Entities seeking deductible gift recipient (DGR) endorsement may wish to consider their eligibility for inclusion on the Register of Harm Prevention Charities. This article explores this category of DGR endorsement, along with some of the more common questions about it.
1. What is DGR endorsement?
Organisations (or funds) with DGR endorsement are permitted to receive gifts of money or property from donors and issue a tax deductible receipt. This means donors are able to claim a tax deduction for the amount of their donation. To be eligible for DGR endorsement, the entity’s purposes or activities must align with one of over 50 DGR categories and must meet the associated eligibility requirements.
While most categories of DGR endorsement are administered by the Australian Taxation Office (ATO), certain categories of DGR currently require an entity to be listed on a particular register maintained and administered by other Government departments, one of which is the Register of Harm Prevention Charities.
To gain a deeper understanding of DGR endorsement, you can read our article ‘Could your organisation be endorsed as a deductible gift recipient?’
2. What is the Register of Harm Prevention Charities?
The Register of Harm Prevention Charities (Register) is one of the many DGR categories and is established under subsection 30EA of the Income Tax Assessment Act 1997 (Cth) to encourage donations to such entities. This category is available to entities with the principal activity of promoting the prevention or control of behaviour which is harmful or abusive to human beings, provided certain requirements are met. The Register is maintained by the Department of Social Services (Department).
To be eligible for endorsement under this category, entities must:
- have a ‘principal activity’ of preventing or controlling behaviour that is harmful or abusive to human beings;
- establish a public fund;
- ensure the governing document includes certain specific clauses;
- register the entity or public fund as a charity with the Australian Charities and Not-for-profits Commission (ACNC) and as a Tax Concession Charity with the ATO;
- comply with other legislative requirements; and
- apply for endorsement as a DGR under the Register.
As at 1 July 2022 there were 121 entities listed on the Register.
A key incentive for inclusion on the Register is the ability to issue tax deductible receipts which can make the entity a more attractive target for potential donors and thus has the potential to increase the flow of donations to the entity. Additionally, inclusion on the Register, along with the required ACNC registration, can increase the credibility of the entity which can further boost donations.
3. What is harmful or abusive behaviour?
Harmful or abusive behaviour is defined by the Department and the ATO as including one or more of the following:
- emotional abuse;
- sexual abuse;
- physical abuse;
- self harm;
- substance abuse; and
- harmful gambling.
Each harmful or abusive behaviour is to be understood according to its ordinary meaning. It is also an inclusive list, meaning entities involved in other behaviours and social issues not listed above are unlikely to meet the requirements for endorsement under the Register. The entity must be appropriately focused on one or a small number of these behaviours through a primary activity or otherwise risk failing to meet the requirements.
4. What does ‘promoting the prevention or control of behaviour’ mean?
According to the Register of Harm Prevention Charities Guidelines (Guidelines), while prevention relates to stopping the behaviours from occurring, control is about the steps, measures, actions, activities, treatment or interventions implemented to reduce a specific harmful or abusive behaviour. It is also not necessary for the entity to promote both the prevention and control of the behaviour – either is sufficient. Finally, the Guidelines confirm the ‘promotion’ element requires communication with the public around the narrowly defined behaviour being prevented or controlled. This can be achieved through advertising campaigns, education, events, or targeted communications, and may be in verbal, print or electronic form.
5. What is the ‘principal activity’ requirement?
As set out above, promoting the prevention or control of harmful behaviour must be the ‘principal activity’ of the entity. This means it must be the main activity of the entity that outweighs all others. The entity must clearly articulate the behaviour it is seeking to prevent or control and the way in which its principal activity directly contributes to the promotion of the prevention or control of that behaviour. It must also set out any other activities addressing each behaviour, the way the activities are to be conducted, the percentage of time spent on each activity, and the priority given to activities addressing each behaviour. An application is unlikely to be successful if it is about broadly preventing harm, supporting others to address the specified behaviours, or if the impact of the principal activity is too remote, unrelated, or is difficult to establish.
According to the Guidelines, suitable activities may include:
- running courses and programs on preventing, avoiding, overcoming or managing the specified behaviour;
- counselling people affected by the specified behaviour, such as family members; and
- training carers and professionals in ways of dealing with the relevant specified behaviour.
Similarly, the Guidelines outline that the following principal activities have previously been considered unsuitable:
- providing craft, sport, music or other social activity;
- general school education;
- general employment programs;
- workplace safety and accident prevention programs;
- parenting programs; and
- the provision of financial support.
6. What is the ‘Public Fund’ requirement?
To be eligible for endorsement, the entity is required to establish and maintain a public fund which will be listed on the Register for the receipt of donations.
The public fund must:
- have its own name;
- be a not-for profit;
- be established and operated in Australia;
- have its own objects and rules clearly set out in the entity’s constitutional documents or in a separate governing document or trust deed;
- receive contributions from the public (a failure to do so will result in the public fund losing its DGR endorsement);
- issue its own receipts for donations;
- have its own bank account to deposit tax-deductible donations with clear accounting procedures to allow for transparency and accountability;
- have its own management committee of at least three people to manage the public fund (with the majority of the management committee meeting the ‘responsible person’ requirement as set out by the ATO); and
- have an acceptable winding up clause.
Importantly, the public fund must not receive any other money or property into its account.
7. What are the obligations of an entity endorsed under this category?
Being included on the Register brings obligations. In addition to annual reporting to the ACNC, entities must:
- lodge a Statistical Return on an annual basis, including an audited financial statement for the entity and its public fund; and
- ensure donations are being sought, received and appropriately accounted for.
Satisfying the additional compliance obligations will require extra time and resources. Overall, it is necessary to firstly evaluate whether your entity qualifies for DGR endorsement under this category based on its principal activity, and then determine whether this endorsement will help the entity to better achieve its objectives.
8. Help and support
If you or anyone you know needs help or support:
- Lifeline on 13 11 14
- Kids Helpline on 1800 551 800
- Beyond Blue on 1300 224 636
- Suicide Call Back Service on 1300 659 467
- Headspace on 1800 650 890
- ReachOut at au.reachout.com
- MensLine Australia on 1300 789 978
- Care Leavers Australasia Network (CLAN) on 1800 008 774
- Head to Health at headtohealth.gov.au
9. How can we assist?
If you would like to find out more about DGR endorsement under the Register of Harm Prevention Charities or DGR more broadly, please get in touch with our specialist Charities + Social Sector Lawyers.