Public benevolent institutions

Australians for Equality Ltd was a charity established in connection with the 2017 marriage equality debate. It registered with the ACNC as a charity with the charity subtype of advancing public debate, which includes promoting or opposing a change to any matter established by law, policy or practice in the Commonwealth, a state, territory or another.

Once same-sex unions were facilitated by Commonwealth legislation, the organisation changed its name to Equality Australia Ltd and also its focus. It pivoted to eliminating discrimination on the grounds of sexual orientation by promoting changes to Australian law to achieve equal marriage rights for same-sex couples.  The constitution was altered to reflect this new focus (don’t change your constitutional purposes or objects without seeking legal advice first).

Equality Australia received funding from ancillary funds (foundations) through another body acting as an auspice for an administrative fee. Ancillary funds are generally restricted to only making grants to organisations that have deductible gift recipient (DGR) status, the most common of which is a public benevolent institution (PBI).  Equality Australia applied to the ACNC to change from a charity with a subtype of advancing public debate to PBI in order to directly receive ancillary fund grants.

There are approximately 33,000 DGRs, of which approximately 11,300 are PBIs. PBIs may also seek other tax concessions such as donation deductibility status and fringe benefits tax exemption, as well various concessions from the State governments.

The ACNC has been systematically reviewing its register of DGR-endorsed charities on a risk basis to confirm their eligibility with special funding from the Government. It aims to review about 2% of the DGR register each year.

The ACNC is also in the process of revising its statement of how they apply the definition of PBI (Commissioner’s Interpretation Sta tement (CIS)), and this is expected to be released at the end of August 2023. Their first draft of the revision CIS was generally disputed in many areas, with a significant divergence of views between the draft and those responding.

The meaning of PBI was first considered by the High Court in 1931, and it has not considered the term since cases in 1942, with some significant cases occurring in the context of the Great Depression or war. For the ACNC, a PBI is a charitable institution with the main purpose of providing benevolent relief to people in need (ACNC PBI CIS 2.1).

The ACNC, in a recent submission to the Productivity Commission on Philanthropy, advised:

:…applications for registration with the Public Benevolent Institution (PBI) subtype can be complicated by the fact that the term Public Benevolent Institution is not defined in legislation. Although the term has been considered judicially and on merits review, there remains an opportunity for further clarification surrounding aspects of the common law definition. Recent consultation on a redraft of the Commissioner’s Interpretation Statement: Public Benevolent Institutions demonstrated differing views within the sector, including advisers to the sector. This can increase the complexity of applications with the PBI subtype and, as mentioned above, can distort behaviour, as PBI is a pathway to DGR status which can significantly impact a charity’s ability to raise funds.” (references omitted)

The ACNC decided that Equality Australia did not qualify to be registered with the PBI subtype on the initial submission and on an internal objection to that decision.

Equality Australia then applied to the Administrative Appeal Tribunal (AAT) for a review of the decision with the assistance of pro bono lawyers and Counsel.

The Tribunal consisted of 3 members, including the Deputy President and 2 lay members. It is a no-cost jurisdiction; this means that a party cannot recover their costs from the other party, even if they are successful.

The Tribunal is confined to looking at Equality Australia at the time of the original decision, but the review was a re-hearing. So, the Tribunal could consider evidence that was not before the ACNC provided the evidence was relevant to determining what was the correct decision at the particular point in time.

The ACNC argued that:

• Equality Australia was conducted to achieve changes to laws and government policies that apply to all LGBTIQ+ people. This does not constitute the direct and immediate relief to people suffering poverty, sickness, destitution, helplessness, misfortune or distress which is required for an entity to be a PBI; and
• Equality Australia’s political advocacy and lobbying activities disqualified it from being a PBI.

All Tribunal members agreed that:

• the argument by the ACNC that Equality Australia was disqualified from being regarded as a public benevolent institution because it engaged in politics was not valid;
• the argument by the ACNC that a public benevolent institution was inevitably limited to providing actual practical relief from (or mitigation of) harm or distress that has already become manifest was not valid. The case authorities confirmed that preventative measures could be appropriate for a PBI;
• it was inappropriate for the term PBI to be fixed in time, and the meaning will alter as its common understanding does; and
• LGBTIQ+ people in Australia are susceptible to and/or experience distress, such as to be persons in need of benevolence.

The issue to be determined by the Tribunal is whether Equality Australia is organised or conducted for or promotes the relief of distress experienced by LGBTIQ+ people in Australia.

Unusually, the Tribunal did not agree on this issue and had differences about the interpretation of the expression ‘public benevolent institution’.

The majority took the view that it was necessary to establish a sufficient connection between the means employed and the benevolent ends.

The majority found after a review of the evidence that Equality Australia was focused on advocacy in furtherance of its goal of changing laws and social practices that were injurious to LGBTQI+ persons. The organisation did not routinely provide support directly to individuals or groups beyond providing referrals, information exchanges and opportunities for connection except where that support was incidental to other activities that were directed to the achievement of its primary mission.  It did not, on the evidence, have the financial or human resources to play such a role.

They noted that while an organisation need not be directly involved in the provision of relief or aid, there must still be a sufficient of connection between the activities of the entity and the benevolent ends it seeks to achieve.

The majority did leave open that later, when the plans of Equality Australia to provide more direct assistance had eventuated after being disrupted by the pandemic, the matter of PBI status could be considered again.

The minority, as noted above, agreed on most issues with the majority but took a different view of the evidence. They found that Equality Australia since its change in focus in 2018, did engage in activities and projects that could appropriately be described as providing benevolent relief.

This finding meant that the minority did not have to consider the issue of sufficient direct relief needed by PBIs and did not express an opinion on the matter.

The minority judgment also included a forensic historical examination of the term PBI in relation to the case authorities and the changing nature of the meaning of the term over the decades. For example, some of the judgments during the Great Depression referred to the concept of PBI dispensing benevolence, which aroused pity and compassion in the average person.  The Tribunal Member commented that this is quite subjective, as not everyone feels compassionate about refugees or other disadvantaged groups, and outdated because it has echoes of welfare and handouts rather than being inclusive about rights, including human rights.

The Tribunal decision has been appealed to the Federal Court of Australia[1].

With the release of a new ACNC view of the meaning of PBI, continuing reviews of PBI status and an impending appeal, this all points to leaders of PBIs being vigilant as to unfolding developments.

[1] Equality Australia Ltd and Commissioner of the Australian Charities and Not-for-profits Commissioner [2023] AATA 2161