A CHARITY IN ALL BUT LAW: THE POLITICAL PURPOSE EXCEPTION AND THE CHARITABLE SECTOR.

• Date: 01 January 2019
• Author: Glazebrook, Susan

Contents I A Tale of Two Cases II Charity Defined III The Political Purpose Exception A Politics Defined B Purpose versus Activities C Shift in the Role of Charities D Rationale E Assessment of Rationale F Freedom of Expression G Some Arbitrary Distinctions IV Modern Mitigation A Australia B New Zealand V Some Reflections I A Tale of Two Cases

I thought I would start by contrasting two cases. (1) The first concerned the establishment of a society for the rescue of badly treated animals and the prevention of cruelty to animals, which, in 1984, was held to be charitable. (2) The second related to an organisation dedicated to securing the release of prisoners of conscience and the eradication of torture, which in 1981 was held not to be charitable. (3) So what was going on? Was this a strange variant of the archaic idea that a gentleman may beat his wife but not his dog? Well, the given rationale was that the second organisation, Amnesty International, fell foul of the political purpose exception to the definition of charity, the subject of this article. In order to examine this exception, we must first start with the rule, in this case, the definition of charity.

II Charity Defined

The modern definition of charity has its origins in the English Reformation and the gap in the systems caring for the poor with the ousting of the Catholic Church. (4) In 1601, to help fill the void left by the Church, the Statute of Charitable Uses 1601 ('Statute of Elizabeth') was passed to create a structure to supervise charities, encourage private donation and prevent abuses in the administration of some charities. (5)

The Preamble to the Statute of Elizabeth provided a list of charitable purposes, including relief of aged, impotent and poor people, the maintenance of sick and maimed soldiers and the marriage of poor maids. It also included various educational activities and, somewhat oddly to modern ears, the repair of bridges and highways.

The first authoritative legal definition of charity (and its purpose), based on the preamble, was given by Lord Macnaghten in Commissioners for Special Purposes of the Income Tax v Pemsel ('Pemsel') in 1891. (6) His Lordship's definition provided a structured approach to the concept:

'Charity' in its legal sense comprises four principal divisions: trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community, not falling under any of the preceding heads. (7) Lord Macnaghten's definition survives in modern times. His formulation is the basis of the statutory definitions of charity/charitable purpose in Australia, (8) New Zealand, (9) and England and Wales. (10) In Canada, while there is no legislative definition of charity, (11) in order to get fiscal relief, charities must register with the Charities Revenue Agency ('CRA'), which uses the Pemsel definition to determine charitable status. (12)

The influence of the Preamble on the definition of charity is of significance for at least two reasons. The first is that the Preamble was not meant to be a definition and the second is that the Statute of Elizabeth was passed in very different times and for very different purposes. This may explain some of the issues with modern definitions of charity, based, as they are, on the Preamble.

Further, as Lord Macnaghten noted, difficulties arise because 'the popular meaning of the words "charity" and "charitable" does not coincide with their legal meaning'. (13) I had my clerk do an informal survey of her colleagues at the Court as to what they thought of as charitable. (14) The common thread was that it involved giving altruistic assistance to those in need in a manner that was for the good of the community. The answers effectively concentrated on the first and fourth heads of the Pemsel definition and the important value of altruism. Significantly, for the next part of the discussion, they also concentrated on the provision of tangible benefits.

Of the four heads of charity identified by Lord Macnaghten, it is usually the fourth head (any other purpose beneficial to the community) that gives the most trouble, as it has the explicit requirement of being for the public benefit. In most statutory definitions, apart from in England and Wales, (15) the public benefit of the first three heads of charity--relief of poverty, advancement of education and advancement of religion--is assumed, even though that may not necessarily have been the position at common law. (16) The difficulty with the fourth head of charity is that the public benefit is not assumed. Assessing whether a particular end is in the public benefit is inherently problematic, as it places the courts in the delicate position of having to assess the merits of controversial matters. (17)

The earlier case law also required that, to come within the fourth head, a purpose had to be within the 'spirit and intendment' of the Statute of Elizabeth. (18) At the same time, it was recognised that the notion of what is in the public benefit can change as society itself changes. (19) Those two propositions sit rather uneasily together. The first requirement, it seems to me, is best described as seeking the 'vibe' of the Statute of Elizabeth. (20) The second concept is, to a degree, orthodox in terms of assuming that statutes are always speaking and adapting to modern conditions. The tension between these two points arises because the courts are left trying to work out how modern situations and views fit within the updated 'vibe' of the Preamble of a statute passed in very different times and for very different purposes, when it was not even intended as a definition.

This, in turn, raises the question of what exactly the 'vibe' of the Statute of Elizabeth is. Elias CJ, in Re Greenpeace of New Zealand Inc ('Greenpeace'), noted that, alongside reforming abuses of charitable trusts, the Statute of Elizabeth promoted 'private philanthropy in reducing the burden on parish ratepayers of poor relief'. (21) More generally, the Statute of Elizabeth was intended to encourage individuals to provide for works that may otherwise have been borne by public resources. (22)

None of this, however, assists much in assessing the relationship between charities and politics and the reasons for the political purpose exception, to which I now turn.

III The Political Purpose Exception

Neither the Statute of Elizabeth nor its Preamble mentioned a political purpose exception--probably unsurprising given the date of its passage and the context in which it was passed. The political purpose exception arises from the requirement that the purposes of charities must be exclusively charitable. (23) Modern cases have said that it has long been held that a political purpose is not charitable. (24) Commentators, however, suggest that this was not in fact the case. They say that the exception is a relatively late entry, (25) and that it is based on a text published in 1888 (26) and the misinterpretation of earlier case law. (27)

Lord Parker's dicta in Bowman v Secular Society Ltd ('Bowman') has been treated as the origin of the political purpose exception. (28) However, Bowman was not in fact a case on charities at all. Rather, the case concerned whether a gift of the remainder of a deceased's estate to a society that discouraged belief in the supernatural was void, which it would have been if promoting anti-Christian information had amounted to the offence of blasphemy. (29) The majority held that it did not, as long as the views were expressed politely. (30) In the course of his judgment, however, Lord Parker discussed the dividing line between charitable and political trusts; the latter, he said, not being charitable. (31)

The political purpose exception was picked up over the years in cases in New Zealand, (32) Canada (33) and, although with a bit less enthusiasm, Australia. (34) It is not the law in Scotland or the United States, where charities are free to advocate for changes in legislation or policy by lawful means. (35) The exception is that they may not directly or indirectly promote the election of a political party. (36)

Canada, after some difficulty with the issue, had codified the political purpose exception for income tax purposes, but allowed charities to carry out limited non-partisan political activities in support of their charitable purposes. (37) The Charities Revenue Agency ('CRA') guidance allowed no more than 10% of resources to be spent on such activities and required reporting on the political activities carried out. (38)

The political purpose exception in Canada was, however, the subject of controversy. In 2012, the then conservative government announced that it would audit charities to examine their political activities. (39) Many charities saw this as a targeted attack, with allegations that the charities chosen for these audits were those that had been criticising the government's policies and, (40) in particular, environmental charities. (41) The threat of audits was said to have created an 'advocacy chill' (42) and the audits became a campaign issue during the 2015 election, with the winning Liberal party promising to stop them. (43) The suspension of the audits only occurred in May 2017. (44)

A consultation panel was set up by the Minister of National Revenue in September 2016 (the 'Panel'). (45) In its report of March 2017, the Panel recommended that the CRA should amend its administrative guidance to 'permit a charity to engage in public policy dialogue and development, if it furthers a charity's charitable purposes, is subordinate to those purposes and is non-partisan in nature'. (46) It also recommended that 'charities should not have to quantify and report' on these activities. (47) It was made clear, however, that the current legal requirement that charities be 'constituted and operated exclusively for charitable purposes' be...