Beware: Why Your Charity May Be Disqualified

If you run a charity, you are probably thinking – where is the line between legitimate public advocacy, and political activity that will disqualify you? 

Advancing a social cause is inherently political so we understand that this is a question many charities may be asking themselves. 

When running a charity is it vital that you know what activity you can and can’t engage in. 

We’re here to help! Let’s break it down below. 

What Does The Law Say? 

1. Charitable Purposes

In accordance with the Charities Act 2013 (Cth), a charity must have a ‘charitable purpose.’

In section 12 of the Charities Act 2013 (Cth), your charity has a ‘charitable purpose’ if it is for: 

• The purpose of advancing health
• The purpose of advancing education
• The purpose of advancing social or public welfare
• The purpose of advancing religion
• The purpose of advancing culture
• The purpose of promoting reconciliation, mutual respect and tolerance between groups of individuals that are in Australia
• The purpose of promoting or protecting human rights
• The purpose of advancing the security or safety of Australia or the Australian public
• The purpose of preventing or relieving the suffering of animals
• The purpose of advancing the natural environment
• Any other purpose beneficial to the general public that may reasonably be regarded as analogous to, or within the spirit of any of the above purposes. 

If your charity exists for the purposes of any of the above, it will be deemed to have a ‘charitable purpose.’ 

To ensure the livelihood of your charity however, you must ensure that your charity does not have a ‘disqualifying purpose.’

2. Disqualifying Purposes 

Section 11 of the Charities Act 2013 (Cth) prohibits charities from having a ‘disqualifying purpose.’ 

Under the Charities Act 2013 (Cth) there are two ‘disqualifying purposes’: 

(a) Disqualifying Purpose 1:

Where a charity’s purpose is to engage in, or promote, activities that are unlawful or contrary to public policy, it will be considered as having a disqualifying purpose. 

Contrary to public policy means:

• Engaging in activity that is against the rule of law, the constitutional system of government or the safety of the general public and national security. 

An example of this disqualifying purpose would be if a charity’s purpose was to raise funds for an identified terrorist group. 

Reasons for this is because: 

• Terrorism goes against the law 
• The charity’s purpose would be contrary to the safety of the general public and national security. 

(b) Disqualifying Purpose 2:

Where a charity’s purpose is to promote or oppose a political party or a candidate for political office. 

Now this is where the line between legitimate public advocacy and political activity becomes relevant. 

This disqualifying purpose would lead you to believe that charities cannot engage in political activity. Although it’s not as simple as this. 

As somebody who runs a charity, it is important to not engage in the above. However, there are further do’s and don’ts you should know about. Especially when it comes to distributing information and advancing debate about public policy. 

So, What Activity Can’t My Charity Engage In? 

As above, the law is explicit in prohibiting charities from engaging in activity that promotes or opposes a political party or a candidate of a political office. 

For example, this means that a political party could not be deemed a charity. 

Why? 

• Because it inherently promotes itself as a political party 
• It promotes and opposes candidates of a political office.

As a charity, it is critical to know that you cannot directly fund a political party. The Commonwealth Electoral Act 1918 (Cth) prohibits this. Further, directly funding a political party would likely constitute ‘promoting a political party’ warranting the disqualification of your charity. 

The Australian Charities and Not-for-profits Commission (ACNC) is the regulator of charities in Australia. They enforce the Charities Act 2013 (Cth) and ensure that your charity has a charitable purpose as opposed to a disqualifying purpose. 

The ACNC has some great guidelines around the do’s and don’ts of political advocacy and campaigning that can be found here.

An informative example regarding what charities can and can’t do when it comes to political advocacy and the role of the ACNC can be found below: 

In 2017, the ACNC released a warning to all charities stating that it was going to crack down on political activity that warranted disqualification. This was in light of a number of complaints received by the ACNC following the 2016 Federal Election. 

Action taken by the ACNC should be taken very seriously. Keeping up to date with the ACNC’s guidelines and advice around political advocacy and campaigning can help put your charity and its purpose in the best position possible. 

The Take-away:

Your charity should not engage in any activity that may be viewed as: 

1. Promoting or opposing a political party 
2. Promoting or opposing a political candidate (both during election periods and when they currently hold office). 

What Can My Charity Do?

Whilst your charity must not engage in activity that may be viewed as promoting or opposing a political party or candidate, it can engage in public debate, if it is relevant to your charities purpose. 

Charities are entitled to advocate for change and distribute information relevant to the law, policy and government practices, so long as it is relevant to the charities purpose and such action does not promote or oppose a political party or candidate. 

For instance, let’s circle back to the ACF example. 

The ACF’s charitable purpose is to advance the natural environment, in accordance with s 12 of the Charities Act 2013 (Cth). 

In order to promote its purpose, the ACF is entitled to promote the livelihood of the natural environment by engaging in public debate about climate policy and laws that impact the natural environment. 

By doing so, the ACF is technically engaging in politics, however, not to the extent that they are promoting or opposing a political party or candidate. 

Charities of all kinds are entitled to engage in legitimate public advocacy that is relevant to their charitable purpose. It is only when charities engage in political activity that constitutes promoting or opposing a political party or advocate that disqualification may eventuate. 

Legitimate Public Advocacy v Political Activity Warranting Disqualification

Let’s consider the below examples to further cement what your charity can and can’t do when it comes to engaging in legitimate public advocacy and political activity warranting disqualification. 

Above are some examples that should help you in determining where the line is drawn between legitimate public advocacy and political activity that warrants the disqualification of your charity. 

Anything Else To Watch Out For? 

There sure is! 

On the 16th of February 2021, the Federal Government announced proposed changes to the scope of ACNC’s Governance Standard 3.

What is ACNC’s Governance Standard 3 you may ask? 

ACNC’s Governance Standard 3 requires charities to not act in a way that could constitute: 

• An indictable offence or 
• A breach of the law.

So basically, ACNC’s Governance Standard 3, requires charities to act within the law. Sounds simple. 

Well it should be, however, proposed changes have ruffled a few feathers in the charity world. 

The Federal Government has proposed to expand ACNC’s Governance Standard 3 by adding that: 

• A registered charity will be de-registered with the ACNC if they: 
  • Act in a way that constitutes a summary offence under an Australian law relating to real property, personal property or causing personal injury or harm to an individual or
  • Fail to take reasonable steps to ensure its resources are not used to promote acts (or omissions) by any entity that may be dealt with as an indictable offence, a relevant summary offence, or a civil penalty of 60 penalty units or more.

Examples of offences that the above is referring to include: 

• Unlawful gathering or remaining on land or in a building
• Malicious damage, vandalism or theft of personal property 
• Common assault or threatening violence against an individual.

So, What’s The Big Deal? 

The general consensus is that charities are livid about the proposed changes. 

Charities are of the understanding that proposed changes to ACNC’s Governance Standard 3 will impact charities ability to advocate on behalf of their charitable purpose. 

As a result of the proposed changes to ACNC’s Governance Standard 3, any charity that wishes to engage in activism and advocacy runs the risk of having their charity de-registered with the ACNC. 

Various lawyers, the Human Rights Law Centre and distinguished charities such as Greenpeace are claiming that the proposed changes creates implications for: 

• Access to justice 
• Charities ability to advocate for their charitable purpose without running the risk of becoming de-registered with the ACNC. 

An interesting example to consider is the following: 

Provided that the proposed changes to ACNC’s Governance Standard 3 are drafted so broadly, events such as the women’s annual march against sexual violence could run the risk of having charities becoming disqualified with the ACNC. 

This is obviously an extreme, yet likely outcome of proposed changes. 

Does This Impact My Charity Right Now?

It could if the proposed changes come into effect.

As such, keep your eyes peeled for our legal updates on this topic. 

Being informed on this topic is super important for the livelihood of your charity. 

Need More Help?

We’re here to help! We understand that the line between legitimate public advocacy and political activity that warrants disqualification can appear blurred. 

It may be difficult for your charity to confidently state that it does not engage in political activity that warrants the potential disqualification of your charity. 

We’re here to simplify the law and ensure your charity is sticking to its charitable purpose.

Reach out to our team for a free, no-obligations chat at team@sprintlaw.com.au or 1800 730 617.

Bella Duncan

Bella has experience in boutique and large law firms with particular interest in privacy and business law. She is currently studying a double degree in Law and Psychology at Macquarie University.