About not for profit funding requirements

The requirements

To be eligible for NSW Government financial assistance, a non-government school must not operate for profit. Operating for profit is defined under Section 83C of the Education Act 1990 (NSW). 

A school operates for profit if it: 

• uses school income or assets for purposes other than the operation of the school
• pays for property, goods or services that are:
  • not required for the operation of the school
  • more than the reasonable market value
  • otherwise unreasonable for a school receiving financial assistance
• pays members for their role on the school governing body (except reimbursement to members for payments they have made that are connected with the operation of the school).

The Education Regulation 2026 (NSW) specifies situations where a school may or may not be operating for profit.

Who must comply

Anyone involved in the running of a NSW non-government school needs to:

• be aware of the not for profit requirements
• implement practices that comply with the not for profit requirements in their school.

This includes, but is not limited to, the governing body and school executive.

The NSW Non-government Schools Not For Profit Guidelines

The NSW Non-government Schools Not For Profit Guidelines help schools to comply.

The Guidelines:

• explain the not for profit requirements
• explain what the Minister for Education and Early Learning will consider when deciding whether a school is operating for profit
• guide schools on how to meet their obligations
• provide advice on the documents, policies and procedures schools can maintain to show compliance
• support transparent and accountable use of income and assets.

Updates to the Guidelines

The updated Guidelines were released on 17 April and are now in effect.

Schools should use the updated Guidelines alongside the Act and Regulation. Want to know more?

Read the official notice.

Learn more about changes to NFP regulation.

Minister's role

Under the Act, the Minister must not provide financial assistance to a non-government school that operates for profit. The Act sets out a range of regulatory responses the Minister can use to address for profit and non-compliant activity. Some of these regulatory responses are administered by NESA under delegation.

NESA’s role

At NESA, we monitor and assess schools' compliance with the not for profit requirements by:

• making preliminary enquiries into matters
• conducting investigations
• issuing directions
• coordinating audits of financial affairs.

We also provide:

• resources and advice to schools
• secretariat support to the Non-Government Schools Not-for-profit Advisory Committee
• advice to the Minister on regulatory policy and decision making.

The Advisory Committee's role

The Advisory Committee:

• provides recommendations and advice to the Minister on:
  • schools' compliance with not for profit requirements
  • the types of regulatory action the Minister may take
  • issuing guidelines
• provides advice to NESA before we:
  • issue directions
  • undertake audits of financial affairs
  • commence investigations
• works with NESA to develop advice and support materials for schools.