Asking “What is the “best” legal structure for a non-profit organisation” may be seen as the ‘how long is a piece of string’ type of question as the answer is far from straightforward and is dependent upon a number of factors. Indeed, in some cases, a not-for-profit organisation doesn’t even need to have a formal legal structure.
Of course there are a number of advantages in incorporating a group whether or not the group registers as a NZ charity (if qualified by the Charity Test to do so).
Some types of nonprofit are:
- unincorporated groups (such as a mothers’ coffee group supporting their kindergarten) [it has been suggested that 61% of NZ nonprofits are unincorporated!]
- incorporated societies (membership governed bodies such as a sports club, or a restoration society)
- charitable trusts
- not-for-profit companies (possibly a large company like Sanitarium)
- provident societies
- Social enterprises
- Maori Land trust
Community Net Aotearoa has produced a very useful table comparing the different types of legal structures and their various characteristics, with links to a separate page that discusses unincorporated groups. A post on this site also gives a little information.
The Community Net website also has a section which “provides some basic guidance and tips on a range of topics related to organisational structures for community groups. It looks at everything from unincorporated groups to incorporated societies and charitable trust boards, as well as the less common formal structures, such as companies and Māori land trusts.”
Another very useful website is the Community Law Manual Online which provides a detailed coverage of the subject.
Our consultant may also be able to help.