Not-For-Profit Requirements (s83C) NSW

School Funding eligibility for NSW Independent schools

Recurrent public funding is provided to schools by governments to help meet the general annual operating expenses of providing school education. 

State and territory governments provide the majority of public funding for government schools, while the Australian Government provides the majority of public funding for non-government schools. 

Schools supplement public funding with funding from other sources, including fees and other contributions from school communities.

Not-for-profit requirement

Only schools that operate not-for-profit are eligible for recurrent government funding from the Australian and NSW governments. 

Currently, the NSW Department of Education (DoE) Non-Government Schools Unit manages the payment of State Government funding to NSW non-government schools and regulates schools compliance with section 83C of the Education Act 1990 (NSW). 

Section 83C of the Education Act 1990 (NSW) sets out requirements for non-government schools operating in NSW about what it means to operate for profit.  

Section 83C specifies that a school operates for profit if the Minister is satisfied that;

a.     any part of its proprietor’s assets (in so far as they relate to the school) or its proprietor’s income (in so far as it arises from the operation of the school) is used for any purpose other than for the operation of the school, or

b.    any payment is made by the school to a related entity or other person or body—

  1. for property, goods, or services at more than reasonable market value, or

  2. for property, goods, or services that are not required for the operation of the school, or

  3. for property, goods, or services that are in any other way unreasonable in the circumstances having regard to the fact that financial assistance is provided to or for the benefit of the school by the Minister, or

c.     any payment is made by the school to a person in connection with the person’s activities as a member of the governing body of the school unless it is in reimbursement for a payment made by the person in connection with the operation of the school.

Asset means an economic resource that may depreciate in value over time.

Income means money or other forms of consideration received periodically from the provision of property, goods or services, investments, gifts, donations, grants, financial assistance or any other gain obtained from the use of a school’s assets or its proprietor’s assets.

Payment means a transaction involving consideration (including non-monetary consideration) and includes a commitment to spend or a liability incurred (whether or not the time for payment has arisen).

2023 Review of section 83C of the Education Act 1990 (NSW)

On 19 October 2023, the NSW Government announced a review of Section 83C, the part of the NSW Education Act that governs expenditure by non-government schools and determines whether a school is operating for profit.

AISNSW responded with a Media Release welcoming the review as an opportunity to return to the scope of the original legislation and move responsibility for compliance to an independent regulator.

The Terms of Reference for the Section 83C Review were approved by the Education Minster and published on 6 November 2023. 

The review of Section 83C is being conducted by Mr Tom Alegounarias, a former Chair of NESA and an experienced education administrator. He will produce a final report with recommendations for the Minster no later than the end of June 2024.

AISNSW, as the peak body for Independent schools in NSW has been meeting with Mr Alegounarias over the course of the review to represent the sector’s views and will continue to advocate for changes to improve the regulation of the not-for-profit requirements under section 83C of the Act.

Stakeholders were invited to make a submission (provide feedback) to the review of Section 83C by 23 February 2024.

AISNSW made a submission to the review, representing the interests of Independent schools. AISNSW made a further supplementary submission to the review on 15 April 2024.

AISNSW will be providing frequent updates on the review as more information is released.

Non-Government Schools Not-for-Profit Regulatory Framework development and Not-for-Profit Guidelines review

Since October 2022, the NSW Department of Education (DoE) Non-Government Schools Unit has been working on revising the current Not-For-Profit Guidelines for Non-Government Schools (last updated in 2019).

On 19 October 2023, the Non-Government Schools Unit released an exposure draft of a proposed new version of the Not-for-Profit Guidelines for Non-Government Schools’.

At the same time, they released an exposure draft of a ‘Regulatory Framework for the Oversight of Financial Assistance Provided to NSW Non-Government Schools’.

These two documents were available for a short public consultation in November 2023. Submissions closed Friday 24 November 2023.

AISNSW made a joint submission with AHISA to represent the views of NSW Independent schools.