Do you want to register your organisation as a charity with the Australian Charities and Not-for-Profits Commission (ACNC)? You might have encountered the term, ‘public benevolent institution’ (PBI) when deciding on a charitable subtype. This article sets out what a PBI charity is, provides some examples and also sets out the benefits of applying under this subtype.
What is a PBI Charity?
If you wish to register a PBI charity, you must first satisfy the definition of a charity. This means you must:
- be a not-for-profit;
- be for the public benefit;
- not have a disqualifying purpose; and
- not be an individual, political party or government entity.
A PBI charity must also:
- be an institution;
- have benevolent relief (i.e working for the relief of poverty or distress) as your primary purpose; and
- show that you provide relief to people in need.
We explore what each of these points means below.
What is a Not-For-Profit?
As a not-for-profit (NFP), your organisation does not operate for profit nor personal gain. Practically, this means that any profit you generate from your activities is put back into the organisation or distributed among your members.
What Does Charitable Purpose Mean?
To be registered as a charity, your organisation must have a charitable purpose or purposes. Your organisation’s purpose is what it has been set up to achieve, otherwise known as your organisation’s mission.
Generally, the ACNC will decide what your organisation’s purposes are by looking at the following:
- your organisation’s governing document (for example, its constitution), as this usually sets out your organisation’s purpose; and
- other types of evidence, such as your organisation’s activities, annual reports, financial statements and corporate documents.
What Does Public Benefit Mean?
To be registered as a charity, the organisation must benefit the public generally or a significant section of the community. A significant section of the community could be a local community, followers of a particular religion, people with a particular disability, refugees or young people.
What are Disqualifying Purposes?
Some organisations cannot register as a charity, including:
- individuals (e.g. you cannot be a sole trader and a charity);
- political parties or government entities (e.g. Centrelink); or
- sporting groups, social clubs or professional groups.
Also, you cannot be a charity if you:
- engage in unlawful activities or act against public policy; or
- you promote or oppose a political party or candidate.
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What is an Institution?
Institutions can be organisations, associations or establishments that are created to promote a purpose. For a PBI, the focus is on general charitable purposes. It is also important that your organisation is more than a fund or a trust.
An institution must do more than distribute funds to other groups. For example, it might:
- coordinate with other organisations to conduct activities for benevolent relief;
- partner with organisations to run activities; and
- be structured as an incorporated association or company limited by guarantee.
What is Benevolent Relief?
Benevolent relief means that you work to relieve poverty or distress. Pain can include sickness, disability, suffering, misfortune or helplessness. The focus does not have to be purely on reducing financial hardship. You can also provide other help, such as counselling people traumatised by a natural disaster or providing education and activities to disadvantaged young people to help them gain skills in life. However, the need for relief must also be:
- beyond the suffering experienced in daily life;
- concrete; and
- significant.
Importantly, you do not have to provide material help directly. Some PBI charities align themselves with organisations that undertake activities on their behalf or as part of a partnership to provide relief.
Who Are People in Need?
People in need are considered any section of the community that requires help. You must show that you work for a section of the community rather than providing general assistance.
Advantages of a Public Benevolent Institution
A PBI charity is eligible for both charity tax concessions and deductible gift recipient status (DGR) from the Australian Tax Office (ATO). When you apply as a PBI, the ATO automatically assesses your organisation for DGR endorsement. However, there are a few additional requirements that your charity must satisfy, including:
- holding an Australian business number (ABN);
- meeting the ‘In Australia’ requirement; and
- including a DGR ‘winding up’ clause in your rules.
The ‘In Australia’ Requirement
If you want DGR status, your organisation must be established and operate in Australia. The ATO has issued guidance on whether charities that have purposes or beneficiaries that are not in Australia will meet this requirement.
The purpose of your PBI and the people you assist does not have to be in Australia if you are one of the following organisations:
- public fund that provides religious instruction in government schools;
- Roman Catholic public money for religious education in state schools;
- public fund for ethics education in government schools;
- disaster relief organisation;
- necessitous circumstances fund;
- Australian war memorial fund;
- public fund for family counselling or family dispute resolution;
- marriage guidance fund; or
- public fund for providing money for scholarships.
Key Takeaways
Choosing which category to apply for as a charity can be confusing. However, registering as a Public Benevolent Institution can help you obtain benefits like DGR status. Importantly, you need to make sure that your purposes and activities reflect the definition of providing benevolent relief as well as showing that you assist a section of the community. You can see a full list of charity subtypes on the ACNC website.
For more information about PBIs and other business structures available, our experienced charity 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.
Frequently Asked Questions
You must be a not-for-profit, have only charitable purposes that are for the public benefit, not have a disqualifying purpose and not be an individual, political party or government entity. A PBI charity must also be an institution, have benevolent relief as its primary purpose and show that you provide relief to people in need.
Benevolent relief means that you work to relieve poverty or distress. The degree of distress is vital to whether you are providing benevolent relief. Your organisation only meets the definition of benevolent relief if that need is significant enough (and the circumstances difficult enough) to arouse compassion in people in the community, beyond the suffering experienced as part of ordinary daily life and concrete enough – aimed at helping people who are recognisably in need of benevolence.
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