What is the risk to my DGR or charitable status from advocacy work?
There is no barrier to charities participating in political activity where it is consistent with their charitable purpose. In fact, advocacy can be a very successful strategy.
By Neil Pharaoh
One of the questions I’m asked most when working with social sector clients during their advocacy and engagement journey is about the risk to their charitable or deductible gift recipient (DGR) status if they undertake advocacy work. For many years it has served politicians and political interests to perpetuate the myth that charities may lose their charitable or DGR status if they advocate or engage in political campaigning. This is not the case, and I am keen to spend a moment reflecting on the status of advocacy and DGR /charities in the Australian context.
Since the Aid/Watch Case, it is clear in Australian law that there is no barrier to charities participating in political activity where it is consistent with their charitable purpose. “Advancing public debate” is a charitable purpose set out under the Australian Charities Act, meaning charities can promote, or oppose a change to any matter of law, policy or practice. There are, however, a few boundaries and limitations put in place by the ACNC. These are predominantly:
you must be furthering or advancing another charitable purpose;
you cannot be engaging in or promoting activities that are contrary to public policy; and
you cannot have a disqualifying purpose (which includes promoting activities that are unlawful, or promoting or opposing a political party or candidate for political office).
Let’s investigate these in a bit more detail. “Advancing another charitable purpose” typically means you can’t exist solely to advocate or campaign. However, if you undertake activities in education, health, or the environment as a charitable purpose, then advocacy around these (or other charitable issues) is clear and is advancing public debate. I say typically, because in Aid/Watch it found that advocacy itself was charitable because it was about more effective use of aid, which in and of itself was a charitable purpose.
At first glance “contrary to public policy” would seem to disqualify a broad range of advocacy measures, and given government often uses the term “public policy” for its initiatives this is sometimes misread as meaning to oppose the government. However, it would be more accurate to describe it as adherence to the rule of law, acceptance of the constitutional system of government and the safety of the public and national security. In other words, criticism of government policy is not a reason to lose your status.
The disqualifying purpose around unlawful activities has been used recently to strip Aussie Farms of their charitable status and represents one of the few examples of a charity losing its status. In this instance by publishing a list of farms around Australia as an “attack list” for animal rights protesters to enter properties and conduct protests, raids, theft (letting animals out of enclosures) and trespassing, this was seen as directly inciting unlawful activity. It was on this basis that the ACNC revoked their charitable status.
The final disqualifier concerns political parties and political candidates. The ACNC gives two great examples of this, so I will use them verbatim:
A charity with the purpose of advancing social or public welfare produces and distributes flyers that compare the key features of the paid parental leave policies of various political parties.
The website of a charity with the purpose of advancing the natural environment states its policy on the development of renewable energy and compares it to the current policies of several political parties.
Neither of these activities amount to a disqualifying purpose.
The disqualification of charitable status is focused specifically on organisations whose affiliation to a political party is so extensive it suggests its main purpose is to elect a particular party or candidate. This clearly represents a much higher threshold than commentary or comparisons of political parties or candidates during the cut and thrust of an election campaign.
There are three key questions to consider ensuring your advocacy meets the ACNC and Aid/Watch test:
Is my advocacy, campaigning and political engagement aligned to or enhancing my charitable purpose and charitable activities?
Do we have specific policies and processes to make sure we do not stray into a “disqualifying” purpose (political, unlawful, contrary to rule of law)?
Has the team undertaking the advocacy and the board read the ACNC guidance on the issue?
The issue of DGR and charitable status is one which tends to flare up when an election is near. Various attempts (mainly by Conservative political parties) to restrict or limit advocacy in the charitable sector via changes to the Charities Act have largely been unsuccessful. There have, however, been repeated attempts in lobbying and engagement circles (particularly in relation to the environment) to mandate that more than 50 per cent of the funding of a charity must be used in “remediation” as opposed to “campaigning”. This dates from both a 2017 Treasury review, and the actions of former MP Andrew Nikolic who called for the Liberal Federal Council to strip environmental groups of their charitable status.
The inherent hypocrisy in this situation regarding the charitable status of the social purpose sector, is that when business or industry associations spend money on internal government engagement specialists or lobbying firms, that spending is by its very nature an “expense” for them, and thus reduces profit and indirectly forms a tax deduction. Yet business and industry associations are not bound by the restrictions of advancing a charitable purpose, so are free to lobby as they wish and donate millions of dollars to political parties. Therefore the threshold is already higher for the social purpose sector and their advocacy than for private interests.
However this is no reason for social purpose organisations to avoid advocacy and neither is political pressure. Advocacy is a very successful strategy when kept within the guidelines listed here.
This article first appeared at Pro Bono Australia as part of Tanck's fortnightly column, Happenings on the Hill.
Tanck offers advisory services in government relations, stakeholder strategy, and communications.
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