Starting a Health NFP in Australia: Which Structure is Right for You?
Starting a health-focused not-for-profit (NFP) is a powerful way to contribute to your community and pursue your purpose. Whether your mission is improving access to medical services, delivering mental health programs, or supporting under-served communities using technology, the right legal structure will set the foundation for your organisation’s success.
Choosing the correct structure is about more than compliance - it will affect how you govern your NFP, attract funding, manage liability, and deliver your mission long into the future. At You Legal, we often say: getting the structure right at the start will save you time, cost, and protect your purpose, by managing risks.
In this article, we explore the two most common legal structures for Australian NFPs in the health and medical sector - Incorporated Associations and Companies Limited by Guarantee (CLGs) and outline the key factors to consider when deciding which is best for your idea.
Start with Why: The Purpose Behind Your NFP
Before you look at legal structures, it’s critical to pause and ask yourself why you are establishing your NFP. Your organisation’s purpose will shape every decision you make, from governance to funding.
Reflecting on your “why” can clarify your strategic direction and help you identify the structure that will best support your ambitions. Consider these questions as a starting point:
Do you intend to operate mainly in one state or, in time, will you operate nationally?
Will you apply for charitable registration (with the Australian Charities and Not-for-profits Commission, ACNC)?
Will you be seeking government grants, fundraising from the public, receiving significant donations, or will members donate funds to operate the entity?
Will your organisation employ staff or rely mainly on volunteers?
Are you planning for substantial growth over the next few years?
Having clear answers to these questions will put you in a much stronger position to choose a legal structure that aligns with your mission and can adapt as your organisation evolves.
Two Most Common Structures for Health NFPs in Australia
In Australia, health-related NFPs most commonly choose between two legal structures:
Incorporated Association
Company Limited by Guarantee (CLG)
Both are well-established frameworks that provide your organisation with a legal personality (so it can enter into contracts, hold assets, and limit the liability of members and board members). But there are significant differences in scope, complexity, and suitability.
Let’s explore each in turn.
Incorporated Associations
Best suited for: Smaller, community-based NFPs operating mainly within a single state or territory.
Incorporated Associations are created under state or territory legislation - for example, the Associations Incorporation Act 1985 in South Australia or equivalent laws elsewhere.
They are typically the simplest and most cost-effective option for smaller organisations.
Advantages:
Lower cost and simpler registration process
Less complex ongoing reporting (if not registered as a charity with the ACNC)
Suitable for grassroots community health organisations, smaller clinics, local health education groups, and volunteer-run health initiatives
Considerations:
The organisation must primarily operate in its home state or territory
If expanding interstate, may require additional registration (for example, as a ‘Registrable Australian Body’ with ASIC)
The structure may not be flexible enough if you expect substantial growth, national operations, or large-scale fundraising
In summary, Incorporated Associations are excellent for community-based health programs, small volunteer groups, and pilot programs - but if your organisation has aspirations to grow nationally or internationally, register as a charity, or fundraise extensively, a CLG may be a better fit.
2. Company Limited by Guarantee (CLG)
Best suited for: NFPs with a vision to be larger – to grow a national or international presence, or any health organisation with ambitions for long-term growth, charitable registration, or significant fundraising.
CLGs are incorporated under the Corporations Act 2001 (Cth) and regulated by ASIC. They may also be eligible to register with the ACNC as charities and apply for DGR status.
Many of Australia’s most established health charities and professional associations use this structure.
Advantages:
Have the ability to operate nationally and internationally
Suitable for registering with the ACNC as a charity and applying for DGR status
Well-recognised and accepted structure when applying for government funding, private grants, and public donations
Offers flexibility for growth and evolving activities (for example, moving from a local project to a national network)
Considerations:
Requires a more formal governance structure (company constitution, ACNC and ASIC reporting)
Higher ongoing compliance obligations (annual reporting to ACNC and ASIC)
May require a larger board and more formalised risk management processes (which require investment)
In short, CLGs are ideal if your vision is for a larger health NFP. If you aim to become a recognised charity, operate across state borders, or partner with government and institutional funders, this is likely the right structure.
Key Differences at a Glance
| Feature | Incorporated Association | Company Limited by Guarantee (CLG) |
|---|---|---|
| Jurisdiction | Limited as state or territory-based | National (regulated by ASIC and ACNC) |
| Suitable for | Small, local, community-based NFPs | Larger, national, or international NFPs |
| Common for charities? | Less common | Very common |
| Complexity of setup | Low | Moderate |
| Ongoing reporting | Less if not registered with ACNC | More formal (ASIC + ACNC) |
| Governance | Less formal | Requires strong governance, larger board |
| Cost | Lower | Higher |
A Note on Constitutions - the Heart of Your NFP
Regardless of the structure you choose, your organisation’s constitution is critical. Think of it as the “rulebook” that underpins how your NFP will operate.
A well-crafted constitution should:
Clearly define your purpose and objectives
Establish governance arrangements and decision-making processes
Set out how members are admitted and removed
Outline directors’ powers, duties, and responsibilities
Provide for accountability and transparency
At You Legal, we frequently see NFPs using generic templates that don’t reflect their specific needs. Often, founding members of NFP’s revisit their constitutions within a few years because they no longer support their growth. We strongly recommend investing the time to tailor your constitution from the start so it can more easily adapt as your organisation evolves.
How You Legal Can Help
At You Legal, we regularly help founders of health NFPs across Australia choose the right legal structure and put governance practices in place that support both compliance and growth.
Whether you are just starting or looking to restructure an existing initiative, we can guide you through:
Choosing the most suitable legal structure
Registering with the relevant regulators (ASIC, ACNC) and understanding your reporting requirements
Ensuring compliance with privacy, employment, and healthcare law
Protecting directors and volunteers from liability
Designing governance frameworks that evolve with your NFP
Getting the right structure in place from day one will set your NFP up to thrive so you can focus on delivering impact to the communities you serve.
Our team has extensive experience advising on medical and health matters, including not-for-profits, on legal structures and best practices. To discuss your legal requirements, contact our team here.