What is an unincorporated association?

The Australian Charities and Not-for-profits Commission (ACNC) writes its guidance on unincorporated associations for charities, as one of the legal structures a charity can use, so some points may not apply to a group that is not a registered charity. It says an unincorporated association cannot be a party to contracts in its own name, which includes employing staff, cannot own assets in its own name, and cannot sue or be sued; its members do these things on the association's behalf. It adds that members may each be personally liable for the association's debts, and that if it cannot pay them, members can be required to make up the shortfall from their personal assets.

The ACNC says some associations get around the asset problem by arranging for a few individuals to hold property on trust for the group or its charitable purposes. It notes that arrangements like this may not protect members in all cases, and says getting legal advice on them is important. Among the risks it lists for unincorporated associations is letting the people responsible for running the charity mix its money with their own.

It also says the law does not make an unincorporated association adopt a written governing document, but the ACNC needs one before it will register the association as a charity. For registered charities in general, the ACNC says a charity must keep financial records in writing that correctly record and explain how it receives and spends its money, and hold on to them for 7 years. It adds that what a charity has to keep varies with matters such as its size, its activities and any further requirements from state regulators.

• Paying the group's money into a member's personal account, so the association's funds and personal funds end up mixed together.
• Not recording which member signed an agreement or holds the group's equipment, so nobody knows once the committee changes.
• Assuming the ACNC's guidance covers every association, when it is written for charities.