IA vs CLG - Choosing The Right Legal Structure For Charitable Organisations

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When setting up a charity, one of the most important early decisions is selecting the appropriate legal structure. This choice affects how the organisation is governed, its legal responsibilities, and its ability to grow and access funding. Two of the most common options are Incorporated Association (IA) and public Company Limited by Guarantee (CLG). However, each structure offers advantages and limitations depending on the charity’s size, scope, funding sources, and regulatory obligations.

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When setting up a charity, one of the most important early decisions is selecting the appropriate legal structure. This choice affects how the organisation is governed, its legal responsibilities, and its ability to grow and access funding. Two of the most common options are Incorporated Association (IA) and public Company Limited by Guarantee (CLG). However, each structure offers advantages and limitations depending on the charity’s size, scope, funding sources, and regulatory obligations.

This article outlines the key features of both structures and factors to assist in deciding which legal structure is most appropriate.

Public Company Limited by Guarantee

A CLG is registered under federal law via the Corporations Act 2001 (Cth) and regulated by the Australian Securities and Investments Commission (ASIC).

Unlike companies limited by shares (i.e. a Pty Ltd or Ltd company), a CLG does not have shareholders or share capital. Instead, it is comprised of members who agree to contribute a predetermined amount (i.e. a guarantee) toward the company’s liabilities in the event it is wound up or becomes insolvent.

Incorporated Association

An IA is a legal entity formed under the relevant state or territory legislation that it is registered in, such as Associations Incorporation Act 2009 (NSW) and is regulated by the relevant state regulator.

CLG vs IA, a comparison

The table below compares some of the key aspects:

Aspect	Company Limited by Guarantee (CLG)	Incorporated Association (IA)
Legal Status	Separate legal entity that can enter into contracts and hold property in its own name	Separate legal entity that can enter into contracts and hold property in its own name
Membership Requirements	Register a minimum of one member.	Dependent on state legislation, but most states require at least five members.
Liability	Liability for members is limited to the guarantee they have provided.	Liability for members is limited to the membership or subscription fee payable.
Management requirements	Must have at least: 3 directors, at least 1 of whom must be a resident in Australia; and 1 company secretary, who may also be a director.	Requirements differ from state to state, however typically at least 3 committee members will be required, with at least 1 being a resident in Australia.
Operations	Can operate anywhere in Australia.	All, if not a majority, of the IA’s operations should be in the state that it has been incorporated into. Interstate operations may be permitted, however may require registration with ASIC.
Reporting requirements	A CLG that is a registered charity only needs to report to the ACNC (with a financial report, if it is medium or large).	An IA that is a registered charity only needs to report to the ACNC (with a financial report, if it is medium or large.
Set Up Costs	ASIC incorporation fees are currently around $500.00.	Registration Fees depend on the relevant regulating body, but are generally around $200.00.
Ongoing Costs	None if registered as a charity, however there may be ongoing costs associated with management and reporting.	None if registered as a charity, however there may be ongoing costs associated with management and reporting.

Key considerations when choosing

While there is a no one-size-fits-all solution, the following considerations can help determine which legal structure will support the charity’s purpose and objectives:

Size and scope of operation: the expected scale of the organisation and whether there are plans to operate locally, regionally, nationally, or internationally. The structure should support both the charity’s present activities and expected future growth.
Costs: costs of setting up and maintaining the structure, including registration fees, annual reporting, audits, and professional services.
Long term objectives: choose a structure that aligns with your long-term vision. Whilst you can migrate to a different legal structure later, the process can be complex and disruptive.

Final thoughts

Choosing the right structure is more than a legal formality—it is a strategic decision that shapes how the charitable organisation operates and grows. Both structures offer limited liability and legal recognition, but they serve different purposes. By understanding the legal structures of IA and CLG, this assists in making informed decisions as to whether the legal structure will meet the organisation’s purpose, current operational needs and long-term objectives.

Not sure whether an IA or CLG is right for your organisation? Speak with our team to explore the best option for your charity’s goals.

Originally published 22 April 2026.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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