Restrictions on money-making activities
What you can, and can’t do
An incorporated society is a non-profit organisation. Under the Incorporated Societies Act 1908 a society is not permitted to make a profit with the intention of passing it on to some, or all, of its members.
A society may, however, make money where it will be used to help achieve the society’s 'objects' or purpose (for example, through fees or fundraising activities).
The Act lists some specific examples of money-making activities that are permissable. These include:
- A society’s property can be divided among its members when the society is dissolved.
- Members of a society can receive a salary as an employee or officer of the society.
- Members of the society can compete with each other at ‘members only’ society events for trophies or prizes, other than money prizes.
- A member may benefit personally where they would have been entitled to the financial gain whether or not they were a member of the society.
- Where an incorporated society exists to regulate an industry or trade, or to promote better practice, funds raised by the body can be put toward this purpose. The society cannot, however, take part in the industry or trade.
If a society is found to be engaging in operations involving financial gain, both the society and its members can be prosecuted and fined. In addition, all members involved may be held personally liable for any debts and obligations incurred by the society.
