Latest / Beyond Sovereignty / #052 - Unincorporated not-for-profit Vs Company Limited By Guarantee

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#052 - Unincorporated not-for-profit Vs Company Limited By Guarantee · Beyond Sovereignty

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  The Labor Party, the Liberal Party, the School Canteen Committee, some
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  of the oldest organisations in this country. companies
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  at all. Most people believe that a not-for-profit is
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  one thing and you just register it and you're done. But
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  the reality is there are two, well at least two,
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  completely different structures and there are
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  three differences that can decide which one you
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  need. Over the past 20 years I've helped hundreds of
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  entrepreneurs to set up and run not-for-profit structures legally
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  and most importantly compliantly. So in this episode, I'm
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  going to be stepping you through the unincorporated association, the company
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  limited by guarantee, and why nine out of ten of
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  my clients end up with both. What is an unincorporated association
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  in one sentence? An unincorporated association is
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  an entity that is self-governing. That
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  means that the organisation has a, generally, it's
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  a community service organisation that has a group of
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  members or founders and they create their
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  own rules and regulations of how they are going to exist. Now,
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  why do political parties use them? Can you guess?
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  Tell me. Tell me in the comments below quick before I say it. Tell
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  me what it is. Obviously, because they have their own governing documents.
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  Yeah. Now what does it mean when you have your own governing documents? Does it mean that
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  the external governance that exists in that country doesn't
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  apply to you because you have your own internal governance? Hit the
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  nail on my head, my friend. Now what's involved in setting one up?
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  Well, Normally you'd have like some epic legends who
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  are very well informed about governance and especially public and
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  private governance. And you would have those legends set that up for you because
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  doing it yourself or getting some other people, because
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  believe me, I see a lot of documents and I am like, what is that mumbo
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  jumbo woo woo, la la la la. Because even though I live in
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  the Byron Shire, well, outside of the Byron Shire, we
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  set ourselves up legally and compliantly in a way that
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  is still going to protect you in the private, but
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  is not going to be seen as some 1900s
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  woo-woo document that means absolutely sweet F.A. Because
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  that's what I see a lot of. And believe me, if you look at somebody's self-governing
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  documents and you think that it is a whole lot of palaver that doesn't make
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  sense, guess what? So does everybody else. What can it
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  do that a company can't? And what can't it do?
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  Now, what it can do is create its own governing documents,
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  which means that you decide on how you and your members
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  are going to exist, what rules and regulations you're
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  going to have, what things you're going to abide to, how you're going
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  to service your community, how you're going to pay taxes if
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  you choose to pay them. what exactly you are going to
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  spend funds on and how you are going to be not for profit because
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  all the funds are going to go to your mission, your purpose, your community, rather
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  than to the benefit of individuals, individual founders,
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  that is. Now, what can't it do? It can't own
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  assets in its name. It can purchase the asset if
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  it is not a digital asset. Like it can't purchase crypto stocks or
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  shares, no Bitcoin, okay? But it could potentially purchase
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  a house because that is a dwelling that is not just an
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  investment, it can be for the benefit of the community. What
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  else can't it do? It can't get loans
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  in its name either. So it can't do that. Although if
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  you have really good brokers that you might work with, they can always help you work with some
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  magic. And what is a company limited
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  by guarantee? A company limited by guarantee is
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  the most flexible company structure in Australia.
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  Wouldn't it be awesome if you could have a company and get all of the benefits that
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  a company has, and then also have all of the benefits
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  and tax exemptions that a charity has? Yes. Yes,
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  my friends. Yes. That is the ultimate goal. So
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  why would you choose a Pty Ltd that has all of its funds and profits
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  being sucked away by the ATO? because you haven't been informed by your
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  accountant and your solicitor that something else exists. Now,
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  people always say, well, what is the guarantee? Well, guess what? The
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  founders, at least one of the founders, has to guarantee that
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  the organisation, if everything screws up, will
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  pay between 10, minimum of $10, up
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  to whatever you want. But why wouldn't you set it at $10 when the government just
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  wants you to have a minimum of $10? So you can have a personal
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  guarantee of $10 if everything screws up in your organisation, that
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  can't be sued, that can't be bankrupt, that can't be liquidated, that
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  you're gonna close it for $10. Remind me why you have a
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  PTYLTD again. Doesn't make any sense, does it? Why
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  do we do the things? Because we've been programmed at school to
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  be taxed. What's involved in setting one up? A
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  company limited by guarantee needs to have an amazing constitution that
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  is going to be able to house everything that you're going to
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  want to create for the rest of your life and potentially your children's life and your great-great-great-great-great-grandchildren.
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  And that's what we do really, really well because we've been doing this for such
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  a long time that we create entities that
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  are going to outlive you, my love, to outlive
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  you, to outlive your kids, so that you have got the
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  strongest entity on the planet. So
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  you could set it up yourself and try and fail a million times or
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  you could just get epic legends like us to do it for you because really
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  I don't see any other option for you, sorry. Now how do
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  the two entities work together once And who
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  do we register with? Well, first of all, we register with ASIC, because
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  ASIC gives us our ACN and our ABN. And if you're in another country,
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  then we help you with your regulatory bodies. Then we set
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  up, and Australia is just one of the countries that's got a lot of processes. Not
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  every country is like that. New Zealand, Canada, not all
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  countries are like that. So then we set up with ASIC, then
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  we set up with the ACNC and that is a very long process.
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  It takes 20 weeks because so many people are setting up charities this
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  year. But you know what, last year it only took like eight weeks. How
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  many more people are getting charities? Everybody's doing it. Everybody's doing it.
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  If you're not doing it, everybody else is doing it. So it takes
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  20 weeks with that. And then after that, then
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  it takes about two months to get your ATO endorsements as well for
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  DGR status so that people can pay you donations and you can
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  give them tax exemptions. Not tax exemptions, but deductible gift receipts, right?
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  Lit. Awesome. Now, how do these two entities work
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  together when they're both up and running? They don't. They're
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  separate, completely separate entities. However, if
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  your unincorporated association was going to
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  go for a grant or some corporate funding or
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  something like that, a government grant, and it
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  needed to be sponsored by an incorporated entity
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  because this one's unincorporated. Unincorporated just means that it's
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  unincorporated. It's got its own self-governance rather than
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  it being governed by the ATO, which is fully legal and compliant. It's
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  okay. Because it's an unincorporated private entity, it means
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  that sometimes when you're going for a grant, it needs to
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  have a public representative. So your CLG,
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  your company limited by guarantee, can big brother this guy, which
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  is awesome. So it can sponsor it.
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  We call it auspicing, okay? That's what the government calls it, auspicing.
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  But just for ease and flow, let's just call it sponsoring.
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  So this guy will piggyback your unincorporated association
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  so that it can get the grants and the funding for this guy. to
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  be able to go and deliver the community event that you want to create,
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  because this guy's a community service organisation and the CLG charity
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  is a public registered charity, so they're different entities. So that's how they
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  can work together. They can also work together if,
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  let's say you're working on one amazing project. Let's
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  say you're building an orphanage, okay? And you are
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  going to be having funds coming in from the government. They're going to go into
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  your CLG so that the CLG can then deliver more, like
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  create a cultural centre, create a build, create the orphanage, actually
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  build the orphanage for your charity, right? But then you
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  might do community service work where funds go into your unincorporated
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  association and the unincorporated association also pays
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  for helping the charity get up and running. Or it might also pay
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  for people to come and live there. It might pay for the food of
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  the children, clothing, any of those sustenance. Sustenance
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  means lifestyle. So it can pay for any of the sustenance that is
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  needed for the community. So that's how they sort of work together,
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  but they don't work together at the same time. Does that make sense? It's like
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  saying, how do these two neighbours work together? Well, they don't work together. They
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  just live next door to each other, but sometimes they have common goals. That's
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  pretty much what it's like. Now, when does somebody only need one?
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  Let me ponder this one. Funding, grants or donations, then
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  they might just need an unincorporated association, a private members association. So
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  let's say you were just servicing the community and you had services
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  that were coming in, like revenue that was coming in, contributions that
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  were coming in. Sorry, we like to call them contributions in the unincorporated space.
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  contributions are coming in and then you're able to provide service
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  to your community. And you just want to do that and you never
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  want to own assets in your name, you never want to own assets, you
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  never want to own assets that need to be owned in a name. So what I
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  mean by that is like let's say you want to buy it, your organisation saves off
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  enough money and it wants to purchase a house outright. Well
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  you can do that, that's awesome. However it will need to be in
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  somebody's name who's in the public sector. Now, if you want it in your
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  name, you can do that, but then there's lots of taxes that are incurred from
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  that, yuck. So why wouldn't you have it in a CLG's name
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  so this guy could pay for it and the CLG can put it
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  in its name so then it's, there is none of those taxes incurred and it can
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  actually go to then support the community and any of the investments that
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  you want to support for your charity. So
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  that's why you'd only need this guy. You could just have a charity as
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  well if you wanted to not have any
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  sustenance provided to you or your community through your unincorporated association
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  and not have any of lifestyle needs be met of
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  the founders. So you could have your CLG If
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  it runs by itself, it's similar that you would pay director's
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  fees or director's wages, sorry, to your directors and
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  your directors would then pay income tax and do all of the normal things. So,
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  can you read between the lines? I don't know, probably need both because
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  they're awesome and they both have completely different things that
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  they do because of course you want to have
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  assets in your organisation, you want to have properties, you
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  want to have stocks, shares, crypto, you want to have a massive diversification
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  of investments because that is a smart way to
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  protect yourself and your future generations and your community in
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  the future and your mission and your purpose. So that's why you would have this
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  guy. And then this guy, sustenance, very important. And
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  then also for your community service work, which is also
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  vitally important. So, some people get one,
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  generally only the people that have already got one set up. So, that's when
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  you would only need one, rarely. Now, which one did I start first
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  and why? The reason that I started with an unincorporated
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  association many, many, like two decades ago
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  was because that was what I knew. I was I was fighting the
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  system. I was fighting hard. I
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  was all for freedom! And I thought
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  that freedom meant just being outside of the system and
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  being private and having nothing to do with the system and that's how we're gonna change everything
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  because we're gonna change the system by being outside of it. Well,
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  let me tell you, two decades later, nothing changed. All
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  I saw was friends of mine going to jail, getting taken away in
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  paddy wagons, And believe me, we created no systemic change.
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  And do you know how that felt in my soul? Like I was dying. And
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  then I realized when somebody dubbed me into the ATO, thank
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  you so much to you for dubbing me into the ATO for
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  all of these claims against me. okay, you know, I studied legislation, so
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  it all worked out very, very well. And it was actually during this
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  process of being dubbed into the ATO that the ATO were the ones that
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  actually said to me, well, upon my counterclaim, because
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  they asked me for funds that they believed that I hadn't
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  paid, which was not true. And when I told them that I
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  was actually running a not-for-profit and I was doing amazing work and that they should pay
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  me, they said, look, we personally can't pay you, but we'll put you in touch with
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  this part of the council and these people and go and speak to them because they can definitely
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  support you in the work that you're doing. Because what you're doing is tickety-boo, you
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  know? So, because what we do on our land is a lot.
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  We've helped homeless people for the past seven years. Anyway, I could go on and on and
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  on and on. environmental, humanitarian work. We do all of it in our
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  organisation and it lights my heart up so much
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  and I honestly hope that you get to live your
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  purpose and live all of your passions and your missions because they
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  are addictive, they are so helpful for you and
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  for so many people. Like what we're doing, oh my god, I
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  just want to do a whole episode on just what we're doing because it's so awesome. But anyway, we're
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  not going to do that. Come to a retreat. The retreats are much better. If you want to
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  know more about it, you can join us at our retreats. The link might
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  be in the bio. If you're lucky, there's not many spaces. That's why you never
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  hear about them. So I digress. I went on a tangent. That's why I
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  set up the PMA first, because I only knew about the unincorporated associations.
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  I didn't want to have anything to do with the system. We were like helping. It
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  was a time, let me tell you, I'm not going to tell you all the things that we were doing back then. legal
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  amazing things but finding out a lot of information when you know
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  the internet had only just come out. So everything was open source back then and we found
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  out everything about the government and all of these entities. It's
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  definitely not online anymore but everything used to be. So
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  that's why I set up the Unincorporated Association first and that's why I
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  set up the CLG after because I found out that I could get
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  a lot of support from the government in the things that I wanted to do
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  and I didn't need to fight them anymore that they were actually there to support
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  me in my mission and that the government, their currency
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  is our creativity and that's why creativity is not taught
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  as much as it used to be because when we are creative minded we
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  actually are limitless. We can do and create more
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  things and the government will pay us for that but we
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  never knew because at the moment if we're not creating the creative stuff
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  than other corporations are and they're just funding themselves. So
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  we actually get to be funded by the government too. So believe me
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  my love, your creativity, your intuitiveness, your
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  ideas are currency and the government is willing
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  to pay you for them. So if you've got more questions and we haven't answered
• 14:40
  enough and you want to dive deeper, then we've got freebies for you. There's PDFs, there's
• 14:43
  a webinar. They're awesome, guys. Like they are like 20 years
• 14:47
  of research compiled into a like tiny little jumbo mumbo for
• 14:51
  you to be able to download and watch now. So get into
• 14:54
  that. And if you are ready to move forward, if you're like, you know what, I
• 14:58
  am wanting to do this. Oh my gosh, I've been waiting for this. This is the missing link. Because
• 15:01
  believe me, it's the missing link. Then book a call. What are you waiting
• 15:04
  for? There is nothing stopping you except for yourself. So
• 15:08
  please jump into wherever you need to jump into right now, whether
• 15:12
  it's below, whether it's a link, and get on a call with
• 15:15
  us. Book in with me and my team. We are here to support you to
• 15:19
  live your greatest life ever. It will be
• 15:22
  your missing link. It will change your life forever. So Book that
• 15:25
  call. We can't wait to hear from you. And if you're not ready, click
• 15:29
  in the other things. They're awesome too. And I just want to say thank you so
• 15:32
  much for being on this episode with me. I really hope this
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  has given you more awareness around what's possible for you and
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  that it helps you to move forward, that it helps you to go from where you are
• 15:42
  now being stuck or thinking that the system's against you or any of those things
• 15:46
  to actually taking action because nothing's holding you
• 15:49
  back, my love. Nothing's holding you back. Take the time now,
• 15:52
  move forward. I am so grateful to have shared this time
• 15:56
  and space with you. I'm really honoured that you spent time with