The 2015 Not for Profit Almanac
Tuesday, 12th April 2016 at 9:13 am
The right of a Jedi Society to qualify as a religious charity and a contentious multi-million dollar, home-made will to set up a charitable foundation are just two of the more unusual cases revealed in this year’s Not for Profit Almanac, writes Myles McGregor-Lowndes from Queensland Institute of Technology.
An analysis of the 2015 legislative and case law developments for charities and Not for Profits provides some interesting and timely reading.
One case that serves as a good example of flawed governance is about a $40 million loan to build schools and other religious facilities by the Anglican Church involving borrowings of a church fund from the Commonwealth Bank of Australia.
The Anglican Development Fund Diocese of Bathurst borrowed the $40 million from the CBA and spent more than $28 million of it on two new schools. The loans were given with a bishop’s certificate naming the Diocese as guarantor. However, the schools did not do well and could not meet their obligations. Receivers were appointed on 23 October 2013. The fund subsequently defaulted.
The case is essential reading for those involved in complex church structures involving unincorporated associations or private faith based schools. (See Anglican Development Fund Diocese of Bathurst in its own capacity and as trustee of Anglican Development Fund Diocese of Bathurst (receivers and managers appointed v) v Rev Palmer, Bishop of Bathurst; Commonwealth Bank v Bishop of Bathurst (Almanac case 2.4.1).
This case is part of a summary of the 2015 legislative and case law developments for charities and Not for Profits in the Australian Centre for Philanthropy and Nonprofit Studies 2015 Nonprofit Legal Almanac.
The Almanac includes a roundup of amendments to association, cooperative, fundraising and charity gaming legislation from around Australian states and territories. Commonwealth amendments to FBT and other issues are also covered.
Contenders for the most interesting case of 2015 included disputes about whether the NZ Jedi Society qualified as a religious charity (Almanac case 2.1.5); whether a UK gun club was charitable (Almanac case 2.1.1); and the prosecution of a Singaporean mega-church pastor following misdirection of at least $24 million to support the pop singing career of his wife (Alamanac case 2.7.3).
However, the clear winner was Secretary for Justice v Chinachem Charitable Foundation (Almanac case 2.8.15).
Nina Wang was the richest woman in Asia and the world’s 35th richest person. She died, leaving an estate of HK$82 billion (A$13.93 billion) and a contentious home-made will, containing only four clauses. Clause one gifted her property to a Foundation. Clause two set out provisions for appointing a managing organisation to supervise the Foundation, and funding “a Chinese prize of worldwide significance similar to that of the Nobel Prize”.
Although wording about the prize was vague, the court determined that the foundation held the fortune on trust to comply with clauses two, three and four. The prize was deemed to have a charitable purpose: “For the public good, in encouraging the general public to strive for excellence in scientific, social and cultural activities which are beneficial to mankind; the public good being in encouraging ‘hundreds of thousands of people who do not win the prize.”
This is an example of the complexity that can arise when wills are home-made, though on a very large scale because of the immense sum involved. The foundation was charitable, but there was one aspect – the limited provision for family – which might have affected that outcome.
There were some significant taxation cases during 2015, including several disputes with State Revenue Authorities about exemption from payroll taxes.
Notable among these were Grain Growers Limited v Chief Commissioner of State Revenue (Almanac case 2.8.4); Law Institute of Victoria v Commissioner of State Revenue (Almanac case 2.1.6); Robson & Ors v Commissioner of Taxation (Almanac case 2.4.2); Queensland Chamber of Commerce and Industry v Commissioner of State Revenue (Almanac case 2.8.5).
The Australian Nonprofit Sector Legal Almanac 2015 is available free from QUT E prints.
About the Author: Myles McGregor-Lowndes is with the QUT Business School and the former Director of The Australian Centre for Philanthropy and Nonprofit Studies at QUT. He is a member of the Australian Charities and Not-for-profits Commission Advisory Board and ATO‘s Not for Profit Advisory Group.