Chapter 7: Altruism
Terms of Reference In addition, the Board should specifically consult on whether the public benefit test in the Charities Bill 2003 should require the dominant purpose of a charitable entity to be altruistic, as recommended by the Report of the Inquiry into the Definition of Charities and Related Organisations. |
Introduction
7.1 The CDI recommended ‘[t]hat the public benefit test be strengthened by requiring that the dominant purpose of a charitable entity must be altruistic’ (recommendation 7, p 125). The Board notes that this is not a requirement in the common law.
7.2 The CDI also stated that ‘[a]n organisation may provide a benefit to the public without necessarily acting altruistically. ….In its simple dictionary meaning, altruism may be defined as “unselfish concern for the welfare of others” or “regard for others as a principle for action”. The key elements of these definitions are unselfishness and concern for others. In the context of charity, altruism can also be characterised as a voluntarily assumed obligation towards the wellbeing of others or the community generally.’ (CDI p 124)
Overview of submissions
7.3 In the group discussions conducted by the Board, those attending almost universally indicated that they regarded the requirement of ‘altruism’ as unnecessary or as another test that would reduce clarity and increase administrative costs. Submissions differed widely in their response to this question with more than half providing either no comment or a neutral position. A minority were opposed largely because it could require additional administrative work. They argued that the term was vague, subjective or redundant. A very small number of submissions were in favour of the term being added.
The case for changing the public benefit test to include altruism
7.4 Some of the submissions which supported a change to the public benefit test regarded altruism as an important distinguishing feature of a ‘charity’ as understood by the general community.
7.5 ACOSS, supported by a small number of other submissions, favoured the change in the public benefit test as it might exclude charitable status for organisations that provide health, education or welfare services to an ‘exclusive’ group, such as people on high incomes. ‘This would, in our view, be consistent with the underlying purpose and meaning of charitable status.’
7.6 Several submissions indicated that the current activities of some organisations might be subject to greater scrutiny if the term ‘altruistic’ were adopted and that this was to be encouraged. ‘Altruism should be encouraged and material gain be discouraged i.e. large business owned by a charity should be subject to the same taxes as ordinary business.’ (Humanist Society of South Australia)
7.7 A small number of submissions anticipated that the change would strengthen the public benefit test to the detriment of some organisations. ‘For some time, the sector has had to tolerate private operators who, by the nature of their organisation exclude people. Many instances of exclusion have been historically based on sexual preference or religion but also on monetary grounds. This unfortunate blight on the good work of Australian charities has been particularly apparent within the private school sector.’ (Federation of Parents and Citizens Associations of NSW)
The case against changing the public benefit test to include altruism
7.8 Submissions that opposed the change did so for a number of reasons, as set out below.
7.9 Altruism is inconsistent with the draft Bill’s inclusion of self-help groups. ‘[T]here is an inconsistency between a strict concept of altruism and the important principle.….of an open and non-discriminatory self-help group.’ (W.A. Lee)
7.10 A number of submissions argued that the draft Bill’s definition is adequate. The Catholic Church in Australia’s submission was similar to many from major organisations in suggesting that the draft Bill does not need to change in this respect: ‘The proposed elements of the core definition operate cumulatively to ensure that entities that are not for the public benefit do not qualify as charities. The motivation for the charitable purpose or activity is not always easy to discern. The inclusion of altruism would produce no additional benefit.’
7.11 The potential difficulty in assessing whether a dominant charitable purpose was ‘altruistic’ was raised in many submissions. Adopting the term ‘...may require those applying the charity definition legislation to assess the motivations of the people directing or managing a charitable organisation. These assessments are likely to be subjectively and inconsistently applied.’ (ACROD Ltd)
7.12 A number of submissions, including that from the Independent Schools of Australia, noted that the term ‘altruistic’ was ambiguous and suffered from not having a judicial meaning.
7.13 Several submissions noted that the CDI Report had proposed a major change to the definitional framework. As this had not been followed, adopting the further recommendation regarding the term ‘altruistic’ was not advisable. ‘The recommendation that such a test be applied by the CDI was tied up with a number of other recommendations that required a definitional framework to distinguish “altruistic” entities from other entities and included the creation of new types of entities. Unless the government is willing to go down this path, which includes significant changes to the existing situation, the inclusion of the term “altruistic” only engenders greater uncertainty.’ (Australian Flying Corps and Royal Australian Air Force Association)
Board assessment
7.14 The Board believes that the draft Bill’s core definition is sufficiently robust as it is currently drafted. It requires the dominant purpose of an entity to be charitable and for the public benefit, and the entity also to be not-for-profit. Further qualification may be of symbolic value only, adding to the administrative burden.
7.15 The Board also notes that the CDI Report proposed a marked change to the definitional structure of the charitable sector and that this has not been adopted. The case for including the concept of altruism appears to have been integral to CDI recommendations but not relevant to the approach adopted in the draft Bill.
Recommendation
7.16 The Board recommends that it is not necessary to require an entity’s dominant charitable purpose to be altruistic as the public benefit test is adequate.
