Following a NSW Government review of Section 83C of the Education Act 1990, changes have been made to the Education Regulation 2017 to clarify how non-government schools can operate as not-for-profit organisations while remaining eligible for government funding.
These changes, which take effect immediately are designed to improve transparency, provide clearer regulatory guidance and better reflect how schools operate in practice. For school leaders, understanding these updates is important to protect funding, strengthen governance and confidently engage with your community.
Navigating new regulatory updates can feel overwhelming. This article breaks down the updates, explains the practical implications and offers guidance on next steps to support confident compliance.
What Is Section 83C?
Section 83C of the Education Act 1990 (NSW) ensures that government funding goes to schools that operate for education, not for profit. Schools must demonstrate that:
- Income and assets are used to support educational purposes, and
- Any surplus is reinvested into the school or approved charitable purposes.
The recent amendments clarify how these rules apply in everyday school operations, reducing uncertainty around common activities.
Key Changes in the Regulation
1. Clearer Examples of Permitted Activities
Schools can now engage in certain activities without being considered “for-profit”:
| Activity | What the update says | Practical tip for school |
| Joint use of facilities | Schools can share resources with other organisations | Document agreements to show educational/community benefit |
| Community use of premises | Low-cost or free access to non-profits is permitted | Track usage and ensure school functions aren’t disrupted |
| Donation of obsolete assets | Donating old equipment does not count as acting for-profit | Keep records of donated assets |
| Charitable fundraising | Funds can be raised and given to ACNC-registered charities | Maintain clear records of amounts and recipients |
2. Redress Payments Clarified
Compensation for past child abuse incidents will not affect your not-for-profit status, even for payments above the National Redress Scheme. This ensures schools can respond compassionately without jeopardising funding.
3. Flexible Compliance & Remediation
The changes allow for proportional responses if a school unintentionally breaches not-for-profit rules, rather than automatic punitive action. This supports schools in quickly addressing issues and staying compliant.
Practical Implications for Schools
For school boards, executives and administrators, these changes are intended to provide greater clarity but they don’t remove the need for strong governance and documentation. In our experience:
- Clearer rules help, but compliance risk remains
Greater clarity around permissible income and asset use should reduce some grey areas. However, schools will still need to carefully assess activities involving donations, commercial income and community programs to ensure they align with not-for-profit requirements.
- Shared-use arrangements need to be structured properly
Joint use of facilities with community groups or third parties can be compliant, but only where arrangements are appropriately documented and reflect fair and reasonable terms. Informal or poorly documented arrangements remain a common risk area we see in the Education Sector.
- Regulatory flexibility doesn’t replace good governance
While remediation pathways may be more flexible, schools should not rely on regulatory discretion. Clear policies, board oversight and proper record-keeping remain critical to protecting funding eligibility.
We expect updated Not-for-Profit Guidelines and supporting materials from NESA in early 2026, which should provide more practical guidance on how these changes will be applied in practice. Schools should treat this as an opportunity to review existing arrangements before the new guidance is released.
Our Advice for School Leaders
Navigating regulatory change doesn’t have to feel like going it alone. Here are a few practical steps schools can take now:
- Review your governance policies with these regulatory clarifications in mind, especially where assets, facilities and fundraising are involved.
- Document Everything – keep simple records for donations, joint use agreements and community programs.
- Prepare for Guidelines – the updated Not-for-Profit Guidelines will provide additional examples so ensure have your governance framework ready to integrate them.
- Connect with trusted advisers early if your school’s operations intersect with areas of ambiguity (e.g. joint use agreements or charitable fundraising).
Our experts work with Education Sector clients to interpret regulatory updates and embed compliant systems that support both operational agility and funding eligibility.
Final Thoughts
Regulatory changes don’t have to be a source of uncertainty. Section 83C amendments clarify rules, reduce ambiguity and allow schools to focus on education, community and student outcomes.
Like death and taxes, regulation change is a certainty, so keep an eye out for changes in other States too.
