social isolation. This means that the main activities of the organisation must reflect this purpose.
- It provides a physical and dedicated location for people to work collaboratively (for example by gardening, woodworking or other activities that foster connection and improve mental health through shared experiences). The community shed should support people to work on projects or other activities in the company of others at that location.
- It has an open membership that allows anyone to join. This means not restricting membership based on matters such as age, ethnicity or background. Membership may only be restricted in relation to gender or Indigenous heritage or both.
Sunrise Men's Shed meets the criteria
Sunrise Men's Shed is a registered charity with the ACNC. Its constitution states that its dominant purpose is to advance mental health and relieve social isolation. It operates a physical shed where members work on woodworking and gardening projects together. It works to achieve its dominant purpose by inviting guest speakers to talk about mental health, providing information and mental health first aid training, and linking members with professional mental health services. Membership is open to all men, regardless of age, background, or ethnicity.
Before Sunrise Men's Shed applied for DGR endorsement, they checked to make sure they met the criteria to be eligible. They confirmed that their purpose and activities were eligible; their constitution had a DGR winding up and revocation clause; that they were registered as a charity with the ACNC; and their membership was open (restricted only by gender, which is allowed).
Because they met all the DGR criteria they could move on to the next step of applying for DGR endorsement.
End of example
Craft & Connect Shed Inc. opens their membership
Craft & Connect Shed Inc. is a not-for-profit that runs hobby classes. Its constitution focuses on skill-building and creative expression to support member's mental health and forge social connections. Membership is limited to people over 60 and the committee can refuse membership for new members without needing to provide a reason.
The shed's leadership team wanted to apply for DGR endorsement as a community shed. Before they applied, they checked their characteristics to see if they were eligible.
They realised that they would need to update their membership policy to allow people of any age to join, and not have a committee approval process where some applicants could be denied approval.
After serious discussion, Craft & Connect Shed decided that they would open their membership to people of all ages. Some committee members were concerned that new members who were disruptive might cause problems for Craft & Connect Shed, and with open membership nothing could be done about it. But after other committee members explained that they could develop a code of conduct to set expectations for members, those fears were put to rest.
After updating their membership process and checking the other criteria, Craft & Connect Shed went ahead and applied for DGR endorsement.
End of example
ToolTime Co. realise they aren't eligible
ToolTime Co. is a club for people living in the Happy Meadows area. Local residents can join to make use of collective woodworking facilities, 3D printers and sewing machines.
The primary purpose of ToolTime Co. is to give people access to machines they might not have at home, to encourage creativity and learn new skills. While they are using the facilities they might enjoy the benefit of talking to other people and being in their company, but advancing mental health and preventing or relieving social isolation is not the primary purpose of the club.
The club briefly considered applying for DGR endorsement, but quickly identified that they did not qualify because of their restrictive membership, and because their dominant purpose was not advancing mental health and preventing or relieving social isolation. The club was happy with their existing structure and decided not to make any changes. They did not apply for DGR endorsement.
End of exampleReview the guidelines before applying for DGR endorsement
If you are considering applying for DGR endorsement, check your charitable NFP meets the criteria before you submit your application.
Learn more about DGR endorsement for Community sheds, or find out more about Deductible gift recipient eligibility in general.
Stay up to date
- You can read more articles in the Not-for-profit newsroom and, if you haven't already, subscribeExternal Link to our free monthly newsletter Not-for-profit news to be alerted when we publish new articles.
- For updates throughout the month, Assistant Commissioner Jennifer Moltisanti regularly shares blog posts and updates on her LinkedInExternal Link profile. And you can check out our online platform ATO CommunityExternal Link to find answers to your tax and super questions.