Authors: Belinda Marsh, Partner and Monisha Lazarus, Associate
The ACNC has recently published a new registration decision summary, which provides guidance on the appropriate charitable subtype for organisations seeking registration as a charity, with a charitable purpose of relieving necessitous circumstances.
Summary of ACNC registration decision
The ACNC decision summary relates to an organisation that applied for charity registration under the subtype “advancing health”. The organisation aimed to alleviate financial distress for individuals experiencing necessitous circumstances because they were unable to afford what they needed to have a modest standard of living due to the cost associated with managing their health conditions.
The ACNC reviewed the application and took the following approach:
- As the purpose of the organisation was not aimed at preventing or relieving sickness, disease or human suffering or advancing health generally, it would not be entitled to be registered with the charity subtype of “advancing health”.
- However, the organisation did qualify for registration as the subtype of “advancing social or public welfare”, as its purpose aligned with relieving those in necessitous circumstances.
The organisation then withdrew its original application and applied instead to be registered with the subtype “advancing social or public welfare.” The ACNC registered the organisation with that subtype.
Key determinations
In the decision summary, the ACNC noted:
- “Advancing social or public welfare” is a charity subtype that encompasses providing relief to people experiencing poverty, distress, or disadvantage, including people in necessitous circumstances.
- The term “necessitous circumstances” refers specifically to financial necessity rather than other needs, for instance, sickness, incapacity or aging needs. Commonly, the method of relieving an individual in necessitous circumstances is by giving money or goods directly to that individual.
- If a charity has a charitable purpose of relieving necessitous circumstances, it must only provide, via funds or goods, assistance to people who would otherwise lack what they need to have a modest standard of living in the Australian community.
This decision published by the ACNC gives helpful guidance to applicants as to the regulator’s determination of what is and isn’t considered “necessitous circumstances” from the perspective of registration as a charity.
Additional considerations
A public fund established to relieve individuals in the Australian community in necessitous circumstances may be endorsed by the Australian Taxation Office (ATO) as a deductible gift recipient (DGR).
Registration of an organisation or entity as a charity by the ACNC is a separate process from registration with the ATO to obtain DGR status. We strongly recommend that charities or persons interested in establishing funds to assist persons in “necessitous circumstances” carefully consider the requirements of both the ACNC (for registration in the correct charity subtype) and the ATO (for eligibility for registration as a DGR) before submitting the relevant applications, to avoid delays, requisitions or rejections from the relevant authorities.
