Can I register my organisation as a public benevolent institution?
A public benevolent institution (‘PBI’) is among the fourteen subtypes of charities that may be registered with the Australian Charities and Not-for-profits Commission (‘ACNC’). Obtaining PBI registration is highly desired by many organisations due to its provision of specific tax concessions, such as fringe benefit tax exemptions, and the potential for increased access to government funding.
Not all charities may be registered as a PBI, and determining eligibility requires a careful examination of an organisation's purpose, structure, and operations.
What is a public benevolent institution?
In simple terms, a public benevolent institution is a charitable organisation established to provide relief to people in need, such as those who are in poverty, sickness, suffering, distress, misfortune, disability or helplessness. To qualify as a PBI, an organisation must satisfy the criteria derived from its three component words: ‘public’, ‘benevolent’, and ‘institution’.
Meaning of ‘public’ in a public benevolent institution
The size of the group that the organisation seeks to assist is the primary consideration in determining whether it satisfies the ‘public’ component. Specifically, the organisation should provide support to an extensive group of people within the community, such as those who require emergency relief, the elderly or disabled, or refugees and asylum seekers.
When evaluating whether an organisation fulfils the ‘public’ requirement for a PBI, several other factors may be taken into consideration. These include whether the organisation:
- receives funding from the public;
- has a significant level of public accountability and control; or
- has a connection or relationship with government.
Meaning of ‘benevolent’ in a public benevolent institution
For an organisation to satisfy the ‘benevolent’ component, its main purpose must be to provide relief to individuals that are recognisably in need of relief, and it must have clear mechanisms for delivering that relief. The emphasis is on the substance of an organisation’s main purpose and the activities it performs, not just its form.
Notably, a ‘benevolent’ purpose must be directed at people, and an organisation that relieves the suffering of animals does not qualify as a PBI.
The motivations of an organisation are, generally, not relevant when determining whether its main purpose is ‘benevolent’. For instance, an organisation whose main purpose is to advance religion (for example, a church or mosque) would not qualify for registration as a PBI. By contrast, if an organisation is motivated by religious faith but its main purpose is, for example, to provide temporary accommodation services for the homeless, it will likely satisfy the ‘benevolent’ component.
An organisation conducted for individual profit or whose profits benefit private individuals is not considered to be ‘benevolent’. Nonetheless, an organisation may still qualify as a PBI even if it engages in non-benevolent activities, so long as those activities are merely ancillary or incidental to the main benevolent purpose.
An organisation may be eligible to register as a PBI even if it does not directly provide relief to people in need, as long as it is structured to engage solely in fundraising for benevolent causes. However, to be eligible, the organisation must demonstrate that its benevolent activities actually provide relief to people in need. Additionally, an organisation may undertake prevention activities as long as they support or further the main benevolent purpose.
An organisation can be organised or operated in various ways to carry out benevolent purposes. This may be through shared planning, shared processes or a common purpose. The emphasis is on the substance of an institution's objects and activities it performs, not just its form.
Generally, the organisation’s governing document, for example, a constitution, and the scope of its activities will be sufficient to determine if it is ‘benevolent’. In this regard, it is critical that organisations seek legal advice as to the suitability and eligibility of their governing document prior to seeking registration.
Meaning of ‘institution’ in a public benevolent institution
In order to satisfy the ‘institution’ component, the legal structure of an organisation must be suitable for registration as a charity. Eligible legal structures include the ‘incorporated association’ legal structure, company limited by guarantee and some types of trusts. You can learn more about suitable legal structures in our earlier blogs:
- Registering a charity in Australia
- Benefits of incorporating associations and clubs
- Company limited by guarantee vs incorporated association for not-for-profit organisations
Organisations should seek legal advice to ensure their organisation’s structure is eligible and suitable for registration.
Eligibility to register as a public benevolent institution
To be eligible for registration as a PBI, an organisation must not only have a suitable legal structure, it must also demonstrate its capacity to operate in the foreseeable future and conduct benevolent activities. This may require the submission of financial records, business plans, third-party agreements (e.g. service agreements) and grants or funding agreements.
Organisations that have recently commenced, or are yet to begin operation, often experience difficulty providing satisfactory evidence of this kind, and it is advantageous to their application that they seek legal advice to explore alternative supporting documentation to strengthen their application.
If an organisation fails to commence operating within a year of registration and is unable to provide a satisfactory explanation, the ACNC may review their registration. The ACNC may also review the registration of an existing PBI that has not been operating for 6 months or more.
Finally, it is important to note that an organisation operating overseas will generally find it more challenging to satisfy the requirements of a PBI, particularly with compliance with the governance standards set by the ACNC. As a result, organisations operating overseas should seek legal advice before applying for registration as a PBI.
Get help registering as a public benevolent institution
Registering a charity can be a daunting task even for the most decerning or proficient, especially when it comes to registering as a public benevolent institution subtype.
Hall Payne Lawyers have extensive experience and expertise assisting and advising registered charities and not-for-profit organisations.
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This article relates to Australian law; either at a State or Federal level.
The information contained on this site is for general guidance only. No person should act or refrain from acting on the basis of such information. Appropriate professional advice should be sought based upon your particular circumstances. For further information, please do not hesitate to contact Hall Payne Lawyers.