What is a Charitable Purpose? Why is it Important?

When running a charity, it is essential that you carefully consider and decide on the charity’s purpose. We all recognise that charities have an altruistic purpose and positively impact society. Accordingly, businesses and individuals may choose to support charities with a purpose that aligns with their values. Australia holds charities to a high standard. However, many charities may be unaware of how to meet these standards. The first and perhaps most essential aspect of being a legally compliant charity is ensuring you set up your charity correctly so that you may register it with the Australian Charities and Not-For-Profits Commission (ACNC). To register a charity, you must select a charitable purpose. In this article, we explore the multiple, overlapping meanings of ‘charitable purpose’, how you might choose your charitable purpose and ongoing obligations related to that purpose.  

Choosing a Charitable Purpose 

To be a charity in Australia, organisations must meet the federal statutory definition in the Charities Act 2013, which means that the organisation must:

• be a not-for-profit, meaning it cannot distribute profits to members, and any profit must be put towards bolstering the aims of the organisation;
• have a charitable purpose for the public benefit;
• not have a disqualifying purpose; and
• not be an individual person, political party or government entity  

A charitable purpose is the reason for setting up the charity and what its activities work towards achieving. There must be a clear match between what your charity aims to do and what it actually does.

Charitable subtypes reflect your charitable purpose. The ACNC Act sets out 14 charity subtypes. These include: 

• the 12 charitable purposes in the Charities Act 2013 (Cth) (“Charities Act”);
• Public Benevolent Institutions (PBIs); and 
• Health Promotion Charities (HPCs). 

If applying for the latter two subtypes, you must estimate the time and money spent on the charity’s activities. 

In summary, the 12 charitable purposes outlined in the Charities Act are:

• advancing health;
• advancing education;
• advancing social or public welfare;
• advancing religion;
• advancing culture;
• promoting reconciliation, mutual respect and tolerance between groups of individuals in Australia;
• promoting or protecting human rights;
• advancing the security or safety of Australia or the Australian public;
• preventing or relieving the suffering of animals;
• advancing the natural environment;
• any other purpose beneficial to the public that is in the spirit of any of the purposes mentioned above; and
• promoting or opposing a change to a matter of law, policy or practice concerning any of the purposes above.

Common Law and State-Based Meanings of Charitable Purpose

Common Law Meaning

Beyond the federal Charities Act’s meaning of charitable purpose, there is a common law definition of ‘charitable purpose’. Common law means the law created by judges. The common law definition has the following categories:

• relief of poverty, age or impotence;
• advancement of education;
• advancement of religion; and
• other purposes beneficial to the community that are within the spirit and intention of the UK law, the Statute of Charitable Uses.

State-Based Meanings

This common law definition is relevant because most states and territories also have differing meanings of charitable purpose, many of which build upon this definition, set out below.

New South Wales

Along with the common law definition, the NSW definition of charitable purpose includes any benevolent, philanthropic or patriotic purpose.

South Australia

In South Australia, charitable purposes include:

• the provision of, or research into, health services;
• providing support to diseased, disabled, sick, infirm, incurable, poor, destitute, helpless, or unemployed persons or the dependents of people in those categories;
• war relief;
• providing support to people who are or have been members of the armed forces of Australia or to their dependents; or
• the provision of welfare services for animals.

Australian Capital Territory

The Australian Capital Territory’s fundraising laws define charitable purposes as including any benevolent, philanthropic or patriotic purpose.

Queensland

In Queensland, charitable purposes include:

• supplying help, education, instruction or care of any persons in distress;
• aiding any hospital, ambulance, or nursing service in Queensland;
• purposes determined by the Minister or declared by regulations to be charitable

Western Australia

In Western Australia, charitable purposes include:

• the relief of the sick, poor, destitute or unemployed, or their dependants;
• the relief of distress caused by war and the support of people who are members of the armed forces;
• support of hospitals, child health centres, schools, kindergartens;
• support of activities of a social or welfare character; and
• any other benevolent, philanthropic or patriotic purpose and includes animal welfare, conservation and environmental causes. 

Tasmania

Along with the common law definition, charitable purposes in Tasmania include any benevolent, philanthropic or patriotic purpose.

Choosing a Charitable Purpose

When registering your charity, you can select one or multiple purposes. To be eligible to register your charity, you must direct your organisation’s objects and activities towards achieving the charitable purpose described by that subtype. 

Only choose subtypes representing your organisation’s current purposes to ensure your charity is legally compliant. Accordingly, do not apply for subtypes that may reflect a potential future purpose of your organisation or subtypes that were only relevant when you first started.

Obligations After Choosing a Charitable Purpose 

As a charity, you have ongoing obligations after selecting a charitable purpose. You must set out your charitable purpose in your charity’s governing documents. As such, the campaigns you run must align with your purpose. Otherwise, you risk the deregistration of your charity. 

Key Takeaways 

Your charitable purpose is essential to your organisation. Firstly, it is a prerequisite to registration. Furthermore, it sets the focus and direction for your charity and provides a palpable cause for donors and the community to support. 

If you need help with your business structure, our experienced business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.