Stegley Lecture Philanthropy, advocacy and charity law reform

1. Stegley LecturePhilanthropy, advocacy and charity law reform Interim results of Charity Law Reform project By Esther Abram

2. Overview Charity law and political activity restriction Results � charitable institutions, peak organisations and charitable trusts Key issues for philanthropic organisations re funding political activities Reform options Conclusion

3. Charity law and political activity restriction Common law governs charitable status, dating back to 1601 English Statute of Elizabeth No restriction on political activity until 1917 �A trust for the attainment of a political object has always been invalid, not because it is illegal...but because the Court has no means of judging whether a proposed change in the law will or will not be for the public benefit...� Restriction extended to include changes in government policy, and the retention of the law in its current state Common law on political activities is confusing � Tax Ruling 2005/21 the best guidelines for charities (but not law) Lord Parker �A trust for the attainment of a political object has always been invalid, not because it is illegal, for everyone is at liberty to advocate or promote by any lawful means a change in the law, but because the Court has no means of judging whether a proposed change in the law will or will not be for the public benefit, and therefore cannot say that a gift to secure the change is a charitable gift.� Bowman v Secular SocietyLord Parker �A trust for the attainment of a political object has always been invalid, not because it is illegal, for everyone is at liberty to advocate or promote by any lawful means a change in the law, but because the Court has no means of judging whether a proposed change in the law will or will not be for the public benefit, and therefore cannot say that a gift to secure the change is a charitable gift.� Bowman v Secular Society

4. Political activity restriction explained in the Tax Ruling Charitable purposes defined in common law � � 4 heads of charity� Difference between purposes (ends) and activities (means) Political and lobbying purposes are not charitable. While such purposes may use educational means, this is not sufficient to show a charitable purpose However, political or lobbying purposes and activities that are merely incidental to a purpose that is otherwise charitable do not by themselves prevent that purpose being charitable The relief of poverty, the advancement of religion, the advancement of education, other purposes beneficial to the communityThe relief of poverty, the advancement of religion, the advancement of education, other purposes beneficial to the community

5. Party political not OK It is not ok for charities to: Support a political party Seek to persuade members of the public to vote for or against particular candidates or parties Participate in party political demonstrations Distribute material designed to underpin a party political campaign

6. Other political / lobbying OK so long as its incidental to objects and ancillary Can participate in the election process and promote participation, so long as it is non partisan Can campaign on legislation and public policy Can represent individuals using the charity�s services to government Can seek support from government for projects Can provide input into government processes Can engage in awareness raising

7. Key points on legal barriers Charities are allowed to undertake a wide range of political activities, but not party political activities The key factor in making political activities permissible is that the activities are in furtherance of their objects They are also supposed to be �ancillary� � not dominant activities ATO provides good(ish) guidance for charitable institutions � no examples about charitable trusts

8. Research methodology Interviews with �doing� charities, �giving� charities and experts Survey of peak organisations and networks Participation from Australian Tax Office in paper-based hypothetical Future � potentially more interviews and surveys Aid/Watch decision analysis

9. Results � charitable institutions 7 interviewed Australian Conservation Foundation Australian Council of Social Service Federation of Community Legal Centres Human Rights Law Resource Centre Public Interest Advocacy Centre The Wilderness Society Victorian Council of Social Service All had prior experience / knowledge of restrictions to political activity under charity law

10. Charitable institutions and tax exemption significance Charity status - 8 TCC, 5 DGR, (3 PBI) The higher the level of exemption, the more significant they were to the organisation TCC significant re fee for service activities DGR significant to most orgs which had it 2 reported very high reliance on philanthropic funding (50% and 30%) Org which lost DGR negatively impacted All PBIs placed high value on the ability to recruit and retain staff due to salary packaging TCC = Tax Concession Charity DGR � Deductable Gift Recipient PBI � Public Benevolent InstitutionTCC = Tax Concession Charity DGR � Deductable Gift Recipient PBI � Public Benevolent Institution

11. Impact of charity law on the approach to public policy reform None reported it prevented PPR work Half took steps to minimise the risk Half said �we do advocacy because we can�t achieve our charitable objects without doing it� For those with PBI status, extra level of concern about the quantity of advocacy they do in relation to direct relief

12. Risk minimisation steps importance of having a mix of activities changing how they plan for and undertake PPR pay attention to the way language is used getting legal advice ensuring the annual report shows a mix of activities changing the way campaigning is approached during elections being less willing to work in coalition with other groups

13. Other important issues for charitable institutions Philanthropic funding for PPR, in particular the difficulty of accessing such funding without DGR and the difficulty of accessing philanthropic funding for projects which involve advocacy The relationship with government and how government funding affects the sector. Gag clauses were seen to also stifle advocacy. PPR = public policy reformPPR = public policy reform

14. Results � peak welfare and rights organisations 23 peaks participated in a brief email survey Wide range of charitable status represented by the group � 10 different combinations 13 had inferior tax concession status (no DGR) Of these, 2 had no tax concessions at all None of the COSS�s participating had DGR 10 had superior tax concession status (DGR) Of these, 8 were PBIs as well

15. Peaks and philanthropic funding 8 peaks receive philanthropic funding All bar one who does has superior tax concessions 5 have in the past or get funded through others 10 don�t receive philanthropic funding Most of those who don�t have inferior tax concessions

16. Peaks and philanthropic funding - PPR Almost half of the peaks who have received philanthropic funding have got this for advocacy related projects A number noted that the projects funded provided information which was then used for advocacy The ability to receive independent funding for PPR a big issue for peaks

17. Charitable trusts and foundation results 6 philanthropics interviewed Melbourne Community Foundation ANZ Trustees Reichstein Foundation RE Ross Trust Education Foundation � Foundation for Young Australians Ruffin Falkiner Foundation An eclectic group representing a wide variety of sizes, organisational type and funding interest

18. Charitable trust and foundations approach to giving Some project based only, some will give untied funds to organisations Variety of responses to what sort of charitable status required by recipients. Generally they appear to only want what is legally required. Wide range of recipients funded

19. Charitable trusts and foundations and funding social change All see funding social change as very important All fund projects which look at systemic issues Those with donors which play a role in granting reported that they try to educate donors towards social change projects

20. What about public policy reform? All have funded projects with public policy reform dimensions Law reform and lobbying the two activities which are seen as the �risky� stages of PPR Activities which are seen as �charitable� work which helps to quantify a problem community engagement research into the needs of a target group building an evidence base developing models education and community building.

21. Do they fund �risky� PPR? Some have funded law reform and lobbying. Some won�t fund law reform and lobbying. 1 didn�t see the law as a barrier to funding lobbying and law reform � more concerned about the appropriateness of such a role for philanthropics

22. Ways philanthropics deal with political activity restrictions Fund lobbying and law reform as part of wider project (incidental and ancillary) Ensure a wide mix of projects funded so that law reform and lobbying is ancillary Fund all the bits of the project which don�t involve law reform and lobbying Provide a non-tied grant Frame activities in different ways and use language which doesn�t seem �political�

23. Some observations from experts No agreement on how philanthropics should approach the funding of political activities. Varies from �don�t� to �it�s ok so long as incidental and ancillary rules apply� All the different types of trusts and foundations provides an added layer of complexity Context plays a role and is difficult to define. ie recipient respectability seems to count for something For those who want to fund political activities, it involves taking a risk which can be managed. However, risk taking is not part of the philanthropic community culture Political activity issue part of a larger set of problems for the not for profit sector

24. If you were an English trust you... wouldn�t be restricted in funding projects which involve political activities, unless the particular project was in breach of your Trust Deed wouldn�t be able to fund a project which was in breach of Charity Commission guidance � such as a party political project would be able to fund a law reform, lobbying project, so long as it furthered your objects would need to have good processes in place to protect the funds

25. Bringing it together Charitable institutions see the need to work on PPR as an important way to achieve charitable purposes and want funding to do that which is independent of government. Advocacy, lobbying etc are seen as key, legitimate activities. Charitable trusts and foundations want to support social change projects. But they are concerned about their ability, and the appropriateness, of funding lobbying and law reform Tax ruling is not uniformly relevant to trusts; Attorney General not providing any guidance

26. What are the reform options? Independent regulator, followed by new statutory definition on charities Aid/Watch High Court decision � may change the common law approach to political activity DGR categories extended More work on the Tax Ruling? Guidance from the Attorney General?

27. Conclusion Healthy democracy, policy debate and advocacy go together Despite the controversy, few charities and no trusts have lost charitable status due to political activities Charitable institutions more able to use Tax Ruling and work within the guidance More clarity needed for charitable trusts