New charities law must not restrict charities' vital advocacy role

Three years ago, the federal government committed itself to modernising the definitions of charity used in tax law, which are based on British laws that are 500 years old.

To that end, the government established a Charity Definitions Inquiry. The Inquiry consulted widely with the charitable sector and delivered its report in June 2001. Broadly speaking, its recommendations were supported by the charitable sector.

Last month, the government released a draft Charities Bill 2003 to define "charity" for taxation purposes and asked the Board of Taxation to consult over its wording.

The Bill does modernise the definition of charity in a number of positive ways, by:

• clarifying the list of charitable purposes to include "advancement of social or community welfare" and of the "natural environment";
• acknowledging that child care services are charitable; and
• acknowledging that self help organisations may be charitable, provided they are open and non-discriminatory in their membership.

Advocacy by charities

However, the Bill seeks to impose outdated and counterproductive restrictions on the advocacy and lobbying activities of charities.

Clause 8 of the draft Bill would exclude from charitable status organisations that have among their purposes "changing the law or government policy", or "advocating a cause", unless these purposes are no more than "ancillary or incidental" to the other purposes of the organisation.

This ambiguous and confusing formulation is a shaky foundation for 21st century charity law in Australia. "Ancillary or incidental" could be interpreted in at least two different ways.

On a liberal interpretation, this is consistent with the Charity Definition Inquiry's recommendation that the advocacy work of charities should not be restricted, provided that it:

• furthers or aids the organisation's dominant charitable purpose; and
• does not promote a political party or candidate for political office.

If this is the correct interpretation, Clause 8 is unnecessary (except to restrict partisan political advocacy) because Clause 4 of the draft Bill already states that a charity should not "engage in activities that do not further or are not in aid of its dominant purpose". There is no need to single out "non-partisan" advocacy for special treatment because all the activities of a charity should further or aid a charitable purpose. This was the Inquiry's argument regarding advocacy by charities.

However, a narrow interpretation of Clause 8 would suggest that charities should restrict the resources they devote to advocacy (as is the case in the United States and Canada), or that charities should be regulated in terms of the kind of advocacy they perform (as in England).