Public benevolent institutions – “Kneebone gotta be sufficiently connected to the footbone”

We have previously reported on Equality Australia Ltd’s case before the Administrative Appeals Tribunal (AAT) regarding its application for public benevolent institution status (PBI), which was turned down in a split decision.

Equality Australia Ltd appealed the decision to the Full Federal Court and has been turned down again.

Recap

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 sub-type 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 (Equality Australia) 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 PBI.  Equality Australia applied to the ACNC to change from a charity with a sub-type of advancing public debate to a PBI in order to directly receive ancillary fund grants and was refused.

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

The AAT 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 PBI application was again refused.

The Full Court

Equality Australia appealed to the Full Federal Court on several grounds, the main being that the AAT misconstrued the expression “public benevolent institution” as involving a test of sufficient proximity or directness between the beneficial activities of an entity and the benevolent ends it seeks to achieve.

The Full Court found that it is open to a decision maker to infer from the “ordinary meaning” of public benevolent institution, a requirement of a “sufficient proximity” between activities of an entity and relief of distress. In contrast to other sub-types of charity, the focus is on the relationship between activities and outcomes rather than purposes.  The Tribunal found that the activities of Equality Australia were directed to law reform and social change.  Even if there is a “logical connection” between the activity and the relief, it is open to a decision maker to decide that, on its view of the facts, there is an insufficient connection.  The Tribunal had decided that there was an insufficient connection, and the Full Court would not disturb that decision.

What’s next?

Equality Australia might apply for special listing in the taxation legislation and as a DGR and many in their position have eventually been added to the legislation.

The ACNC may consider producing a case impact statement and then revising their Commissioner’s Interpretation Statement on PBIs to take account of the decision.

For those PBIs that achieve their purposes through advocacy and education rather than direct material relief, it would do well to keep an eye on measuring their impact on easing the distress of persons in need of benevolence.

In other words, your actions must be seen as being sufficiently connected with your outcomes.