Cases of note for organisations seeking charitable status

CHARITIES and social entrepreneurs should take note of two recent court decisions which could make it easier for social enterprises or organisations which have charitable purposes to qualify for charitable status and be eligible for tax advantages and funding.

To qualify for charitable status, an organisation must apply profits exclusively to charitable purposes.

Under the law, the charity can operate a business which is ancillary to the core charitable purposes, so long as the profits are used for the charitable purposes.

Two recent decisions suggest that the courts are taking a broader approach to what kind of activities are considered to advance the public benefit so as to entitle organisations to charitable status.

Under the Charities Act 2005, an organisation qualifies for registration as a charitable entity if it ‘‘is established and maintained exclusively for charitable purposes’’ and ‘‘is not carried on for the private pecuniary profit of any individual’’.

Charitable purposes include the relief of poverty, the advancement of education, the advancement of religion, or any other matter beneficial to the community.

Twelve years ago, in 2008, Greenpeace of New Zealand

Incorporated applied for registration as a charity.

Its application was declined, and Greenpeace has been fighting the case through the courts ever since.

The Charities Registration Board had declined Greenpeace’s application for charitable status on the basis that Greenpeace’s purposes included advocating its own views on the protection of the environment and on peace, nuclear disarmament and the elimination of weapons of mass destruction and the board did not consider that these purposes were of public benefit and charitable.

It also considered that Greenpeace NZ was disqualified from charitable status because it engaged in and endorsed illegal activities to support its purposes.

The High Court disagreed. In its judgement issued on August 10, 2020, the court ruled that Greenpeace qualifies for charitable status, because its main activity is advocacy for the protection of the environment addressing climate change, protecting the ocean and improving the quality of New Zealand’s freshwater, which has a charitable public benefit as it contributes to the broadbased support and effort necessary for the end goal of protecting the environment.

Greenpeace’s goal of promoting nuclear disarmament and the elimination of weapons of mass destruction would not be a charitable purpose of public benefit in itself (as there are complex policy decisions involved in determining whether peace is better achieved by disarmament or bargaining by strength), but the court accepted Greenpeace’s argument that it had already ‘‘won’’ on these issues when New Zealand instigated its nuclearfree legislation and was no longer focused on these issues. The High Court ruled that Greenpeace NZ was entitled to be registered as a charity.

The other recent decision relates to the charitable status of Family First, the ‘‘family values’’ advocacy and education group. Family First, which states on its website that it ‘‘seeks to promote strong families, marriage, and the value of life . . .’’, holds socially conservative views on issues such as LGBT rights, abortion, euthanasia and drug reform, and its campaigns have included opposition to the antismacking and samesex marriage law changes.

Family First was first deregistered as a charity in 2013, and then again in 2017, the Charities Registration Board having decided that Family First’s purposes were not exclusively charitable and its core purpose of promoting its conception of the ‘‘traditional family’’ was not in the public benefit in the charitable sense under the Charities Act.

The Court of Appeal disagreed, with two of the three judges deciding that despite its focus on the ‘‘traditional family’’, Family First’s advocacy for the importance of family and marriage nevertheless has a charitable public benefit.

The dissenting judge found it more difficult to see how Family First’s promotion of its particular viewpoints on the ‘‘traditional family’’ and issues such as divorce, prostitution, euthanasia, pornography and abortion was of public benefit.

Family First’s battle may not be over yet, as the Attorneygeneral has applied for leave to appeal the decision to the Supreme Court.

However, these wins for Greenpeace and Family First may encourage more notforprofits and social enterprises, especially those which have an advocacy focus, to consider applying for registration as a charity. These organisations should first ensure that they have clearly articulated their charitable purposes so as to qualify them for charitable status. This cannot be mere lip service — the Greenpeace and Family First cases are important reminders that charities can be investigated at any time to check that they are acting in accordance with the charitable purposes.

Rachel Laing is a senior solicitor with Marks & Worth Lawyers and specialises in intellectual property and privacy law.