Daniela Chiew and Catherine Dean look at the ACNC's guidance on Public Benevolent Institutions and Health Promotion Charities.
The Australian Charities and Not-for-profits Commission (ACNC) has recently released new interpretative guidance on Public Benevolent Institutions (PBIs) and Health Promotion Charities (HPCs).
The guidance explains how the ACNC will apply the law in practice in determining PBI and HPC status. This is important for new charities seeking registration as well as for existing charities in confirming their continuing entitlement to registration.
For PBI’s, the ACNC guidance includes criteria used to determine whether an entity satisfies each of the requirements for endorsement as a PBI, specifically whether it is a charity, whether it is public, has a benevolent purpose as its main purpose and whether it will be an institution.
The public test considers the extensiveness of the class of individuals who benefit as the main factor, as well as other factors such as receipt of public funds and public control and accountability. Relevantly the ACNC highlights that PBIs with three or more unrelated responsible persons with responsibility in the community are more likely to demonstrate the public control and accountability requirements.
For charities operating overseas, the ACNC considers that such organisations will generally find it more challenging to demonstrate their compliance with ACNC governance standards than entities operating solely in Australia because of higher risks they face including risks of financial loss such as from theft, fraud and money laundering. Accordingly, organisations operating overseas need to address such risks and can expect additional ACNC review of governance.
The guidance also provides examples of entities that may be considered to be PBIs such as not-for-profit hospitals as well as those that may not satisfy the requirements to be a PBI such as animal welfare societies.
The guidance highlights the requirement to notify the ACNC in the event there is a contravention of the law or where a governance or external conduct standard has not been complied with such that charitable registration may no be longer available.
Charities should consider on an ongoing basis their compliance with the guidance to ensure they continue to satisfy the requirements for PBI and HPC status as part of good corporate governance.