What you need to know
- Only organisations which provide relief for poverty, distress, suffering or misfortune, and specifically direct services to individuals with these needs, will gain public benevolent institution (PBI) status.
- PBI endorsement is necessary for donors to receive income tax deductions on gifts.
- Examination of an organisation's constitution, related documentation and actual activities performed will inform a decision on PBI eligibility.
What you need to do
- Entities must ensure their services are targeted towards providing relief to those actually in need due to poverty, distress, suffering or misfortune.
- Constitutions should be drafted with appropriate wording to reflect the activities performed to maximise the chance of the entity attaining PBI status.
The Administrative Appeals Tribunal (AAT) has addressed the scope of "public benevolent institutions" by denying registration to an organisation providing services to pregnant women.
Facts
The Women's Life Centre Inc (WLC) provides counselling and other services for pregnant women experiencing a 'crisis pregnancy'.
WLC had applied to the Australian Charities and Not-for-profits Commission (the ACNC) for registration under three different charity subtypes: for the purpose of advancing health, for the purpose of advancing social or public welfare and as a public benevolent institution.
The ACNC Commissioner decided WLC was eligible under the first two subtypes but declined eligibility as a PBI. Registration as a PBI would enable WLC to seek endorsement as a deductible gift recipient under section 30-120 of the Income Tax Assessment Act 1997 (Cth). This permits donors to obtain income tax deductions for gifts made to WLC.
The WLC sought review of the Commissioner's objection decision.
Considerations by the Tribunal
In deciding whether WLC could be regarded as a public benevolent institution, the Tribunal focused specifically on the 'benevolent' aspect. The Tribunal engaged in a characterisation process which involved consideration of WLC's main purpose.
Prior cases have established that a benevolent institution must provide relief from poverty, distress, suffering or misfortune. The principal objective in WLC's Constitution is seemingly consistent with this purpose as its principal objective was stated to be to provide relief of poverty, suffering, distress, misfortune, destitution, misfortune or helplessness for pregnant women and mothers of all sections of the public irrespective of race, colour or creed.
As part of the characterisation process, the Tribunal examined the additional objectives contained in the Constitution and the description of the activities in WLC's registration application, which included providing counselling for women facing a 'crisis pregnancy'.
Evidence of the founder's prior activities in the 'pro-life movement' and her aim to provide women with assistance experiencing a 'crisis pregnancy' were also considered. The Tribunal also examined a letter to donors written by the founder which described WLC as an 'apostolate' and assessed WLC in the context of the 'pro-life' ministry.
Decision
The AAT affirmed the ACNC's objection decision that WLC was not a public benevolent institution.
Although the principal objective contained in WLC's constitution was consistent with the aims of a PBI, the Tribunal found that the concept of a 'crisis pregnancy' encompassed activities that went beyond WLC's stated principal objective. Additionally, the donor letter suggested that references to a 'crisis pregnancy' incorporated additional values which were not consistent with the requirements of a public benevolent institution.
The Tribunal found that WLC had not established that the women who used WLC's services were actually in need in the required sense or how those services were directed toward providing relief to those in need. WLC's services were available to all women who sought assistance, including pregnant women who were experiencing uncertainty or unease. Further, the Tribunal found that counsellors did not have the necessary qualifications and experience to address the specific requirements of individuals in need. Counsellors were trained to provide emotional support and assistance of a general nature.
This decision indicates that attaining PBI status is not a simple drafting exercise. It is important to consider the activities and overall objectives of the organisation when seeking PBI registration, and not just the stated purpose in constituent documents.
Author: Geoffrey Mann, Partner.
