How to start a non-profit organisation: Steps, tips and essentials

Published Monday 22 December 2025

Table of contents

• What is a non-profit organisation?
• Can you make money from a non-profit?
• Ways to generate revenue as a non-profit
• Types of non-profit organisations
• Before you start: Research and planning
• Choose your non-profit structure
• How do I start a non-profit organisation?
• Ongoing compliance and responsibilities
• Ongoing management is important
• Manage your non-profit with Xero
• FAQs on starting a non-profit organisation

Key takeaways

• Define your organisation's specific purpose and mission statement clearly before registration, as this guides all future decisions and helps you identify the unique community need your non-profit will address.
• Choose the appropriate legal structure for your non-profit (such as incorporated association or company limited by guarantee) based on your operational scope and seek professional advice to ensure compliance and access to tax benefits.
• Develop multiple sustainable revenue streams including donations, grants, fundraising events, program service fees, and corporate partnerships to reduce dependence on any single funding source.
• Maintain ongoing compliance with annual reporting requirements, accurate financial record-keeping, and regular governance meetings to preserve your non-profit status and eligibility for tax concessions.

What is a non-profit organisation?

A non-profit organisation is a business that operates to serve charitable or socially beneficial purposes rather than generate profits for owners.

Non-profit status provides several financial advantages:

• Tax exemption: Your profits may be exempt from corporate tax
• Grant eligibility: Access to government and foundation funding
• Donation incentives: Donors may receive tax relief for contributions

The definition of a non-profit, and the taxes you need to pay, depends on your location. Check with your local tax authority or charities regulator to find out what benefits you are entitled to and what non-profit accounting practices you need to follow.

Can you make money from a non-profit?

Yes, non-profit organisations can make money and generate profits to support their mission. Earning revenue reduces dependence on grants, donations and government funding.

Key restrictions on non-profit profits:

• No owner distributions: Profits cannot be paid to shareholders or owners
• Mission reinvestment: All profits must be reinvested in the organisation
• Approved uses: Fund new projects, hire employees, or expand services

Ways to generate revenue as a non-profit

Non-profit revenue streams provide the cash flow needed to sustain operations and fund your mission. Here are five primary ways to generate revenue:

Donations

Donations can come from both individuals and corporations. Individuals often donate to causes they believe in, and corporations may be motivated by the tax relief they'll receive for their donations.

Grants

Grants supplied by government bodies or private foundations can provide a financial lifeline for non-profits. Grants often come with extra administrative responsibility, like financial transparency and reporting requirements. If you are not familiar with grant applications, ask an experienced grant writer for help.

Fundraising

Hosting fundraising events can boost both your finances and your non-profit's profile, which can help increase donations once the event is over, too. Fundraisers can be all shapes and sizes, from 5 km runs to silent auctions to extravagant galas. Because events can be costly to organise, make sure the benefits outweigh the time and money it costs to host them.

Program service fees

Consider introducing program service fees, such as by providing a paid membership to your non-profit, as a way of raising income. This is often done by arts organisations, professional associations, and other types of non-profits to fund their services, such as a dog shelter charging an adoption fee to a prospective owner.

Corporate sponsorship and partnership

These can benefit both you and the business. A corporation may sponsor an event, provide ongoing funding, or offer in-kind support that saves you money. In return, they gain brand exposure and show their support for your cause.

Types of non-profit organisations

Charities

Charitable organisations provide services and support to the public. The qualification rules for charitable status differ between places, but they include religious, educational, and scientific organisations. The Australian Taxation Office also lists cultural, health, sporting, and community service organisations among the groups that can self-assess their income tax status. For instance, a charity could be established to set up a school, a disease research centre or an animal rescue shelter.

Foundations

Like charities, foundations have a humanitarian outlook but they give funding or grants to other non-profit causes rather than raising money for their own initiatives. They're often set up by wealthy individuals with particular interests (for instance, helping travel writers from underrepresented backgrounds) or by for-profit companies to fund good causes (such as the Coca Cola Foundation).

Social advocacy

As the name suggests, a social advocacy group is set up to advocate for a social issue or cause. They may promote the causes of large groups of people, like human rights organisations, or smaller sections of society, like anti-semitism campaign groups.

Membership organisations

You might set up a membership organisation to promote the collective interests of a particular group. These organisations represent professions, locations, hobbyists, activities or industries.

An example is the American Medical Association, which represents the medical profession. Such organisations usually charge membership fees that fund their activities.

Before you start: Research and planning

Before you take the first official step, do your homework. You need a clear plan to turn your idea into a successful non-profit.

Take the time to research and plan, so you can start with confidence:

• Outline your purpose: What specific community need will your organisation address? A clear and compelling mission will be your guide for every decision you make.
• Do some background research: Look into other organisations working in the same space. Understanding the landscape helps you find your unique angle and opportunities for collaboration.
• Consider the resources required: Think about what you'll need to get started. This includes funding, people, and any physical assets. A realistic view of your needs will help you build a sustainable plan.

Choose your non-profit structure

The legal structure you choose for your non-profit affects your governance, your legal obligations, and your eligibility for tax concessions. It's a big decision, so it's worth getting it right from the start.

In Australia, common structures include:

• Incorporated association: This is a popular choice for smaller, community-based groups. It's registered at a state or territory level and is often simpler and cheaper to run.
• Company limited by guarantee: This structure is registered nationally with the Australian Securities and Investments Commission (ASIC) and is suitable for organisations that will operate across Australia. It may have more complex operations and, as a public company, must have at least 3 directors and 1 secretary.

Each structure has different rules and responsibilities. It's a good idea to get advice from a legal or financial professional to help you choose the best fit for your mission.

How do I start a non-profit organisation?

Here are some ways you can start your own non-profit.

Research and plan

Research and planning establishes the foundation for your non-profit's success. Complete these essential steps:

Define your purpose:

• Identify the social need: What problem does your non-profit solve?
• Research the landscape: Who else serves this need and how?
• Develop your mission statement: How can you explain your purpose in a clear and memorable way?

Set your framework:

• Establish goals: Define measurable outcomes for your organisation
• Identify requirements: Research permits and licences needed to operate

Do the foundational work

Foundational work involves choosing your name and legal structure before registration.

Choose your name:

• Create brand recognition: Select something catchy and memorable
• Check availability: Ensure the name isn't already registered

Select your legal structure:

• Research your options, such as a community interest company, trust, or trade association
• Get professional advice: Consult accounting and legal experts to ensure you operate within the law and access all eligible financial benefits and tax deductions

Find a financial advisor using Xero's advisor directory.

Comply with the law

Legal compliance officially establishes your non-profit and unlocks tax benefits. Follow these registration steps:

• Register your organisation: Obtain required identification numbers (like an ABN in Australia)
• Apply for non-profit status: Secure eligibility for tax exemptions and relief
• Contact authorities: Your local government body provides specific registration requirements

Create a business plan

A business plan maps out your non-profit's financial needs and operational strategy. It helps you allocate resources effectively and identify required funding from different income streams.

Essential business plan components:

• Executive summary: Sum up your non-profit's mission, the key points from your research, the need in your community you aim to meet, and how you're going to meet it.
• Offering description: Describe, in depth, what your non-profit is offering; these could be program, services, or products. Include your non-profit's impact goals.
• Marketing plan: Explain how you're going to reach your audience and build brand recognition.
• Operating plan: Summarise your team structure, each role's responsibilities, and how your organisation will operate each day.
• Financial plan: Write a detailed plan of your non-profit's financial situation. This includes the startup cash needed, your budget, financial statements (cash flow and income), balance sheets, your revenue streams, operating costs, and so on. Basically, everything to ensure your business is financially sound and prepared.

Get going with a free business plan template from Xero.

Fundraising, budgeting and financial transparency

Sustainable funding requires strategic planning and transparent financial management.

Build your funding model:

• Identify relevant income streams: Grants, donations, events, or corporate partnerships
• Create realistic budgets:Plan monthly cash flow to cover operational costs
• Build financial reserves: Save funds for higher-cost months and rebuild during cheaper periods

Maintain financial transparency:

• Track all finances: Keep detailed records for funder requirements
• Ensure compliance: Meet reporting standards to access tax benefits and grants

Start building your non-profit's presence

Building your presence attracts supporters, funders, and community members to your cause.

Develop your digital presence:

• Create a professional website: Clearly communicate your mission and goals to visitors
• Maintain active social media: Share your aims, achievements, and community impact
• Ensure consistent messaging: Make your purpose immediately clear across all platforms

Engage your community:

• Research your audience: Identify who you want to reach and how to connect with them
• Network in person: Build relationships through local events and meetings
• Develop marketing strategy: Create targeted outreach to increase donations and funding

Carry out market research before you start your marketing plan. Once you know who your target audience is, and how to reach them, you'll be able to craft a marketing strategy that builds your non-profit's presence, which could lead to increased donations and funding.

Ongoing compliance and responsibilities

Once your non-profit is up and running, you'll have ongoing responsibilities to maintain your status and stay compliant. Keeping on top of these duties is key to your organisation's long-term health and reputation.

Your obligations will depend on your structure and location, but they generally include:

• Annual reporting: Most non-profits must submit annual statements or reports to their regulator. For instance, according to the Australian Taxation Office (ATO), non-charitable not-for-profit organisations (NFPs) that self-assess as income tax exempt must lodge an annual NFP self-review return as of 1 July 2023.
• Financial record-keeping: You must keep accurate financial records that correctly show your income, spending, and financial position. For example, the ACNC requires large charities to disclose key management personnel remuneration in their annual reporting.
• Meeting obligations: You will need to hold regular meetings for your committee or board, and an annual general meeting (AGM) for your members. For public companies, ASIC requires the AGM to be held within 5 months of the financial year ending.
• Following your rules: You must operate according to your organisation's constitution or rules.

Ongoing management is important

Ongoing management ensures your non-profit remains sustainable and effective long-term.

Establish operational systems:

• Create assessment frameworks: Set up regular evaluation processes to track progress
• Build your team strategically: Attract talent creatively within budget constraints
• Recruit volunteers: Supplement staff with committed volunteer support

Lead effectively:

• Provide clear direction: Ensure everyone understands their roles and responsibilities
• Support your team: Keep staff challenged, supported, and connected to your mission
• Adapt as needed: Adjust strategies as your organisation grows and faces new challenges

Manage your non-profit with Xero

Founding a non-profit can be a rewarding and satisfying experience when you plan well and understand your obligations. Creating a strong business plan, building the right team and efficiently communicating your message all help to get your non-profit off the ground. Being legally compliant and professionally managing your finances will help you claim any tax relief you're entitled to.

Xero's online accounting software for non-profits simplifies your accounting, from tracking cash flow and paying employees to sharing financial reports. You’ll have more time to set up and manage a successful non-profit. Try Xero for non-profits for free today.

FAQs on starting a non-profit organisation

Here are some common questions you might have about starting a non-profit organisation in Australia.

Can you be a not-for-profit without being a charity?

Yes. All charities are not-for-profit organisations, but not all not-for-profit organisations are charities. Many organisations like sporting clubs, community service groups, and professional associations are not-for-profits but don't have charity status. To be a charity, an organisation must have a purely charitable purpose that benefits the public.

How long does it take to register a non-profit organisation?

The timeframe can vary. Registering as an incorporated association with your state or territory can take a few weeks. Registering as a company limited by guarantee with ASIC is often quicker, sometimes just a few days. Applying for charity status with the ACNC can take longer, depending on the complexity of your application.

What happens if I don't meet ongoing compliance requirements?

Failing to meet your obligations can have serious consequences. Regulators can issue warnings or directions, and in serious cases, they may revoke your non-profit or charity status. This can lead to the loss of tax concessions and public trust. It's important to stay on top of your reporting and governance duties.

Can I convert my existing business into a non-profit?

It's not a simple conversion process. You would generally need to wind up your for-profit business and transfer its assets to a newly established non-profit organisation. This process has significant legal and tax implications, so it's essential to get professional advice before you proceed.