Understanding Charitable Purpose for Australian Charities Under the Charities Act 2013 (Cth)

Introduction

For any organisation seeking to register or maintain its status as a charity in Australia, understanding the concept of ‘charitable purpose’ is fundamental. This purpose is not merely a mission statement; it is a core legal requirement defined under the Charities Act 2013 (Cth) and is essential for registration with the Australian Charities and Not-for-profits Commission (ACNC) and ongoing compliance.

Defining and adhering to a clear charitable purpose ensures that a charity operates legitimately and directs its efforts and resources appropriately. This guide provides essential information on the legal definition of charitable purpose, including the types recognised under the Charities Act 2013 (Cth), such as those considered beneficial to the general public, and explains the critical importance of aligning an organisation’s activities with its stated purpose.

What is a Charitable Purpose for an Organisation

Defining Your Charity’s Mission

A charitable purpose represents the fundamental reason an organisation exists and outlines what its activities aim to achieve. This is often referred to as the charity’s mission. It serves as a guide for the charity’s operations and must be clearly articulated.

This purpose is typically set out within the charity’s governing document, such as its:

• Constitution
• Rules
• Trust deed

Clearly defining the mission helps everyone involved understand the charity’s objectives and how its activities contribute to them. This includes:

• Staff
• Volunteers
• Donors
• Government agencies

All funds and assets must be used solely to further this stated charitable purpose.

The Legal Definition Under the Charities Act 2013 (Cth)

The 12 Recognised Charitable Purposes

The primary legislation defining charitable status at the federal level in Australia is the Charities Act 2013 (Cth). Section 12(1) of this Act outlines twelve specific categories recognised as a charitable purpose. For an organisation to register and be recognised as a charity, its objectives must align with one or more of these purposes.

The twelve charitable purposes listed in the Charities Act 2013 (Cth) are:

• Advancing health: This includes preventing and relieving sickness, disease, or human suffering.
• Advancing education: This involves furthering knowledge and skills through formal instruction or other means like operating schools, universities, museums, or libraries.
• Advancing social or public welfare: This covers:
  • Relieving poverty, distress, or disadvantage experienced by individuals or families
  • Caring for the aged or disabled
  • Providing child care services
• Advancing religion: This involves promoting spiritual beliefs, observances, and practices, including establishing places of worship or religious instruction.
• Advancing culture: This includes:
  • Promoting or fostering culture
  • Preserving Australian heritage
  • Supporting arts, music, or literature
• Promoting reconciliation, mutual respect and tolerance: This purpose focuses on fostering harmony between diverse groups of individuals within Australia.
• Promoting or protecting human rights: This involves upholding rights recognised in international conventions or Australian law.
• Advancing the security or safety of Australia or the Australian public: This includes purposes like supporting emergency services or promoting public safety initiatives.
• Preventing or relieving the suffering of animals: This covers activities aimed at animal welfare, rescue, and care.
• Advancing the natural environment: This involves protecting, preserving, and improving the natural world, including flora, fauna, and ecosystems.
• Any other purpose beneficial to the general public: This category covers purposes considered analogous to the others (discussed further below).
• Promoting or opposing a change to law, policy or practice: This purpose is valid only if the advocated change furthers or hinders one of the other eleven charitable purposes.

Understanding Purpose Beneficial to the General Public

The category listed as “any other purpose beneficial to the general public” is found in Section 12(1)(k) of the Charities Act 2013 (Cth). This charitable purpose is intended to cover purposes that courts have previously recognised as charitable but which may not neatly fit into the other specific categories. Additionally, it allows the legal meaning of charitable purpose to evolve over time through court decisions, reflecting contemporary Australian society’s needs and expectations.

However, this category is not designed as a broad ‘catch-all’. An organisation seeking registration should first carefully assess if its aims align with one of the more specific charitable purposes listed from (a) to (j) in the Charities Act 2013 (Cth). The ‘other beneficial purpose’ category applies only when a purpose is reasonably considered analogous to, or within the spirit of, those other specific purposes.

Importance of Aligning Activities with Your Charitable Purpose

A charity’s defined charitable purpose is more than just a statement; it dictates the organisation’s actions. It is crucial that a charity’s day-to-day activities and the use of its funds directly contribute to achieving its stated charitable purpose or purposes. This alignment ensures the charity operates genuinely for its mission.

The ACNC examines several elements to understand a charity’s true purpose:

• The charity’s activities
• Its governing documents
• Its reports

There must be a clear connection between what the charity aims to achieve (its purpose) and what it actually does (its activities). Even activities designed to raise funds must ultimately support the primary charitable goals.

This requirement is directly linked to ACNC compliance, particularly Governance Standard 1. This standard mandates that a registered charity must:

• Be run as a not-for-profit entity
• Actively work towards its charitable purpose on a daily basis
• Use all funds and assets solely to further these objectives

Failure to align activities with the stated charitable purpose can lead to serious consequences. If the ACNC finds a charity’s activities do not further its registered purpose, the organisation could be found in breach of Governance Standard 1. This non-compliance may result in regulatory action, potentially including the deregistration of the charity.

Purposes Not Recognised or Disqualified for Charities

Purposes Not Considered Charitable

Certain purposes, although potentially beneficial to the community, may not align with the specific legal definition of a charitable purpose required for registration. Organisations primarily established for social interaction or recreation often fall into this category.

Examples of organisations whose purposes are generally not considered charitable include:

• Social clubs: These are typically not charities unless their main purpose is genuinely charitable, such as assisting socially isolated or disadvantaged individuals, with social activities serving as the method to achieve this charitable aim.
• Sporting and recreational organisations: These groups usually do not meet the definition unless their primary objective is charitable. For instance, providing sporting activities specifically tailored for people with disabilities or the elderly could qualify.
• Professional or trade groups: These are generally not charitable unless their principal purpose aligns with a recognised charitable purpose, such as advancing education within their field.

While these organisations might operate as not-for-profits and potentially qualify for certain tax exemptions or state-level charity status, they are unlikely to meet the federal definition required for registration with the ACNC.

Disqualified Purposes

The Charities Act 2013 (Cth) explicitly disqualifies certain purposes, meaning an organisation with these purposes cannot be registered as a charity, regardless of any potential public benefit. An organisation must not have a disqualifying purpose.

Purposes that automatically disqualify an organisation include:

• Engaging in or promoting unlawful activities: This covers involvement in illegal acts such as tax evasion, drug trafficking, or dealing in illegal goods. Even if set up with seemingly charitable aims, if an organisation’s true purpose involves illegal conduct, it cannot be a charity.
• Engaging in or promoting activities contrary to public policy: An example includes educating people on how to perform illegal acts. While education itself can be a charitable purpose, promoting activities that endanger the public is against public policy and disqualifies the organisation. However, advocating for changes in law or policy is not automatically against public policy and can be charitable if it furthers another recognised charitable purpose.
• Promoting or opposing a political party or candidate: An organisation whose main purpose is to support or oppose a specific political party or a candidate running for political office cannot be registered as a charity. This includes activities like fundraising for election campaigns.

Conclusion

Understanding and correctly defining a charitable purpose under the Charities Act 2013 (Cth) is fundamental for any organisation seeking registration and ongoing compliance with the ACNC. Properly aligning your charity’s activities with one of the twelve recognised charitable purposes, while avoiding non-charitable or disqualified purposes, ensures legal adherence and effective operation.

If your organisation needs assistance defining its charitable purpose, ensuring alignment with activities, or navigating the registration process, contact LawBridge today. Our not-for-profit lawyers’ specialised guidance tailored to the unique needs of your organisation will help you establish and maintain your charity effectively.

Frequently Asked Questions