What is the difference between a non-profit organisation and a charity?

Despite its liberal colloquial use, the term “charity” actually has a very specific meaning in Australian law. Only some types of organisations are recognised as charities. Charities are a type of non-profit organisation. Not all non-profit organisations are charities but all charities must be not for profit. In order to be legally recognised as a charity, an organisation must meet a strict set of requirements and be endorsed by both the Australian Charities and Not-for-profits Commission and the Australian Taxation Office.

The legal definition of charity was recently explicitly defined in Commonwealth law and will take effect from 1 January 2014. The Charities Bill 2013 introduced a statutory definition of charity that is applicable across all Australian states and territories. It replaces the common law definition of charity that dated back to 1601 and was based on hundreds of years of case law.

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