Legal Structure and Compliance

Is your toy library set up correctly and meeting your legal obligations? Who is responsible for your toy library? Your toy library may or may not have paid staff or a manager with responsibility for the day-to-day running, however a governing body will be legally accountable for the toy library.

This may be an independent toy library committee of management, a council, or you may be part of a larger organisation like a neighbourhood house which has a board that looks after a number of different activities or services. Whatever governance structure is adopted you need to be clear who is responsible for running your toy library, any legal requirements you must meet, and put in place policies and procedures to help everything run smoothly.

This section helps you to look at governance and legal responsibilities and helps you to identify ways to minimise risk.

Throughout this standard (Getting your house in order) we use the term “committee” but this could be the board or governing body of the toy library.

If you are a community-run toy library this may be the first time that many of your committee members have had legal responsibility for an organisation. It is important to know and follow the requirements of your constitution/rules and the relevant Act.

Not-for-profit VS for-profit organisations

A not‑for‑profit toy library uses any money it makes to support its purpose, instead of giving profits to owners or shareholders. Its goal is to help the community, not to make money for individuals.

If a not‑for‑profit earns extra money, it must put that money back into its services, programs, or mission.

A for-profit toy library operates to generate profit for its owners or shareholders. Profits can be distributed to individuals or investors rather than being reinvested for community benefit.

Toy libraries are typically not-for-profit organisations, meaning their focus is on providing access to play, learning, and community connection rather than making a profit.

Toy Libraries Australia (TLA) is a not-for profit organisation. Additionally, to be a member of Toy Libraries Australia a toy library must be not-for-profit.

Common operational structures

Toy libraries may operate under one of the following structures.

Unincorporated group (informal)

An unincorporated group does not have a separate legal identity. This means:

• Committee members and members may be personally liable for debts or legal action

• An unincorporated toy library will not have obligations under incorporation laws, but they can still have reporting and governance duties under other laws or grants. It is uncommon for toy libraries to be unincorporated and registered with the ACNC, but if this did occur, they would need to meet ACNC governance and annual reporting requirements.

• Unincorporated toy libraries often need an incorporated organisation to “auspice” them.This means another organisation agrees to take on the formal legal responsibilities that the toy library can’t carry itself.

  An auspicing organisation may be needed for things like:

  • Signing legal agreements

  • Holding a lease or rental contract

  • Applying for grants

Incorporated association

An incorporated association is a formal legal entity registered under state or territory law, such as the Associations Incorporation Act in Western Australia.

It is very common for Australian toy libraries operational structure to be an Incorporated association.

Incorporation creates a separate legal identity. This means:

• The association is responsible for debts or legal action

• Individual committee members are generally protected

Incorporated associations can:

• Sign leases

• Open bank accounts (though not all banks require this)

• Apply for more grants

If your toy library is not incorporated, or you are a new toy library, please read more about the reasons to incorporate.

Responsibilities of committee members

Justice Connect has the most up to date advice, in-depth guides and fact sheets about generally running not-for-profit organisations. 

• Responsibilities of the board and committee members 

• Overview of your legal responsibilities 

• Legal protections for Committee Members 

If you are incorporated, it is essential to understand and comply with your constitution or rules, and relevant legislation for your state or territory.

Your constitution and incorporation details

Your constitution, or rules explain how your toy library committee and membership works. It sets out the rules everyone agrees to follow. It usually includes things like:

• How many committee members you need

• Who can be a member and what membership rules apply

• How often you must meet and how meetings are run

• How disagreements or disputes are handled

  
  

Your constitution is the first place to look if you’re ever unsure about what your toy library is allowed to do or how decisions should be made.

All members of your toy library should receive a copy of your constitution (this might be a link to where it is stored) and all committee members should be aware of how to easily find the constitution and know what is in the constitution so that it can be referred to as required.

Most states and territories have online portals where incorporated associations can:

• View their constitution

• Update details of who is on committee and information such as change of contact details

• Submit annual information statements

  
  

Each state has slightly different requirements for what is mandatory to have in your constitution. Associations may operate under the State Model Rules or their own rules, provided all mandatory clauses are included.

Annual General Meeting (AGM)

An Annual General Meeting is a mandatory yearly meeting for incorporated associations.

AGMs are used to:

• Present the annual report and financial report for the previous financial year

• Elect or re-elect committee members

• Review or make key decisions such as membership fees

  
  

All members must be invited and are encouraged to attend. AGMs are an important way to maintain transparency and accountability.

Your constitution will outline:

• Timelines: such as how many days before the meeting date you need to let all your members know about the meeting

• Nomination processes

• Meeting requirements: some toy libraries have attendance at the AGM as a requirement of membership. If this is a requirement of your toy library you should remind members of this when sending out the notice of the meeting.

  
  

Useful resources:

Legal requirements for Annual General Meetings (AGM) 

The ultimate guide to not for profit AGMS 

What needs to be in your annual report 

AGMs are typically the trigger to begin handover of information when roles change. If your maintain an up to date record of key information, it can prevent loss of knowledge with committee departure, or loss over time from long standing committee members.

AGM tips for toy libraries

Many community groups struggle to get members to attend their AGM — and toy libraries are no exception. The good news is that toy libraries across Australia have come up with creative, family‑friendly ways to increase attendance and make AGMs feel less like a chore and more like a community moment.

Here are some ideas that have worked well:

• Make it fun, combine your AGM with a stay and play: some toy libraries run their AGM at the same time as a stay‑and‑play session. Parents can listen to the meeting while their children play nearby.

  A few toy libraries have taken this even further by hiring a cuddly animal farm.(Guinea pig cuddles may or may not be reserved for those listening closely to the President’s report 😉.), a face painter or other local children and families entertainers. This approach helps members feel that coming to the AGM is easy, social and worthwhile.

• Host your AGM online: Many toy libraries with lots of working families find that an online AGM dramatically improves attendance. It allows people to join from home after work, while cooking dinner, or while supervising bedtime. Before choosing an online format, make sure your constitution does not require the AGM to be held “in person.” If online meetings are permitted, a simple Zoom or Teams link can remove many attendance barriers.

• Combine your AGM with another useful activity:

  • Run it immediately before or after a busy borrowing session

  • Combine it with a working bee 

  • Hold it during a volunteer thank‑you morning tea

  This helps families feel the meeting is part of a normal toy library rhythm, not an extra obligation.

• Add food (it helps!): morning tea, pizza night, or a "dessert and decisions" format can make the AGM feel more social and less formal.

• Offer a door prize: A membership extension as a door prize is a great way to encourage attendance (and it often goes to a committee member, so it's also a lovely thank you in advance for their service).

• Offer child-friendly spaces: AGMs are easier for parents when their children are happily occupied.

  Set up:

  • A supervised craft table

  • A simple sensory corner

  • A quiet corner with books

• Make it a celebration, not just a meeting: Members are more likely to attend when it feels meaningful and uplifting. Use the AGM to:

  • Share wins from the past year

  • Announce volunteer thank‑you certificates

  • Reveal “Toy of the Year”

  • Share a few photos or a short video of the year in review

• Keep it short: A clear agenda and well-prepared reports help keep the meeting to 20–30 minutes. Families are far more willing to attend if they know it won’t take all day.

• Take the pressure away to put your hand up on the day: Use technology to accept nominations for roles to be elected prior to the AGM - that way you can say to members that you already have some (hopefully all) of the important roles filled - no-one likes to feel like they might be pressured into taking on a role they don't really want!

• Communication is key, promote the AGM clearly: Send reminders and make sure the message is simple:

  • When is it?

  • How long will it go for?

  • What makes it worth attending?

  • Will kids be welcome?

  
  

Changes to an organisation

Managing change in your toy library is important, and it’s essential to follow the right steps when something significant is happening. Remember! Your constitution is the first place to look if you’re ever unsure about what your toy library is allowed to do or how decisions should be made. It outlines the rules your organisation must follow and will guide you through many common changes.

Some more information and tips about these common changes can be found on the Not-for-Profit Law (Justice Connect) website and the Institute of Community Directors website:

• Changing your organisation’s name 

• Ending an organisation 

• Merging an organisation 

• Insolvency 

If your toy library is considering any of the changes listed above, please contact Toy Libraries Australia on email info@toylibraries.org.au 

Our Member Development team has supported many toy libraries through these transitions and can:

• Share practical advice

• Point you to the right resources

• Connect you with other toy libraries who have been through the same process

• Help you avoid common pitfalls and learn from others’ experiences

You don’t need to navigate these changes alone — we’re here to support you.

Australian Charities and Not-for-profits Commission (ACNC)

The Australian Charities and Not-for-profits Commission is the national regulator of charities. The ACNC registers and regulates how charities meet their obligations, provides guidance and advice, maintains a free, searchable public database of all registered charities.

If you haven’t looked at the ACNC Charity Register for a while, it’s worth taking a moment to explore it: Search for a charity | ACNC . You can try it out by searching for your toy library to check whether it is registered, or by looking up Toy Libraries Australia to see what information is publicly available.

Benefits of ACNC registration for toy libraries

ACNC registration can provide:

• Reduced red tape as ACNC‑registered charities generally follow a national reporting process, which replaces or simplifies many state‑based reporting requirements.

• Financial reporting that meets most state requirements: in most states and territories, your ACNC financial reports will also satisfy the state regulator’s reporting obligations, meaning you only need to complete them once.

• Waived state reporting fees (in most states)

  • Victoria: Incorporated associations registered with the ACNC no longer lodge annual reports with Consumer Affairs Victoria and do not pay the annual fee.

  • Northern Territory: An additional financial report is still required. This is usually submitted to Licensing NT.

• Easier access to not-for-profit discounts: ACNC registration makes it simpler to demonstrate not‑for‑profit status when accessing discounts or exemptions.

  Many providers now ask for ACNC registration before offering charity‑level pricing — including services such as: Canva Pro, Microsoft, and Xero

• More grant opportunities: A growing number of funders require ACNC registration as part of their eligibility criteria, meaning registration can open the door to more grants.

Obligations of ACNC-registered charities

Registered charities must:

• Submit an annual Information Statement (annual, meaning every year....if you are new to committee please check that yours has been submitted)

• Lodge an annual financial report if required

• Maintain charity status

• Notify the ACNC of significant changes

• Keep accurate financial and operational records

• Comply with the ACNC Governance Standards

If your toy library is not registered with ACNC or you are a new toy library, watch this video for Justice Connect's Top tips for applying for charity registration with the ACNC

In 2024-2025, Toy Libraries Australia supported around 50 toy libraries to register with ACNC as part of a bulk submission process, and the Member Development team has experience to support your toy library to get ACNC ready.

Deductible Gift Recipient (DGR) Status

Deductible Gift Recipient (DGR) status is an Australian Taxation Office (ATO) endorsement that allows an organisation to receive tax-deductible donations. It is different from ACNC registration, which recognises an organisation as a charity and regulates governance and reporting; DGR is specifically about donors being able to claim a tax deduction. Toy libraries can apply for DGR endorsement under the “public library” category, which requires meeting specific eligibility criteria, maintaining appropriate governing documents, and complying with additional ATO reporting and oversight obligations. See Further Learning below for our training video.

While DGR can make an organisation more attractive to certain funders and donors, it also brings extra administrative and governance responsibilities. Unless you are a larger toy library seeking substantial numbers of grants that specifically require DGR status, and you have the governance capacity to manage the added compliance, TLA does not recommend DGR for most toy libraries. As Toy Libraries Australia holds DGR1 status, many toy libraries can access grants requiring DGR for eligibility through auspicing arrangements or deductible donations via our GiveNow portal without needing their own DGR endorsement.

Laws

There are a range of laws that your Toy Library may need to stay compliant with.

These links will take you to the Justice Connect website to help you understand them more

●       Discrimination and privacy laws

●       Fundraising and holding events

●       Communications and advertising

●       Entering into contracts

●       Work health and safety laws

●       Understanding the tax landscape