The impact of the Global Citizen decision limited to similar organisations
The Australian Charities and Not-for-profits Commission (ACNC) has issued its statement on the impact of the Administrative Appeal Tribunal’s decision in Global Citizen Ltd and Commissioner of the Australian Charities and Not-for-profits Commission [2021] AATA 3313.
Background to the Global Citizen decision
In this case, the Tribunal considered whether Global Citizen was entitled to registration as a public benevolent institution (PBI) which, in turn, would entitle it to registration by the Australian Tax Office as a deductible gift recipient (DGR). DGR endorsement can be an important tool for charities in raising the funds they need to provide their charitable services as it entitles donors to a tax deduction for eligible donations and allows a charity to receive funds from public ancillary funds that can only distribute their income and/or capital to certain DGRs, including PBIs.
The ACNC Commissioner argued that Global Citizen was not eligible to be registered as a PBI for the following reasons:
- it had an independent purpose, or purposes, of education and/or advocacy that prevented it from being a PBI; and
- it did not provide relief directly, or through related entities, to those in need, preventing it from being a PBI.
However, the Tribunal was satisfied that Global Citizen is organised for the purpose of relieving poverty.
ACNC’s view on the definition of ‘main’ benevolent purposes
The Commissioner’s Interpretation Statement: Public Benevolent Institutions 2016/03 specifies that the provision of benevolent relief must be a PBI’s main purpose, however, it may have non-benevolent activities provided they are incidental or ancillary to its main purpose.
An activity is not considered incidental or ancillary if it is entirely independent of the main benevolent purpose – that is, if it is an end in itself; of substance in its own right; or is not intended to further benevolent relief.
The Commissioner is of the view that an organisation cannot be “part PBI” – its purpose is either to provide benevolent relief, or it is not. The existence of independent activities that are not of a benevolent nature (or are not ancillary to the charity’s main benevolent purpose) will operate to deny it status as a PBI.
Tribunal’s statements on the definition of ‘main’ benevolent purposes
In reaching its decision, the Tribunal made a number of statements about the meaning of PBI in the current context. In particular, the Tribunal expressed the position that the ordinary meaning of ‘main’ in relation to an object or purpose does not preclude an entity from having other objects or purposes, provided the benevolent purpose is predominant.
In considering the relevant case law, the Tribunal determined that the ACNC Commissioner’s current conception of ‘main’ purpose is derived from previous cases involving the determination of charitable status rather than PBI registration, and that these were two different considerations. The Tribunal said that just because a charity must have exclusively charitable purposes does not mean a PBI must have exclusively benevolent purposes. The Tribunal indicated its analysis of the authorities suggests an ‘exclusivity of purpose’ test should not apply in relation to PBIs.
Despite these comments, unfortunately the Tribunal did not reach a concluded view on the meaning of the term ‘main’ purposes as it determined that Global Citizen had only one purpose, so it was not necessary to do so.
ACNC’s view on the impact of the decision
In its recent impact statement, the ACNC did not address the Tribunal’s statements about the definition of ‘main’ purposes in detail. The ACNC has indicated that the decision does not result in a change to its view of the definition of ‘main’ purposes as set out in the Commissioner’s Interpretation Statement.
The ACNC confirmed that entities that undertake advocacy and educational activities towards specific aid projects, and operate within a network of entities providing relief, may now be entitled to registration as a PBI as a result of the Tribunal’s decision.
The ACNC’s impact statement also addressed the Tribunal’s comments about the provision of benevolent relief indirectly, through other organisations, and confirmed there is likely to be a spectrum and the activities of an organisation may be too remote to determine that the entity is ‘organised’ for, or ‘concerned in’ or ‘promoting’ the relief of poverty or distress.
What does this mean for charities?
As a result of the ACNC’s impact statement there is unlikely to be a flood of organisations now applying for PBI registration that were not previously eligible. However, if your organisation’s activities include advocacy or education in a collaborative effort with other organisations to provide benevolent relief, you should seek advice about its eligibility for PBI registration.
You can read more about the background to this case and the Tribunal’s decision in our article here.
This publication was authored by Hannah Rose and is ©For Purpose Advisory. It is for general guidance only and any opinions expressed are the opinions of the author. The content and any links are current as at the date it was published and For Purpose Advisory takes no responsibility for any changes to the links or accuracy of the content. Legal advice should be sought before taking action in relation to any specific issues mentioned in this publication.
