For a charity to qualify as a public benevolent institution, several legally established criteria must be met, writes Australian Charities and Not-for-profits Commission Assistant Commissioner General Counsel Anna Longley.
What makes a charity a public benevolent institution (PBI)? Why does it matter? These are common questions we receive at the ACNC. There are approximately 60,000 charities on our Charity Register, and around 14,000 are PBIs. It is the directors’ responsibility to ensure a charity maintains entitlement to registration and part of that is ensuring it is registered under the correct subtype and fulfilling the charitable purpose associated with its subtype.
There are significant benefits for an entity once it is registered as a charity. For example, charities can access income tax and GST concessions. Some charities are eligible for deductible gift recipient (DGR) endorsement and donations to them are tax-deductible.
It is not mandatory for an entity to nominate a subtype when applying for charity registration, but most do. Subtype categories reflect an entity’s character or charitable purpose, the reason it has been set up or what its activities aim to achieve, such as “advancing health”. A PBI is one of 14 subtypes and brings additional tax and other benefits when compared with other charity subtypes. Its main purpose is to relieve poverty or distress, to provide benevolent relief for people in need. Hospitals, hospices, disability support services, aged care services, providers of low-cost rental or subsidised housing are charities that could be registered as PBIs.
Some of the words may seem old-fashioned, but they are still used in charity law, which has developed over hundreds of years. “Public benevolent institution” is not defined in the Australian Charities and Not-for-profits Commission Act 2012 (Cth) (ACNC Act), so we must turn to legal decisions to clarify the definition.
Decisions informing the ACNC position
The High Court in Perpetual Trustee Co Ltd v Federal Commissioner of Taxation (1931) found that a PBI is “an institution organised for the relief of poverty, sickness, destitution or helplessness”. A number of subsequent cases have further informed our interpretation of PBI. More recently, the Federal Court in Commissioner of Taxation v Hunger Project Australia (2014) affirmed that the meaning is not fixed and may develop over time.
In 2021, three cases were decided in respect of entities that sought charity registration with a PBI subtype. The first case was decided in the Administrative Appeals Tribunal (AAT) in March 2021, in the matter of Women’s Life Centre Inc v Commissioner of the Australian Charities and Not-for-profits Commission (2021). It was central to the tribunal’s decision that services provided by charities registered as a PBI need to be targeted towards those people in our community experiencing serious poverty, distress or misfortune, for whom the relief provided by a PBI may be vital. As the tribunal found that the charity provided services to pregnant women generally, not just those in need of relief, it upheld the Commissioner’s decision to decline an application for registration as a PBI, although the charity continues to be registered under two other subtypes.
An interlocutory decision of the Federal Court handed down in April 2021, highlighted that there is a continuum along which an entity’s activities can be viewed. In Australians for Indigenous Constitutional Recognition v Commissioner of the Australian Charities and Not-for-profits Commission (2021), the court noted there must be a degree of directness between a PBI’s activities and the relief of poverty. In complex cases like this one, it is this degree of directness that we have to assess.
To round out a busy 2021, the AAT made a ruling in September, in Global Citizen Limited v Commissioner of the Australian Charities and Not- for-profits Commission (2021). The tribunal found on the facts as put to it that the charity was entitled to registration as a PBI, as its activities were directed to the sole purpose of the relief of global poverty. The tribunal found that through the charity’s network and its collaboration with other entities in Australia and overseas, “monies are directed to international organisations that are involved in the direct delivery of aid and assistance in the relief of poverty”.
The Commissioner’s Interpretation Statement on PBIs provides guidance on the ACNC Commissioner’s view on the meaning of PBI within the ACNC Act. This is a current document, although we are reviewing it to ensure it is contemporary and encompasses relevant case law.
Following key decisions by a court or tribunal, we will publish a statement on our website, detailing the facts of each matter, the salient points and any implications for regulation of the sector. Where it is necessary, we will also update guidance and resources for charities to ensure clarity for applicant entities and to be transparent about the way we regulate Australia’s vital charity sector.
More information is available in the ACNC impact statements.
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