Australia’s social entrepreneurs and impact investors play a critical role in addressing societal and environmental issues and driving positive change. However, navigating the legal landscape can be daunting, particularly for newcomers and those with limited resources.
Setting up and funding a purpose-driven business is made more complex by the way purpose and profit are separated under Australian law. There is no legal entity designed to combine them. From a legal point of view purpose and profit are at best fellow travellers and more often strange bedfellows.
This makes legal structuring a critical early consideration. But it can be hard for those setting up and running a purpose-driven business, and for their financial supporters – whether investors or grant makers – to find out what their options are.
The Centre for Social Finance Law and PRF have prepared this introductory short guide to legal structures in Australia to fill that gap. We believe that reliable information on legal structures is important for fostering innovation and sustainability within the sector.
The for-purpose sector is diverse, comprising organisations with varying missions, sizes, and operational models. This guide offers a starting point for understanding the options – the legal “building blocks” – and for considering the potential impact of the legal structure.
Understanding the rights and obligations, the opportunities and constraints, and the compliance requirements of the legal “building blocks” is critical to having a legal structure that is a platform for growth and not a quagmire of problems. Ensuring compliance with the structure’s legal requirements is essential for transparency, accountability and public trust, as well as maintaining tax treatment, licensing, registration and other benefits.
The information contained within this document should be considered as general background in the broader decision-making process of all those undertaking or supporting purpose-driven business.1
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1. This Guide is issued subject to the Important Notice at the back of the Guide.
