CHARITIES, ELECTION CAMPAIGNING AND THE AUSTRALIAN CONSTITUTION.

• Date: 01 December 2019
• Author: Beard, Jennifer Leigh

I Introduction II Charities as a Class of Non-Profit Organisation A Charities and Their Legal Form III The Meaning of 'Charity' and 'Charitable Purposes' under Commonwealth Law A The Purposes of Charity B The Purpose of Charitable Advocacy C The Purpose of s 12(1)(l) and the High Court's Rejection of the Doctrine against Political Purposes in Charity Law 1 The Doctrine in Australia D The Political Aspects of Charity IV The Position of Charities within the Australian Constitutional Landscape A A Plural, Representative Democracy B Informed Voting V Maintaining the Integrity of the Charity Sector A Independence and Democracy VI Charities in the Electoral Law Landscape A The Distinct and Overlapping Roles of Charities and Political Parties B The Electoral Act C Charities and Commonwealth Electoral Reform 1 The Electoral Act as Amended D Third Parties E Political Campaigners F The Disclosure of Electoral Expenditure VII Conclusion I INTRODUCTION

This article focuses on the role played by charities as advocates of charitable causes in Australia's system of representative democracy. The first two parts of this article introduce the meaning of charity to the general reader. In Part II, charities are distinguished as a class of non-profit organisation. In Part III, the meaning of 'charity' and 'charitable purposes' under Commonwealth law is explained, and further distinguished. (1) I argue here that although very few charities have the exclusive object of promoting or opposing changes to law, policy or practice in pursuit of a charitable purpose, many charities engage in political activities as an incidence of their charitable mission. I conclude that this political engagement is crucial to Australia's political sovereignty. Part IV of this article positions charities within the Australian constitutional landscape. The aim here is to add further, specific Australian constitutional law jurisprudence to the existing literature on the political aspects of charity by explaining the role of charities as political actors in Australian political sovereignty. Political sovereignty is described by Nettle J in McCloy v New South Wales ('McCloy') (2) as 'the freedom of electors, through communication between themselves and with their political representatives, to implement legislative and political changes'. (3) Part V explores the tensions that have arisen for the charitable sector as it seeks to maintain its integrity despite its politicisation. (4) In this part, I argue that the integrity and independence of the sector must include the freedom to speak out, or to speak up. I question whether contemporary political culture in Australia respects this proposition and suggest that governments and the sector must do more to ensure that the public understands what independence means in this context. Part VI of this article considers recent reforms to federal electoral laws. The Minister introducing these reforms intended to address government concerns about the influence charities and other not-for-profit entities have on voter intentions. This should only be the concern of electoral laws if that influence is undue or an abuse of power, not merely influential. Fortunately, the original amendments did not pass the Senate inquiry process, but the resulting amendments do little to assist charities to perform their role as political actors in a confident and transparent manner. By explaining how these reforms affect charities in Australia, I begin the process of questioning whether federal electoral law is working in the best interests of Australian democracy.

II CHARITIES AS A CLASS OF NON-PROFIT ORGANISATION

Non-profit entities are constituted for a purpose other than the profit or personal gain of specific people. (5) Non-profit entities can, and do, make a profit, but whatever profit they do make cannot be distributed to members of the organisation. In that sense, their constitution may be considered purposely altruistic. (6) The Productivity Commission estimates that there are more than 600,000 non-profit entities operating in Australia. (7)

The terms 'charity' and 'non-profit' or 'not-for-profit' are commonly used interchangeably. This misuse--or misunderstanding of, or nonchalance about, what a charity is, and how charities are distinguished from other types of non-profit entities--often leads to confusion in public policy debates about the not-for-profit sector generally and charities in particular. (8) Confusion also raises compliance concerns. In lay terms, charities have traditionally been understood as associations of individual members, who voluntarily give their time to alleviate poverty and engage in other altruistic purposes that we generally think of in moral or religious terms as 'charitable'. However, over the centuries, legal definitions of charitable status and charitable purpose have been developed by parliaments and common law judges that differ from the lay understanding of the term. The aim of these legal definitions has been to capture, give recognition to, incentivise, and regulate a distinct sector of organised society that receives and raises private and public funds to pursue a defined set of 'charitable purposes' for the public benefit. The legal definition of charity is considered in Part III.

A Charities and Their Legal Form

Charities are often referred to incorrectly as if 'charity' denotes a corporate entity or 'legal person. The underlying structure of an entity is separate from its charitable status. At law, charity is a legal status--some might say a privilege--obtained by an entity because its institutional arrangements are non-profit, and its purposes are 'charitable' in a legal sense and for the public benefit. (9) An institutional arrangement that has been granted charitable status is subject to legal obligations and special privileges and protections that are specific to charities. (10) In terms of legal form, charities may operate within incorporated structures (for example, as incorporated associations, companies limited by guarantee, non-trading cooperatives or Indigenous corporations) but they may also have unincorporated structures (for example, trusts or unincorporated associations). (11) These differences in legal form generate governance and compliance issues for the sector and its regulation, particularly in a federation. (12)

In Australia, incorporated and non-incorporated entities that satisfy the definition of a charity at law are registered with, and regulated by, the Australian Charities and Not-for-Profits Commission ('ACNC'). (13) The ACNC was established:

(a) to maintain, protect and enhance public trust and confidence in the Australian not-for-profit sector; and

(b) to support and sustain a robust, vibrant, independent and innovative ... sector; and

(c) to promote the reduction of unnecessary regulatory obligations on the ... sector. (14)

It is possible that a non-profit may have all the attributes of a charity but not be registered with the ACNC, (15) although government reforms will make this less likely in the future. (16) The ACNC on its website claims that there are approximately 56,000 registered charities, and that 'charity registrations in Australia are growing by about 4 per cent per year'. (17)

III THE MEANING OF 'CHARITY' AND 'CHARITABLE PURPOSES' UNDER COMMONWEALTH LAW

In Australia, at the Commonwealth level, Parliament has expanded and replaced common law definitions of 'charity' and 'charitable purpose' with statutory definitions in the Charities Act 2013 (Cth) ('Charities Act'). (18) In that Act, 'charity' means an entity: that is not-for-profit; (19) all of the purposes of which are charitable purposes that are for the public benefit, (20) or purposes that are incidental or ancillary to, and in furtherance or in aid of, such purposes; (21) and none of the purposes of which are disqualifying purposes. (22) This means that charities may have more than one charitable purpose, as well as other purposes that are not charitable but which assist the charity to further a charitable purpose, as long as they are not 'disqualifying purposes'. Moreover, the law does not prevent charities from engaging in activities that are not in themselves charitable. As Chia and Stewart observe, '[t]he distinction between purposes and activities is well-established in charity law, but it is not a bright line distinction. (23) According to Chia and Stewart, case law suggests that 'at some undefined point', an entity's activity 'may be construed as being of sufficient significance as to have become an independent non-charitable purpose', which would 'disqualif[y] it from charitable status and the tax concessions that flow from this status'. (24)

A The Purposes of Charity

Charitable purposes are listed in the Charities Act under s 12(1).25 These include traditional 'heads' of charity such as the advancement of religion, (26) education, (27) and social or public welfare, (28) but they also include more contemporary purposes such as promoting or protecting human rights (29) and advancing the natural environment. (30) A statistical portrayal of charities in Australia in 2016 indicates that the most common charitable purpose in Australia was religion (30.8%). A further 19.4% of charities pursued education and research, 7.8% pursued social services, and 9% advanced health. (31)

B The Purpose of Charitable Advocacy

Section 12(1)(l) of the Charities Act is drafted in slightly different terms to the other listed charitable purposes in that it conceives advocacy for or against changes to law, policy or practice as a charitable purpose, as long as it is undertaken as a means to achieving one or more of the purposes listed under s 12(1). Section 12(1)(l) states:

(1) In any Act:

charitable purpose means any of the following:

(l) the purpose of promoting or opposing a change to any matter established by law, policy or practice in the Commonwealth, a State, a Territory or another...