This section provides information that will act as a guide to incorporate your community group.
When setting up a community group, your organisation can exist simply as a group of people with a common interest and shared purpose.
You can also choose to ‘incorporate’ which provides your community group with a formal legal structure and identity. Incorporating your community group is not compulsory but can be beneficial.
What is an incorporated association?
Incorporation is the legal structure of a community group that operates as a not-for-profit. You can recognise an incorporated association by the word ‘Incorporated’ or the abbreviation ‘Inc.’ after its name. When a club or community group incorporates, it becomes a ‘legal person’ – that is, a legal entity that stays the same even if its members change.
An incorporated organisation can enter into contract, sign a lease, employ people, and sue and be sued. Incorporated groups follow a particular structure, with group rules (or constitution), members, and a governing body (often called a board or committee).
Being incorporated has consequences for people who are going to be on the board or committee of management of a not-for-profit group, as these people have legal duties in their roles.
Victorian incorporated associations are registered with Consumer Affairs Victoria under the Associations Incorporation Reform Act 2012 (the Act).
What is an unincorporated association?
An unincorporated association (pdf, 276KB) is a group of individuals that have come together to further a common interest without forming any separate legally-recognised structure. They have not gone through an incorporation process and therefore an unincorporated group does not have its own legal identity.
What is not-for-profit?
A not-for-profit is an organisation that does not operate for the profit, personal gain or other benefit of particular people.
In a not-for-profit organisation, any profit made is used to further the aims of the organisation. That means all the profits are put back into the organisation to continue to pay for its activities and functions and to achieve its mission.
All not-for-profit community groups will have some kind of structure or rules; arrangements between the people in the group about how the group operates. These arrangements may include things like how the group makes decisions, what kind of activities the group undertakes, and how the group manages money. The definition of not-for-profit applies both while the organisation is operating and if it ‘winds up’ (closes down).
Should your community group incorporate?
By law, community groups do not have to become incorporated. If you do decide to incorporate, there are rules you must follow. Becoming an incorporated association is not suitable for organisations that are formed to, or operate mostly to, make a profit for their members.
The decision about incorporation is an important decision for community groups. Incorporation has significant legal consequences, many beneficial. However, incorporation also brings with it responsibilities to report to government.
Visit the Consumer Affairs Victoria website to help you decide whether incorporating is the right option for your community group. CAV is Victoria’s consumer affairs regulator, helping create a competitive and fair marketplace for businesses and consumers.
Common reasons for community groups becoming incorporated:
- Funding - your organisation may be eligible to apply for a larger range of government and non-government grants.
- Taxation - an incorporated group may be eligible for tax concessions not available to unincorporated groups.
- Legal action - incorporated groups are able to take legal action as a group.
There are a number of stages involved in formally establishing your not-for-profit organisation. Before setting up (pdf, 216KB) a not-for-profit organisation, your community group needs to:
- agree that the group will operate on a not-for-profit basis
- decide whether or not the group should incorporate; and
- if the group is going to incorporate, decide which incorporated legal structure would best suit the group's aims and activities – refer to Handy Links: ‘Legal information for community organisations’
Choosing an appropriate structure is important, as using a legal structure that is not right for the aims and activities of your organisation can cause your group to run into legal difficulties when it tries to carry out its activities. Changing structure can be costly and time consuming for your group so it’s important to take the time to determine which structure is best.
Consumer Affairs Victoria has a checklist for registering and requirements as an incorporated association.
Consumer Affairs Victoria (CAV)
Consumer Affairs Victoria has an online system that lets incorporated associations manage their obligations, such as updating contact details and lodging annual statements, all in one place.
The legal structure you choose will determine the requirements for incorporating your not-for-profit and how your organisation will be run.
- are regulated by Consumer Affairs Victoria (CAV)
- cannot operate outside Victoria unless also registered with the Australian Securities and Investment Commission (ASIC) as an Australian Registered Body
- must have a minimum of five members
Choosing a location and premises
Your community group may need a location to work from or just a post office box or commercial space. Whether renting or purchasing a premises, there are a number of things you should consider, such as lease arrangements or duties and taxes.
Room hire – Moonee Valley City Council
Your not-for-profit may need to meet occasionally, or, on a regular basis. We have a range of meeting rooms and facilities that can be booked for this purpose
A checklist of the tasks you need to complete when starting a not for profit organisation.