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 the NSW Education Standards Authority 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).

AISNSW Not-For-Profit Support Unit

The AISNSW Not-For-Profit Support Unit provides an advisory service for AISNSW Member schools on the way section 83C may be applied in particular contexts (Please note we do not provide legal advice). 

AISNSW Members with Not-for-Profit section 83C enquiries can contact the AISNSW Not-for-Profit Support Unit.

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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. Terms of Reference for the Section 83C Review were published on 6 November 2023, with Mr Tom Alegounarias appointed to conduct the review, .

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

AISNSW made a submission to the review on 23 February 2024, and a further supplementary submission on 15 April 2024.

On 16 August 2024, the review was officially concluded with the release of the final report by the NSW Government. A key recommendation of the review was that the regulatory function for monitoring compliance with s83c be moved from the NSW Department of Education to the NSW Education Standards Authority (NESA). On 22 January 2025 an Administrative Arrangement Order was made to transfer the function to NESA.

AISNSW continues to work closely with NESA and Mr Alegounarias as the recommendations of the report are implemented and will be providing regular updates to schools.

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 2024).

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.