AAT determines Global Citizen Limited to be a PBI

The Administrative Appeals Tribunal (AAT) has overturned a decision of the Commissioner of the Australian Charities and Not-for-profits Commission (ACNC) to disallow Global Citizen Limited's (GCL) objection to the Commissioner's earlier decision to reject GCL's application for registration as a Public Benevolent Institution (PBI).

The AAT confirmed that a PBI may provide benevolent relief indirectly, and has suggested that an entity need not have exclusively benevolent purposes to be a PBI.

What you need to know

• Lobbying governments and philanthropists to secure specific commitments to projects can constitute benevolent relief.
• While PBIs can provide relief indirectly, it may be the case that an entity's activities may be too remote or abstract to constitute the provision of relief.
• There is still an open question as to whether advocating for changes in government policy is concrete enough to amount to relieving poverty.

Background to the decision

GCL is a not-for-profit (NFP), the aim of which is to end extreme global poverty by 2030.

GCL was registered as a charity by the ACNC with the subtype of advancing education. In August 2018, GCL applied to instead be registered with the subtype PBI, as a PBI is entitled to be endorsed as a deductible gift recipient (DGR). As a DGR, GCL would be eligible to apply for and receive grants from ancillary funds. This application was eventually refused by the Commissioner of the ACNC in September 2019.

GCL objected to this decision in November 2019 and the Commissioner disallowed the objection in February 2020. GCL subsequently applied to the Administrative Appeals Tribunal (AAT) to seek review of the Commissioner's objection decision.

Before the AAT, the Commissioner submitted that GCL was not eligible to be registered as a PBI on the grounds that:

• GCL has an independent purpose, or purposes, of education and/or advocacy and is therefore prevented from being a PBI (the purpose sub-issue); and
• GCL does not provide relief directly or through related entities to those in need, which further prevents it from being registered as a PBI (the direct relief sub-issue).

In response, GCL submitted, broadly, that:

• its only purpose was the provision of benevolent relief of poverty, sickness, destitution, distress, suffering and helplessness to persons in need, with a particular emphasis on bringing an end to extreme poverty globally; and
• there is no requirement for a PBI's activities to be demonstrated to provide direct, causal relief to people in need.

The AAT found in favour of GCL and accepted that GCL is an entity that is "organised for", or "conducted for" or that "promotes" the relief of poverty.

GCL's operations

The AAT spent some time canvassing the operations, both past and current, of GCL in its decision. GCL's predecessor, the Global Poverty Charitable Trust (Trust), was established in 2008 with the object of raising awareness and achieving policy change for the relief of poverty. The Trust was subsequently wound up in 2010, at which point GCL was incorporated. After orchestrating the 2011 End of Polio Concert in Perth, which coincided with the Commonwealth Heads of Government meeting, and which culminated in the leaders of Australia, the UK, Canada, Pakistan and Nigeria pledging AU $118 million of additional funds for polio eradication, GCL's co-founders expanded its operations into an international network (GC Network). The network was centrally administered by Global Poverty Project Inc (GPP US), GCL's parent entity and a public charity in the United States.

In 2015, the United Nations launched its Sustainable Development Goals (SDGs). The launch coincided with the Global Citizen Festival, an event run by GC US since 2012, and the UN Secretary General appeared at the Festival to celebrate the launch.

The entities within the GC Network, including GCL, have embraced the SDGs as a framework for action targeted towards eliminating extreme poverty. The entities work together under a model (GC Model) that builds on previous campaigns to raise awareness, and that uses that awareness to secure government, corporate and philanthropist funding.

Purpose sub-issue

Previous case law concerning purpose

The AAT considered a number of High Court cases concerning the meaning of a PBI, including the case of Perpetual Trustee Co Ltd v Federal Commissioner of Taxation. The AAT noted that the High Court in that case did not refer to purpose, but formulated the test for whether or not an entity is a PBI in terms of whether the entity is "organised for relief of poverty, sickness, destitution or helplessness", or is "conducted for" the relief of poverty. In the subsequent case of Maughan v Federal Commissioner of Taxation, the High Court had referred to a "dominant object" and a "main object".

The AAT considered that the ordinary meaning of "main" in relation to an object or purpose does not preclude an entity from having other objects or purposes, provided that the benevolent purpose is the predominant purpose. The AAT rejected the Commissioner's submission that the meaning of "main purpose" requires that any other purpose be incidental or ancillary, and warned against failing to distinguish between principles that apply to determining charitable status on the one hand and to determining PBI status on the other.

The AAT's analysis of the authorities led it to the conclusion that an "exclusivity of purpose" test ought not to be applied in relation to PBIs. The AAT noted that when the Commissioner of Taxation was responsible for determining PBI status prior to 2012, he took the view that "any purposes and operations must be incidental to the public benevolence or of minor extent and importance".

The AAT ultimately considered that it was not necessary to reach a conclusion on the meaning of "main purpose", as it was of the opinion that GCL has only one purpose.

GCL's purposes

The AAT then turned to consider GCL's purposes. GCL's constitution states that its principal object is to provide benevolent relief to persons in need, with particular emphasis on bringing an end to extreme poverty globally.

The AAT considered GCL's activities at and before the date of GCL's application for PBI status. These activities were designed to create public awareness of global poverty and were concerned with mobilising that awareness to put pressure on governments and philanthropists to make specific financial commitments to various aid projects.

The AAT accepted that GCL's educational and advocacy activities were central to GCL achieving its purpose of relieving poverty and were not purposes in and of themselves. In that sense, GCL had only one purpose: the relief of global poverty. Even if these activities were viewed as purposes, the AAT was satisfied that they were incidental and ancillary to GCL's main purpose of relieving poverty.

Direct relief sub-issue

The AAT noted that, prior to 2014, it was generally accepted that an entity had to directly provide benevolent relief to be eligible for registration as a PBI. This principle arose as a result of NSW Court of Appeal's decision in Australian Council of Social Service v Commissioner of Pay-roll Tax, but was rejected by the Full Court of the Federal Court in Federal Commissioner of Taxation v The Hunger Project Australia (Hunger Project). There, the Federal Court held that the contemporary meaning of PBI was broad enough to encompass institutions that provide relief indirectly.

Previous decisions

The AAT noted that there were only a handful of authorities dealing with this issue, including Hunger Project and Australian Council for Overseas Aid v Federal Commissioner of Taxation. These cases were clear authority for the proposition that a PBI may provide relief indirectly, and did not suggest that it is necessary to require proof of any link between the activities of the entity and the provision of relief. The cases were also not prescriptive about the nature of the relationship required between the PBI and the entities directly providing relief. From these cases, the AAT gleaned two tests: whether the entity conducts itself in public towards those in need of benevolent relief, however that exercise of benevolence may be manifested; and whether the relationship between entities shows that they have a common benevolent purpose.

The AAT also considered Australians for Indigenous Constitutional Recognition Ltd v Commissioner of the Australian Charities and Not-for-profits Commission, from which it derived the principle that where an entity provides relief indirectly, there is likely to be a spectrum. On that spectrum, it is possible that an applicant's activities will be such that it is not possible to conclude that the entity is organised for or concerned in or promoting the relief of poverty.

Contemporary meaning of PBI

The AAT highlighted that the need to adopt a contemporary meaning of the term PBI is particularly relevant in the context of international aid and assistance. The AAT heard uncontradicted evidence that it is unlikely that any one organisation can provide relief for the sort of problems identified by the SDGs.

GCL's activities

GCL relied on two experts in the field of international development assistance, who led evidence to the effect that direct relief activities such as food distribution or delivering education alone are not sufficient to eliminate poverty. These activities need to be paired with meaningful changes in government policy and legislation. The experts gave evidence that GCL's meetings with world leaders to advocate for specific funding commitments are fundamental to the alleviation of poverty.

The AAT noted that there is an open question as to whether advocating for changes in government policy is concrete enough to amount to relieving poverty. However, this question did not fall for determination, as it was clear that GCL's activities extended beyond mere advocacy.

Finally, GCL led evidence in the form of letters from international organisations and government ministers which acknowledged GCL's role in the relief of poverty. The letters from the international organisations demonstrated a relationship with GCL and a common benevolent purpose.

Conclusion

The AAT was satisfied that GCL was organised for the purpose of relieving poverty and that it was therefore eligible to be registered as a charity with the subtype PBI.

The AAT acknowledged that its decision raises difficult questions of public policy, particularly surrounding the blurring of the distinction between a PBI that participates in political processes as a means to provide benevolent relief, and an entity that pursues political outcomes for its own agenda. However, the AAT noted that such questions should be dealt with by Parliament.

Authors: Geoffrey Mann, Partner; Bronwyn Kirkwood, Counsel; and Elizabeth John, Graduate.