The purposes for which a charity operates are among the most important issues over which the ACNC can choose to review and take action against an organisation. In this Insight, we explore the importance of “Charity Purpose” and why it is important to amend your Governing Document in case your purpose changes.
As mentioned in a previous article (here) the ACNC is targeting the compliance of older charities – particularly those registered before 3 December 2012. To ensure that you do not come under scrutiny for your charitable purposes – it may be time that your charity’s purposes were reviewed.
What are charitable purposes?
All charities registered with the ACNC must have a charitable purpose. A charity may have one or more charitable purposes which are typically set out in the charity’s governing document. A charitable purpose is the reason a charity has been set up, and what it’s activities work towards achieving. This purpose must be pursued by the charity on a daily basis. This also means that all funds and assets of the charity must be applied solely towards furthering the charity’s purposes.
The Charities Act 2013 (Cth) lists twelve charitable purposes under section 12(1):
- advancing health
- advancing education
- advancing social or public welfare
- advancing religion
- advancing culture
- promoting reconciliation, mutual respect and tolerance between groups of individuals that are in Australia
- promoting or protecting human rights
- advancing the security or safety of Australia or the Australian public
- preventing or relieving the suffering of animals
- advancing the natural environment
- promoting or opposing a change to any matter established by law, policy or practice in the Commonwealth, a state, a territory or another country (where that change furthers or opposes one or more of the purposes above), and
- other similar purposes ‘beneficial to the general public’ (a general category).
Why is it important to get it right?
The importance of your charitable purposes should not be understated. It is critical for your charity to get it’s purposes right, and to stick to them. This is because your charitable purposes are directly aligned with compliance of Governance Standard 1.
This Standard requires your charity to:
- Set up as a not-for-profit with a charitable purpose; and
- Run as a not-for-profit and work towards that charitable purpose.
Therefore, if the ACNC discovers that your activities have not been pursued to further your charity’s purposes, then your charity could be found in breach of Governance Standard 1.
What can you do?
1. If you are in the process of registering your charity with the ACNC for the first time – thoroughly review and ensure your intended purposes are:
- Charitable; and
- Directed towards what your charity intends to achieve/pursue on a daily basis.
At this point, do not include purposes which reflect a future goal of the charity;
2. If you are currently registered however you are changing your activities, object or mission – you must immediately amend your governing document to reflect this;
3. If you are currently registered but your charity is doing work outside the scope of its original charitable purposes – then you need to amend your governing document to reflect this.
If you would like to review your charitable purposes with our team at Birchgrove Legal, get in touch by calling (02) 9018 1067.