A guide to applying for and maintaining
deductible gift recipient endorsement
March 2014
Part 1 – Introduction to Deductible Gift Recipient (DGR) Endorsement
5
1.
What is DGR endorsement?
7
2.
Does my community organisation need DGR status?
8
2.1
Benefits of DGR endorsement
8
2.2
Obligations for DGR endorsed organisations
9
3.
Is my organisation eligible for DGR endorsement?
9
3.1
DGR categories
9
3.2
Other requirements
9
4.
Is there another way to benefit from DGR endorsement?
10
4.1
Set up a fund, authority or institution
10
4.2
Set up a separate organisation
11
4.3
Auspicing
11
4.4
Charitable foundations and trusts
12
Part 2 – Common Categories of DGR Endorsement
14
1.
15
Overview of common categories for DGR endorsement
1.1
Registered public benevolent institution
16
1.2
Registered health promotion charity
17
1.3
Harm prevention charity
18
1.4
Animal welfare charity
19
1.5
Arts or cultural organisation
19
1.6
Environmental organisation
20
1.7
Approved Research Institute
20
1.8
Overseas Aid Fund
21
2.
Other categories
21
3.
What if our organisation fits within a number of categories?
23
4.
What proportion of our activities or purposes need to be directly related to the DGR category?
23
5.
Some types of organisations that may have difficulty getting DGR endorsements
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5.1
Advocacy organisations
24
5.2
Neighbourhood houses and community centres
24
5.3
Sports clubs and associations
24
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2
5.4
Peak bodies
25
5.5
Cultural associations
25
Part 3 – Preparing for and applying for endorsement as a DGR
27
1.
29
Outline of preparation and application process
1.1
Prelimiary matters
29
1.2
Do we apply to the ACNC or the ATO?
29
2.
Meeting baseline requirements for all DGR applications
30
3.
How do we apply for DGR endorsement?
33
3.1
Apply to the ACNC to be a registered charity (if required)
34
3.2
Apply to be on a Departmental Register (if required)
35
4.
Getting legal advice
35
5.
Applying to the ACNC/ATO for endorsement as a DGR
35
6.
If we are unsuccessful, what are our options?
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7.
Case study: Overseas Aid Organisations
38
8.
Appendix – Overview of requirements for DGR endorsement for 8 common categories
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Part 4 – Maintaining DGR Endorsement
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1.
49
Self-review
1.1
Principle purpose requirement
49
1.2
Not-for-profit requirement
50
2.
Notification
51
3.
Administering deductible gifts
51
3.1
Use of gift fund money
Resources
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This part covers:

what is DGR endorsement?

does your community organisation need DGR status?

which community organisations may be endorsed as DGRs?

is there another way of accessing DGR concessions?
Part 1 summary
This Part of the Guide contains information on what DGR status means, the basic details of eligibility
for DGR status and how to make a decision about whether DGR status would benefit an organisation.
There are other tax concessions that not-for-profit organisations can consider applying for that are not
discussed in this guide.
1. What is a DGR?
DGR is a special tax status that an organisation can seek from the Australian Tax Office (ATO). People
who make gifts or donations to a DGR are able to ‘deduct’ those gifts from their own income for tax
purposes, and DGRs are eligible to receive funds from certain grant makers and philanthropic bodies
that can only fund DGRs.
2. Does your community organisation need DGR status?
An organisation will benefit from being endorsed as a DGR if it already receives gifts from the public,
wishes to start fundraising and receiving gifts from the public, or wants to attract funds from the grant
makers and philanthropic bodies that can only give funds to DGRs. DGR status is not always essential
for not-for-profits to run successfully and not-for-profits can fundraise without being a DGR.
3. Which community organisations may be endorsed as DGRs?
To be endorsed as a DGR, an organisation must:
 be not-for-profit
 have an Australian Business Number (ABN)
 fall within a recognised general category of DGR (there are almost 50 categories), which are
described in the DGR Table in the Australian tax law. Most categories in the DGR Table have
certain ‘eligibility criteria’ that your organisation must meet in order to be endorsed by the ATO
 be ‘in Australia’. An organisation applying for DGR status has to be established and run in
Australia, and its purposes and beneficiaries should also be in Australia. There are certain
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5
categories which allow an organisation to have purposes or beneficiaries overseas (for example, if
you are an approved overseas aid fund), but even these organisations must be run in Australia
 have acceptable rules for transferring surplus gifts and deductible contributions if your
organisation or fund is wound up or its DGR status is revoked (these are normally in your
constitution), and
 in some cases, maintain a gift fund.
If an organisation meets the criteria, it will then need to apply to either the ATO or the Australian
Charities and Not-for-profits Commission (ACNC), or to another relevant government department,
depending on the DGR category, for endorsement.
If your organisation is a charity, it may also need to be registered with the ACNC before it can apply for
endorsement as a DGR (for example, as a public benevolent institution or health promotion charity).
4. Is there another way of accessing the benefits of DGR endorsement?
If your organisation as a whole is not eligible to be a DGR, certain activities of the organisation may be
eligible for DGR endorsement. There are structuring options that enable your organisation to be
endorsed as a DGR in relation to particular eligible activities, but these options come with extra
administration (eg. your organisation will need to establish a gift fund with DGR to hold the gifts and
donations that are only applied to the particular eligible activities).
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DGR is a special federal tax status that an organisation can apply to the ATO to access. An
organisation with DGR tax status becomes an ‘endorsed deductible gift recipient’.
If your organisation is endorsed as a DGR it can benefit from:
 people who make certain gifts or donations to your organisation being able to ‘deduct’ those gifts
for their own income tax purposes (that is, the donor can claim the donation as a deduction when
filing their personal income tax return), which then means people may be willing to donate more to
your organisation, and
 being eligible to receive funds from certain grant makers and philanthropic bodies that are only
able to give money to organisations that have DGR status.
In general, unless your organisation is endorsed as a DGR, people donating to your organisation
cannot claim their donation against their tax. The wording ‘donations over $2.00 are tax deductible’
indicates that an organisation has been endorsed by the ATO as a DGR.
The legislation that sets out the requirements for DGR status is called the Income Tax Assessment Act
1997 (Cth) (Income Tax Act).
You can check if your organisation is already a DGR by:
 checking your organisation’s listing on the Australian Business Register – that sets out all tax
concessions an organisation has been endorsed to access: www.abn.business.gov.au
 finding your organisation’s listing on the ACNC Register – that provides a link to the Australian Business
Register to determine all tax concessions an organisation has been endorsed to access:
www.acnc.gov.au, or
 phoning the ATO on 13 28 61.
Not all kinds of gifts to a DGR are tax deductible. For more information on the kinds of gifts that
are tax deductible, see Part 4 of this Guide, which is about maintaining your DGR endorsement.
Applying for DGR endorsement is often complicated, and we recommend you seek the
assistance of a lawyer. It can save time and money down the track to get your advice on eligibility
and get your application right from the start.
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Applying for DGR status can be a time consuming process. Before you go to the trouble of applying for
endorsement as a DGR, it is worth considering whether DGR status will benefit your organisation.
2.1 Benefits of DGR endorsement
An organisation will benefit from being endorsed as a DGR if:
 it receives gifts from the public or wishes to start fundraising and receiving gifts from the public
 it wants to attract (and is likely to be able to attract) funds from certain grant makers and
philanthropic bodies that can only give to DGRs, and
 some categories of DGR status also allow your organisation to offer salary packaging benefits to
your employees (for example, Public Benevolent Institutions).
The following circumstances illustrate how DGR can benefit people interacting with a DGR endorsed
organisation:
 a person pays $250 to attend a DGR’s golf game hosted by the Australian Sports Foundation. The
person would be entitled to claim a tax deductible contribution for the difference between the market
value of the golf game (say, $20) and the amount paid (so long as the difference was paid voluntarily)
 a person donates $2,000 to a public university for the purpose of establishing a scholarship for
Indigenous Australians, and
 a person sacrifices $100 per month of their salary to the RSPCA. This gift is paid by the person’s
employer on their behalf as part of a workplace giving program.
In each case, the person donating the money would be eligible to claim the donation as tax deductible
donation.
It is also important to think about the kind of fundraising or donations your organisation plans to
seek. If the money paid to your organisation cannot be classified as a ‘gift’ then the donor cannot
claim a tax deduction. For more information about what is a gift, see part 4 of this guide.
For more information about fundraising generally go to www.nfplaw.org.au/fundraising/
DGR status is not always essential for not-for-profits to run successfully:
 some state government, local government and philanthropic foundations provide funding to
organisations without DGR status - check their grant guidelines, and
 DGR is also not normally as important for seeking funding from corporate entities. Unlike
donations from individuals, businesses that might want to donate to a not-for-profit organisation
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8
can usually claim their donation as a deduction from their tax under other provisions in the Income
Tax Act.
2.2 Obligations for DGR endorsed organisations
Finally, before applying for DGR, your organisation should carefully consider the time and effort
involved in making the application, and the conditions that are imposed on DGRs. DGR applications in
some categories (such as Overseas Aid) can take up to two years to process. There are also recordkeeping and reporting requirements that come with being a DGR. Sometimes the burden of extra
administration and DGR requirements will outweigh the benefit of DGR status.
You should consider if DGR endorsement will be of sufficient benefit to your organisation to justify the
application process and ongoing compliance with the extra requirements. For more information see
Part 4 of this Guide.
3.1 DGR categories
Most commonly, to be endorsed as a DGR an organisation must fall
within one of the categories of DGR specified in the Income Tax Act.
There are almost 50 different DGR categories. Each category of
DGR has certain ‘eligibility criteria’ to meet to be endorsed by the
ATO. Some common categories for DGR endorsement are set out in
Part 2 of this guide.
In some cases, if an organisation does not fit within one of the
existing categories, it can apply to be listed by name in the Income
Tax Act as a DGR. It is difficult and time-consuming to get an
organisation specifically listed as it requires parliament to amend
the Income Tax Act. This process can take up to two years with no
guarantee of success. An example of an organisation that achieved
special listing is Australian Council of Social Service (specially listed
in the Income Tax Act).
3.2 Other requirements
Given the technical language
required to meet the criteria of
many of the DGR categories, it
will be a good idea for most
organisations to seek advice
from a legal or accounting
professional before you apply for
DGR endorsement.
Your organisation does not
always need to be incorporated
to apply for DGR, but it does
need to meet all
the eligibility criteria for the
category of DGR endorsement
you are applying for.
In general, before applying for DGR endorsement organisations should:
 have an Australian Business Number (ABN)
 meet “in Australia” requirements as defined in tax law (or have a fund, authority or institution
operated in Australia)
 be a not-for-profit organisation (this will usually involve having appropriate not-for-profit and
dissolution clauses in your organisation’s governing documents, discussed further in Part 3), and
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9
 have an appropriate winding up and revocation of endorsement clause in your organisation’s
governing documents (discussed further at Part 3).
There are extra requirements for some categories (see the table in the Appendix to Part 3). Depending
on the category an organisation may need to:
 apply to be on the relevant register (if your organisation is, for example, a harm prevention charity,
cultural organisation, environmental charity or overseas aid organisation)
 be a charity registered with the ACNC, or the fund, authority or institution that your organisation
operates may need to be registered with the ACNC
 have set up a public fund (if required – see the Appendix to Part 3), and/or
 have set up a gift fund (if required – note that if an organisation is seeking endorsement as a
whole it usually will not require a gift fund, but if a fund, authority or institution of the organisation
is seeking endorsement a gift fund will be required).
If your organisation as a whole is not eligible to be a DGR, certain activities, if isolated, may be eligible
for DGR status. There are several options that can enable your organisation to benefit from DGR
endorsement in relation to the particular eligible activities. These options are explained in more detail
below, and include:
 setting up a fund, authority or institution to undertake eligible activities that is operated by your
organisation and is eligible for DGR endorsement
 setting up a new organisation that solely undertakes your eligible activities and is eligible for DGR
endorsement
 creating a project that is auspiced by another organisation that has DGR status, or
 asking an existing charitable foundation to establish a sub-fund or a special account to raise
money, or give out grants, for a particular cause.
4.1 Set up a fund, authority or institution
It may be worth considering establishing a fund, authority or institution that your organisation operates
to deliver or fund your eligible activities. By siloing your eligible activities, the fund, authority or
institution may be eligible for DGR endorsement even though your organisation as a whole is not.
Determining whether to set up a part of your organisation as a fund authority or institution, and
deciding which of these is most suitable is not straightforward and you will most likely require the
assistance of a lawyer.
Whether your organisation needs to set up either a fund or authority or institution will depend upon
the requirements of the Income Tax Act. The Income Tax Act sets out what is required to obtain DGR
endorsement under the different categories of eligibility and any conditions which attach. For
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example, if your organisation is setting up as a public benevolent institution under item 4.1.1 of
Section 30-45 of the Income Tax Act then it will need to set up as an institution, not a mere fund.
There is no definition of an institution or fund or authority in the Income Tax Act. An institution carries
out activities or provides services, but what constitutes an institution will vary from case to case. A
charitable institution is established and carried out to advance or promote the charitable purposes as
constituted in its governing documents. A fund mainly manages and holds property to distribute to
entities that carry out charitable purposes, rather than carrying out the charitable purposes itself. A
fund can be endorsed for DGR in its own right (eg. a school building fund or school library fund).
An authority is usually an Australian government agency or is set up to carry out functions of a public
nature or those functions which are connected to or generally identified with functions of government.
An organisation that advocates for more affordable housing is not eligible for DGR as a whole, but it
runs a small sheltered hostel that could be eligible if isolated as a fund or institution. The organisation
could set up a fund relating to the sheltered hostel that may be eligible for DGR status. You will normally be
required to establish a gift fund for the DGR endorsed part of the organisation.
Note that institutions do not have to be separately incorporated, but
do need to meet certain criteria.
Organisations seeking endorsement of a fund, authority or
institution that they operate (rather than endorsement of the
organisation as a whole) will have to set up a gift fund that receives
donations related to the fund, authority or institution (unless they
have another fund set up already for another DGR that they
operate).
If you are thinking about pursuing
this option and need some
information about whether to
separately incorporate the fund,
authority or institution, visit
www.nfplaw.org.au/gettingstarted
4.2 Set up a separate organisation
If your organisation as a whole is not eligible for DGR endorsement, you could consider setting up a
separate organisation (such as a subsidiary organisation, or a sister organisation) to undertake the
parts of your organisation’s activities that could attract DGR endorsement.
For example, many religious groups set up separate incorporated bodies to undertake their charitable
activities that meet requirements for DGR endorsement, such as welfare or social housing.
Your organisation should seek legal advice about this option. While setting up a separate entity to
carry out your charitable activities can be an effective way to become eligible for DGR status, it will
require your organisation to manage the additional governance and reporting requirements of a
second entity.
4.3 Auspicing
Another alternative is to ask a community organisation that already has DGR endorsement to ‘auspice’
a specific project that your organisation wants to run. This means that the organisation agrees to
apply for funding for your project, or accept donations in relation to your project, that will be carried
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11
out by you under the auspice of the organisation with DGR. The success of this approach will depend
upon whether you can find a suitable organisation to auspice your project, as well as ensuring an
appropriate relationship is set up with the auspisor (which may include a formal agreement).
It may be difficult to find an organisation which has an appropriate
DGR endorsement that is willing and able to auspice your
organisation. Your project will need to fit within the category of their
If your organisation is considering
auspicing a project, you can find
endorsement and be consistent with that organisation’s purposes.
more information on auspicing at
If an organisation with DGR endorsement enters into an auspice
www.nfplaw.org.au/gettingstarted
agreement that breaches the tax law and ATO requirements for tax
deductible donations, it could lose its own endorsement.
Being auspiced means that your organisation may lose some of its
independence as the auspicing organisation will administer project
funding, and place certain extra requirements on your project.
These extra requirements may include the auspicing organisation
imposing an administrative fee.
Auspicing organisations often
charge administrative fees for
processing donations.
Auspicing of arts projects, one-off events and smaller projects are common.
4.4 Charitable foundations and trusts
Some organisations seek to set up a grant making foundation. If your organisation would like to start a
fundraising entity or grant making foundation to support a particular cause, a good option is to ask an
existing charitable foundation to set up a sub-fund for your organisation. Some existing foundations
will allow you to establish named sub-funds or special accounts, and will manage the administration
for you.
For more information, see our Information Sheet on Fundraising foundations and charitable trusts at
www.nfplaw.org.au/legalstructure
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This part covers:

overview of common categories of DGR endorsement

other categories of endorsement

what if our organisation fits within a number of categories?

what proportion of our activities or purposes need to be directly related to
the DGR category?

types of organisations with difficulty getting DGR endorsement
Part 2 summary
1. Overview of common categories of DGR endorsement
Of the close to 50 DGR categories there are 8 common categories of DGR endorsement that can be
split broadly into the following themes: public benevolent institutions, registered health promotion
charities, harm prevention charities, animal welfare charities, arts or cultural organisations,
environmental organisations, approved research institutes, and Overseas Aid Funds.
2. Other categories
This section outlines DGR categories of specialised public funds including: scholarship funds, school
building funds, necessitous circumstances funds, Australian disaster relief funds, and Public Ancillary
Funds.
3. What if our organisation fits within a number of categories?
This section discusses what you should do if your organisation may fit a number of categories.
4. What proportion of our activities or purposes need to be directly related to the DGR category?
This section considers how much of your organisation’s time must be devoted to activities that are
relevant to its DGR category with examples of the types of activities your organisation may engage in.
5. Types of organisations with difficulty getting DGR endorsement
There are some types of organisations that commonly have difficulty getting DGR endorsement
including: advocacy organisations, neighbourhood houses and community centres, sports clubs and
associations, peak bodies and cultural or social associations.
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14
Generally, to be endorsed as a DGR, your organisation (or a fund, authority or institution operated by
your organisation) must fall within one of the recognised categories for endorsement.
There are many categories - this Part provides a brief overview of 8 common categories of DGR
endorsement including:
 Public benevolent institutions – that provide relief to those experiencing disadvantage such as by
helping people experiencing illness, homelessness or poverty
 Harm prevention charities – that work towards preventing harm (eg. alcohol abuse or suicide)
 Animal welfare charities – that provide care or rehabilitation to animals
 Health promotion charities – that promote good health and awareness (rather than providing relief)
 Environment organisations – organisations whose principal purpose is the protection and
enhancement of the natural environment or a significant aspect of it, or research or education
about the environment or a significant aspect of it
 Cultural organisations – organisations whose principal purpose is the promotion of literature,
music, performing arts, craft, design, film, video, radio, community arts or television
 Approved research institutes – recognised research institutions
 Overseas aid organisations – providing development and relief assistance in recognised developing
countries
The ATO Giftpack and DGR table
has a full list of categories, case
studies and category checklists.
Other categories include certain educational activities, support for
families, public libraries and museums, emergency services, other
types of international relief (eg. disaster relief in developed
countries).
If your organisation is going to apply for DGR endorsement, you will need to provide the ACNC
and/or the ATO with copies of your organisation’s constituent documents (rules or constitution).
You should be aware that the ACNC and/or the ATO will look carefully at your organisation’s objects clause
(or statement of purposes) to see that it reflects the criteria of the particular DGR category your organisation
is applying for. Therefore you may need to seek legal help to refine your purposes for DGR endorsement.
For more information see Part 3 of this Guide.
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15
The checklist below can help you identify if your organisation fits within one of these common DGR
categories. When considering DGR categories, it is important to consider your organisation’s overall
principal purpose/s, and your activities must support those purpose/s (if only part of your organisation’s
purposes and activities fit within a category, you may need to consider setting up a separate organisation or
fund to undertake the eligible activities).
1.1 Registered public benevolent institution
Does your organisation provide welfare services to people (or fundraise to assist
the provision of welfare services to people)?
If Yes – your organisation may be eligible for DGR endorsement as a public benevolent institution.
A public benevolent institution (PBI) is a registered charity with the dominant purpose of providing
relief of poverty, sickness, suffering, distress, misfortune, disability, destitution or helplessness of
people that arouses compassion in the community. Organisations are unlikely to qualify as a PBI if
their activities are aimed at preventing poverty or suffering, rather than relieving the suffering.
Activities must be aimed at relieving the actual needs of a class of disadvantaged people, and services
need to be available to the public or a section of the public (based on need rather than on a
discriminatory basis).
 A homeless shelter run by a community organisation
 A community legal centre
 A not-for-profit drug and alcohol residential rehabilitation centre
 A local ‘meals on wheels’ services
There have been recent and significant changes to the directness requirements for PBIs that are not
yet settled. These changes may mean that some organisations that have previously been denied DGR
endorsement as a PBI may now potentially be eligible under the new position.
The old position is outlined below, as well as the new position based on the 2013 case The Hunger
Project Australia v Commissioner of Taxation [2013] FCA 693 (the Hunger Project Case).
Old position: Until recently, to qualify as a PBI, the main purpose of an organisation had to be to
provide services directly to people in need of relief (ie. disadvantaged people). It was not enough to be
a research, advocacy, information, fundraising or referral service for the community generally.
The Hunger Project Case position: The Hunger Project Case opened the possibility that to be a PBI an
organisation does not have to directly provide services to those in need itself. The Hunger Project
engaged in fundraising which it then passed on to affiliate organisations that delivered services to
relieve hunger. The Federal Court decided that its activities were mostly for the indirect relief of
poverty. However, the Federal Court said ‘there was nothing in the ordinary usage of the expression
public benevolent institution that required such an institution directly to dispense aid.’ The judgment
did require the organisation’s benevolent objects to be sufficiently “concrete”. This requirement was
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16
satisfied because the Hunger Project has a concrete aim to relieve hunger in the world, and its
affiliated organisations shared that common purpose of relieving hunger with the Hunger Project,
shared planning and processes with the Hunger Project, and had a close relationship with the Hunger
Project.
Accordingly, if an organisation does not provide direct benevolent relief, to satisfy the Hunger Project
Case position, that organisation must demonstrate that:
 there is a clear way to deliver the benevolent relief for which the funds are raised by the
organisation (even if the relief is not delivered directly by the PBI), and
 there is a relationship of collaboration (through planning and management of funds), and a
common benevolent purpose between the organisation raising the funds and the organisation
delivering the services providing relief.
Note that the ATO intends to appeal the decision in the Hunger Project Case, and therefore it is not
clear whether formerly ineligible organisations can consider reapplying to be endorsed as a PBI.
The ACNC has released its interpretation of the Hunger Project Case.
From 3 December 2012, the new charities regulator, the ACNC, became responsible for determining
PBI status (which used to be determined by the ATO). For more information see the ACNC’s factsheet
‘What is a public benevolent institution?’. Further details about applying to be endorsed as a DGR are in
Part 3 of this Guide.
1.2 Registered health promotion charity
Does your organisation promote the prevention or control of disease in human
beings?
If Yes – your organisation may be eligible for DGR endorsement as a registered health promotion
charity.
A health promotion charity is a charity registered with the ACNC as a health promotion charity whose
principal activity is to promote the prevention or the control of diseases in human beings. Disease
includes ‘any mental or physical ailment, disorder, defect or morbid condition, whether of sudden
onset or gradual development and whether of genetic or other origin.’ Some examples of diseases
covered under this category include asthma, paraplegia, mental illness and cerebral palsy. Your
organisation must specify which disease or diseases it will be concerned with preventing or controlling
as it is not enough just to promote ‘health’ or ‘wellbeing.’
Your organisation may be considered to be a registered health promotion charity if it undertakes one
of the following as its principal activity:
 Providing relevant information to sufferers of a disease, health professionals, carers and the
public, or
 Undertaking research on how to detect, prevent, treat or cure diseases in people or developing or
providing aids or equipment to sufferers of a disease.
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


the Cancer Council of Australia
a camp that provides respite care for autistic children
a community centre that provides assistance to young people with a mental illness, and
an organisation that conducts research and develops products to assist in the prevention and treatment
of heart diseases.
Organisations whose principal activity is accident prevention will not meet the definition of a health
promotion charity.
From 3 December 2012, the new charities regulator, the ACNC, became responsible for determining
Health Promotion Charity status (which used to be determined by the ATO). For more information see
the ACNC’s factsheet What is a health promotion charity?’ and the ATO’s Tax Ruling 2004/8.
Further details about applying to be endorsed as a DGR are in Part 3.
1.3 Harm prevention charity
Is your organisation trying to minimise or control abusive behaviours, substance or
alcohol abuse, self harm, suicide or gambling?
If Yes – your organisation may be eligible for DGR endorsement as a harm prevention charity.
A harm prevention charity is a charity registered with the ACNC whose principal activity is to promote
the prevention or control of ‘behaviour that is harmful or abusive to human beings’. Harmful or
abusive behaviour is defined in the tax law to include emotional abuse, sexual abuse, physical abuse,
substance abuse, self-harm, suicide or harmful gambling. A harm prevention charity can provide direct
support through counselling or workshops, or indirect support through community education and
awareness-raising.





an organisation established for suicide prevention
a shelter for women subject to domestic violence
a foundation that provides resources to help parents improve childhood environments
a charity that delivers an in-school program for students at risk of leaving school early, and
a project that encourages the development of trust in victims of violence or abuse.
For further examples see the Register of Harm Prevention Charities Guidelines and a list of current
registered harm prevention charities on the Department of Social Services (formerly FAHCSIA) website.
A harm prevention charity seeking DGR status must be registered on the Register of Harm Prevention
Charities before apply for DGR endorsement. This Register is maintained by the Department of Social
Services (formerly FAHCSIA).
From 3 December 2012, organisations seeking entry on the Register must first be registered with the ACNC
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as a charity then obtain endorsement as a Tax Concession Charity from the ATO (a special status that
provides access to certain tax concessions not include including DGR). You will need to make sure your
organisation’s constitutional documents meet the requirements for registration by the Department of Social
Services (formerly FAHCSIA) on the Register. For further information, see the Register of Harm Prevention
Charities Guidelines. Further details about applying to be endorsed as a DGR are in Part 3 of this Guide.
1.4 Animal welfare charity
Does your organisation provide direct care or rehabilitation for animals?
If Yes – your organisation may be eligible for DGR endorsement as an animal welfare charity.
An animal welfare charity is a charity registered with the ACNC whose principal activity is:
 providing short-term direct care to animals (but not only native wildlife) that have been lost,
mistreated or are without owners, or
 rehabilitating orphaned, sick or injured animals (but not only native wildlife) that have been lost,
mistreated or are without owners.
Note that some organisations that assist only native wildlife may be eligible for DGR endorsement in
the category of environment organisation.



an organisation established to find homes for greyhounds retired from the racing industry
a service that rehabilitates injured animals, and
a shelter for dogs whose owners can no longer look after them.
1.5 Arts or cultural organisation
Does your organisation promote arts or culture, such as
literature, music, performing arts, visual arts, crafts,
design, film, video, television, radio, community arts,
Aboriginal arts or moveable cultural heritage?
If Yes, your organisation may be eligible for DGR endorsement as an
arts or cultural organisation.
A cultural organisation
seeking DGR status must
first be registered on the
Register of Cultural
Organisations. This register
is maintained by the
Ministry for the Arts.
An arts or cultural organisation is one where the principal activity or
purpose of the organisation is the promotion of literature, music, a performing art, a visual art, a craft,
design, film, video, television, radio, community arts, Aboriginal arts or moveable cultural heritage.




a company dedicated to directing the works of Shakespeare
an community project that operates a youth orchestra
a trust established to provide a fellowship program for emerging composers, and
an organisation that provides guidance to aspiring poets.
For some examples see the Register of Cultural Organisations Guideand a list of current registered cultural
organisations on the Ministry of the Arts website.
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1.6 Environmental organisation
Is your organisation an environmental organisation?
If Yes – your organisation may be eligible for DGR endorsement
as an environmental organisation.
An environmental organisation is an organisation whose principal
purpose is:
 the protection and enhancement of the natural environment or
of a significant aspect of the natural environment, or
An environmental organisation
seeking DGR status must first be
registered on the Register of
Environmental Organisations.
This Register is maintained by
the Department of the
Environment, Water, Heritage
and the Arts.
 the provision of information or education, or carrying on research about the natural environment or
a significant aspect of the natural environment.




a fund established to promote rainforest conservation
an organisation that provides education on climate change
an organisation that promotes awareness of endangered species
a foundation that works with volunteers to deliver a cleaner environment and community beautification,
and
 an organisation that works to conserve native vegetation in a particular area in Australia.
For further examples see the Register of Environmental Organisations’ Guidelines and a list of current registered
environmental organisations on the Department of the Environment, Water, Heritage and the Arts website.
Environmental organisations, developed country disaster relief funds and overseas aid funds are the
only categories for endorsement as a DGR which allow an organisation to have overseas objectives.
1.7 Approved Research Institute
Does your organisation do scientific research?
If Yes – your organisation may be eligible for DGR endorsement as an approved research institute.
An approved research institute is a university, college, association or organisation which is
undertaking scientific research that is, or may prove to be, of value to Australia



a centre to increase understanding of the United States of America in Australia
a research centre that promotes discussion of public policy
an organisation that provides scholarships to managers of charitable organisations to enhance their
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
management and accountability, and
an academy that enhances interest in the humanities in Australia.
For further examples see the Australian Commonwealth Scientific Research Organisation (CSIRO), or the
Commonwealth Department of Health or the Department of Industry. For more information see the ATO’s
Guidelines for Approved Research Institute Applicants on the ATO’s website.
1.8 Overseas Aid Fund
Does your organisation provide funds for the relief of
people in developing countries?
If Yes – your organisation may be eligible for DGR endorsement
as an overseas aid fund.
An overseas aid fund is a charity whose main purpose is the relief of
people in distress in countries that have been declared by the
Minister for Foreign Affairs as ‘developing’.


An overseas aid fund seeking
DGR status must first be
registered on the Register of
Overseas Aid Organisations. This
Register is maintained by the
Department of Foreign Affairs
and Trade – Australian Aid
(formerly known as AusAID).
A fund that provides relief to refugees in a recognised developing nation, and
A trust established to fund programs to prevent avoidable blindness in South Pacific countries.
For more information see:
 the Overseas Aid Gift Deduction Scheme (OAGDS) Guidelines on the Department of Foreign Affairs
and Trade website
 the ATO’s GiftPack
 the Case Study on applying to be an overseas aid organisation, in Part 3: Applying for DGR
endorsement in the Guide to DGR, and
 a list of the approved developing countries on the Department of Foreign Affairs and Trade website.
There are many other DGR categories that your organisation (or part of your organisation) may fit into,
such as the following specialised public funds:
 scholarship fund – established and maintained solely for providing money for eligible scholarships,
bursaries or prizes
 school building fund – established and maintained solely for providing money for the purchase,
construction or maintenance of a school or college building
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 necessitous circumstances fund – established and maintained for the relief of people in Australia
who are in ‘necessitous’ circumstances. Generally, this means that the fund distributes goods or
money to particular individuals who do not have the financial resources to obtain all that is
necessary, not only for a bare existence, but for a modest standard of living in the Australian
community (for example for the benefit of children orphaned in a car accident, or to assist a person
undergoing very expensive medical treatment), and
 Australian disaster relief funds – established and maintained solely to provide money for the relief
of people who are in distress as a result of a disaster.
These are public funds that may be set up as a separate entity (eg. under an instrument of trust) or
as part of your organisation (often called the ‘sponsoring’ organisation). If they are eligible to be
registered as a charity (ie. if they are an ACNC type entity) then they must also be registered with the ACNC.
 Public ancillary funds (PuAFs) – are public funds which must be set up as a trust and which
channel gifts to other DGRs. PuAFs are complex to set up and administer, and your organisation
should seek specific legal advice if it thinks establishing a PuAF is an option. Trustees of PuAFs
must be ‘constitutional corporations’. Incorporated associations will not always meet the definition
of ‘constitutional corporation’.
If your organisation would like to start a fundraising entity or grant making foundation to support
a particular cause, one option is to ask an existing charitable foundation to create a sub-fund. Some
existing foundations will allow you to establish named sub-funds or special accounts, and will manage the
administration for you. For more information, see the our Information Sheet on Fundraising foundations
and charitable trusts at www.nfplaw.org.au/legalstructure
For a full list and details of all of the DGR categories, case studies of various types of organisations
and whether they meet the DGR category criteria, and category checklists, you should refer to the
ATO’s DGR Table and free GiftPack publication. You may also wish to seek legal or accounting advice
for more information about whether your organisation may be eligible for endorsement as a DGR.
Remember, if your organisation does not fit into a DGR category, there may be other options.
See Part 1 of this Guide.
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There may be a number of categories that are relevant to your organisation. You are able to nominate
up to four categories in the ATO’s application for endorsement form.
You should enter the most suitable category first. This will be the category that best fits your
organisation’s objectives and purposes and will be the category for which your organisation would
ideally receive endorsement. The other categories may relate to the ancillary or incidental purposes or
activities of your organisation.
Your organisation’s principal activities must relate to the purposes for which the organisation has
received DGR endorsement. There must be a clear link between your principal activities and the DGR
category. Your organisation may engage in other activities that do not directly further your charitable
purpose, however, those activities must be incidental or ancillary to the principal purpose.
The Asthma Foundation NSW is a charity that is registered with the ACNC under the subtype ‘health
promotion charity.’ It is also registered as a DGR with the ATO. The Asthma Foundation NSW’s objects
include: improving health outcomes for people with asthma, advancing research into the prevention,
diagnosis, treatment and cure for asthma, and providing support to people with asthma and their carers.
The following activities would qualify as consistent with the purposes of the Asthma Foundation and the DGR
category:
 a research grant provided to a PhD student into the degradation of airways in asthmatics
 a campaign run in schools to provide education on asthma treatment and prevention, and
 a course in emergency asthma management run for sport and leisure professionals.
The following activities may NOT qualify as activities consistent with the principal purposes of the Asthma
Foundation and the DGR category:
 a program run to encourage healthy eating as part of a wider ‘healthy living’ campaign run by the Asthma
Foundation, or
 a yoga day to promote general wellbeing among asthma sufferers.
Activities that do NOT qualify may still be undertaken if they are not ‘incidental’ or ‘ancillary’ to the principal
purpose. An example of an incidental activity would be meeting with politicians to discuss funding
opportunities for asthma programs or running staff development programs so that staff have better
technology capabilities.
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Below is a very general list of some types of organisations that may (but not always) have difficulty
getting DGR endorsement. Before applying for DGR endorsement, you should carefully consider your
organisation’s purposes and activities. You may need to speak to a lawyer or accountant for more
information about your organisation’s eligibility for endorsement as a DGR.
5.1 Advocacy organisations
Generally if your organisation’s principal purpose is advocacy, it will have difficulty getting DGR
endorsement. This is because advocacy is not a recognised category for DGR endorsement. Your
organisation may be able to receive endorsement as a DGR if it falls into the category of a health
promotion charity (see above) or harm prevention, because these categories allow relevant advocacy
to be a principal purpose.
5.2 Neighbourhood houses and community centres
Neighbourhood Houses are sometimes eligible to be endorsed as
DGRs under the Public Benevolent Institution (PBI) category. If a
Neighbourhood House undertakes direct welfare as a dominant
A similar issue was faced by The
Hunger Project in the Hunger
activity, rather than preventative social inclusion and community
Project Case discussed in earlier
development type activities, it may be eligible for endorsement as a
at 1.1 of this Part of the Guide.
PBI for the whole organisation. If not, there may be a particular
program that fits within a DGR category may be eligible if appropriately isolated from the broader
organisation.
Neighbourhood houses often struggle to attain DGR endorsement, as they undertake a range of
activities, some eligible and others not.
The national Association of Neighbourhood Houses and Learning Centres (ANHLC) was successful in
advocating for a specific listing as a DGR endorsed organisation. ANHLC may accept requests from
neighbourhood houses to auspice particular DGR eligible activities (eg. feeding the poor through a
soup kitchen). For more information on auspicing see www.nfplaw.org.au/auspicing, and contact
ANHLC for specific information.
5.3 Sports clubs and associations
Sports clubs and associations generally have difficulty getting DGR status. This is because there is no
general category for sports and recreation organisations, so in order to obtain DGR endorsement they
must be listed by name in the tax law. For more information about this process, see Part 3 of this
Guide.
There are a few sporting organisations that use sport to provide assistance to disadvantaged people in
the community (eg running a youth soccer clinic for refugees) that may be eligible for DGR
endorsement.
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5.4 Peak bodies
Like neighbourhood houses, peak bodies may be eligible to be endorsed as DGRs under the PBI
category if they undertake direct welfare as a dominant activity, rather than the sector development
and advocacy activities that many peak bodies engage in. It may also be possible to apply for DGR if
the majority or all of a peak body’s members are PBIs. However, the ATO has advised that a peak body
would only be classed as a PBI in limited circumstances.
Some examples of peak bodies that are also registered as charities and have DGR endorsement
include:
 Volunteering Australia Incorporated (PBI)
 Conservation Council of South Australia (which is not a DGR itself, but has a separate gift fund endorsed
as a DGR)
 Physical Disability Australia (PBI), and
 Homelessness NSW Incorporated (PBI).
5.5 Cultural associations
Cultural associations, like specific ethnic associations or clubs, sometimes have difficulty getting DGR
endorsement if they do not promote an aspect of their culture specifically (like literature, or film) but
rather promote the culture more generally. They also sometimes have difficulty getting DGR
endorsement as a PBI if they do not undertake direct welfare activities as their predominant activity.
The DGR table requires that in order for an organisation to be endorsed for DGR status under this
category, it must either be on the Register of Cultural Organisations or be a public library, museum or
art gallery run by an Australian government agency. In order to be entered on the Register of Cultural
Organisations, the organisation must satisfy the following criteria:
 it must be a body corporate, a trust or an unincorporated body established for a public purpose by
the Commonwealth, a state or a territory
 its principal purpose must be to promote literature, music, a performing art, a visual art, a craft,
design, film, video, television, radio, community arts, Aboriginal arts or movable cultural heritage
 it must not give any of its property, profits or financial surplus to its members, beneficiaries,
controllers or owners
 it must maintain a public fund to receive gifts for its principal purpose
 it must agree to provide information on donations at six monthly intervals, and
 it must agree with the Office for the Arts that, if included on the register, it will participate in
periodic reviews of eligibility.
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This part covers:

outline of preparation and application process

preliminary requirements for all DGR applications

how do we apply for DGR endorsement?

getting legal advice

applying to the ACNC/ATO for endorsement as a DGR

if we are unsuccessful, what are our options?

case study: overseas aid organisations
Part 3 summary
Once you have determined that your organisation (or the fund, authority or institution your
organisation operates) would benefit from DGR status, and may fit into one of the DGR categories, you
will need to formally prepare for and apply for DGR endorsement. This Part of the Guide contains
information to help you apply for DGR status.
1. Outline of preparation and application process
There are a number of initial considerations for an organisation beginning the DGR application
process. This section gives an introduction to the preliminary requirements and some of the specific
requirements for each of the common categories for DGR endorsement (covered in Part 2). This
section also contains a table with an overview of the requirements for endorsement for the common
categories.
2. Preliminary requirements for all DGR applications
Before applying for DGR endorsement there are a number of requirements your organisation must
meet. These include having an Australian Business Number (ABN), operating ‘in Australia’, being a
‘not-for-profit’ organisation and having an appropriate winding up and revocation of endorsement
clause in your constitution. Depending on the DGR category, your organisation may have to set up a
public fund or a gift fund.
3. How do we apply for DGR endorsement?
The process for DGR endorsement depends on the DGR category your organisation is applying for. This
section outlines some of the requirements common to several categories including applying to be on a
Departmental Register, applying to the Australian Charities and Not-for-profits Commission (ACNC) to
be a registered charity (if required) and applying to the ATO for endorsement as a DGR.
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4. Getting legal advice
We recommend your organisation seek professional legal or accounting advice before applying for
DGR endorsement
5. Applying to the ACNC/ATO for endorsement as a DGR
We provide a brief outline of how you should apply to the ACNC or ATO for endorsement.
6. If we are unsuccessful, what are our options?
This will depend on the reasons for rejection. However, in general, before your organisation makes
another application you will need to show you have made changes and can now comply with the
criteria for the category of DGR for which you are applying to receive endorsement.
7. Case study: overseas aid organisations
This case study illustrates that the process required for endorsement as an overseas aid organisation
can be complex and time consuming. Because of this, it can be worth considering other options such
as being auspiced by a body that already has endorsement in a relevant DGR category.
The Federal Minister for Social Services Kevin Andrews recently confirmed that the Federal
Government will move to abolish the ACNC and will replace it with a Centre of Excellence. At the time of
publication of this Guide the processes involving the ACNC are current, however it is uncertain what impact
the introduction of the Government’s proposed Centre for Excellence will have, in particular regarding the
application process for DGR endorsement.
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1.1 Preliminary matters
In general, before you apply for DGR endorsement there are some requirements that all organisations
will need to meet. You should check that your organisation:
 has an Australian Business Number (ABN)
 is “in Australia” – a legal test about where your organisation operates (or the fund, authority or
institution your organisation operates)
 is a not-for-profit organisation (this will usually involve having appropriate not-for-profit and
dissolution clauses in your organisation’s governing documents, discussed further below), and
 has an appropriate winding up and revocation of endorsement clause in your organisation’s
governing documents (discussed further below).
There are also more specific requirements for each different category. Read the table
in the Appendix to this Part to identify the requirements that apply to your category
before continuing reading.
Depending on the category of DGR endorsement that your organisation is applying for, your
organisation may need to:
 apply to be on the relevant register (if your organisation is, for example, a harm prevention charity,
cultural organisation, environmental charity or overseas aid organisation)
 be a charity registered with the ACNC (or the fund, authority or institution that your organisation
operates) may need to be registered with the ACNC
 have set up a public fund (if required), and/or
 have set up a gift fund (if required – note that if an organisation is seeking endorsement as a
whole it usually will not require a gift fund, but if a fund, authority or institution of the organisation
is seeking endorsement a gift fund will be required).
1.2 Do we apply to the ACNC or the ATO?
The process for applying for DGR endorsement changed when the new charities regulator, the ACNC,
opened and took over some functions of the ATO and ASIC. If your organisation is required to be a
charity to be endorsed as a DGR and is not yet a charity at the time of applying for DGR endorsement,
it can normally make one application to the ACNC for both registration as a charity and DGR
endorsement at the same time. For most categories, once the ACNC has registered the charity, it
passes the application for DGR endorsement on to the ATO or, in some cases, another relevant
government department for processing.
In some cases, applications for DGR endorsement are made straight to the ATO, for example:
 where an organisation is already registered as a charity, or
 where an organisation is not required to be registered with the ACNC to be endorsed as a DGR;
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There are other circumstances when an application for DGR endorsement cannot be made
direct to the ATO. For example, cultural organisations that seek to be registered on the Register of
Cultural Organisations must apply to the Minister for the Arts for endorsement. The Minister then
considers whether to approve and pass on the application to the ATO to formally approve.
If you are unsure about which regulator to apply to, discuss this with your lawyer or call the ACNC.
All organisations applying to be endorsed as a DGR need to meet the following requirements.
Requirements for DGR applications
Have an ABN
Operate ‘in Australia’
Be not-for-profit
Have revocation of endorsement clause
Set up public fund or gift fund (if required)
1. Have an Australian Business Number (ABN)
To check whether you have an ABN, or for more information on how to apply for an ABN go to the
Australian Business Register.
2. Operate ‘in Australia’
Your organisation (or the fund, authority or institution your organisation operates) must be in Australia.
For more information on the test that applies, go to the ATO page In Australia.
3. Be a not-for-profit organisation
For general information about what being ‘not-for-profit’ means, go to our fact sheet: What does 'notfor-profit' mean?.
Currently there is no statutory definition of not-for-profit. The ATO considers that a not-for-profit
organisation is one that meets both of the following conditions:
 it is not carried on for the profit or gain of its owners or members while it is operating or upon
winding up, and
 under an Australian law, foreign law or the organisation’s governing rules, the organisation is
prohibited from distributing, and does not distribute, its profits or assets to its owners or members
(whether money, property or other benefits), neither while it is operating nor upon winding up,
unless the distribution:
 is made to another not-for-profit organisation with a similar purpose, or
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 is genuine compensation for services provided to, or
reasonable expenses incurred on behalf of, the organisation.
The ATO requires organisations applying for DGR endorsement to
have particular clauses in their governing documents, which prevent
the distribution of profits or assets to individual members, both
while operating and winding up. Your organisation’s actions must
be consistent with these clauses.
While various wording can be used, the ACNC website provides the
following examples of acceptable non-profit and dissolution clauses:
The ACNC requires registered
charities to be not-for-profit
organisations. Currently, the
ACNC cites the ATO examples of
non-profit and dissolution
clauses as acceptable to prove
that your organisation is a notfor-profit.
Non-profit clause
'The assets and income of the organisation shall be applied solely in furtherance of its above-mentioned
objects and no portion shall be distributed directly or indirectly to the members of the association except as
bona fide compensation for services rendered or expenses incurred on behalf of the organisation.'
Dissolution clause
'In the event of the organisation being dissolved, the amount that remains after such dissolution and the
satisfaction of all debts and liabilities shall be transferred to any organisation with similar purposes which is
not carried on for the profit or gain of its individual members.'
For some DGR categories the transfer will need to be made to an organisation endorsed in the same
DGR category.
Endorsed DGRs are required to have a revocation clause as described below, so the dissolution
clause can be combined with this revocation clause.
4. Have an appropriate revocation of endorsement clause
The ATO requires most organisations applying for DGR endorsement to have an appropriate revocation
clause in their governing documents. The revocation clause must set out that if your DGR status is
revoked or your organisation is wound up, any remaining gifts, deductible contributions and money
received will be transferred to another DGR.
While various wording can be used, the following example is an acceptable winding-up and revocation
clause (whether your organisation, or a fund, institution or authority that your organisation operates is
endorsed as a DGR):
Revocation of endorsement clause
If the organisation is wound up or its endorsement as a deductible gift recipient is revoked (whichever occurs
first), any surplus of the following assets shall be transferred to another organisation to which income tax
deductible gifts can be made:
 gifts of money or property for the principal purpose of the organisation;
 contributions made in relation to an eligible fundraising event held for the principal purpose of the
organisation; and
 money received by the organisation because of such gifts and contributions.
If an organisation maintains a gift fund for a fund, institution or authority that is endorsed as a DGR,
the organisation’s governing documents must require the transfer of any surplus funds of the gift fund
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to another gift deductible fund, authority or institution when its fund, authority or institution is wound
up or on revocation of endorsement, whichever occurs first. For example, the gift fund’s governing
documents could say:
Gift fund revocation of endorsement clause
If the [fund, institution or authority] is wound up or its endorsement as a deductible gift recipient is revoked
(whichever occurs first), any surplus of the following assets shall be transferred to another organisation, fund,
authority or institution to which income tax deductible gifts can be made:
 gifts of money or property for the principal purpose of the organisation;
 contributions made in relation to an eligible fundraising event held for the principal purpose of the
organisation; and
 money received by the organisation because of such gifts and contributions.
5. Setting up a public fund (if required)
Your organisation may be required to set up a public fund (see the Appendix table for common
categories requiring a public fund). In addition, if your organisation is listed in the Income Tax Act by
name, the Government will generally require it to have a public fund.
You will need the help of a lawyer to set up a public fund. A public fund may be established as a
separate entity, for example under an instrument of trust, or as part of an organisation (the fund can
be set up within the constituent documents of the organisation). The fund’s purposes should align with
the relevant DGR category. Public funds need to be administered by a controlling body (like a
committee) and meet certain other requirements. A separate bank account and clear accounting
procedures are required for public funds.
The requirements for setting up and running public funds are set out on the ATO website Public Funds.
For an example, see the case study on overseas aid organisations at the end of Part 3 below.
Where a public fund is required, that fund must have its own rules and objects. These can be set
out in a separate founding document or incorporated into the governing documents of the organisation.
The organisation’s governing documents must authorise the establishment of a fund in, for example, the
objects clause. For more information, see Taxation Ruling 95/27.
A public fund has different requirements to a gift fund, however the public fund itself may be the
gift fund (eg there would be no need for a separate gift fund) as long as the public fund only receives
gifts or deductible contributions, and its governing documents have appropriate winding-up rules.
If a public fund receives other money or property, it will need to maintain a gift fund.
There is tailored guidance available on setting up a public fund for environmental organisations, harm
prevention charities, cultural organisations and overseas aid funds available from the relevant
administering government departments, which are noted in the Appendix below.
6. Setting up a gift fund (if required)
If a fund, institution or authority operated by your organisation is endorsed as a DGR and your
organisation as a whole does not have DGR endorsement then you will need to set up a gift fund.
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Where an organisation is
required to maintain a gift fund,
that gift fund may either have its
own rules or constitution, or a gift
fund section may be incorporated
into the governing documents of
the organisation or a fund,
authority or institution (if such a
fund, authority or institution has
separate governing documents
from its sponsoring organisation).
A gift fund is a fund set up to hold tax deductible contributions of
money or property. The money and property can only be distributed
for the purposes for which the fund was established (which are
usually approved by the ATO as part of attaining DGR endorsement).
A gift fund should only hold money which has been donated, and
donated money should not be mixed with other money. Your
organisation does not have to set up a separate bank account for
the fund, but it can be a good idea to do so to ensure donated
money isn’t mixed with other money of your organisation.
The gift fund may have its own rules or constitution, or they may be
part of the governing documents of your organisation (ie. your
constitution may have a clause that sets up the gift fund). These
rules or governing documents should provide evidence of the gift fund's existence, name, purpose and
operations. The fund must be operated in accordance with the rules set out in the governing
documents.
If your organisation is required to have multiple gift funds because it has multiple funds, authorities or
institutions endorsed for DGR, it can maintain one gift fund that services each of the endorsed funds,
authorities or institutions.
The requirements for setting up and running gift funds are set out on the ATO page Gift Fund
Requirements.
You need to carefully check the eligibility requirements for the category of endorsement you are
applying for. It can cause delays and waste fees if you apply in the wrong category.
The process for DGR endorsement varies, depending on the DGR category your organisation is
applying for, and for some categories, whether your organisation is already registered as a charity or
not. Read the Table below for further details for common categories.
Some examples are as follows:
 where an organisation is required to be a registered charity for the category that it is applying for,
when it applies to the ACNC to become a registered charity it can also submit its DGR application
(on the same form) and the DGR information will be passed on to the ATO. With the exception of
public benevolent institutions or health promotion charities, if the organisation is already registered
with the ACNC when it decides to apply for DGR endorsement, it can apply directly to the ATO, and
 for some categories, organisations will first need to apply to a relevant Commonwealth government
department for listing on a register first (using their form and providing supporting documentation).
The department will then pass the application to the ATO to finalise endorsement as a DGR. See
the Table below for more information.
Guide to Deductible Gift Recipient Endorsement
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General information on the DGR endorsement process is available below. For more information see
the ATO’s GiftPack publication.
Check the requirements of the Registers, ACNC and ATO before applying as you might need to make
changes to your organisation’s structure and activities.
Most likely you will need to amend your governing documents to meet the requirements for DGR
endorsement. For more information go to the Not-for-profit Law webpage www.nfplaw.org.au/constitution.
3.1 Apply to the ACNC to be a registered charity (if required)
For some categories of DGR, your organisation (or the fund, institution or authority that your
organisation operates) will need to be registered as a charity with the ACNC before it can be endorsed
as a DGR (see Appendix below). This is because the tax law requires that in order to meet the
requirements of the category; the organisation must be a ‘registered charity.’ However, the ACNC
application form asks whether your organisation wishes to apply for tax concessions or DGR status,
and also provides you the opportunity to upload your DGR application. This is to streamline the
application process. To be eligible to be registered with the ACNC your organisation must:
 be a charity (meaning it must be a not-for-profit, have a charitable purpose and be for the public
benefit). For more information see our Information Sheet on Applying to be a Tax Concession
Charity
 have an Australian Business Number (ABN)
 comply with the governance standards (and external conduct standards, if there are any), and
 not be involved in terrorist or other criminal activity. Some not-for-profit organisations have, in the
past, provided support for terrorist and other criminal activities. Often this was done unknowingly,
however, occasionally it was deliberate. Traditionally, not-for-profits have been subject to little or
no governmental oversight of their overseas activities, making them a target for many terrorist and
criminal organisations. The ACNC introduced this requirement in order to protect the not-for-profit
sector from misuse by these organisations.
An organisation that applies to the ACNC to become a registered charity (or makes an application
on behalf of a fund, authority or institution they operate to become a registered charity) can notify
the ACNC in their application that they wish to be endorsed as a DGR. The ACNC will then pass this
information to the ATO.
Alternatively, if the organisation (or the fund, authority or institution they operate), is a registered charity or
does not need to be a registered charity for the particular category for which it seeks endorsement, in most
cases it can apply directly to the ATO for endorsement as a DGR.
For more information, and to see the application form, go to the ACNC’s webpage ‘Register my
Charity’.
Guide to Deductible Gift Recipient Endorsement
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3.2 Apply to be on a Departmental Register (if required)
You need to carefully check the eligibility requirements for the category of endorsement you are
applying for.
There are a few DGR categories that require you to become an ‘approved organisation’ and go on a
Departmental Register. Of the 8 common categories discussed in this Part, you will need to do this
for:
 harm prevention charities
 cultural organisations
 environmental organisations, and
 overseas aid organisations.
Each Register has its own requirements which you will need to consider carefully. For overseas aid
organisations, see the case study at the end of this Part.
For many organisations, it will be a good idea to seek professional advice from a lawyer and/or an
accountant before applying to the ATO for DGR endorsement.
This is because to apply for DGR endorsement you will need to provide copies of your organisation’s
governing documents (rules or constitution). The ACNC and/or the ATO will look carefully at your
organisation’s objects clause (or statement of purposes) to see that it reflects the criteria of the
particular DGR category your organisation is applying for, as well as looking for appropriate non-profit,
winding-up, revocation and other clauses as may be required (eg for public funds and/or gift funds).
As the language required in clauses to meet the requirements of many of the categories is technical,
you should seek help from a lawyer in drafting (or re-drafting) your organisation’s governing
documents. You may also need assistance with setting up a public fund and/or gift fund with separate
accounting procedures, if required.
The information below is a general outline. For more detailed information, and the relevant application
form, go to the ATO page, Application for endorsement as a deductible gift recipient.
As discussed earlier, if your organisation is applying to be registered as a charity with the ACNC, it can
choose to obtain tax concessions or seek DGR status in its ACNC application.
If your organisation is not required to be a charity for the category of DGR endorsement being sought,
or was a charity prior to the commencement of the ACNC Register, it will be required to apply for DGR
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endorsement directly to the ATO. This is with the exception of public benevolent institutions or health
promotion charities that apply to the ACNC regardless of the timing of their DGR application.
To apply for DGR status, your organisation must:
 ensure it meets the criteria set out in section 1 of this part above, and
 complete the Application for Endorsement as a DGR form found on the ATO website, and complete
the appropriate schedule (if any). The schedules ask you to provide additional information, which
may include details of the organisation’s:

objects

website

principal activity (and its other activities)

winding up and revocation clauses (i.e. where they are found in its governing documents)

registration with the ACNC

public fund, and

board member details.
DGR categories that require a schedule to be completed include:
 animal welfare charity
 Australian disaster relief fund
 charitable services institution
 developed country disaster relief fund
 fire and emergency services fund
 private ancillary fund
 public ancillary fund
 scholarship fund, and
 war memorial repair fund.
Certain categories require more specific information related to the category, including:
 for disaster relief funds – details of the disaster for which it intends to provide aid (and how the aid
will be provided)
 for health promotion charities – details of the disease to which your organisation’s activities are
directed
 for harm prevention charities – which areas of abuse your organisation intends to focus on
(including a description of the activities)
 for a public benevolent fund – the activities undertaken to provide direct relief of need (and the
activities undertaken that do not provide direct relief), and
 for a scholarship fund – eligibility criteria for the scholarships, who they will be offered to and how
the recipients will be selected.
Guide to Deductible Gift Recipient Endorsement
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constitute legal advice, full disclaimer and copyright notice at www.nfplaw.org.au/disclaimer.
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To ensure your organisation’s best chance at obtaining DGR status, your responses to the
schedules in the application should be as detailed as possible. You should carefully read the
schedules before deciding which category is appropriate for your organisation, to make sure you
can address each of the ATO’s requirements. You should also consider getting help from a lawyer.
If your application for endorsement as a DGR is refused, the ATO will provide you with an explanation
of its decision. You have a right to ask the ATO for a review of the decision by lodging an objection
against the ATO’s refusal.
This objection must be:
 in writing, signed and dated
 lodged within 60 days of the date of notice of the decision (though you might be granted an
extension in some cases)
 addressed to the ATO, and
 explain the reasons for your objection.
The ATO will then write to you explaining outcome of their review and the reasons for their decision. If
you are still dissatisfied with the ATO’s decision, you have a right to apply to the Administrative
Appeals Tribunal for a review of the ATO’s decision, or you can appeal to the Federal Court of Australia
(a very expensive option).
A similar procedure for review applies to decisions by the ACNC to refuse registration as a charity.
If, after a refusal, you wish to make another application for endorsement, you will need to show the
ATO that your organisation has made relevant changes in an effort to comply with the proposed DGR
category. You must show that the changes mean your organisation now complies with the criteria for
the category of DGR for which you are applying to receive endorsement. The length of time since the
previous application is also relevant as your organisation will need to demonstrate it has properly
implemented relevant changes prior to reapplying.
In some circumstances it may be helpful to review the records held by the ACNC or the ATO in relation
to your application. Under the Freedom of Information Act 1982 (Cth), you have the right to access
information about you that is held by the ACNC or ATO, as well as other documents such as any public
rulings and guidelines that the ACNC or ATO used to make its decision. A freedom of information
request form is available for download at the ATO website. There is no specific form for a freedom of
information request made to the ACNC. There are administrative fees associated with lodging freedom
of information requests (described at page 2 of the form), however if you can demonstrate financial
hardship you may seek to have these fees waived.
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This case study shows that the process to obtain endorsement as an overseas aid organisation
operating a developing country relief fund can be complex and time consuming (and therefore, it can
be worth considering other options such as auspicing under a body that already has endorsement in a
relevant category).
The Australian overseas aid program is managed by the Department of Foreign Affairs and Trade
(DFAT) – Australian Aid. The seven criteria for acceptance of an overseas aid fund are outlined in the
Overseas Aid Gift Deduction Scheme (OAGDS) Guidelines for Obtaining Tax Deductibility.
Being accepted as an overseas aid fund is a three step process:
1. the organisation that operates the fund must be accepted as an 'approved organisation' by the
Minister for Foreign Affairs
2. the organisation (i.e. the fund) must be registered as a charity with the ACNC, and
3. the organisation must make an application for endorsement to the ATO showing that it is a public
fund exclusively for the relief of persons in countries declared by the Minister for Foreign Affairs as
‘developing’.
Achieving tax deductibility under the Overseas Aid Gift Deduction Scheme is a two-step process:
1. Apply to the Department of Foreign Affairs and Trade (DFAT) for ‘Approved Organisation’ Status,
and
2. Apply for endorsement as a ‘Developing Country Relief Fund’.
It is important to check the requirements of DFAT, ACNC and the ATO before you begin the application
process. Note that you can currently apply to DFAT and the ACNC and/or the ATO at the same time, however
this process may change.
7.1 Applying to DFAT to become an ‘Approved Organisation’
The criteria for being accepted as an 'approved organisation' are outlined in the OAGDS Guidelines.
Amongst other things, the organisation must establish that it:
 is an Australian organisation registered as a charity with the ACNC
 can demonstrate a successful track record of carrying out development or relief activities overseas
for at least one and preferably two years
 works in partnership with one or more overseas organisations, and
 is community based and accountable to its members, with a ‘reasonable’ number of voting
members.
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This case study will now discuss each of these criteria in turn. Please refer to the Overseas Aid Gift
Deduction Scheme (OAGDS) Guidelines for Obtaining Tax Deductibility for a detailed discussion of the
criteria that are not dealt with in this case study.
7.1.1 Is your organisation registered as a charity with the ACNC?
To be eligible for ‘Approved Organisation’ status, an organisation must be registered as a charity with
the ACNC.
To be registered with the ACNC your organisation must:
 be a charity (meaning it must be a not-for-profit, have a charitable purpose and be for the public
benefit). From 1 January 2014, the statutory definition of ‘charity’ is an entity that is not-for-profit,
whose purposes are all charitable purposes for the public benefit or are purposes incidental or
ancillary to, and in furtherance of or in aid of its charitable purposes
 have an Australian Business Number
 comply with the ACNC governance standards (and external conduct standards, if there are any),
and
 not be involved in terrorist or other criminal activity.
For more information and an application form, go to the ACNC webpage ‘Register my Charity’.
An organisation that applies to the ACNC to become a registered charity can, at the same time,
request that their public fund be endorsed as a developing country relief fund. In some cases, the
organisation itself will be a public fund, applying for registration and endorsement as a whole. The ACNC
will then pass this request to the ATO.
Alternatively, after the organisation is registered as a charity, the organisation can apply directly to the ATO
for endorsement as a developing country relief fund, or for endorsement of their public fund as a developing
country relief fund.
7.1.2 Are your organisation’s activities development and/or relief?
When determining whether an Overseas Aid Fund is eligible for endorsement for DGR, the ATO
applies a different test to DFAT when assessing an organisation’s activities. Be careful that your
application to DFAT is not inconsistent with the ATO’s test, set out in the ATO’s GiftPack publication.
DFAT and the ATO use different criteria when assessing an applicant's activities:
 ATO: to determine whether an Overseas Aid Fund is eligible for endorsement as a DGR, the ATO
must be satisfied that the organisation’s activities are for the ‘relief’ of persons in developing
countries who are in distress.
 DFAT: when considering whether an organisation is eligible for ‘Approved Organisation’ status,
DFAT considers whether the organisation’s funds are used specifically for ‘development’ and ‘relief’
Guide to Deductible Gift Recipient Endorsement
© 2014 Justice Connect. This information was last updated March 2014 and does not
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activities. From the perspective of DFAT, the organisation's activities must be in the nature of
development or relief, not welfare, partisan political, or evangelistic/missionary activities.
'Development', 'relief', 'welfare', ‘partisan political’ and ‘evangelistic/missionary’ are all defined in
the OAGDS Guidelines.
Relief activities are relatively specific. They are short-term, basic assistance in response to an
emergency such as a natural disaster, famine or conflict. Development projects aim to produce broad
sustainable benefits to the community that will be maintained after the Australian organisation’s
assistance ceases.
Organisations often have difficulty establishing that their activities are ‘relief and development’ as
opposed to ‘welfare’ based. ‘Welfare’ is defined as direct assistance to individuals that addresses
immediate needs, and is not related to an emergency or part of a broader community development
program. Examples of welfare activities are funding a school, orphanage or hospital, or providing food
or clothing to poor communities.
7.1.3 Is your organisation in partnership with an overseas organisation?
To be eligible to be an overseas aid fund, your organisation must work in partnership with an overseas
organisation. Your organisation cannot just be a fundraising body for the overseas organisation. Ideally
there should be a written partnership agreement with the overseas organisation.
Your organisation will need to show DFAT how it, and its overseas partner, approach each stage of the
project lifecycle. Your organisation will also need to provide examples of ongoing communication and
reporting with its overseas partner, and monitoring and evaluation of each project undertaken.
The Australian organisation must also ensure the overseas communities know that the assistance
they receive comes from Australia, by, for example, having ‘Australia’ in its name and including in the
partnership agreement a requirement that the overseas organisation discloses the nature and extent
of the Australian contribution to its projects in its annual reports, website and publicity materials.
7.1.4 Is your organisation community-based and accountable to its members, with
a ‘reasonable’ number of voting members?
In order to meet the criteria about accountability and voting members, your organisation will need to
identify:
 its governing body (ie. the board of director or committee of management)
 who the members are, and
 how the governing body is accountable to the members.
A majority of the people on the governing body need to be ‘responsible persons’, ie. people with a
degree of responsibility to the community as a whole because of their positions in the community or
public office. Examples of responsible persons include judges, solicitors, mayors, members of
parliament, school principals and clergy. For more information go the ACNC page on responsible
persons.
Your organisation will also need to have audited financial statements and annual reports.
7.1.5 The DFAT application process
The following list summarises some important things to consider before applying to DFAT to be
declared an ‘Approved Organisation’:
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 Is your organisation:

Assisting a developing country?

Doing more than raising funds?

In partnership with an overseas organisation?
 Does your organisation:

Have activities in Australia?

Have a successful track record of preferably two years?

Undertake ‘development and/or relief activities?’

Have a reasonable number of members?

Has the above been properly documented so that it can be demonstrated to DFAT?
The application process can take over 6 months to be finalised, depending on the quality and
thoroughness of the application. If your organisation is unsuccessful in its application you can reapply
once you are able to demonstrate that you have made changes that fix the issues identified in the
previous application.
It can also be very useful for organisations to discuss the nature of their overseas activities with
Department of Foreign Affairs and Trade staff prior to preparing an OAGDS application.
The Department of Foreign Affairs and Trade can be contacted for further information on
(02) 62064688 or email: [email protected]
The ACNC decides on the charitable purposes of the organisation and/or fund, and the ATO decides whether
the fund meets the public fund requirements. However, the best approach is to try to ensure that the
requirements for both the ACNC and ATO are met before applying to the ACNC, including setting up your
public fund (see below).
7.2 Apply for endorsement as a ‘Developing Country Relief
Fund’
Once your organisation has been declared an ‘Approved Organisation’, you must then establish a
public fund that is declared by the Federal Treasurer to be a ‘Developing Country Relief Fund’. The ATO
will assess the application, and if the fund is positively assessed, the ATO will seek approval from the
Treasurer that the fund is a ‘Developing Country Relief Fund’, entitled to receive tax deductible
contributions.
A ‘Developing Country Relief Fund’ is a fund that is established exclusively for the relief of persons in
distress in declared developing countries. For a discussion of ‘relief’ see the discussion above.
The Department of Foreign Affairs and Trade – Australian Aid (formerly AusAid) website has an up to
date list of countries that the Minister has declared to be developing countries.
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In some cases, your organisation as a whole will be endorsed as a Developing Country Relief Fund.
In other cases, your organisation will be endorsed to operate a Developing Country Relief Fund.
If your organisation is endorsed to operate a fund then it does not necessarily need to create a
new legal document to establish the fund. Rather, it may insert into its governing rules or constituent
documents the requirements for the developing country relief fund outlined below, eg. public fund name,
objectives, governance by responsible persons, non-profit nature, dissolution and revocation clauses etc.
The current ATO requirements for developing country relief funds are:
 the objects of the fund must be clearly set out in a constitution or set of rules and reflect the sole
purpose of providing relief to people in developing countries
 gifts to the fund must be kept separate from any other funds of the sponsoring organisation (if
there is one). A separate bank account and clear accounting procedures are required
 the fund’s name must reflect the fact it is a developing country relief fund and receipts must be
issued in the name of the fund
 the public must be invited to contribute to the fund
 the fund must operate on a not-for-profit basis. Money must not be distributed to members of the
managing committee or trustees of the fund except as reimbursement for out-of-pocket expenses
incurred on behalf of the fund or proper remuneration for administrative services
 the fund must be managed by members of a Committee, a majority of whom have a degree of
responsibility to the general community (this requirement does not apply to funds established and
controlled by governmental or quasi-governmental authority)
 should the fund be wound-up, any surplus money or other assets must be transferred to some
other fund qualifying under developing country relief fund (this can be a requirement of an
Australian law, or it can be in the governing rules or constitution)
 should the endorsement (if any) of the organisation as a DGR for the operation of the fund be
revoked any surplus money or other assets must be transferred to some other fund qualifying as a
developing country relief fund, and
 there is an undertaking in writing, or the inclusion of a clause in the governing documents, that the
ATO is to be notified of any changes to the fund's constitution or other founding documents.
For more information and an application form, go to the ATO webpage Application for endorsement as
a deductible gift recipient.
If the two steps outlined above are successfully completed, then the Treasurer declares the
organisation’s public fund a developing country relief fund by notice in the Commonwealth Government
Gazette.
Technically, the ATO can only endorse the developing country relief fund after it has been gazetted, so your
organisation will also need to ensure you have received official endorsement from the ATO, AFTER the
Treasurer has gazetted the organisation.
Tax deductible receipts can only be offered and applied to donations received after the date of gazettal and
after official confirmation has been received from the ATO.
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Is there another way of achieving tax deductibility?
There is an alternative to the Australian organisation becoming an overseas aid fund in its own right.
The Australian organisation may wish to become a project of an existing overseas aid fund.
This could be a long term arrangement or could be used to establish a track record for a future
application by the Australian organisation. The existing overseas aid fund can receive the tax
deductible donations for the project and apply them to your organisation’s activities under an
agreement. Your objects and activities must align with the objects of the existing overseas aid fund.
The list of existing approved organisations is on the Department of Foreign Affairs and Trade –
Australian Aid (formerly AusAid) website.
For things to think about when considering an arrangement like this go to our webpage on Auspicing.
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Common
categories
ATO requires DGR to be a public fund,
and/or maintain a gift fund?
Need to be on a special Register?
Need to be registered with the ACNC?
Public Benevolent
Institution (PBI)
No public fund is required.
No
Yes. The organisation must be a registered
with the ACNC as a charity.
Health Promotion
Charity
No public fund is required.
No
Yes. The organisation must be a registered
with the ACNC as a charity.
Harm prevention
charity
A harm prevention charity must establish and
maintain a public fund. This fund as well as
the charity must be listed on the Register.
Yes. Both the charity and its fund must
be listed on the Institution Register of
Harm Prevention Charitable
Institutions, maintained by the
Department of Social Services.
Yes. The organisation and fund must be
registered as a charity.
Organisations are most commonly endorsed
in the PBI category as a whole, and do not
have to maintain a gift fund (although it is
good practice to maintain a gift fund for
donations).
Health promotion charities are most
commonly endorsed as a whole and do not
have to maintain a gift fund (although it is
good practice to maintain a gift fund for
donations).
New legislative requirements were
introduced last year requiring that the
public fund itself also be registered as a
charity. These new requirements were
heavily criticised and the deadline for
existing Harm Prevention Charities to
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Common
categories
ATO requires DGR to be a public fund,
and/or maintain a gift fund?
Need to be on a special Register?
Need to be registered with the ACNC?
register the public fund that they operate as
a charity has been extended indefinitely. At
this point in time, the legislation is still in
place and new organisations applying for
listing on the register of Harm Prevention
charities are required to register their public
fund as an independent charity with the
ACNC.
Animal welfare
charity
No public fund is required.
No
Yes. The organisation must be a registered
charity.
Cultural
organisation
A cultural organisation listed on the register
must maintain a public fund that is listed on
the Register of Cultural Organisations.
Yes. Register of Cultural Organisations,
maintained by the Attorney-General’s
Department (Ministry for the Arts)
No. If the organisation is a charity and
wants to access income tax concessions, it
should apply to be registered with the
ACNC.
Environmental
organisation
An environmental organisation must have a
public fund. This fund must be listed on the
Register of Environmental Organisations as
well as the organisation.
Yes. The organisation needs to be
listed on the Register of Environmental
Organisations, maintained by the
Commonwealth Department of the
Environment.
No. However, note that many environmental
organisations would be eligible to be a
charity.
Approved research
institutes
No public fund is required.
No.
Yes, the institute must be registered with
the ACNC, unless it is not charitable and
therefore ACNC registration is not required.
An animal welfare charity that is endorsed as
a whole is not required to maintain a gift
fund, however it is good practice to do so.
An approved research institute that is
endorsed as a whole is not required to
maintain a gift fund.
Guide to Deductible Gift Recipient Endorsement
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45
Common
categories
ATO requires DGR to be a public fund,
and/or maintain a gift fund?
Need to be on a special Register?
Need to be registered with the ACNC?
Overseas aid
organisations
The overseas aid organisation must establish
and maintain a ‘developing country relief
fund’ (ie. a public fund)
Yes. The organisation must be
approved and entered on the Register
of Overseas Aid Organisations
maintained by the Department of
Foreign Affairs and Trade – Australian
Aid (formerly AusAid).
Yes. The organisation must be registered as
a charity with the ACNC.
Guide to Deductible Gift Recipient Endorsement
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46
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47
This part covers:

self-review

notification, and

administering deductible gifts.
Part 4 summary
Once your organisation successfully applies for DGR endorsement, it is very important to meet ongoing
requirements. This Part covers the ongoing requirements for endorsement.
1. Self-review
The ATO recommends that your organisation reviews its activities regularly (eg. annually) as well as
when major structural changes occur, to ensure that it still meets all of its DGR requirements.
2. Notification
Organisations are required to tell the ATO of changes to their situation if those changes mean that the
organisation no longer fits within the DGR category for which it received endorsement.
3. Administering deductible gifts
A donor can only claim a tax deduction where there is a tax deductible gift. Where you have received
tax deductible donations your organisation must keep certain records, and comply with certain
procedures.
Guide to Deductible Gift Recipient Endorsement
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48
Once your organisation is DGR endorsed, it must continue to meet the requirements for the category
of DGR in which it was endorsed.
The ATO recommends that your organisation reviews its activities regularly (at least annually) as well
as when major structural changes occur within the organisation, to ensure that it continues to meet all
of its DGR requirements. The ATO has worksheets to assist with the review, which are available from
the Related Resources section at the end of this part.
You should review your organisation’s activities regularly to make sure that it is still operating for its
principal purpose/s and complies with the not-for-profit requirements. This will be particularly relevant
when you are starting new projects, to ensure they are in line with your DGR endorsement.
1.1 Principal purpose requirement
If your organisation is endorsed as a DGR, it should be particularly careful if:
 it is thinking about starting up completely new programs or services that are outside its usual field
of work
 it is auspicing another organisation, or
 it is making other changes to its purposes, structure, types of activities or the location of its
activities (eg. commencing activities overseas).
These types of changes may mean that your organisation no longer meets the 'dominant or principal
purpose' requirements that apply to DGR categories or the 'in Australia' requirement.
A common scenario is where a not-for-profit organisation with DGR status (ABC Inc) is approached by
another not-for-profit organisation (XYZ Inc) to auspice its project because XYZ Inc does not have DGR
status. This might mean that ABC Inc receives funding from donors interested in XYZ’s project then contracts
XYZ Inc to deliver the project.
Auspicing arrangements should be approached with caution, as they may put the auspicing organisation’s
DGR status at risk. Fundraising money can only be passed through a DGR if the project being funded is
within that organisation's purposes and aligns with its DGR endorsement. To consider whether the auspicing
proposal is appropriate, organisations should ask themselves whether the project is something the
organisation would otherwise be willing and able to do itself.
Organisations should also check that auspicing is consistent with their rules and governing documents.
Some rules contain provisions preventing auspicing arrangements with (or funding) other organisations.
Peak bodies with DGR status may be able to operate funds which channel money to not-for-profit
organisations without DGR status if it is part of their objectives to operate such a fund and the ATO has
approved this.
It is important to understand specific details about how an auspiced organisation proposes to use DGR
funds. The ATO conducts audits and would check that an auspicing arrangement is:
 consistent with your organisation's objectives, and
 within the endorsement criteria for your organisation's DGR category (eg. public benevolent institution).
Guide to Deductible Gift Recipient Endorsement
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constitute legal advice, full disclaimer and copyright notice at www.nfplaw.org.au/disclaimer.
49
Caution should be exercised auspicing an organisation without DGR status that is known for its campaigning
or lobbying activities - if this is the case, we recommend getting specific legal advice from a tax lawyer.
We recommend that organisations entering into an auspicing arrangement sign an auspicing agreement that
sets out the respective rights and responsibilities of each party, as well as who has control and ownership of
any funds or property and who has responsibility for delivering the project/s. For more information see our
webpage on Auspicing Agreements at www.nfplaw.org.au/workingwithothers.
1.2 Not-for-profit requirement
As discussed in Part 3 of this Guide, a not-for-profit organisation is allowed to make a profit, as long as
the profit is directed back into the organisation and used to further the organisation’s mission and
objects, as opposed to being distributed to the directors or members of the organisation.
As long as your organisation complies with the not-for-profit and objects or purposes clauses (and any
other relevant clauses) in its governing documents, then it will meet this not-for-profit obligation.
From a tax point of view, the decision to pay certain board members as consultants does not necessarily
impact upon your DGR status. The ATO recognises that an organisation can pay board members proper
remuneration for services while still operating on a non-profit basis (provided this is permitted under your
organisation’s governing documents).
Your DGR status will generally only be affected if you fail to meet the criteria for the category of DGR for
which you were endorsed. You should make sure you are familiar with these and review your organisation’s
eligibility on an ongoing basis.
It is therefore a good idea to either:
 have an internal policy document which sets out the types of services for which remuneration can be
given (without compromising the organisation’s DGR status), or
 amend your rules so that they explicitly allow for the payment of reasonable remuneration for services.
However, it is essential that any payments made to board members as consultants are dealt with as an
arm’s length transaction at market rate. If payments exceed what would be considered reasonable
compensation for services, an organisation may be considered to be operating ‘for-profit’ and lose its DGR
status. Details of payments to board members will also have to be disclosed in the company’s accounts.
For more information about the definition of not-for-profit, go to our page ‘Before you Start’.
Guide to Deductible Gift Recipient Endorsement
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50
Organisations are required to tell the ATO of changes to their situation if those changes mean that the
organisation no longer fits within the DGR category for which it received endorsement.
It is important that organisations
are aware of this notification
requirement, as in some
circumstances failing to notify or
delay in notifying can result in the
organisation being fined.
The ATO explains the notification process in the “Self Review”
section of its GiftPack publication, and provides worksheets to help
organisations make sure they are still entitled to endorsement.
The ATO has the power to review your organisation's activities and
revoke its DGR status if it believes that your organisation no longer
meets the DGR requirements.
An organisation registered with the ACNC is required to notify the
ACNC of any changes to its rules or constitution, as the case may be. In some cases, depending on
the organisation type, it may also be required to notify a relevant authority. For example, in the case of
a Victorian Incorporated Association, the organisation will also be required to notify Consumer Affairs
Victoria.
While it is not an ATO requirement it might be a good idea, if resources allow, to write to donors
and tell them that you have been endorsed by the ATO as a DGR and that 'donations of $2 or
more are now tax deductible'.
When a donation is made to your organisation, 3 steps should be followed:
1. Is a donation or contribution a tax-deductible gift?
The first thing to consider is whether a donation or contribution satisfies the ATO's definition of a tax
deductible ‘gift’. If the payment is not a gift, it does not attract a DGR tax deduction.
Is a donation or contribution a tax deductible ‘gift’
the gift must really be a gift (ie. no material benefit is received in return for the gift)
the gift must be of money or property that is covered by one of the gift types, and
any gift conditions must be satisfied.
Is it really a gift?
To be a gift:
 the donation must be given voluntarily
Guide to Deductible Gift Recipient Endorsement
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51
 the donor (person or organisation giving the gift) must not receive a benefit in return for the gift,
unless it is unexpected, or of insignificant value and of no utility (something of insignificant value
would be a sticker or lapel badge in acknowledgement of the gift - for more details see the Office of
Liquor, Gaming and Racing website), and
 the organisation receiving the gift should be advantaged by that
gift. This means there should be no material obligations or other
conditions that the organisation must meet in order to receive
the gift. The organisation should not be contractually required to
use the payment in a specific way.
If a donation or contribution does
not meet the definition of a gift
GST may apply if your
organisation is registered for
GST.
For more information see Taxation Ruling 2005/13.
A donor wants to donate funds for something specific, eg. to pay the venue hire cost for an event your
organisation is holding. The donor proposes that you pay the invoice and then the donor will donate that
amount to your organisation (like a reimbursement).
In situations like the example above you need to be very cautious. The money may not be viewed as a gift
because of the conditions attached. In this scenario there is also a risk that the donor does not donate the
money pledged (and you may have already paid the venue hire). It is preferable for the donor to give the
money to your organisation upfront as a gift. If the donor is a business, another option is for the donor to
sponsor the event and claim the sponsorship as a business deduction (the sponsor organisation should get
specific legal advice on how to treat the sponsorship for tax purposes).
Does it fall within one of the ATO’s ‘gift types’?
For a gift to be tax deductible it needs to fall within one of the ATO
‘gift types’, which are listed in the ATO’s GiftPack publication.
Money is a common gift, however some other gifts can include
trading stock, property, or artwork. If a gift is not money, your
organisation will need to check that it is a gift that is tax-deductible
and also work out how to value the gift for the purposes of issuing a
receipt.
If you have read the ATO's guide
to 'gift types' and are not sure if
your situation is covered, you can
call the ATO's not-for-profit help
line on 1300 130 248.
Are any gift conditions satisfied?
For some DGRs, the law sets gift conditions restricting:
 when a DGR can receive tax deductible gifts and contributions, and
 how a DGR uses the tax deductible gifts and contributions it receives.
The provision of a service or resource does not fall within any category of ‘gift’ recognised by the
ATO as it does not amount to ‘property’ or ‘money’. Therefore even though the service is provided at a
discounted rate it is likely to be viewed by the ATO as a non-deductible gift.
Furthermore, to constitute a real gift the donor must not receive a benefit or an advantage of a material
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52
nature by way of return. In this case, the giver may still be regarded as having received a material benefit
even though the value of the benefit to the donor is less than the value of the property transferred. As the
company has received some money for its services, it has not made a real gift. Such a donation is not tax
deductible.
2. Issue the donor with a receipt
Some DGRs are required to issue receipts for tax deductible gifts, and although not all DGRs are
required by tax law to issue receipts for tax deductible gifts, the issuing of receipts will assist donors
with the preparation of their tax returns.
If a DGR issues a receipt for a ‘gift’ or a ‘deductible contribution’ it must include certain information,
which is set out in detail in the “Receipts” section of the ATO’s GiftPack publication.
If the gift is property (and not money), the receipt should only include a description of the goods, not a
value. The amount claimed by the donor, if any, is determined by the donor or the ATO. It is best to
leave it to them to assign a value. You can write on a receipt what the value assigned by the donor is,
but should make it very clear that the value has not been assigned by your organisation. If a donor
wants your organisation to assign a value, you will need to get professional advice (unless the donor is
gifting listed shares which you can assign a value to as of a particular time).
From time-to-time organisations should also check for any updates which may be required on your
donation form (eg. details of a public fund set up to receive tax deductible donations). Details on
receipts that are automatically issued by banks to donors should be checked with the requirements
for receipts discussed above.
Donating to:




a public authority for health research will only be tax deductible if it is donated for research into
the causes, prevention or cure of diseases in human beings, plants or animals
a life education company will only be tax deductible if it is for the conduct of life education programs
under the auspice of the Life Education Centre
a harm prevention charity will only be tax deductible if the charity is listed on the Register of Harm
Prevention Charities, and
a developing country disaster relief fund will only be tax deductible if the donation is made within 2 years
of the disaster.
3. Maintain a record of the donation
A DGR must keep records that explain all transactions relevant to its DGR status.
The ATO requires an organisation’s DGR records show:
 all gifts, and deductible contributions, of money or property made to it for that purpose, and
 money received because of such gifts or deductible contributions (eg. if the gift money is invested
to earn interest).
Guide to Deductible Gift Recipient Endorsement
© 2014 Justice Connect. This information was last updated March 2014 and does not
constitute legal advice, full disclaimer and copyright notice at www.nfplaw.org.au/disclaimer.
53
3.1 Use of gift fund money
For more information about when DGRs are required to have a gift fund, see Part 3 of this Guide.
The ATO makes it clear that a gift fund must only be used for the principal purpose of the fund or
institution and on a not-for-profit basis.
Acceptable uses of gift fund money, according to the ATO:
 transferring money or property to the organisation or fund for its current and continuing use
 purchase of property or services for use by the fund, or by the organisation for the principal purpose of
the fund
 reasonable costs of managing the gift fund, for example, bank charges, stationery, accounting and audit
fees relating expressly to the gift fund
 professional fees for fundraising, and
 investment, if it is consistent with carrying out the principal purpose of the fund, authority or institution.
If you have any doubt about whether a particular expense can be appropriately paid out of the
public fund, you can call the ATO on 1300 130 248 and speak to someone who is experienced
with not-for-profit groups.
You can also check the ATO’s factsheet on Gift Fund Requirements. This factsheet includes a section on
“what should a gift fund be used for.”
Guide to Deductible Gift Recipient Endorsement
© 2014 Justice Connect. This information was last updated March 2014 and does not
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54
Related Not-for-profit Law Resources
The Not-for-profit Law Information Hub (www.nfplaw.org.au) has resources on the following topics:
Tax
www.nfplaw.org.au/tax
Insurance
www.nfplaw.org.au/riskinsurance
Reporting to government
www.nfplaw.org.au/reporting
Fundraising and Events
www.nfpalw.org.au/fundraisingandevents
Legislation
Income Tax Assessment Act 1997 (Cth)
Australian Charities and Not-for-profits Commission Act 2012 (Cth)
Australian Charities and Not-for-profits Commission (ACNC)
Register my Charity
Australian Tax Office (ATO)
Application for endorsement as a deductible gift recipient
Australian Business Register (ABR)
Australian Valuation Office
Information sheet ‘Overseas aid funds and tax deductible gifts’
GiftPack Publication
This publication includes comprehensive information, as well as the DGR Table of categories for
endorsement.
Tax Rulings
Department of Social Services
Harm Prevention Charity Register
Attorney-General’s Department - Ministry of the Arts
Register of Cultural Organisations Guide
This page contains information on the Register of Cultural Organisations Guidelines and a list of
current registered cultural organisations.
Guide to Deductible Gift Recipient Endorsement
© 2014 Justice Connect. This information was last updated March 2014 and does not
constitute legal advice, full disclaimer and copyright notice at www.nfplaw.org.au/disclaimer.
55
Department of the Environment, Water, Heritage and the Arts
Register of Environmental Organisations
This page contains information on the Register of Environmental Organisation Guidelines and a list of
current registered environmental organisations
Department of Foreign Affairs and Trade – Australian Aid (formerly AusAID)
Overseas Aid Gift Deduction Scheme (OAGDS) Guidelines
List of developing countries
List of approved funds
Summary of application process
Other organisations which may be able to assist with overseas aid DGR
endorsement
Australian Council for International Development (ACFID)
Click on ‘what we do’ for a description of ACFID’s services.
World Relief Australia (WRA)
Click on ‘WRA services’ under the ‘Improve your serve’ box for a description of WRA’s services.
Guide to Deductible Gift Recipient Endorsement
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constitute legal advice, full disclaimer and copyright notice at www.nfplaw.org.au/disclaimer.
56
Contact us:
[email protected]
NFP Law home:
justiceconnect.org.au/nfplaw
NFP Law Information Hub:
nfplaw.org.au
PO Box 16013
Melbourne VIC 8007
DX 128 Melbourne
Tel +61 3 8636 4400
Fax +61 3 8636 4455
GPO Box 863
Sydney NSW 2001
DX 78 Sydney
Tel +61 2 9114 1793
Fax +61 2 9114 1792
ABN: 54 206 789 276 | ACN: 164 567 917
© 2013 Justice Connect. This information was last updated March 2014
and does not constitute legal advice, full disclaimer and copyright notice
at www.nfplaw.org.au/disclaimer.