In our October 2021 TaxEd article we looked at a recent ACNC case regarding the meaning of ‘public benevolent institution’ (‘PBI’) and whether ‘Global Citizen Ltd’ was a PBI. We opened that article with the caution “We will monitor whether the decision gets appealed but in the meantime let’s take a look at the decision“.
Well, it did not take the ACNC long to rule out an appeal stating, instead,
“We are carefully considering the Tribunal’s decision and will publish a statement clarifying any implications relevant for charities”.
By way of summary, the ACNC was unsuccessful in arguing that ‘Global Citizen Ltd’ was not eligible to be registered under the charity sub-type ‘public benevolent institution’ (‘PBI’).
The AAT summarised the purpose and activities of Global Citizen Ltd as “Based on this largely uncontested evidence, we find the activities of GCL, together with other entities in the GC Network and in collaboration with other non-governmental organisations (NGOs), are directed to securing commitments, primarily financial commitments, from governments and wealthy philanthropists, to international organisations that carry out the projects to relieve poverty“.
For those who missed the article, the decision reinforces and arguably expands earlier decisions in this area by confirming:
- directly dispensing relief is not a requirement to be a PBI (it can be done in collaboration/conjunction with others, for example, with related entities or other organisations sharing common benevolent purposes);
- what matters is that the entity should be organised, or conducted for the relief of poverty, sickness, destitution and helplessness; and
- what it means to deliver relief has changed over time, and there is a need to adopt a contemporary definition of what it means to deliver relief. The evidence in the GCL case established that it was unlikely that any one organisation could provide relief for the large-scale world problems that an organisation such as GCL sought to combat (like global poverty, world hunger etc).
- It was increasingly likely that relief will be provided by a variety of entities working with government and non-government organisations to achieve positive results, using advocacy and awareness-raising as an integral part of that process to achieve their goals.
However, there is always a point where having purposes that are expressly stated as being benevolent will not, when considered along side the actual activities undertaken, confer PBI status. The decision included the following observation,
“In the case where the entity does not provide relief directly but relies on providing relief indirectly, there is likely to be a spectrum and it is possible the activities of an applicant will be such that it is not possible to say the entity is ‘organised’ for, or ‘concerned in’ or ‘promoting’ the relief of poverty etc. But we are satisfied that is not the case here”.
We look forward to hearing the ACNCs thoughts on the relevance of the case to other organisations that hold or seek PBI status.
We will certainly cover the ACNC statement when it issues.