The Commissioner of the Australian Charities and Not-for-profits Commission (Commissioner) published the revised Commissioner's Interpretation Statement on Public Benevolent Institutions (CIS PBI) on 31 August 2023. It is the first revision to the CIS originally issued in 2016. The revised CIS PBI seeks to provide consistency with current case law, in particular, the outcome of Equality Australia Ltd and Commissioner of the Australian Charities and Not-for-profits Commissioner [2023] AATA 2161, which is now under appeal.
It remains the case that to be considered a PBI, an organisation must be 'public', 'benevolent' and an 'institution' and in this regard must be 'organised, conducted or promoted for the relief of poverty, sickness, destitution, helplessness, suffering, misfortune, disability or distress'. However, it is the revised CIS PBI that provides additional commentary in relation to previously unclear topics. We explore the revisions and the additional comments below.
Key changes to the CIS PBI
Main purpose test not adopted
The ACNC has previously indicated that it took the view that a PBI must have a 'main purpose' of providing benevolent relief. The ACNC has acknowledged that the use of the phrase 'main purpose' had caused confusion. The ACNC has instead confirmed the requirement that a PBI be organised, promoted or conducted for benevolent relief.
Removal of 'clear mechanisms' test
The revised CIS PBI has removed the 'clear mechanisms' test, which required that an organisation could only be considered a PBI if it had a clear mechanism for delivering benevolent relief. This test has been replaced by a 'sufficiency of connection' requirement which requires that there be a sufficient connection between the organisation's activities and the benevolent relief of its intended beneficiaries.
Some activities will fail to satisfy this test where the relief provided is too indirect. The CIS PBI refers to the Equality Australia Ltd case, in which the Tribunal held that there was not a sufficiency of connection between the organisation's activities and the benevolent relief of its intended beneficiaries. The organisation in that case engaged in advocacy, education and campaigning for legal and social change to relieve the distress caused by structural discrimination to Australia’s LGBTIQ+ community. The Tribunal therefore found that the organisation was not organised, conducted or promoted for benevolent relief of the LGBTIQ+ community.
Advocacy not fatal to PBI status
Notwithstanding the above, the Commissioner has said that there are circumstances in which a PBI can engage in advocacy. The CIS PBI refers to the Global Citizen Ltd case, in which it was found that activities directed towards securing financial commitments for specific projects that organisations were undertaking to relieve poverty around the world would be accepted as 'for the benevolent relief of poverty'. Further, the Commissioner confirmed that it will also be possible for an registered PBI to engage in advocacy that is ancillary to the delivery of benevolent relief.
Commercial activity conducted by PBIs
The CIS PBI has confirmed that an organisation can charge fees to provide relief, but whether or not the ACNC will accept that the fees do not jeopardise its ability to be registered as a PBI will depend on the specific facts, including what services are provided in return and the amount charged. The Commissioner expressly states that where a PBI charges fees for the services provided to deliver the benevolent relief, the amount of those fees must be below the market rate for comparable services.
Further, the Commissioner confirms that a PBI may conduct commercial activities and not jeopardise its status as a PBI where they are merely a means by which it raises funds that are then used to provide the benevolent relief. The ACNC will view these commercial activities as a method of supporting benevolent relief only
Development assistance
The CIS PBI includes further guidance on the types of development assistance activities that a PBI can undertake. The term 'development assistance' will include activities that 'improve the long-term well-being of a group of people by building their capacity and assisting with long-term solutions to serious needs'. The Commissioner acknowledges that this form of assistance may be preventative in nature and may also include services ordinarily provided by local government bodies (i.e. waste collection, construction and maintenance of infrastructure and utilities).
Further, the Commissioner accepts that assistance provided to a whole community in these circumstances will not be inconsistent with the view that benevolent relief must be targeted or directed to people in need and not the broader general community. Rather, activities to relieve poverty and distress will still be considered activities towards providing benevolent relief where the whole community (or the vast majority of the community) are people in need.
Adopting compendium
The CIS PBI includes a compendium that provides responses to specific questions and feedback received by the ACNC in the course of its public consultation. The following is included in the compendium:
PBIs may undertake activities that are regarded as ‘preventative’ under certain circumstances;
- a charity may be registered as a PBI in addition to other subtypes of charities;
- entities that have materials that are accessible by the general public can still be PBIs;
- a corporate trustee may be an institution but a corporate trustee that acts only as a trustee will not be an institution;
- whilst an extensive beneficiary class is usually expected by the Commissioner, there are instances where a smaller beneficiary class may be sufficient; and
- there is no longer a focus on the 'purposes' of an organisation, but rather a focus on whether an organisation is ‘organised, conducted or promoted’ for benevolent relief.
To discuss how the changes to the PBI CIS will impact your organisation, please contact our team.
