The Full Court of the Federal Court recently upheld a majority decision of the Administrative Appeals Tribunal (‘AAT’) rejecting Equality Australia Ltd’s (‘EAL’) application for registration as a Public Benevolent Institution (‘PBI’). The case clarifies the requirements for qualifying as a PBI and offers insight as to when an entity engaging in political advocacy will be eligible to obtain PBI status.
Facts
- EAL is a charity registered under the Australian Charities and Not-for-profits Commission Act 2012 (Cth) (ACNC Act).
- EAL initially focussed on advocating for marriage equality in Australia. Following the legalisation of same sex marriage in 2017, EAL expanded its focus to advocacy with respect to changing laws and social practices that cause distress to LGBTQI+ people.
- In 2020, EAL applied to the Commissioner of the ACNC to be additionally registered as a PBI subtype. The Commissioner refused the application and EAL subsequently appealed the decision to the AAT.
Issue
The AAT was required to consider:
- whether LGBTQI+ persons are in need of the kind of benevolence which is required for PBI eligibility; and
- whether EAL was engaged in activities that provide direct and immediate relief of distress or suffering experienced by those who identify as LGBTQI+.
Decision
All members of the Tribunal found that LGBTQI+ persons face systemic discrimination and constitute a group of people that are in need of benevolence.
The majority noted the expression “public benevolent institution” is undefined such that no individual activity is necessarily determinative. However, it did find that to be considered a PBI, there must be a sufficient connection between the activities of the entity and the benevolent ends it seeks to achieve.
In order to determine whether there was a sufficient connection in the case of EAL, the majority conducted a holistic analysis of the purpose and activities of EAL. It found that EAL was focussed on advocacy in furtherance of its goal of changing laws and practices that caused distress to LGBTQI+ persons.
The majority ultimately found that the kinds of advocacy that EAL were engaged in were “too far removed from the traditional concepts of benevolence”. While EAL did offer direct support to individuals in the LGBTQI+ community, the majority determined this was incidental to its primary focus on advocacy and policy development. It found that advocacy, education and campaigning for legal and social change intended to relieve the distress caused by structural discrimination to LGBTQI+ people was too indirect for EAL to be regarded as organised, conducted or promoted for benevolent relief of the LGBTQI+ community. Therefore, EAL did not establish the sufficiency of connection required for PBI status.
EAL subsequently appealed the majority decision of the Tribunal to the Federal Court. On 5 September 2024, the Full Court issued a judgement dismissing the appeal by EAL against the Tribunal’s decision. The Court found that the Tribunal had not erred in law and that it was open to the Tribunal to decide that EAL was not a PBI.
Key takeaways:
Following the Tribunal’s decision, the ACNC published a revised Commissioner’s Interpretation Statement on PBIs (‘Revised CIS’) in August 2023. The key updates included in the Revised CIS are outlined below.
Advocacy does not automatically preclude PBI status – The Revised CIS provides that political advocacy is not necessarily fatal to achieving PBI status. The ACNC accepts that, in some circumstances, a PBI can engage in advocacy, refering to the case of Global Citizen Ltd v Commissioner of the ACNC [2021] AATA 3313 to support this position. In that case, advocacy aimed at securing government and philanthropic funding for poverty relief projects was deemed consistent with the organisation’s benevolent purpose of relieving poverty. The advocacy must be considered in the context of the purpose of the entity and the other activities it undertakes.
‘Main purpose’ test removed – The previous CSI required a PBI’s ‘main purpose’ to be benevolent relief and for any other purpose to be incidental or ancillary to its purpose of benevolent relief. The ACNC acknowledged that the phrase ‘main purpose’ had caused confusion and removed this reference in the Revised CSI. It now states that a PBI must be ‘organised’, or ‘promoted’ or ‘conducted’ for benevolent relief.
PBIs can charge fees for services – An organisation that charges for its services may be organised, conducted or promoted for benevolent relief. However, eligibility for PBI status will depend upon the nature of the service, the need it intends to relieve, and the fees charged. Depending on the type of benevolent relief that is being conducted or promoted, the fees for services must either be below the market rate or comparable to market rates.
Development assistance – An organisation that provides goods or services to an entire community may be organised, conducted or promoted for benevolent relief if the whole community (or the vast majority of the community) are people in need and the organisation’s activities are directed towards relieving their needs. For example, in developing countries, entire communities may be living in poverty.
Next Steps
Following the Federal Court’s decision, organisations seeking registration as a PBI with the ACNC need to carefully assess whether there is sufficient connection between its activities and the relief it intends to provide.
For further guidance on how the Federal Court’s decision and the Revised CSI may affect your organisation, please reach out to our experienced charity law team.
This Alert is intended as general information only. It does not purport to be comprehensive advice or legal advice. Readers must seek professional advice before acting in relation to these matters.
