Welcome to Eureka Street

back to site

What’s a charity?

Treasurer Costello has taken on a formidable challenge with the Charities Bill 2003. His goal is to codify 400 years of common law on what constitutes a charity into a short piece of legislation.

In its present form, there are inherent problems associated with the Bill. A single joint Catholic Church submission, to which Catholic Welfare Australia is a signatory, describes the bill as ‘unworkable’ and ‘failing to provide clarity and transparency’.

One of the principal concerns is the Bill seeks to take charitable status from those organisations whose advocacy role involves making public statements (sic criticising government) on behalf of those in the community who are less fortunate or in any way afflicted. Section 8 provides a list a ‘disqualifying purposes’ for a charity including those entities ‘attempting to change the law or government policy’. Advocacy needs to be no more than ‘ancillary or incidental’ to other charitable purposes to expel an organisation from the charitable class. Currently, the common law requires that advocacy not become the ‘dominant’ purpose. So there is a significant tightening in the language in the proposed law. It is as close to a total injunction on public comment as can be brought about by the government.

The Treasurer has publicly stated the Bill does not seek to go beyond the current common law. However, it is clear from the draft legislation and the Explanatory Memorandum the current approach will make it more difficult for an organisation to receive, or in some instances retain, charitable status. Losing charitable status will mean a not-for-profit organisation loses tax exemptions, such as payroll tax, that charitable organisations have had to come to rely upon to survive.

The sector, and the churches in particular, believe there is an important principle at stake here. Those persons who seek the assistance of charities also look to those charities to speak out on their behalf. Why should the Government think such advocacy is anything but completely consistent with the legitimate charitable purpose of seeking to help the disadvantaged?

There is the fear the Government is trying to impose its own model of how the charitable sector should be structured and hence how they ought to operate within the public arena. Just think ... without public debate, or even the odd bit of ‘dissent’ to deal with, the Government would have all its own way.
Coalition governments have always supported the not-for-profit sector and the work they carry out. It is this sector that delivers almost all of the social support services at the local level to the Australian community—using donations, government funding and voluntary labour. Historically, it is the community sector that breathes the service delivery innovation into most new government program initiatives. It would indeed be a pity if those peak organisations with the capacity to provide government and the community with informed social policy commentary and research downsize or close due to the application of new taxation regimes.

Catholic social teachings talk of the principle of subsidiarity to describe the natural state of relations between the state and the community whereby the state should not seek to subsume the activities that private associations can most adequately fulfil themselves. Before the economic bottom line became everything, the relationship between community organisations and government was seen very much as a partnership. The present initiative is an attempt, albeit perhaps indirect, to impose a new level of control on the community sector.

Besides the preparation of the Charities Bill there have also been significant interventions from the Prime Minister whose patience with the agitations of many charitable organisations is short fused. He has just established his hand picked Not-for-Profit Council of Australia. He has also used his Community Business Partnership committee to request the Institute of Public Affairs (which has no direct experience of the sector or its work) to review the relationships between NGOs and Government.

There is a further problem with the Bill’s treatment of advocacy. The New Zealand Government has followed a similar process to Australia in setting up an Inquiry into Charities under the New Zealand Treasury. This report included a draft definition of ‘advancement’ of a charitable purpose that includes ‘protection, maintenance, support, research, improvement, enhancement and advocacy’. The Charities Bill has been influenced by this report defining ‘advancement’ of a charitable purpose as ‘protection, maintenance, support, research and improvement’. The deliberate decision to exclude advocacy from the Australian definition is cause for concern.

Finally, in drafting this Bill, the Government has rejected the conclusions of its own inquiry. In June 2001, after a long consultative process including a report of the Productivity Commission, the Government’s committee of inquiry recommended ‘that charities should be permitted to engage in advocacy on behalf of those they benefit’. It was argued that advocacy must further the main purpose or be a minor part of the agency’s operations. In other words: retain the current common law position.

The Board of Taxation has had carriage of the consultation of this Bill and is due to present its final report to the Treasurer in December. Mindful of the lack of countenance given towards Section 8 in the various submissions and the Treasurer’s own public assurances the Bill is not designed to ‘gag’ charities—surely any report would be recommending a revision of the Bill’s current treatment of charitable organisations and their involvement in public advocacy. 

Toby O’Connor is National Director of Catholic Welfare Australia.



submit a comment

Similar Articles

The forgotten people

  • Fatima Measham
  • 12 June 2006

Fatima Measham on the dilemma of poverty in Australia.



  • Martin Flanagan
  • 12 June 2006

Martin Flanagan on Tasmanian Aborigines, Henry Melville and the ABC.