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- Year: 2004
- Country: Australia
- Language: English
- Document Type: Domestic Law or Regulation
- Topic: CSO Framework Legislation
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Social Inclusion and the Indigenous People of Australia:
Achieving a Better Fit Between Social Need and the Charity Law Framework
Kerry O’Halloran *
A government concerned with building or sustaining civil society may face no
greater challenge than fostering the social inclusion of marginalized groups. Consider
a particularly acute form of this challenge: the national and international efforts–
appropriate or otherwise–to reduce the alie nation of minority culture groups. Such
alienation is bound to increase as po pulation displacement, driven mainly by
economics and conflict, continues to affect all modern western nations. Against the
backdrop of the uncertain, still unfolding po litics of the post-9/11 world, the process
of inclusion must preserve the cultural integrity of minority groups while sustaining
the coherence of society. Partnership rath er than assimilation must be both the
method and the goal.
This challenge is perhaps most readily acknowledged when the minority
culture differs substantially from the majority culture. One form of stark contrast
arises in post-colonial, modern western nations in which a legacy of suppression
remains to be worked through. The Inuit in Canada and the United States, the first
nation peoples in Canada, the native Indian tribes in the United States, the Maoris in
New Zealand, and the Indige nous people in Australia all represent, in varying
degrees, examples of unfinished business in terms of cultural imbalance and social
justice. A second form of cultural contra st arises in all modern western societies
through such marginalized groups as the me ntally ill, the disabled, and disaffected
youth. From a charity law perspective, th e issues and possible solutions concerning
the former groups also arguably apply to the latter ones. For building civil society,
sustaining it, or assisting in the transition to it, the meaningful and authentic social
inclusion of groups that perceive themselves as marginalized can be crucial; and
third-party intervention can be the most effective way to foster it.
The Indigenous people of Australia have long been the object of philanthropic
intervention, probably for as long as they have experienced other forms of
intervention. Nonetheless, wi thin the modern western society that is now Australia,
they remain impoverished, comprehensiv ely disadvantaged, marginalized, and
culturally excluded. The poor record of philanthropic intervention demonstrates the
failings of the related legal framework an d to a large extent explains the growing
appeal of a rights agenda.
The experience of the Indigenous peop le has not been unlike that of some
minority cultures in other countries. Recent history provides many examples of
countries experiencing debilitating and at times destructive tensions because the
government cannot appropriately respond to the needs of a minority culture, which
in turn perceives itself as increasingly alienated from mainstream society. When the
government fails to address a group’s need for separate recognition and affirmation
by and within the prevailing so cial infrastructure, there is every possibility of a drift
from alienation to confrontation–as in Northern Ireland, the Balkans, Africa, and the
Middle East. Effective intervention by third parties can help forestall such a drift.
Hence the importance of charity law, wi th its capacity to license and focus
mediation by agencies with immense resources, indepe ndently constituted, and
driven by the public benefit principle. Charity law is not the only framework for
addressing issues of social inclusion; where the drift toward confrontation has
gathered momentum, it may not even be particularly relevant. Good charity law,
moreover, can never substitute for bad politics. Politics and fundamental human
rights must always be allowed clear appl ication, apart from the operations of
charitable entities. However, good charity law can promote philanthropic intervention
that, supplementing politics an d human rights, addresses a na tion’s particular social
inclusion agenda. An essential prerequisite to effective philanthropic intervention is a
charity law framework that fits contempo rary social needs and facilitates the
mediation of organizations capable of aiding marginalized minority groups.
Developing such a legal framework is itself, of course, essentially a matter for
As a case study of the role of law in ci vil society, this article considers the fit
between charity law and the n eeds of the Indigenous people. It begins with a brief
sketch of historical background and then profiles the social disadvantages suffered
by this marginalized group. The article outlines the present charity law framework
and draws attention to specific weaknesses in terms of established precedents,
principles, and administra tion. It shows how the law obstructs the type of
philanthropic intervention necessary to fo ster social inclusion for the Indigenous
people as well as such groups as the disa bled, the mentally ill, and disaffected youth.
The article briefly considers implications of the current charity law review process
before concluding with su ggestions for adjustments to the revised charity law
framework in order to achieve a better fit with the contemporary social inclusion
agenda in Australia.
Australia has been inhabited by Indigeno us people for at least 40,000 years.
In 1788, Captain Cook co nsidered the continent terra nullius, “empty land,” such
that he was entitled to take possession of it and all its creatures and resources in the
name of the British Crown. Since then, the concept of terra nullius has been a cancer
eating at the relationship between the Indigenous and non-Indigenous inhabitants of
Australia. It rests on the proposition that the continent was “uninhabited” at the time
of its discovery by white Caucasians–“uninhabited” in the sense that the land was
not owned and controlled by others; although Indigenous people lived there, they did
so in a disorganized fashion, merely living off the land. At the time, a land whose
people lacked recognizable social or political systems was considered terra nullius
under international law, and the “discoveri ng” nation could claim sovereignty. This
interpretation was endorsed by the courts.
The history of the Indigenous people since the 18 th century is largely one of
systematic persecution, giving way in more recent decades to paternalistic
management. As a result, their numbers ha ve been depleted, their communities and
clan culture dissipated, and their health and well-being eroded. Disenfranchised and
legally defined as non-persons, they were murdered or driven from lands wanted by
the continent’s new occupiers. Such policies are not wholly matters of some dim
historical past; their impact has conti nued within the living memory of many
Australians, and arguably still continues today. The present Prime Minister’s
observation about past polici es, while entirely accurate, fails to consider that the
point may also be relevant to current policy:
“It is true, as was noted recently, that past policies designed to assist have
often failed to recognize the significance of indigenous culture and resulted in
the further marginalization of Aboriginal and Torres Strait Islander people
from the social, cultural and economic development of Australian mainstream
The marginalization of Indigenous people is illustrated by the fact that before
1967, they were identified in the census solely to exclude them from official
population figures, as required by the Constitution. Disenfranchisement, in other
words, was a constitutional requirement. Discrimination against Indigenous people
was institutionalized in Australian society. In the 1880s, Indigenous people were
removed from traditional homelands and resettled in townships or compounds, which
disrupted cultural roots, mixed together incompatible tribes/clans, and traumatized
several generations. Once Indigenous people were relocated, systematized
discrimination ensured that th ey were excluded from the residential areas, schools,
and public facilities used by the non-Indigenous.
Deaths in Custody
The level of deaths among the Indigenous prison population has long been a
matter of public concern. In 1987 the Indige nous death rate in prison was 20 times
that of non-Indigenous people, a fact th at prompted the creation of the Royal
Commission into Aboriginal Deaths in Custody.
3 The Commission considered a
number of factors that might have fueled this disparity: the exercise of police
discretion at point of arrest, which resulted in a much greater likelihood that an
Indigenous person would be detained than a non-Indigenous person guilty of the
same offense, particularly alcohol-related behavior
4; the term of imprisonment,
estimated as twice as long for Indi genous as for non-Indigenous people 5; and
mandatory-sentencing judicial procedures.
By the early years of the 21 st century, the death rate for Indigenous prisoners
had risen to 26 times that of the non-Indigenous prison population. 6
The Aborigines Protection Board
For the first 60 years or so of the 20 th century, each state in Australia had its
own Aborigines Protection Board, statutorily charged with supervising family and
child-rearing matters among the Indigenous people. In fact, after a misguided racial
assimilation policy gave these boards child -removal powers, their main function was
to transfer children from their Indige nous parents to non-Indigenous care
arrangements. Countless child ren were removed from Indigenous parents and placed
with approved Caucasian foster parents or put in institutional care, a disaster for the
many thousands of Indigenous famili es and the communities involved. The Bringing
Them Home report by the Human Rights and Equal Opportunity Commission
documents this policy and its long-term effects in terms of suicides, mental illness,
and family breakdown.
7 The child-removal policy comme nced in the early years of
the 20 th century under the Aboriginals Ordina nce 1918 (NT) and continued for some
decades, officially ending, at least in New South Wales, in 1967. In recent years it
has spawned court cases in which applican ts seek damages for the trauma suffered
as a consequence of this “philanthropic” policy.
The “Native Title” issue
In due course, the law gave Indigenous people some rights to land if they
could show continuous occupation and use of it. Communities were then able to
claim “native title” to land that generations had lived or hunted on or had used for
sacred purposes. However, the exact lega l status of rights conferred through
registering “native title” remained uncertain until Milirrpum v Nabalco, where the
court ruled that “the doctrine of communal native title does not form and never has
formed part of the law of … Australia.”
The proposition that Australia was terra nullius at the time of the British
settlement was rejected by the High Court in its landmark ruling in Mabo v The State
of Queensland (Mabo No. 2).
10 That decision in effect declared that, though the
British Crown had acquired sovereignty over the continent of Australia in the 18 th
century, it could not acquire ownership of lands then occupied by Indigenous people.
The ruling provided firm authority to underpin the legal status of “native title” while
also outlining the circumstances in which it could be extinguished, lost, sold or
otherwise disposed of. Mabo was followed by the case of Wik Peoples and Ors v The
State of Queensland and Ors, which concerned a “native title claim by the Wik
11 In its judgment, the court considered the relative legal standing of “native
title” and “pastoral leases” and ruled that the latter did not necessarily extinguish the
former; the two could coexist, but where there was conflict the latter would prevail.
The Native Title Act 1993 (Cth), drawn up to address the issues raised by the
decision in Mabo 2, was introduced on January 1, 1994. It provided for the
recognition and determination of “native ti tle” rights and for the compensation of
those whose rights had been ex tinguished or impaired. It also introduced Indigenous
Land Use Agreements (ILUA)–agreements made between native title holders and
third parties as to future use of the la nd. The 1993 Act was amended in 1998 to take
account of the Wik ruling. The amendments provided for Federal Court jurisdiction of
“native title” disputes, a registration pr ocedure and test, and the extinguishing of
“native title” in certain ci rcumstances. In the main, the amendments reduced the
negotiating powers of Indigenous people rela tive to the claims of those with interests
relating to mineral exploration and pastoral leases on traditional aboriginal land,
resulting in the dispossession of many Indigenous families.
Indigenous People: The Contemporary Context
Estimating the size and geographic spread of the Indigenous population has
been hampered by difficulties of definition.
The Indigenous People
The Commonwealth working definition 12 of an “indigenous person” is one
(a) is either:
(i) an Aboriginal person, meaning a person of the Aboriginal race of
(ii) a Torres Strait Islander, meaning a descendant of an indigenous
inhabitant of the Torres Strait Islands; and
(b) identifies as an Aboriginal person or a Torres Strait Islander; and
(c) is recognized or accepted by an Aboriginal or Torres Strait Island
community as a member of that community.
This incorporates three distinct elements: descent, self-identification, and community
acceptance. The Indigenous people of Australia comprise a total of approximately
500 distinct communities from quite di verse cultural groups. The 1996 Census
estimated the Indigenous population to be 386,049, or approximately 2.1 percent of
the total Australian population. Compared to the Australian population as a whole,
the Indigenous population is younger (half are age 20 or younger, compared to a
median age of 34 for the population as a wh ole) and more rural (nearly one in five
Indigenous people live in an area classified as “very remote,” compared to under one
in a hundred Australians overall).
The Health Circumstances of Indigenous People 13
Aboriginal and Torres Strait Islander pe ople are disadvantaged according to a
range of socioeconomic indi cators, including education, employment, income, and
housing, and are therefore at greater risk of ill health than other Australians.
Recipients of public services: Aboriginal and Torres Strait Islander people are
overrepresented in several areas of community services. They are more likely to be
part of the “Supported Accommodation Assistance Program” than non-Indigenous
people. Indigenous children are more likely to be placed under care and protection
orders or in out-of-home care than thei r non-Indigenous counterparts. Indigenous
people used aged-care services at younger ages and in proportionally lower numbers
(because of their shor ter life expectancy) than the non-Indige nous population.
Indigenous people use disabi lity services at similar rates to the rest of the
Housing: The 1999 data indicate that Aborigin al and Torres Strait Islander
people are more likely than the non-Indige nous population to live in substandard
conditions. Indigenous people disproport ionately confront overcrowding, high
housing costs relative to income, poorly maintained buildings and facilities, and
inadequate infrastructure. Aboriginal and Torres Strait Islander people are also less
likely to own their own homes than non-Indigenous Australians.
Health: The available evidence suggests th at Indigenous people are less
healthy than the rest of the population. In digenous people suffer from higher levels
of many mental and behavioral disorders, and their susceptibility to infectious
diseases is 12 times higher than the Australian average. Figures from 1998–99
demonstrate that Indigenous people are mo re likely to be hospitalized for most
diseases and conditions, with hospital admissions for males 71 percent higher and
for females 57 percent higher than for th eir counterparts in the non-Indigenous
population. Diabetes is a disease of particul ar importance, affecting 30 percent of the
Health services: There are clear differences be tween the Indigenous and non-
Indigenous populations in term s of health services. Overall, Indigenous people have
less access to health services than the general population.
Mortality: The life expectancy of Indigenous people is 20-21 years less than
that of the general population. Figures from 1997–99 indicate that the life
expectancy at birth for an Indigenous male is 56 years, and for an Indigenous female
63 years. Data from national surveys in 1994 and 1995 show that Indigenous people
are more likely than non-Indigenous pe ople to smoke, to consume alcohol at
hazardous levels, to be exposed to violence , and to be categorized as obese. Babies
of Indigenous mothers are nearly twice as likely as babies of non-Indigenous
mothers to be of low birthweight, and ba bies of Indigenous mothers are twice as
likely to die at birth and during the earl y post-natal phase. Indigenous childhood
mortality is 3 to 5 times higher than that for the population of Australian children.
The Criminal Justice System and Indigenous People
The criminal justice system has a disp roportionate impact upon Indigenous
people. Indigenous people constitute only 2.1 percent of the general population but
28.6 percent of the prison population.
14 One in seven Indigenous people is in jail,
one in four males. Figures from 1996 indicate that an Indigenous juvenile is 21 times
more likely to be imprisoned than a non-Indigenous juvenile. Between 1994 and
1997, the number of detained Indigenous juve niles rose by 20 percent. Data from
1999 indicate that 91 percent of the fema le prison population in Australia is
The Economic Circumstances of Indigenous People
According to recent research:
Indigenous Australians remain the most disadvantaged section of the
Australian population…. This has again been made clear from early results
from the 2001 Census that again clearly demonstrate that the Indigenous
population is growing quickly at over 3 percent per annum and that the ratio
of Indigenous to non-Indigenous income s remains low at 0.67 indicating that
Indigenous people remain relatively poor…. The proportion of Indigenous
young people who attend post -secondary training is significantly below that of
the rest of the Australian populati on and the employment statistics
demonstrate a great disparity between th e unemployment rates of Indigenous
and non-Indigenous people. There is some variation between the States but
the overall picture is that only a small proportion of Indigenous people are in
full-time employment and only a smal l proportion are represented in the
The economic circumstances of Indigenous people clearly reveal continuing and
endemic impoverishment. Their unemployment rate is 22.7 percent, compared to 9.2
percent for the general population; and the mean individual Indigenous income is 65
percent of that of the general population.
The Charity Law Framework
The Australian law governin g contemporary charities and their activities is
derived from the English Charitable Uses Act 1601 (43 Eliz. 1 c. 4) and remains true
to its common law origins. As elsewhere in the common law world, the law governing
charities and their activities developed as a part of the law of trusts, with a trust as
the means for putting a donor’s charity into effect, and the trustee required to apply
the donor’s gift exclusively for charitable purposes. The Preamble to the 1601 Act
broadly stated the purposes th en regarded as charitable, which in turn were crudely
classified by Macnaughten LJ in the Pemsel case.
16 Although further broadened by
subsequent judicial interpretation, they re mained firmly tied to the initial common
law parameters and principles. The commo n law of each state and territory now
allows for the creation of charitable trusts, with some modification by the trust
legislation of each state. The law of trusts continues to provide the template within
which charities operate, though most of them are now constituted as companies
rather than trusts.
Charities: Legal Definition
Charities must satisfy the common law test of “charity.” There is no federal
statutory definition of this term, and the concept of what constitutes charitable
activity draws heavily on traditional English common law dating back several
centuries. As the Australian Tax Office (ATO) has explained, 17
For a purpose to fall within the technical meaning of “charitable” it must be:
Beneficial to the community; and
Within the spirit and intendment of the Statute of Elizabeth.
The courts in Australia, following the Pemsel classification, have generally come to
recognize the following categories of charity:
the relief of poverty,
the relief of the needs of the aged,
the relief of sickness or distress,
the advancement of religion, and
the advancement of education.
There are also certain other charitable purposes grouped under the general heading
“for the benefit of the community,” and ot hers may be recognized if they can be
shown to come within “the spirit and intendment of the Statute of Elizabeth.”
As a federation of states, Australia does not have a unified and uniformly
applicable legislative capacity; each state is reasonably free to legislate for itself,
though some Commonwealth legislation applies across all state jurisdictions. For the
most part, the Australian states and te rritories have not defined “charity” or
“charitable purposes” in legislation but, like the federal government, have left it to
the courts to apply common law.
18 Some jurisdictions, howe ver, do have statutory
definitions that to varying degrees expa nd or modify the common law definition.
The legislative foundations of contemporary charity law across the continent
rest on statutes dealing with charitable trusts and with tax.
Charitable Trusts Legislation
The Charitable Trusts Act 1993 (NSW) and the Charitable Trusts Act 1962
(WA) establish the law of charities in thos e states. The statutes do not define what
constitutes a charity, nor do they differe ntiate charitable activities from other
activities. The legislation derives from co mmon law foundations and remains true to
them. For practical purposes, the relevant law is now found in a combination of
established common-law-based case law precedents and certain statutes, the latter
applied at federal, state/territorial, and local levels.
The Income Tax Assessment Act 1997
Broadly speaking, the main legislation applying to all not-for-profit
organizations (NPOs), including charitie s, across Australia is the Income Tax
Assessment Act 1997.
19 Legislation in each state/terri tory governs such matters as
fundraising, collections, and trusts. Divisi on 50 of the 1997 Act, in the “exemption
tables,” provides income tax exemptio n for a number of different types of
organizations, including charities; these are listed under subject headings derived
from the Pemsel categories, such as “health,” educ ation,” “defense,” “environment,”
and “the family.” Tax legislation distin guishes between “institutions” and “funds”
An institution is an establishment, organization, or association,
instituted to promote some objective, especially one of public or general
utility. It connotes a body called into existence to realize a defined purpose. It
may be constituted in different ways, including as a corporation,
unincorporated association, or trust.
A fund mainly manages trust property, and/or holds trust
property to make distributions to other entities or persons.
Both entities, if charitable, qualify for exemption under Division 50 and qualify as
rebatable employers under s 65J of the Fringe Benefits Tax Assessment Act 1986.
The concept of “charitable purposes” re mained central to the law governing
charity until 1914. The Estate Duty A ssessment Act 1914 (Cth) then divorced
“charity” from gift deductibility and introduced the term “benevolent institution.”
Subsequently, in The Perpetual Trustee Co. Ltd. v Federal Commissioner of
Taxation, 21 the High Court defined “public benevolent institution” as an institution
organized for the relief of poverty, sickness, destitutio n, helplessness, suffering,
distress, or misfortune. Since then the ATO has had a double-pronged approach to
tax liability: a charity is eligible for ta x exemption, while a public benevolent
institution (PBI) is eligible for donation deduction.
(i) Public benevolent institution
Sections 30–45 of the Income Tax Asse ssment Act 1997 require any entity
applying for status as a recipient of deductib le gifts to provide evidence that it is a
public benevolent institution. Not every ch arity, however, is a PBI. The 1997 act does
not define “public benevolent institution”; although the term expresses a unitary
concept, each of the constituent parts of the term must be met.
The class of eligible persons must be suffici ently wide to constitute “the public” in
the sense of a substantial, appreciable, extensive, or sufficient section of the
22 The principal test as to whether an institution is “public” is that it
confers benevolence upon an apprec iable needy class in the community. 23
• “Benevolent” or “Benefit”
A public benevolent institution has been defined by Starke J, in a statement that
has borne the test of time, as an “institu tion organized for the relief of poverty,
sickness, destitution or helplessness.”
24 The component of “helplessness” has since
attracted a good deal of judi cial attention, usually affirmative. It is well established
that “relief” is not synonymous with “benefit.”
An “institution” co nnotes something more than a mere trust. It is a legal
undertaking formed to undertake activities that bring benevolent purposes into
effect. Gyles J, in Trustees of the Indigenous Barrister’s Trust: The Mum Shirl Fund v
FC of T, reviewed the authorities relating to th e interpretation of “institution” and
In my opinion, a body cannot be a public benevolent institution unless it can
be identified as carrying on activities or providing services relevant to the
benevolent purpose. In my view, a trust fund administered by trustees who
provide money in order that services prov ided by others can be availed of is
not an institution in this sense.
For that reason, he held that the trust could not be termed a public benevolent
(ii) Public Fund
To meet the definition of a “public fund,” a trust must demonstrably satisfy
the “public” element, be limited to “nec essitous circumstances,” and be for the
“relief” of thos e circumstances.
(iii) Relief of necessitous circumstances
In The Mum Shirl case, Gyles J stated:
“Necessitous circumstances” is not a term of art or a defined term, and it is
not confined to the relief of poverty in the strict sense … An indigenous
person with virtually no assets and with all the social disadvantages shown by
the evidence needs help in order to break free of the poverty trap….
Economic, social and cultural barriers exist to successful participation in
commercial or administrative life at any level by such persons.
This view enabled Gyles J to conclude that the broad strategic support provided by
the fund represented an appropriate means to relieve the necessitous circumstances
of such Indigenous persons.
Gyles J significantly broade ned “necessitous circumstan ces” by ruling that the
term need not be restricted to the relief of poverty. His ruling endorsed judicial
notice of the fact that Indigenous people are per se within “necessitous
circumstances” and allowed gr eater strategic leverage for charitable activities. The
ATO subsequently chose not to appeal this ruling, though it commented that it will
“seek the earliest available opportunity to test these issues before the court.” 27
No government body bears particular responsibility for administering the law
as it relates to charities, nor does the law impose registration or regulatory
requirements on charities, though some a ssociated activities, such as fundraising,
are regulated on a st ate-specific basis.
The Attorney Generals
State Attorney Generals retain their traditional role of parens patriae in
relation to charities, which in theory gives them responsibility to exercise protective
supervision over all charities and to enforce charitable trusts where necessary.
However, this role lacks any regulatory fu nctions. For example, an Attorney General
does not register or audit charities operating within the jurisdiction.
The Australian Tax Authority (ATO)
The federal government is responsible fo r the income tax, capital gains tax,
fringe benefits tax, customs duties, and Goods and Services Tax (GST). State and
territory governments are responsible for su ch taxes as stamp duties and land and
payroll taxes. Local authorities levy rates an d charges. At each level of government,
NPOs, including charities, are, to varying degrees, exempt from taxation.
The 1997 Act sets forth the complex syst em for administering the eligibility
for tax exemption of not-for-profit organizations, including charities, and the ATO
administers it. This government agency do es not have a brief to be proactive in
recognizing charities that engage in new forms of public benefit activity. Australia
distinguishes between organizations and donations in terms of eligibility for income
tax exemption. Although the concepts of charitable institution and funds are used to
determine income tax exemption, a different classification system is used to determine
eligibility to receive tax-deductible donations. In the 1997 Act, Division 50 lists
organizations by specific name or by class, including charities, that qualify for income
tax exemption; Division 30 lists organizations, including public benefit organizations,
that can receive tax-deductible gifts.
In Australia, the judiciary alone applies established common law principles
and precedents to modern social circumstan ces. With no equivalent of the English
Charity Commission, the task of fitting the law to contemporary social need falls
exclusively to the courts. However, it has long been a characteristic of charity law, in
this jurisdiction and elsewher e, that the volume of litigation is drying up: charities
are increasingly unwilling to tolerate the heavy costs and the unwelcome publicity.
As the number of cases before the courts declines, so too does their capacity to
exercise a steady influence over the evolution of charity law.
The Australian Securities and Investment Commission (ASIC)
Charities per se are not required to register the facts of their existence,
location, assets, governance arrangements , or dissolution with any public body.
However, many charities choose to assume the legal form of a company limited by
guarantee, and all such comp anies must register with the Australian Securities and
Investment Commission (ASIC). This body administers the provisions of the
Corporations Act 2001 as it applies to all co mpanies, including incorporated charities,
but it has no specific brief in relation to charities as such.
Charity Law in Practice: The Lack of Fit
Law constructed in the main from traditional case law principles and
precedents cannot adequately address the complex nature of much contemporary
social need. This is particularly true in relation to the extreme and embedded nature
of social disadvantage suffe red by Indigenous people. Many of the reasons for this
legal failure can be traced directly or indirectly to the legacy of the common law.
Outside the Spirit and Intendment of the Statute of Elizabeth
As the ATO has emphasized, “Purposes ar e not charitable if they lack the
required community benefit or are not within the spirit and intendment of the Statute
28 In this jurisdiction, the “spirit and intendment” clause is a crucial
common law element of the public benefit test for charitable activity. An organization
whose purposes do not fit within the Pemsel classification, or are not analogous to
those listed there, must show that the purpos es fall within the legislative intent of
the preamble to the 1601 Act. Four hundr ed years later, it can require some
ingenuity to match the public benefit of a modern activity, such as Internet access,
to a preamble activity, such as repair of highways–and such a match can be
necessary to qualify for charitable status.
29 This sort of ingenuity is rare in Australia,
where the body charged with making such interpretations, the ATO, is primarily
concerned with maximizing public revenue.
The Absence of a Forum for Adjusting the Law
For judicial review of principles in the light of practice, the common law
requires a continuous case flow. In Australia, judicial review of principles and
precedents occurs so seldom and randomly as to provide little capacity for effectively
addressing changes in social need. In Aust ralia, no mechanism exists to permit an
on-going review and adjustment of the law to ensure an appropriate fit with new or
embedded forms of social disa dvantage, which amounts to a structural flaw in the
charity law framework. This is not to deny that the judiciary makes important rulings
with potential to reset the application of the law. As acknowledged by Gyles J in
Trustees of the Indigenous Barristers Trust : “In my opinion, the undisputed evidence
leads to a finding that, at the time the Trust was settled, and for the foreseeable
future, many, indeed most, indigenous persons in Australia could properly be
described as ‘disadvantaged.'” 30
Although judicial notice has been taken, in this and other cases, of the fact
that Indigenous people are per se socially disadvantaged, th is has not influenced the
approach adopted by the ATO. In the abse nce of an explicit High Court judgment
directing a different interpretation of the law, the ATO is free to continue its
conservative defense of exemptions from income tax liability on grounds of an
organization’s charitable purposes.
Causes and Effects of Poverty
Established case law has confirmed that the effects rather than the causes of
poverty must be the focus of a charity’s pu rpose and activity. For example, funding a
person’s education and helping the person get established in self-employment or in a
profession does not constitute the relief of poverty, sickness, destitution, or
(i) Compassion and helplessness
The traditional dynamic of benefactor and supplicant remains entrenched in
Australian judicial interpretations of “cha rity.” This was illustrated by Hely J’s
explanation of “benevolence” in Mines Rescue Board of New South Wales v
Commissioner of Taxation :
institution” to institutions whose primary activities are eleemosynary. That is,
the authorities import an underlying conc eption of “charity” or “gratuity” as
the fundamental foundation for their und erstanding of “benevolence” in this
context. In short, the authorities propound, and I adopt, a notion of
benevolence which involves an act of kindness or perhaps most particularly,
the rendering of assistance voluntarily to those who, for one reason or
another, are in need of help and who cannot help themselves.
An attitude of discretionary benevolence on the part of the giver, coupled with
the reciprocal helplessness of the recipient, is clearly an important component, as
was further illustrated by Evatt J in Perpetual Trustee Co Ltd v FC of T, when he
wrote of recipients: “Those who receive aid or comfort in this way are the poor, the
sick, the aged, and the young. Their disa bility or distress arouses pity, and the
institutions are designed to give them protection.”
32 This interpretation endorses the
patronizing approach traditionally asso ciated with charity and anathema to
contemporary minority groups . It would seem to foreclose any possibility of a more
strategic approach intended to tackle st ructural and embedded causes of social
While the advancement of education is a charitable purpose, not all training
schemes fit under this umbrella. They may prove unable to satisfy the “public
benefit” test. The more tightly drawn the cr iteria for gaining access to the training,
the more likely the scheme will be judged insufficiently “public” to qualify for
charitable status. The courts, however, have found that Indigenous persons per se
qualify as disadvantaged:
described as “disadvantaged” generally and, in particular, in relation to
education and the ability to take a pl ace in the business and professional
world of Australia.
Moreover, training, even when narrowly restri cted to a rather elitist profession such
as “barrister,” would meet the “public” requir ement, at least in relation to the needs
of Indigenous people:
Whilst, at one level, assisting persons to become practicing barristers may be
seen by some as a luxury, I see it as the grant of assistance to persons to
take a place in the world which the ability of the person would warrant but
which might be denied with out the assistance provided in order to overcome
economic and social disadvantage.
The group targeted for training must be large enough to be cons trued as sufficiently
“public” in nature. So, while “Indigenous people” may satisfy the test, any further
limitations that restrict access to those of a certain age, clan, or locality will probably
prevent the training scheme fr om being deemed charitable.
Again, while the advancement of educ ation is a charitable purpose, an
organization that restricts it self to conducting research will be denied charitable
status. Activities must do more than si mply increase the quantum of knowledge;
they must also disseminate it through te aching. An organization thus cannot gain
charitable status by research ing the nature and extent of the disadvantage suffered
by a group, profiling the ca uses, and gathering the data necessary to identify the
resources required to remedy the situation.
Advocacy or Political Lobbying
The restraints within charity law on the advocacy activities of disadvantaged
groups represent a particular obstacle for organizers, who are often impelled to draw
public attention to their grievances as a method of leveraging change.
(i) Political lobbying
The ATO maintains that political lobbying and promotional activities, where
such are the main purpos es, are not charitable:
Political, lobbying and promotional purposes are not charitable. While
promotional purposes may use educational means we do not consider this
sufficient to show a charitable purpose.
However, where political, lobbying or promotional purposes are merely
incidental to a purpose that is otherwise charitable, they need not prevent
that purpose being charitable.
These activities are allowed, even encourag ed in some jurisdictions, when they are
“merely incidental” to a purpose that is otherwise charitable. An organization
established to campaign on behalf of the needs of a minority group, however, would
have to forgo charitable status.
(ii) Advocating change in law or government policy
Organizations set up to challenge go vernment policy or to campaign for
changing the law will be denied charitable status. The ATO states:
An institution or fund whose purpose is to change the law or government
policy is not charitable. This is so even if the subject matter of the change
concerns the relief of poverty, education or religion….
A purpose of seeking changes to governme nt policy or particular decisions of
governmental authorities is also not charitable. 36
Clearly, an organization will not qualify as charitable if it is established primarily to
improve the social circumstan ces of a disadvantaged group by advocating changes in
policy or law, or if it chooses to make this its primary activity.
The ATO has stated: “A charitable purp ose must be for the benefit of the
community. Charity is altruistic and intends social value or utility. The benefit need
not be for the whole community; it may be for an appreciable section of the
37 However, the application of this principle in the context of Indigenous
community development projects has no t proved to be so straightforward. 38
(i) Self-help groups
Many community-based projects are initiated by small groups whose
members, sharing the same vision, organize the necessary resources and engage in
an activity or create a facility for their coll ective benefit. Such groups will not qualify
for charitable status, even if some extern al access is allowed, because the necessary
“public” element will not be met and the activity or facility will be construed as being
essentially for member benefit
39 or as being too vague or imprecise. 40
(ii) Cultural affirmation
Where a group belonging to a minority culture creates an organization to
preserve and promote its cultural heritage, the organization probably will not qualify
for charitable status: the ATO is likely to regard such activities as essentially social
and therefore of insufficient “benefit” to the community.
41 So, for example, a
community center established in Melbourne to provide for the cultural and social
needs of Latvians was held to be non-charitable on the grounds that the needs
addressed were mainly social in nature.
42 Such initiatives may also breach the ATO
rule that purposes must not be vague or ambiguous.
Community development schemes often have a business component, because
a disadvantaged community usua lly places a priority on projects that may bring in
capital and help lift its members out of poverty. Such schemes may not be overtly
run for profit but may involve a private financial contribution and/or generate a
surplus. They are often set up solely to train the unemployed in skills appropriate to
the needs of local industries. However, the involvement of private funds and the
basis for distributing any pr ofits can be fatal to the charitable status of the
Philanthropy has always served an important strategic soci al function by
mediating between the need s of the disadvantaged and the resources of the
privileged. This has not always been to th e long-term advantage of either group; in
particular, philanthropic intervention channe led through trusts existing in perpetuity
can perpetuate the dependency and marginalization of recipients while reinforcing
the patronizing role of the benefactor. Nor is philanthropic intervention necessarily
the answer to inequitable social divisions, which ma y require redress through a
political or rights frame of reference. Howe ver, the vast resources and public benefit
purposes of philanthropy have enormous potential to address the causes and
ameliorate the effects of disadvantage whil e also facilitating social inclusion. If
philanthropy is to fulfill its potential and promote the social inclusion of marginalized
groups, a better fit must be found between the law, philanthropic resources, and the
needs of the socially excluded.
Philanthropy is governed by law, specifical ly by charity law, but this no longer
provides an appropriate or sufficient mean s for channeling philanthropic resources to
foster social inclusion. The reasons for this are largely to be found in certain aspects
of the common law heritage that continue to underpin much of charity law in
Australia and many other modern western so cieties. In this country, the chronically
disadvantaged circumstances of the Indige nous people, remaining impervious to
generations of philanthropic intervention, graphically illustrate the consequences of a
misfit between law and social need. This case study has concentrated on the needs
of the Indigenous people, but the findings are relevant for minority culture groups of
other nations and for such socially marginalized groups as the mentally ill, the
disabled, and disaffected youth in all modern western nations.
Australia and many other common law na tions are currently reviewing their
charity law frameworks–an unprecedented op portunity for a coordinated adjustment
of the common law chassis that for four centuries has carried much the same body of
charity law. This article has indicated the type of adjustments that are necessary.
First, a new and independent entity (with a remit corresponding to that of the
Charity Commission) should be established to proactively shape the future functions
of charity law. The courts are no longer in a position to ensure that principle and
practice evolve to meet emer ging manifestations of social need, and the overriding
brief of the ATO will always be to maximize public revenue–so lead responsibility for
ensuring that philanthropic resources pr omote a contemporary interpretation of
public benefit must be vested elsewhere. Second, it is manifestly wrong for the law
still to require that charitable purposes focus solely on the effects of poverty and not
also on its causes. Charities must be fr eed to tackle the structural and embedded
nature of poverty that so often afflicts socially marginalized groups. Third, the
constraints on advocacy and lobbying activiti es should be removed. Every democratic
nation must take all necessary steps to ensu re that it hears the voices of dissent and
grievance; advocacy and lobbying activiti es should be encouraged. Fourth, the
community development approach offers a new and radical means of affirming and
empowering minority groups; all obstacles, such as the restrictions applying to self-
help groups, should be removed. The presen t difficulties associated with setting up
local training facilities and perhaps involving venture capital should also be removed;
the social and economic regeneration of lo cal communities must be facilitated rather
than impeded. Many other common law char acteristics of contemporary charity law
in Australia as in other jurisdictions could usefully be reappraised but cannot be done
Above all, this article has sought to re veal the nature of the principal common
law constraints and to explain why and how charity law must be adjusted to allow
philanthropic intervention to promote the social inclusion of such marginalized
groups as the Indigenous people and ther eby forestall their alienation. Ensuring a
better fit between the law, philanthropic re sources, and the needs of the socially
disadvantaged is a matter of pressing im portance for the Indigenous people, for
other marginalized groups in Australia an d elsewhere, and for the governments of
many modern western nations.
* Assistant Director (Research), Centre for Voluntary Action Studies, School of Policy
Studies, University of Ulster, Northern Ireland. This article draws from a study
undertaken in the capacity of Myer Prin cipal Research Fellow at the Centre for
Philanthropy and Nonprofit Studies, Queensland University of Technology, Brisbane,
Australia. The author acknow ledges with sincere thanks the support and many acts
of kindness provided by Professor Myles McGregor-Lowndes and the staff of CPNS.
1 See, Cooper v Stuart (1889) 14 App Cas 286.
2 See, Prime Minister Howard , J., Menzies Lecture Series: Perspectives on Aboriginal
and Torres Strait Islander Issues , December 13, 2000, at p 3.
3 See, the Royal Commission into Aboriginal Deaths in Custody, National Report:
Overview and Recommendations , Australian Government Publishing Service, 1991.
4 See, Royal Commission into Aboriginal Deaths in Custody, at p 228.
5 See, Royal Commission into Aboriginal Deaths in Custody, at p 288.
6 See, B. Hunter: Indigenous Australian arrest rate s: Economic and social factors
underlying the incidence and number of arrests, CAEPR Working Paper No 10 (2001),
and the Human Rights and Eq ual Opportunity Commission’s Social Justice Report
7 See, the Human Rights and Equal Opportunity Commission, Bringing Them Home:
A Guide to the Findings and Recommendations of the National Inquiry into the
Separation of Aboriginal and Torres Strait Islander Children from their Families,
Australian Government Publishing Service, 1997; also memorably portrayed in the
film Rabbit-Proof Fence.
8 See, for example, Kruger v Commonwealth (1997) 190 CLR 1 and Cubillo v
Commonwealth (2000) 174 ALR 97.
9 (1971) 17 FLR 141, a ruling questioned by the court in Coe v The Commonwealth
of Australia and Ors (1979) 53 ALJR 403; (1979) 24 ALR 118.
10 (1992) 175 CLR ALR 1.
11 (1996) 141 ALR 129.
12 See, Department of Aboriginal Affairs, 1981.
13 The Australian Bureau of Statistics (ABS) publication The Health and Welfare of
Australia’s Aboriginal and To rres Strait Islander Peoples (2001) provides the main
source of information for this section.
14 See, generally, the report of the Human Rights and Equal Opportunities
15 Evidence given during the Indigenous Barristers” case, op cit, by the Director of
the Centre of Aboriginal Economic Poli cy Research at the Australian National
University. This multidisciplinary social sciences research center focuses on
indigenous Australian economic policy and economic development issues, including
social justice and the socioeconomic status of indigenous Australians. Also, see, B.
Hunter Indigenous self-employment: mi racle cure or risky business?, CAEPR
Discussion Paper 176 (1999), CAEPR, ANU, Canberra.
16 See, Commissioners for Special Purposes of Income Tax v Pemsel  AC 531.
17 See, ATO, Draft Taxation Ruling TR 1999/D21, at para 8.
18 See, Chesterman v FC of T (1925) 37 CLR 317; Incorporated Council of Law
Reporting (QLD) v FC of T (1971) 125 CLR 659.
19 Building on foundations laid by the Income Tax Assessment Act 1936, which first
exempted certain classes of nonpro fit organizations from income tax.
20 See, ATO, Draft Taxation Ruling TR 1999/D21, at paras 19 and 20.
21  45 CLR 224.
22 See, Maughan v Commissioner of Taxation (Cth) (1942) 66 CLR 388 at 398.1;
Little Company of Mary (SA) Inc v Commonwealth (1949)
66 CLR 368 , per Rich J at
383-384, citing Verge v Somerville  AC 496 at 499; Commissioner of Taxation
(Cth) v Royal Society for the Prevention of Cruelty to Animals Queensland Inc  Qd R 571 per Fitzgerald P at 577.
23 See, Lemm v Commissioner of Taxation (Cth) (1942) 66 CLR 399 per Williams J at
411, unanimously endorsed by the Court.
24 See, Perpetual Trustee Co Ltd per Starke J at 232.
25 See, Joseph Rowntree Memorial Trust Hous ing Association Ltd v Attorney General
 1 All ER 288 at 295; City of Hawthorne v Victorian Welfare Association  VR 205 at 208-209.
26 Op cit.
27 See, ATO, Non-Profit News Service No 0031.
28 See, ATO, Draft Taxation Ruling , TR 1999/D21 at p 7.
29 See, Re Vancouver Regional FreeNet Associat ion v Minister of National Revenue
(1996) 137 DLR (4 th) 206.
30 See, Trustees of the Indigenous Barrister’s Trust: The Mum Shirl Fund v FC of T
(2002) ATC 5055. Citing in support: Re Mathew  VLR 226 at 232; Re Bryning
 VR 100 at 101-102; Aboriginal Hostels Ltd v Darwin City Council (1985) 75
FLR 197 at 211-212; Tangentyere Council Inc v Commissioner of Taxes (NT) (1990)
99 FLR 363 at 369-371 (although cf. Commissioner of Taxes (NT) v Tangentyere
Council Inc (1992) 102 FLR 470); and Alice Springs Town Council v Mpweteyerre
Aboriginal Corporation at 252-254.
31 (Cth) (2000) 44 ATR 107 at p 30.
32 (1931) 45 CLR 224 at p 233.
33 See, Trustees of the Indigenous Barrister’s Trust: The Mum Shirl Fund v FC of T,
35 See, ATO, Draft Taxation Ruling TR 1999/D21. Also, see, Re Boning  QSC
36 Ibid , at paras 78–85: citing McGovern v Attorney-General  3 All ER 493.
Also citing N.D.G. Neighbourhood Association v Revenue Canada 88 DTC 6279 which
concerned a neighborhood association whose activities involved campaigning on such
issues as government cutbacks, transporta tion changes, conversion of areas into
condominiums, and improving roads.
37 See, ATO, Draft Taxation Ruling TR 1999/D21, at para 43.
38 See, Aboriginal Hostels Ltd. v Darwin City Council (1985) 75 FLR 197 and also
Flynn v Mamarika (1996) 130 FLR 218). Also, see, Native Communications Society of
British Columbia v MNR  3 FC 471, which concerned a scheme to develop
radio and television programs relevant to native people and training native people as
39 See, In re Income Tax Acts (No 1)  VLR 211.
40 In this context, the ATO relies on the decision in Inland Revenue Commissioners v
Baddeley  1 All ER 525, where a gift of land to trustees for the moral, social,
and physical well-being of a community was found to be too vague to qualify as a
41 See, for example, Attorney-General (NSW) v Cahill  1 NSWR 85.
42 See, Latvian Co-operative Society v Co mmissioner of Land Taxes (Vic) (1989) 20