The recent case of Women’s Life Centre Inc and Commissioner of the Australian Charities and Not-for-profits Commission (Taxation) [2021] in the Administrative Appeals Tribunal on 12 March 2021 dealt with the characterisation process of a Public Benevolent Institution (PBI).

This case concerned an appeal of a decision made by the ACNC in relation to the registration of a charity. The charity was registered under the sub-types of: (i) advancing health (subtype item (1)); and (ii) advancing social or public welfare (subtype item (3)) [1]. The ACNC however, had declined to register the charity as a public benevolent institution (subtype item (14)), bringing light to this appeal.

What is the importance of being registered as a public benevolent institution (PBI)? You can read more about this is on our earlier insight: Public Benevolent Institutions: When is a charity benevolent? | Birchgrove Legal

The Tribunal stated[2]:

Our task is essentially one of characterisation. We have to determine whether, at the relevant time, WLC answered the description of a public benevolent institution. That expression is not defined in the ACNC Act (or in the ITAA 1997, for that matter), but it has a specific and well-understood meaning at common law.

There was consensus that the charity was both “public” and an “institution”; however, what was not agreed was whether or not the charity was “benevolent”.

The case law referred a benevolent organisation as one “… which provides relief for those who are sick, suffering, helpless or in distress or subject to misfortune or to the disabilities of the aged or the young.[3]

The Tribunal emphasised that an organisation’s character and purpose can be divined from the “objects and practice of the particular institution”; that is, a charity’s governing documents as well as their activities are observed when determining its main character and purpose.

It was determined that characterising a charity as a public benevolent institution also requires satisfaction that any other purpose of the charity is ancillary to the main purpose of benevolence. If this main purpose is not identified, with another sufficiently important purpose existing, the charity may not qualify as a public benevolent institution.

The Tribunal noted [at paragraph 32] citing various authorities:

The characterisation process requires that we consider the main purpose because an organisation might have a number of purposes that are ancillary to its main purpose or objective. For example, it might have to engage in fund-raising activities or make investments that will facilitate the achievement of the main purpose of providing benevolent relief. Provided we are satisfied those other purposes are genuinely ancillary to the main purpose of benevolence, that will not be an issue. But if we are not satisfied benevolence relating to an identified need is the main purpose – because one of the supposedly ancillary purposes has effectively become an end in itself, or because there is evidence which suggests another sufficiently important purpose is present – then the applicant may not qualify as a public benevolent institution. As Handley JA explained in Maclean Shire Council v Nungera Co-operative Society Ltd (1994) 84 LGERA 139:[16]

It is well-established that the existence of such independent and collateral objects and powers can result in an institution or association losing some status it would otherwise possess such as being charitable, religious, benevolent or scientific.

The Tribunal also noted that the applicant (ie the charity) bears the evidentiary onus of establishing the existence of its benevolent purpose.

Ultimately the Tribunal found that the applicant charity was not appropriately characterised as benevolent as:

It is difficult to be confident all or even most of the women who use the services will experience the sort of unmet need – that is, poverty, distress, suffering and/or misfortune – referred to in Perpetual Trustees and Cairnmillar. Second, even if we assume many women experiencing a ‘crisis pregnancy’ also have an unmet need of the kind referred to in those cases, the services provided by WLC do not appear to be precisely targeted towards providing relief to those individuals, as opposed to pregnant women more generally. The services appear to be available to all women who ask for assistance, including pregnant women who might simply be feeling unease or uncertainty. The lack of targeting would appear to be a problem for the reasons explained by Priestly JA in the Australian Council of Social Services case.[4]

If you are unsure about whether or not your organisation is appropriately characterised as a Public Benevolent Institution (PBI), of if any questions arise from this case, please get in touch for a confidential discussion with Birchgrove Legal NFP Team today on (02) 9018 1067.

[1] Section 25-5(5) of the Australian Charities and Not-for-profits Commission Act 2012

[2] At paragraph 6.

[3] Commissioner of Pay-roll Tax (Vic) v Cairnmillar Institute (1990) 90 ATC 4752

[4] At paragraph 57

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