Religious charitable status and public benefit in Australia.

• Jurisdiction: Australia
• Author: Ridge, Pauline
• Date: 01 December 2011

[The Commonwealth government proposes to enact a statutory definition of religious charity. Whether religious groups should prove that they provide public benefit in return for charitable status is contentious and the current law is confused. Moreover, overseas reforms diverge on this issue. Identifying an appropriate model for determining public benefit is important because charity law is a significant means of state control over religion. This article proposes three criteria evidence, human rights and cost--by which to judge a public benefit charity test, and identifies three models that could be adopted. The model that is most consistent with the proposed criteria broadly accords with the current common law position.]

CONTENTS I Introduction II The Attractions of Charitable Status III The Current Law A The Public Aspect of Public Benefit B The Benefit Aspect of Public Benefit IV State Control of Religious Groups through Charity Law V The Legitimacy of State Control of Religious Groups through Charity Law A The Rationale of Charity Law B A Quid Pro Quo for the Fiscal Benefits of Charitable Status VI The Criteria for a Defensible Public Benefit Test A Sound Evidential Scheme B Consistent with Human Rights Norms 1 Section 116 2 International Human Rights Norms (a) The Right to 'Manifest One's Religion' (b) Discrimination on the Grounds of Religion C Cost-Effectiveness VII Three Models for Religious Charitable Status A Model A B Model B C Model C VIII Conclusion I INTRODUCTION

Fundamental reform of charity law is underway in Australia. As part of this reform the Commonwealth government has pledged to enact a statutory definition of charity by July 2013. (1) One of many issues raised by this development concerns the extent to which religious organisations will need to prove that they provide public benefit in return for charitable status under the statutory definition. Ascertaining public benefit from purely religious activities under the common law of charity has proved challenging in the past, although the difficulties were obscured by the application of a presumption of benefit with respect to most religious purposes. Removing the presumption of benefit would have significant implications for religious groups who rely upon charitable status to access a range of legal and fiscal privileges. Charity law is also a means by which the state regulates religious groups; the public benefit test, in its current and possible future manifestations, is at the heart of such regulation. Determining religion's public benefit through a defensible legal framework is thus an important check on state control over religious groups.

Although the Commonwealth reforms also pose fundamental policy questions concerning the worth of religion in Australian society, (2) this article is concerned with a preliminary legal question: what should a legal model for determining the charitable status of religious groups in relation to purely religious purposes look like when those purposes do not qualify as charitable on some other basis such as the relief of poverty or the advancement of education?

Most of the overseas jurisdictions who share Australia's charity law heritage have progressed more quickly with charity law reform and therefore offer useful comparators for Australia to consider. Two jurisdictions that offer strikingly different legal models in relation to public benefit and religious charitable status are England and Wales (hereinafter referred to as 'England'), (3) and the Republic of Ireland. (4) England has removed any presumption of public benefit for religious charitable status, so that public benefit must now be affirmatively proved, whereas the Republic of Ireland, in legislative reforms yet to commence, has continued to entrench the presumption of public benefit in relation to religious charitable purposes, although it will allow rebuttal in exceptional circumstances. These jurisdictions are particularly relevant in discussing Australia's reform options because Australian charity law derives from their pre-reform case law and because they have contributed significantly to Australia's religious heritage.

Before considering a defensible legal framework for public benefit and religious charitable status it is necessary to explain why charitable status is important for religious groups, and the state of the current law in Australia. It is also important to understand how charitable status is used as a means of controlling religion and to establish the legitimacy in principle of such control. With this background in mind, three criteria for a defensible framework to determine religious charitable status will be described and three reform models that would comply with such a framework will be identified.

II THE ATTRACTIONS OF CHARITABLE STATUS

The primary attraction of charitable status for religious groups is that it makes them eligible for the widest possible range of fiscal benefits. (5) Whilst all 'religious institution[s]' in Australia are entitled to income tax exemption, (6) religious groups are able to reduce, or even eliminate, fiscal expenses if they have charitable status.

Also important are non-fiscal legal privileges associated with charitable status, particularly those attached to the charitable trust for purposes. (7) This allows for perpetual duration of the trust and flexibility as to adjustment of purpose, along with enforcement by the Attorney-General. (8) The charitable trust is of less importance nowadays, given the ability of associations to incorporate, (9) but remains significant with respect to validating gifts made on trust for religious purposes.

A third attraction of charitable status that should not be underestimated, although the empirical evidence is sparse, is the public credibility that such status confers. Charitable status signals society's endorsement of a religious group. (10) If nothing else, this may be important in terms of soliciting financial support. Thus, it seems reasonable to assume that most religious groups desire charitable status, even if for some groups charitable status will be irrelevant and their only interaction with the state will be through the general law.

III THE CURRENT LAW

To be eligible for charitable status, Australian religious groups must show that their purposes come within one of the four common law categories of charitable purpose (11) and are for the public benefit. One category of charitable purpose is the 'advancement of religion'. Particular faith-motivated purposes may also qualify under other categories of charitable purpose such as the advancement of education or the relief of poverty, but this article is concerned with religious purposes that do not come within any other category of charitable purpose. (12) Such religious purposes include prayer, worship, ritual and ceremonial practices, preaching, and evangelism. It is these purely religious purposes for which a public benefit requirement can be problematic.

A The Public Aspect of Public Benefit

Currently, the requirement of public benefit has two, overlapping, aspects. (13) The first is in the nature of a restriction: the persons eligible to participate in the religious purposes must be an inclusive, public group, rather than an exclusive, private group. (14) In the context of religious purposes, it does not matter how small the actual number of persons choosing to join the group is as long as, in principle, others can join. (15) So, for example, a trust for the religious education of a man's grandchildren would not be charitable because it is only able to be enjoyed by those who have the necessary familial relationship with the grandfather. (16)

This is so even if it could be proved that the religious education provided to those individuals caused them to make a beneficial contribution to society. Even religious practices that by their very nature are restricted to a familial group (such as Chinese ancestor worship) cannot be charitable for, it is claimed, they 'can lead to no public advantage, and can benefit or solace only the family itself.' (17)

The 'public' aspect of the public benefit test is problematic because it rules out the wider benefits to society that might ensue from a private group's religious purposes. (18) These indirect benefits have sometimes been acknowledged by the courts, although not in cases involving familial religious groups. For example, in Neville Estates Ltd v Madden, (19) Cross J was prepared to find a charitable trust in relation to the purposes of a Jewish synagogue that was not open to members of the general public. He did so on the basis that 'some benefit accrues to the public from the attendance at places of worship of persons who live in this world and mix with their fellow citizens.' (20) The public aspect of the public benefit test is also troubling because in practice its operation tends to discriminate against non-Western and non-mainstream religion. Perhaps this is not coincidental, but stems from the fact that religious charity law strongly reflects its historical context and is grounded in a mainstream Protestant Christian paradigm. Despite these uncertainties in its application and function, the public aspect of the public benefit test has not reached the law reform agenda in Australia or other countries. (21)

B The Benefit Aspect of Public Benefit

The second, overlapping, aspect of the current public benefit requirement for religious charitable status is that the purposes must benefit society generally, in addition to any personal benefit conferred upon the religious group. It is this aspect of the public benefit test that is the subject of current law reform in Australia and is the primary focus of this article. In order to understand the current law, it is necessary to examine the history of religious charity law.

It was not until the latter part of the 19th century that the English courts explicitly held that purposes for the...