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Do you want to register your organisation as a charity with the Australian Charities and Not-for-Profits Commission? You may encounter the term, ‘public benevolent institution (PBI) when deciding on a charitable sub-type. This article sets out what a PBI charity is, provides some examples and also sets out the benefits of applying under this sub-type.

Definitions

If you wish to register a PBI charity, you must first satisfy the definition of a charity:

  • not-for-profit,
  • 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, and
  • have benevolent relief as your primary purpose, and 
  • show that you provide relief to people in need.

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. The governing rules of an NFP should state that any profits are used to fund the organisation’s activities.

Public Benefit

The organisation must benefit the public generally or a significant section of the community. You can direct the public benefit towards either:

  • a particular religion,
  • people with disabilities, or
  • people of a particular age, gender or financial position.

Disqualifying Purposes

Some organisations cannot register as a charity, including: 

  • individuals (e.g. you can’t be a sole trader and a charity);
  • political parties or government entities (e.g. Centrelink);
  • 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.

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 distributing funds to other groups, for example: 

  • coordinate with other organisations to conduct activities for benevolent relief,
  • partner with organisations to run activities, and 
  • structure your business 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 on reducing financial hardship so you can also provide other help like counselling or education. 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. 

You are unlikely to meet the definition of a PBI if you are occasionally fundraising for different charities. What’s important is that your purposes and activities clearly identify how your organisation provides 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. 

What are the Advantages?

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 charity, the ATO automatically assesses your organisation for DGR endorsement. However, there are a few additional requirements that your charity must satisfy, namely:

  • holding an Australian business number (ABN),
  • meet the ‘In Australia’ requirement, and
  • include a DGR ‘winding up’ clause in your rules.

The ‘In Australia’ Requirement

You must establish your charity structure and operate in Australia. The ATO issued some guidance on whether charities that have purposes or beneficiaries that are not in Australia will meet this requirement. The people you assist do not have to be in Australia if you are one of the following organisations:

  • a public fund that provides religious instruction in government schools,
  • Roman Catholic public money for religious education in state schools,
  • a public fund for ethics education in government schools,
  • a disaster relief organisation,
  • a necessitous circumstances fund,
  • an Australian war memorial fund,
  • a public fund for family counselling or family dispute resolution,
  • a marriage guidance fund, or
  • a public fund for providing money for scholarships.

Key Takeaways

Choosing which category to apply for as a charity is confusing. You want to be able to obtain benefits like DGR status and applying as a PBI charity can help with this. You need to make sure that your purposes and activities reflect the definition of providing benevolent relief as well as showing that you do assist a section of the community. You can see a list of charity subtypes on the ACNC website.

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