Charities update

The past year has seen a number of Court decisions in the charities area which may impact on your charity.  As has long been established, only charities that advance exclusively charitable purposes (or non-charitable ancillary purposes) can remain registered charities under the Charities Act 2005.  For a purpose to be charitable it must advance the public benefit in a way that is analogous to cases that have previously been held to be charitable, thus it is important to be aware of recent decisions and consider how they may impact your charity or its purposes.

The role of the independent Charities Registration Board is to maintain the integrity of the Charities Register by ensuring that entities on the Charities Register qualify for registration.  The Board can direct charities to be removed from the Charities Register when they do not advance a charitable purpose for a public benefit and if it would be in the public interest to remove them.

ICE Foundation

The ICE Foundation owned two charitable companies that were deregistered.  There was also a significant amount of debt owed to the ICE Foundation.  In order to maintain charitable status the two companies restructured in order to operate to fundraise for the ICE Foundation and ensure its charitable purpose remained paramount to their operation.

This case shows the importance of distinguishing business activities from charitable purposes, especially in cases where charities are seeking to raise funds through their business activities.  To do this, the entity must show that the business is capable of making a profit that goes towards charitable purposes, and that the charity does not provide any resources to the trading body at less than market rates.

Kiwis Against Seabed Mining

Any non-charitable purpose, or means of achieving that purpose that is not “ancillary” to achieving a charitable purpose, will mean the requirements for registration as a charitable entity will not be met.

The Charities Registration Board in this case considered the Society’s purpose of advocating for the prevention of seabed mining in New Zealand as non-charitable.  This was due to the potential consequences of preventing seabed mining until all environmental impacts could be understood and mitigated, thus the Board could not determine a sufficient charitable public benefit.  Following this reasoning, the advocacy of a certain point of view regarding controversial issues is unlikely to be considered as having a charitable purpose due to an inability to determine the public benefit.

This case shows the difficulty in determining whether political purposes such as advocacy are charitable at law.  The Supreme Court decision of Re Greenpeace is referred to as binding the Charities Board to consider both the ends the Society is seeking to achieve and the means and the manner in which the Society is seeking to achieve the end.

Family First

This case provides that Courts generally do not find public benefit in advocacy cases involving the promotion of a particular point of view.  As such, purposes such as the one in this case are unlikely to be considered charitable.

It was considered that Family First sought to persuade the reader of their material to a particular point of view rather than educate them on the matter.  This meant that their publications lay outside the scope of the advancement of education as a charitable purpose.  This affirmed the approach taken in the Australian case of Aid/Watch Incorporated, in that reaching a conclusion of public benefit may be difficult where the activities of a society largely involve the assertion of its views.

This case cautions charities that are looking to rely on the Re Greenpeace decision in order to show that their advocacy is a charitable purpose.  While Greenpeace does establish that the advocacy of a charitable purpose is capable of being considered charitable, it cautions that “advancement of causes will often be non-charitable”.  This is because it is often not possible to say whether the views promoted will benefit the public in a way that is recognised as charitable. 

The Family First case summarised the relevant case law and established what must be considered in order to determine whether research reports seek to promote a point of view, or advance genuine educational research.  This includes:

• The nature of the research;
• Whether it has been reviewed by objective third parties; and
• How the views are disseminated to the public.

Auckland Observatory Trust

This case concerned an application for an order of the High Court under s 33 of the Charitable Trusts Act 1957 for approval of a scheme varying the trust deed in relation to trustee appointments and powers.  The proposed amendments were to:

• Require the three longest standing trustees to be replaced each year;
• Allow removal of a trustee by unanimous resolution;
• Allow decisions to be made by written resolution signed by all trustees; and
• Allow the trust deed to be varied for administrative purposes without Court approval.

Section 33 requires that to vary the powers of trustees of a charitable trust the variation must make the administration or operation of the trust easier.  It was held that such changes would enable the Board of Trustees to conduct the Trust’s affairs in a more streamlined manner than had previously been the case, meaning the application was granted.

Foundation for Anti-Aging Research

It is interesting to note that this case found that if research is likely to advance the sum of human knowledge then the research is considered useful in a charitable sense.  Even in cases such as the one at hand, where the end goal may only be achieved in the distant future, the pursuit of such a goal is likely to yield useful knowledge along the way regardless of whether the endpoint is ever achieved.

If you would like further information please contact Jessica Middleton on 07 958 7436.