Unincorporated associations

There's nothing illegal about being an unincorporated association, but it's not a legal entity.

Six people sitting around a table saying "We must do something about this!" are in the eyes of the law an unincorporated association, which for most purposes means no more than just six or so individuals sitting around a table. Nobody else need bother about addressing you as the Australian Doing Something About This Association (ADSATA) rather than as Allan, Denis, Sam, Amy, Terry, and Alison.

If you're the honorary treasurer of an unregistered not-for-profit organisation called ADSATA, for example, and you're renting premises for your organisation, you will have to make the lease in your own name.

If you're a small organisation for simple purposes, you may be able to leave it at that. There's absolutely nothing to stop Allan, Denis, Sam, Amy, Terry, and Alison - or even Allan all by himself - from having ADSATA letterheads printed and sending out press releases, reports, and urgent letters to parliamentarians (as long as they aren't libellous or seditious or otherwise suspect). If you want to organise a demonstration in a tearing hurry this might be the best you can do.

An unincorporated association isn't entirely without legal effect. If someone comes along at the demonstration and says "Here's a thousand dollars for ADSATA," then Patrick holds that money in trust for the purposes of ADSATA and isn't allowed to use it to repaint his garage. Other than this, however, there are very few legal responsibilities and very little supervision. You don't have to be organised in any particular way, or follow any particular procedures. You'll basically have the obligation to act as a trustee for the organisation's purposes, but you can be more flexible about what you do and how you do it.

The advantages of being an informal group are that you don't have to pay the costs associated with incorporation and you don't have to comply with many of the requirements or fill out the forms imposed on corporations.

The disadvantage is that if anything goes wrong -if the ADSATA office burns down, or if people fall over the mat and injure themselves and sue - it's possible that as the lessee and as a committee member you may be held personally liable. In that case if there isn't enough money in the ADSATA cashbox to cover the payout you may have to pay for it yourself.

There can also be difficulties with opening bank accounts, problems with insurance, and confusions about who owns what property. If you stop being a member of ADSATA but your name is still on the contracts there may be difficulties transferring your responsibilities to the new Treasurer.

Furthermore, most foundations and most government departments will only fund organisations that have legal personality.

If you want to do anything very ambitious - anything that involves raising money from the public at large, for example, or applying for grants, or buying or selling property - then you will want to gain official recognition. If your organisation has (for example) registered itself under the Associations Act and has a legal personality, and you're renting premises, then

  • you can have the lease in the name of ADSATA Inc.
  • as an incorporated association ADSATA will have limited liability; that is to say, if someone falls over in the office and sues and the cashbox doesn't have enough money to pay them then you're (usually) not personally liable.

If something does go badly wrong with your association, somebody is quite possibly going to be sued. The first step is to make sure that it isn't going to be any of you. The point about becoming a corporation (whether an incorporated association or a co-operative or a company) is that it creates something else that can be sued, and this has an effect in drawing fire away from members of the group as individuals. This protection isn't absolute, but it helps.

If you want legal status, you have a number of options.