Charities to take a 400 year step forward!
It may be a century or three too late for many community organisations who have not been able to be classified as charities, but the Gillard government is finally doing what no Australia government has been prepared to do – define what it is to be a 21stcentury charitable organisation in Australia.
According to David Crosbie, CEO of the Community Council for Australia, ‘The current situation is confusing and untenable. To set up a charity, you have to satisfy the Australian Taxation Office that you comply with laws first drafted over 400 years ago and continuously refined by case law. If you are denied charitable status by the ATO and want to challenge the ruling, you can end up in a court battle against a very well-resourced government department, a risk few charities can afford to take. The not-for-profit sector desperately needs a clearly set out, modern and relevant definition of charity rather than relying on the ATO to interpret common law from 400 years ago.’
In 1601 the Statute of Elizabeth enacted by the English Parliament set out a Preamble to the Statute of Charitable Uses. This common law currently defines whether an organisation can claim to be a charity and what purposes it may pursue. The four ‘heads of charity’ defined in 1891 - addressing poverty, advancing education, advancing religion, and other benefits to the community – were expanded in 2004 to include child care, self-help groups and religious orders. There have been numerous other refinements and legal precedents, but the reliance on court cases to define charity has long been identified as a barrier to organisations seeking to gain charitable status.
Chair of the CCA Board of Directors and CEO of World Vision Rev Tim Costello said‘this is a good example of the government being prepared to tackle a difficult and important issue. It may not get a lot of public attention and discussion, but this reform is fundamental, not just for the 60,000 Australian charities, but also the broader not-for-profit sector and our communities.’
Many reviews of the not-for-profit sector have called for a statutory definition of charity to be passed by the Commonwealth parliament. The most recent attempt to achieve a statutory definition of charity through parliament was in 2003, but the then Howard government refusal to include advocacy as one of the roles of charities led to controversy and the attempt was abandoned. A discussion paper prepared by the Treasury and released today by Assistant Treasurer Bill Shorten invites all interested groups to have a say in the new statutory definition of charity (copies available at http://www.ato.gov.au/nonprofit/default.aspx).
Mr Crosbie said, ‘the good news is that advocacy and other contentious areas of the definition of charity have not been ruled out by the current government and some groups, like peak bodies, advocacy groups, and some prevention agencies may be eligible to be charities for the first time.’