What does "not for profit" mean?

This means that any profits that the organisation makes are either put back into the organisation or are distributed to charitable bodies. The funds can't be distributed to members. The two main types of not for profit entities are a company limited by the way of guarantee or an incorporated organisation.

Companies that are limited by guarantee are set up under the Corporations Act. They are set up with very minimal capital (usually under $100), with each of the shareholders agreeing to provide and guarantee a small amount. As with any company, a board of directors appointed that is responsible for making sure that the company is managed appropriately.

An incorporated body is governed by the legislation of the State where the incorporation takes place. The incorporated association must establish a set of rules or constitution.

The rules can include the group having:

• a committee;
• a minimum number of committee members;
• a minimum number of meetings;
• an annual general meeting;
• an annual return to the relevant State Government Department,
  (eg. Department of Fair Trading (NSW)).

Incorporation is the most common form of a Non Profit Organisation.

How does an NPO become incorporated?

To become incorporated, you will need to contact the Department of Fair Trading (or equivalent body) in your State, who will guide you through the process.

What is the difference between a voluntary worker, an employee or a contractor?

It can be quite difficult to differentiate between a voluntary worker, an employee or a contractor at times.

A voluntary worker is someone who provides assistance to your group on the basis that they will not be paid wages for their services. You are permitted to pay voluntary worker reasonable expenses but not wages.

If the person is an employee then it means that you are paying the person a wage for their services. You will also have to comply with all the relevant tax, superannuation and regimes with regard to an employee.

A contractor is a person who works on their own behalf. You will usually agree a price for the service with this person prior to the service being provided. The contractor is a separate legal entity to your group, and as such, you should check if they have their own Public Liability Insurance prior to entering into the agreement. Refer to our "Contracts that may affect Insurance page" -click here.

What is an event?

An event is an unusual happening that is outside your normal "day to day" activities.

Example:
A local progress association's normal activities may include monthly meetings, producing a local newsletter and writing to or lobbying various Governmental Agencies.
If the association also organises a local fair or Christmas barbeque, these unusual activities would be considered events.