A recent decision of the New Zealand Supreme Court invites reflection on the relationship between political activities and charitable status. Historically, an organisation could not be recognised as a charity if its activities were primarily political in nature. This principle was based on several policy grounds, such as the idea that charities should not unduly take advantage of government tax concessions. However, in recent years this principle has undergone significant changes at the hands of the courts and the legislature. We consider here the positions of Australia, New Zealand and the United Kingdom on political activities conducted by charities.
In Australia, the position was fundamentally altered by the 2010 landmark decision of Aid/Watch Incorporated v Federal Commissioner of Taxation and the introduction of the Charities Act 2013 on 1 January 2014.
Aid/Watch was an organisation which sought to promote the more efficient use of Australian and multinational foreign aid directed to the relief of poverty. Its activities included research and public campaigns intended to generate public debate and to bring about changes in government policy and activity relating to the provision of foreign aid. The Commissioner of Taxation refused charitable status to Aid/Watch on the grounds that its activities were primarily political in nature. Aid/Watch commenced proceedings in the Administrative Appeals Tribunal (AAT), which were subsequently appealed in the Federal Court, and ultimately the High Court. The High Court agreed with the original decision of the AAT and confirmed Aid/Watch’s charitable status, holding that the lawful generation of public debate regarding the efficiency of foreign aid directed to the relief of poverty was a purpose beneficial to the community. The High Court further held that that there is no general doctrine that excludes “political objects” from charitable purposes.
This decision also highlighted a degree of uncertainty regarding the definition and scope of charitable activities and paved the way for the Charities Act 2013. This Act provides a comprehensive definition of charitable purposes and, with regard to political activities, it reflects the position of Aid/Watch with section 12(1)(l) including “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 country…” as a charitable purpose where the change is related to one of the other charitable purposes listed in section 12(1). Section 11 of the Charities Act maintains the general disqualification on supporting specific political parties or candidates.
Until the recent case of Re Greenpeace of New Zealand Incorporated, New Zealand applied a blanket exclusion on the promotion of political activities. In Greenpeace, the Charities Commission originally declined Greenpeace’s registration for charitable status on the basis that two of its objects were not charitable. These were: the promotion of disarmament and peace and the promotion of “legislation, policies, rules, regulations and plans which further [Greenpeace’s other objects] and support their enforcement or implementation through political or judicial processes as necessary”. Greenpeace was unsuccessful in its initial appeals to the High Court and Court of Appeal and thus appealed to the Supreme Court, the highest court in New Zealand.
The Supreme Court ruled that a general political purpose exclusion should no longer be applied in New Zealand, and that political and charitable purposes are not mutually exclusive in all cases. The Court determined that Greenpeace’s purpose for nuclear disarmament was of public benefit, and thus charitable. Therefore, political activity to promote this charitable purpose constituted a charitable activity.
This decision cited the Australian Aid/Watch case, and brings New Zealand law into greater conformity with the Australian position.
As with Australia, in the UK, the definition of charity has undergone legislative reform with the enactment and subsequent amendment of the Charities Act in 2006 and 2011. The English and Wales Charity Commission provides guidance on campaigning and political activity by charities. Similar guidelines have been published by the Charity Commission for Northern Ireland, and the Office of the Scottish Charity Regulator. Like Australia and New Zealand, charities are disqualified from supporting a specific political party or candidate.
With regards to political campaigning, these guidelines advise that charities may undertake campaigning and political activity, provided:
• it is in furtherance of their charitable purposes;
• it is permitted subject to the terms of their governing documents;
• they never engage in any form of party political activity; and
• they retain their independence and political neutrality.
However, in a departure from the Australian and New Zealand reforms catalysed by Aid/Watch, a UK charity cannot engage in political activity as a primary and permanent driver of its charitable activities. Political activity must be in support of, and ancillary to, an organisation’s charitable purposes, and cannot become the reason for the charity’s existence.
Therefore, in the UK, an organisation such as Aid/Watch, established primarily to engage in political activity, would not be recognised as a charity.
It should be noted that the UK Parliament recently passed the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014 which provides a set of rules to govern people and organisations that publicly campaign on issues in the run up to elections but are not standing as a political party or candidate. The rules seek to ensure that no one individual or organisation can have an undue influence over an election by regulating and imposing a spending limit on their political activities.
If you would like further information about the circumstances of charities in Northern Ireland, read the Charity Commissioner of Northern Ireland's informative article: "Guidance for Charities in Northern Ireland on political purposes political activity and campaigning".
A comparison of the Australian, New Zealand and United Kingdom’s approaches to political activity and charitable purposes illustrates the progressive position taken by Australia since the Aid/Watch decision. Although the UK has yet to adopt the stance taken in Aid/Watch, recent reforms in each of these associated jurisdictions have provided significant scope for charities to engage in political activities. Multi-national charities seeking to engage in political campaigning and reform should be careful to ensure their activities meet the charitable requirements of each jurisdiction.
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