NSW Non-government Schools Not For Profit Guidelines

Part B1: Not for profit requirements – Operation of the school

Part B summary

The Education Act authorises the Minister to provide funding to NSW non-government schools to or for the benefit of non-government school children. To be eligible for this funding, a school must not operate for profit.

‘Records to demonstrate compliance’ provide examples of relevant records that schools may maintain to demonstrate compliance with the not for profit requirements. It is not intended to be a prescriptive or exhaustive list.

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B1.1 School assets, income and payments must be used for the operation of the school

A school operates for profit if any of the proprietor’s assets (relating to the school) or the proprietor’s income (arising from the operation of the school) is used for any purpose other than for the operation of the school. A school will also operate for profit if it makes a payment for property, goods or services that are not required for the operation of the school (Section 83C(2)(a) and Section 83C(2)(b)(ii) of the Education Act).

The expression ‘operation of the school’ is a broad term to encompass the wide range of contexts and operational approaches of schools. The operation of the school includes:

the delivery of education to students of the school
the administration of the school.

Whether the use of school assets or income is for the purpose of ‘the operation of the school’ or whether property, goods or services are ‘required for the operation of the school’ will depend on the circumstances of a particular matter. Information on how schools can demonstrate that the use of assets, income and payments are for the operation of the school can be found under Part D of these Guidelines.

A note on ‘required’ for the operation of the school

The expression ‘required for the operation of the school’ is generally taken to mean property, goods or services which are purchased by a school for its operations or to meet the educational needs of its students. What is considered ‘required’ may vary depending on the specific circumstances of a school and the particular educational purpose it serves.

Educational purpose

Schools operate with an educational purpose. Use of school assets, income or payments made for property, goods or services that are for the purpose of fulfilling a school’s educational purpose and that benefit the education of students at the school can generally be regarded as being for the operation of the school.

Records to demonstrate compliance

Records (including decisions and rationale) demonstrating how the relevant use of assets or income is for the purpose of the operation of the school.
School governing documents (for example the school’s constitution) which set out the educational purpose of the school.
Approved school governing body minutes and reports to support the relevant use of school assets or income (as required).

Note: This list is only a guide. It is not intended to be exhaustive or prescriptive. For further detail read our section on Records to demonstrate compliance.

Schools in systems

In advising the Minister on compliance matters, the Advisory Committee and NESA have regard to the fact that many NSW schools are funded through and operate within established and recognised Approved System Authorities within the meaning of the Australian Education Act 2013 (Cth). In these common circumstances, use of school income, and assets and payments for property, goods and services are necessarily applied both within and across individual school entities, in fulfilling each school’s educational purpose.

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