Defining ‘Charity’: A Historic Milestone

Defining charities is a milestone that recognises the diversity of one of Australia’s fastest growing sectors, writes Federal Shadow Assistant Treasurer Andrew Leigh. 

Since ancient times people have grappled with the meaning of “charity” and the practice of charity.

The concept – taken from the Latin and Greek to mean “unlimited loving-kindness to all others” – was linked to “hope” and “faith” by the Apostle Paul in the first century. Charity is one of the five pillars of Islam.

A common image of the practice of charity is of grey soup kitchens in the Dickensian era offering emergency relief for those beaten by hunger.

For much of the twentieth century, it seemed that charity was going out of fashion. One indicator of this is the extraordinary new Google Books “Ngram viewer”, which makes it possible to search millions of published books for words or phrases. Plug the word “charity” into the database, and you’ll see that from 1901 to 1991, the prevalence of the word “charity” more than halved.

Yet in books published over the past two decades, there has been a return to talking about charity. Perhaps it’s because the need is greater, or because social entrepreneurs are doing their work, but charity is returning to the popular lexicon.

Australian governments too have grappled with the meaning of “charity” because generous tax concessions are applied to those organisations deemed to do charitable work. To decide which ones are eligible, governments in the past have relied on 400 years of case law to define a “charity”. It has resulted in confusion and costly court cases aimed at getting clarity about the meaning of modern-day charity and charitable purpose.

From the start of this year the Charities Act, championed by Federal Labor, came into effect to change all that. It sets out in statute, a historic and uniform definition of “charity” to avoid the ambiguity of the past and to recognise the diversity and vibrancy of one Australia’s fastest growing sectors.  It is the result of years of consultation. It is a sensible change and one widely supported.

Governments, regulators and the broader community will find it easier to define when a charity is a charity and when it is not. The Charities Act clarifies that to be a recognised as a charity, an organisation must be Not for Profit, have only charitable purposes that are for the public benefit, not have a disqualifying purpose and not be an individual, a political party or a government agency.

Modern Australian charities see the need and the cause, and so seek the build capacity and change systems that create disadvantage.

The Act restates the existing (judge-made) law in plain English and also recognises charitable purposes such as the protection of human rights, the promotion of reconciliation and tolerance, and by recognising that many modern charities advance causes by preventing, educating, researching and raising awareness. In consultations, many charitable organisations have welcomed the Act’s broad support of advocacy.

Organisations that promote philanthropy say the reform will generate a new era of strong growth for charitable giving in Australia.

The money foundations spend on legal advice to work out what they can legitimately fund can now be better spent on organisations doing good and lasting work, including action for the environment and human rights.

The reform also resolves a number of anomalies which stymied particular charities. For instance, the de?nition of disaster relief has been expanded to enable charities to go beyond the relief of individual distress after a disaster, by including rebuilding, repairing or securing not-for-pro?t community assets after a disaster.

The legislation retains the flexibility inherent in the common law that enables the courts, as well as Parliament, to continue to develop and extend the definition to other charitable purposes judged beneficial to Australians with the intention of ensuring that the definition continues to reflect our contemporary society and community needs as these change over time.

Because charities make a very important contribution to Australian society, they receive a range of support from Commonwealth, state, territory and local governments, including tax concessions and grants, and support from the public in terms of donations and volunteering.

It is therefore important that there is a clear framework for both the public and regulatory agencies for recognising entities as charitable.

Disappointingly, last year Social Services Minister Kevin Andrews hurriedly sought to delay the introduction of the Charities Act till September 2014, sneakily inserting an amendment to an omnibus Bill that would have scuttled the change were it not for the Opposition and minor parties in the Senate.

The reform is not out of trouble. Minister Andrews may well seek to again scrap the new charity definition when the new Senate is in place after July 1, 2014.  

Perhaps this shouldn’t surprise us given his determination to abolish the Australian Charities and Not-for-Profits Commission. Both reforms are overwhelmingly backed by charities and Not for Profits, but Mr Andrews appears deaf to their aspirations and hopes of making a difference with a regulatory framework that supports them.

About the Author: Andrew Leigh is the Shadow Assistant Treasurer and his website is www.andrewleigh.com.