A public benevolent institution (PBI) is a type of charity registered with the Australian Charities and Not-for-profits Commission (ACNC) which is organised, conducted or promoted for the relief of poverty, sickness, destitution, helplessness, suffering, misfortune, disability or distress.
A PBI is also eligible for endorsement by the Australian Taxation Office (ATO) as a deductible gift recipient (DGR). A DGR is an entity endorsed to receive tax deductible gifts.
What are the requirements for registration as a PBI?
Registered charities, regardless of their subtype / charitable purpose, must satisfy certain requirements associated with the definition of a charity. The Charities Act 2013 (Cth) codifies the definition of charity and defines a charity as an entity which:
- is a not-for-profit entity;
- has all of its purposes as charitable purposes for the public benefit (with any non-charitable purposes incidental or ancillary to, and in furtherance or aid of, its charitable purpose(s));
- does not have a disqualifying purpose (i.e., engaging in or promoting activities that are unlawful or against public policy, or promoting or opposing a political party or a candidate for political office); and
- is not an individual, political party or a government entity.
In addition to the above, to be registered as a charity, an entity must satisfy certain other requirements, including having an Australian Business Number (ABN), and not already being registered as a charity with the ACNC.
To be registered as an PBI, a charity must also demonstrate that it meets the requisition test for being a PBI. That is, it must be:
- public (i.e. the beneficiaries the organisation aims to help form a section of the community that is ‘appreciable’);
- benevolent (see below); and
- an institution (i.e. a body created to conduct activities in furtherance of a particular purpose or aim, provided it is not a mere fund or mere trust).
What is benevolence?
An organisation will be benevolent if it is organised, conducted or promoted for the relief of poverty, distress, sickness, disability, destitution, suffering, misfortune or helplessness and this is the organisations core purpose.
An organisation organised, conducted or promoted for the relief of ‘poverty’, it is generally associated with helping people who cannot afford to obtain what is required for a modest standard of living. That is, the context is important rather than the ACNC merely requiring destitution.
Where an organisation is organised, conducted or promoted for the relief of conditions other than poverty (e.g. sickness, helplessness, suffering, misfortune, disability, and distress), the relevant condition must cause suffering beyond the pain and suffering of everyday life.
An organisation can undertake a wide range of activities directed towards relieving the needs of its beneficiaries. In some circumstances this can include activities that are preventative in nature. A PBI’s activities must be directed towards relieving the needs of its beneficiaries. It is not enough that the activities might benefit people who are in benevolent need. That is, the more abstract and indirect the connection between an organisation’s activities and the relief of its beneficiaries, the less likely it will be regarded as organised, conducted or promoted for benevolent relief. It is also insufficient if the organisation provides relief to the broader community rather than targeted or directing its benevolent relief to people in need. However, where the vast majority of the particular community are people in need, the organisation may still satisfy the requirements (e.g. where an organisation is providing development assistance in a developing country).
What tax concessions are PBIs entitled to?
Charities registered as a PBI’s are generally eligible to access the following Commonwealth tax concessions:
- income tax exemption;
- goods and services tax concessions;
- fringe benefits tax exemption (rather than the fringe benefits tax rebate); and
- DGR endorsement.
What if I want to know more?
For more information on PBI’s you can read the ACNC Public Benevolent Institutions Factsheet or the ACNC Commissioner’s Interpretation Statement: Public Benevolent Institutions (CIS) which both provide guidance on the meaning and scope of PBI’s. The current version of the CIS was published on 31 August 2023 and reflects the Commissioner’s understanding of the law regarding PBIs on that date.
How can we help?
If you believe your organisation is eligible for registration as an PBI, or if you would like help establishing a PBI, please get in touch with our specialist Charities + Social Sector lawyers.