ACNC’s Updated PBI Statement: Key Risks & Changes for Your Charity

Introduction

The Australian Charities and Not-for-profits Commission (ACNC) has released an updated interpretation statement on public benevolent institutions (PBI), reflecting recent legal developments and sector feedback. This updated statement clarifies how the ACNC determines whether an organisation qualifies as a PBI, which is crucial for charities seeking valuable tax concessions and deductible gift recipient status.

With the updated PBI interpretation statement now in effect, organisations must carefully assess their eligibility and understand the new requirements, including the “sufficiency of connection” test. Given the complexity of these changes and the potential for disputes or appeals, it is more important than ever for not-for-profit organisations to seek guidance from a not-for-profit lawyer to protect their PBI status and manage risks effectively.

ACNC’s Updated PBI Interpretation Statement for Your Charity

The Evolving Definition of a PBI

The ACNC acknowledges that the meaning of a PBI is not fixed. In its updated Commissioner’s Interpretation Statement on Public Benevolent Institutions, the ACNC commits to a contemporary approach, recognising that the definition evolves over time.

This means the ACNC will consider modern methods that an organisation uses to relieve benevolent needs. This approach is consistent with court decisions, which have affirmed that the ordinary meaning of PBI will continue to develop to reflect changes in society.

The New Sufficiency of Connection Test

A central change in the updated PBI interpretation statement is the introduction of the “sufficiency of connection” test. This test is particularly relevant for any organisation that provides benevolent relief indirectly, for instance, through advocacy, education, or preventative activities.

The test requires a charity to demonstrate a clear and adequate link between its activities and its benevolent aims. This principle was clarified following the decision in Equality Australia Ltd v Commissioner of the Australian Charities and Not-for-profits Commission [2024] FCAFC 115.

In that case, the court found that the organisation’s advocacy for law and social reform was “too far removed” from the provision of benevolent relief. The ACNC has clarified that a mere logical connection may not be enough, as the relief provided cannot be “too indirect.”

Assessing Risks for Your Existing PBI Status

Reviewing Your Charity’s Objects & Activities

For charities that currently hold PBI status, the updated Commissioner’s Interpretation Statement on Public Benevolent Institutions necessitates a careful assessment of your organisation’s purposes and activities. This review is crucial to ensure your operations remain aligned with the ACNC‘s refined guidance.

Your organisation should evaluate several key areas to confirm ongoing eligibility. A thorough review will ensure that:

• Your objects and constitution clearly reflect the benevolent relief of conditions such as poverty, sickness, destitution, helplessness, suffering, misfortune, disability, or distress.
• Your activities are specifically targeted at a sufficiently “appreciable section of the community” rather than a private or narrowly defined group.
• If your charity provides indirect relief, you can show a demonstrable and sufficient connection between your activities and the benevolent relief you aim to provide.
• Your operations stay alert to the evolving nature of “benevolent relief” and incorporate contemporary methods as contemplated by the ACNC.

If a charity pursues charitable purposes that are not directed towards benevolent relief—a key issue in ACNC compliance and governance—and are not merely incidental or ancillary, it may no longer be considered organised for benevolent relief. Therefore, PBIs should regularly review how their purposes and activities contribute towards their core benevolent mission.

Determining Your Organisation’s Predominant Purpose

To maintain PBI status, the pursuit of benevolent relief must be your organisation’s characteristic and predominant purpose and activity. The ACNC undertakes a holistic consideration of what your organisation does to determine its true nature, looking beyond just the statements in your governing document.

An organisation can engage in activities that are not directly providing benevolent relief, but these must be ancillary to its main purpose. An activity is considered ancillary if it serves as a means of achieving benevolent relief or naturally accompanies it.

If your charity’s other activities go beyond this and become independent pursuits, your PBI status could be at risk.

Gathering Evidence to Support Your PBI Status

Using Lived Experience & Community-Led Evidence

The ACNC recognises that statements from individuals with direct, lived experience can demonstrate the necessary connection between your organisation’s activities and its benevolent purpose. This perspective values the insight of those facing hardship, as they are often best placed to advise on measures that genuinely relieve their distress.

Your PBI can collect multiple forms of community-led evidence to show what works, such as:

• Written submissions from affected individuals detailing how your services have relieved their hardship.
• Testimonials from community leaders or support workers who witness the impact of your programs firsthand.
• Surveys or focus-group results that capture broader community sentiment about the effectiveness of your initiatives.

Because it is generated by the very people you aim to help, this community-led evidence remains a crucial and accessible form of proof that can substantiate your claim for PBI status under the updated ACNC interpretation statement.

Citing Peer-Reviewed Research & Expert Opinions

In addition to firsthand accounts, your organisation can bolster its PBI application by presenting formal research and authoritative opinions that validate your approach. The ACNC accepts a range of expert evidence when evaluating whether a sufficient connection exists.

This evidence offers an objective foundation for your claims and can include:

• Peer-reviewed scientific research that supports the methods your organisation employs.
• Publications by esteemed bodies or reputable institutions endorsing your model of relief.
• Opinions from recognised experts and authorities who can attest to the effectiveness of your activities.
• Evidence of contemporary methods for delivering relief that are widely adopted within your sector.

Managing ACNC Disputes: An Overview of Objections & Appeals Pathways

The ACNC’s Initial Assessment & Decision

When determining if an organisation qualifies for PBI status, the ACNC undertakes a holistic assessment. This initial decision is based on a comprehensive review of various documents and information related to the charity.

To form its decision, the ACNC considers a wide range of information, including:

• The organisation’s governing document, which outlines its core purposes
• Current and planned activities of the charity
• Internal policies and procedures that guide operations
• Operational, strategic, or business plans that set out future directions
• Annual reports and financial statements providing insight into financial health
• Resources, such as staff qualifications and experience
• Relationships and partnerships with other organisations
• Publicly available information, including the charity’s website and social media

Escalating Disputes to the Administrative Review Tribunal & Federal Court

If your organisation disagrees with a decision made by the ACNC regarding its PBI status, there is a clear pathway for escalating the dispute. The case of Equality Australia Ltd v Commissioner serves as a practical example of this process.

Initially, a dispute can be taken to the Administrative Review Tribunal (ART) for a review of the ACNC‘s decision, a process where an administrative lawyer can provide crucial representation. If the matter is still contested after the ART‘s ruling, the organisation can then appeal the decision to the Federal Court.

This structured appeal process ensures that charities have avenues to challenge decisions and seek further legal clarification.

Why Your NFFP Should Seek Legal Counsel

Interpreting the Updated PBI CIS & Its Implications

The updated Commissioner’s Interpretation Statement on Public Benevolent Institutions introduces nuanced legal concepts that can be challenging for an organisation to apply. A not-for-profit lawyer can help your charity understand the changes, particularly the “sufficiency of connection” test, and assess how they impact your specific risk profile.

Engaging legal counsel allows your PBI to consider whether it continues to be eligible for PBI status under the new guidance. This professional advice is crucial for interpreting how the ACNC will holistically assess your purposes and activities.

Assisting with ACNC Applications & Dispute Strategy

A lawyer specialising in not-for-profit law can provide practical support when preparing a strong application for registration as a PBI. They can help your organisation:

• Gather the right evidence to support your application
• Articulate your case for meeting the ACNC‘s requirements

Furthermore, if a dispute arises regarding your PBI status, legal counsel can help develop a strategy for objections and appeals. This includes:

• Assistance with matters before the ART
• Guidance for proceedings in the Federal Court

By ensuring your organisation is well-prepared to defend its eligibility, legal counsel becomes an invaluable asset in navigating both the application process and any potential disputes.

Conclusion

The ACNC’s updated interpretation statement on public benevolent institutions introduces the critical “sufficiency of connection” test, requiring charities to carefully review their purpose, activities, and evidence. Understanding the formal pathways for objections and appeals is also essential for any organisation seeking to maintain its PBI status.

To ensure your organisation complies with these updated requirements, contact the not-for-profit lawyers at LawBridge today. Our team offers specialised services to help you assess your eligibility, prepare strong applications, and develop a clear strategy for any potential disputes, protecting your valuable PBI status.

Frequently Asked Questions