New Charity Definition Needs Clarity & Accessibility - PilchConnect

Specialist Not for Profit legal service, PILCHConnect says it is concerned to ensure that any restatement of ‘charitable purposes’ promotes clarity and accessibility for the Not for Profit sector, in its submission into the Federal Government’s Charity Definition Discussion Paper.

The PilchConnects submission emphasises several points of concern including the effect of a definition change on small to medium NFPs which are heavily reliant on volunteers and struggle to afford or otherwise access professional assistance on regulatory matters.

The submission says one of the most common requests from their clients is assistance to understand (and access) charitable tax concessions. “Clearly the definition of charity is pivotal to most of these concessions.”

The submission says therefore, it is concerned to ensure that any restatement of ‘charitable purposes’ promotes clarity and accessibility for the Not for Profit sector.

“In our view, it should be possible for a non-lawyer to ascertain from reading the legislation if the NFP they are involved with is clearly eligible for charity status; that is to work out if the group is clearly 'in', or even clearly 'out', of the running for endorsement as a charity,” said Director of PilchConnect, Sue Woodward.

“While specialist charity law advice will always be necessary for those at the margins of the definitions, the need to pay for legal assistance for those which are clearly eligible diverts scarce financial resources away from NFP service delivery. For many small groups, the lack of clarity also means they do not obtain the concessions they are eligible for.

Sue Woodward says that to assist charities and prospective charities to understand their obligations, the new definition needs to be backed by practical guidance material and online and telephone advice services from the Australian Charities and Not-for-Profits Commission (ACNC).

The Federal Government released a consultation paper to the Not for Profit sector on the Definition of Charity in October.

The consultation is expected to take place in the first half of 2012 with the Government committing to introduce a statutory definition of charity from 1st July 2013.

The current definition of charity is based largely on over 400 years of common law. The Government agrees the current definition is complex, inconsistent between Australian jurisdictions, outdated, and creates considerable uncertainty for the sector.

Recommendations from a number of inquiries in recent years have failed to deliver a new definition from Government.

The PilchConnect’s submission has relied on and endorsed the detailed submission by Melbourne University.

PilchConnect says the list of charitable purposes proposed by Melbourne University should be adopted, in particular the following should be specifically listed:

• the advancement of civil or human rights
• the advancement of citizenship or community development
• the advancement of social or community welfare
• the advancement of the natural environment
• the advancement of animal welfare

The submission says there needs to be a residual category of ‘any other purposes beneficial to the community’ to ensure flexibility. Under the relevant heads, specific reference needs to be made to prevention.

As well it says the legislative definition of charity should clarify the charitable status of peak bodies and the presumption of public benefit should be retained across all legislated heads of charity.

The submission has called for current core federal government funding to be provided to peak and other sector-based support services to assist NFPs to understand the new definition of charity and other federal NFP reforms such as the role of the ACNC and any new governance requirements.

The PilchConnect submission can be found at: http://www.pilch.org.au/submissions/