The ACNC Commissioner has released the updated version of the Commissioner’s Interpretation Statement on Public Benevolent Institutions (PBI)s. The statement applies from 31 August 2023. Although there are many similarities with the old statement, the new version provides greater commentary and clarification on several areas, including the meaning of the word “public”, relief activities, the relief of poverty and development assistance. It also includes a discussion on what additional subtypes an institution can have, including advancing religion.
It is possible for the purpose of advancing religion to be consistent with the purpose of benevolent relief.
New ACNC Statement on PBIs
The ACNC has released its long awaited updated Commissioner’s Interpretation Statement on Public Benevolent Institutions (PBIs) effective 31 August 2023. The new Statement provides further clarity around how the ACNC determines whether an organisation is a PBI and includes commentary on the recent PBI court cases.
PBIs can access significant tax concessions that are not available to most other charities.
Meaning of “Public”
In order for an organisation to be a PBI, it must be a “public” institution. The beneficiaries it aims to help must be from a “section of the community” that is “appreciable”. The ACNC has expanded its commentary on what is public:
- The organisation does not need to show it can help all possible people who may need its assistance.
- In choosing who it will assist , a PBI should not use criteria unrelated to the need it is aiming to relieve.
- The total number of beneficiaries does not necessarily need to be very large for the beneficiary class to be “appreciable”.
- An organisation can still be public if the total number of potential beneficiaries is small because of the nature of the need the organisation aims to relieve (eg a rare disease).
- The statement contains an extensive list of examples of appreciable sections of the community and groups of beneficiaries which are sections of the community.
- Members of clubs or societies that have the power to include or exclude new members, employees of a specific company and named individuals and/or their descendants (other than descendants of apical ancestors) are not sections of the community.
The ACNC’s statement includes the following guidance on relief activities:
- Relief can be the provision of material relief (eg food, clothing, etc) or non-material relief (eg moral support, preservation of aboriginal culture, etc).
- Activities must be directed towards relieving the needs of its beneficiaries. The more abstract and indirect the connection between the activities and the relief of its beneficiaries, the less likely the organisation will be a PBI.
- Relief must be targeted to people in need and not the broader community. However, providing information on a website which can be accessed by anyone will not necessarily mean the organisation is not a PBI.
- Development assistance to the whole community may be acceptable if the whole community are people in need.
- Prevention activities may be acceptable as people who are “at risk” may already be in need of benevolent relief and these activities may prevent further deterioration of their current needs.
- Advocacy may be acceptable if there is sufficient connection between the organisation’s activities and benevolent relief (see the recent court decisions in Global Citizen Ltd v Commissioner of the ACNC and Equality Australia Ltd v Commissioner of the ACNC – note the latter case is currently on appeal)
Benevolence and Poverty
An organisation that is organised, conducted or promoted for the relief of poverty will be considered benevolent. The ACNC considers a person is in poverty if they cannot afford to obtain all that they need for a modest standard of living within their community. This might include:
- Medical care
- Means of communication
- Electronic devices and school resources for children in primary or secondary education
A PBI must demonstrate that it is “organised, conducted or promoted” for benevolent relief. The ACNC will accept an organisation meets this requirement if its objects are to relieve poverty or to relieve sickness, destitution, helplessness, suffering, misfortune, disability or distress of sufficient seriousness, and all of its activities further its objects.
Previously the ACNC had stated that a PBI is a “charitable institution with a main purpose of providing benevolent relief to people in need”. It has now moved away from using the word “main” and requires any activities that are not directed toward benevolent relief to be ancillary to benevolent relief. An activity is ancillary if it is a means of achieving benevolent relief or naturally tends to go with benevolent relief.
Other Subtypes, including Advancing Religion
The ACNC states that it is possible for a PBI to also be registered under other subtypes as well as PBI. Most PBIs are also registered under the subtype of advancing social and public welfare.
As shown by one of the ACNC’s example, it is possible for a purpose of advancing religion to be consistent with the purpose of benevolent relief. In the example, the PBIs’ objects are to advance religion and to relieve the distress of people who are in prison by providing chaplaincy services for inmates who wish to maintain a connection with their faith. The PBI’s chaplains provide emotional and spiritual support to prisoners of faith or prisoners interested in exploring faith. The PBI provides benevolent relief of the distress caused by the prisoners being excluded from participation in organised religion in the general public.
It is important to note that the ACNC’s example accepts that the purpose and activities of advancing religion are acceptable for this PBI because they are a means of relieving distress. If the purpose of advancing religion is not directed towards benevolent relief, then the organisation can only be a PBI if the religious purpose is incidental or ancillary to providing benevolent relief. The Commissioner’s Statement still includes the example of a church that also runs a food bank and soup van ministry for the homeless. The church is not a PBI as its religious purpose is not incidental or ancillary to its purpose of benevolent relief.
The previous Interpretation Statement commented that an entity’s motives were not directly relevant to determining its main purpose. For example, an entity that was motivated by religious faith but had a main purpose of benevolence could still be eligible to be a PBI. This discussion on motive has been removed from the updated Interpretation Statement. The implications of this are not yet clear.
How we can assist
PBIs can access significant tax concessions that are not available to most other charities. They are entitled to the FBT exemption providing substantial salary packaging benefits for employees. They may also be entitled to deductible gift recipient (DGR) status so that donations to the organisation are tax deductible.
Saward Dawson assists many NFP organisations who wish to establish a PBI entity or obtain PBI endorsement for an existing charity. We also regularly review existing PBIs to highlight any risks that might exist to your ACNC endorsement. Following the release of the new Commissioner’s Statement, we expect the ACNC will increase its focus on reviewing and auditing orgnaisations that are registered as PBIs.
Please contact us to discuss how we can assist your charity.