Nonprofit Political Activity: A View From Down Under

How Are Nonprofits Regulated in Australia?

The Honorable Dame Susan Glazebrook DNZM has posted an interesting article concerning what’s referred to as the “political exception” in Australia.  The exception apparently means that political activity is not a charitable purpose under Australian Law.  Here is an excerpt:

The political exception

 Neither the Statute of Elizabeth nor its preamble mentioned a political exception, probably unsurprisingly given the date of its passage and the context in which it was passed. The political exception arises from the requirement that the purposes of charities must be exclusively charitable. Modern cases have said that it has long been held that a political purpose is not charitable.²² Commentators, however, suggest that this was not in fact the case. They say that the exception is a relatively late entry²³ and that it is based on a text published in 1888²⁴ and the misinterpretation of earlier caselaw.²⁵

Lord Parker’s dicta in Bowman has been treated as the origin of the political exception.²⁶ Bowman was not in fact a case on charities at all. Rather the case concerned whether a gift of the remainder of a deceased’s estate to a society that discouraged belief in the supernatural was void, which it would have been if promoting anti-Christian information had amounted to the offence of blasphemy. The majority held that it did not, as long as the views were expressed politely.²⁷ In the course of his judgment however, Lord Parker discussed the dividing line between charitable and political trusts, the latter, he said, not being charitable.²⁸

The political exception was picked up over the years in cases in New Zealand,²⁹ Canada³⁰ and, although with a bit less enthusiasm, in Australia.³¹ It is not the law in Scotland or the United States, where charities are free by lawful means to advocate for changes in legislation or policy. The exception is that they may not directly or indirectly promote the election of a political party. ³²

Canada, after some difficulty with the issue, has codified the political exception for income tax purposes but does allow charities to carry out limited non-partisan political activities in support of their charitable purposes.³³ The Canada Revenue Agency (CRA) guidance allows no more than 10 percent of resources to be spent on such activities and requires reporting on the political activities carried out.³⁴

The political exception in Canada is however, the subject of controversy. In 2012 the then Conservative government announced that it would audit charities to examine their political activities. ³⁵ Many charities saw this as a targeted attack, with allegations that the charities chosen for these audits were those that had been criticising the

. . . 

Rationale

 So what of the rationale for the political exception. In Bowman Lord Parker put it this way:⁶⁵

… a trust for the attainment of political objects has always been held invalid, not because it is illegal, for every one is at liberty to advocate or promote by any lawful means a change in the law, but because the Court has no means of judging whether a proposed change in the law will or will not be for the public benefit.

Further justifications for the doctrine have been that “the law could not stultify itself by holding that it was for the public benefit that the law should be changed.” ⁶⁶ There is the related point that the courts should not usurp the functions of Parliament by deciding whether proposed changes to the law would be in the public benefit.⁶⁷ There is an added issue of international comity where the legislation or policy changes advocated for are to foreign law or policy.⁶⁸

The cases have also addressed the difficult situation where everyone can agree that an ultimate goal is worthy but where opinions on the means to achieve that goal are divided. In such cases, the courts have said it is impossible to assess the public benefit of the methodology advocated for.⁶⁹ Similar issues arise where the topic is highly controversial. The concern is that the courts would be compromising their neutrality by picking one side over the other.⁷⁰ This is especially evident where the choice can be seen as arising from moral beliefs, such as issues of abortion or euthanasia.

It is interesting to observe that the commentary on the cases, rather than the cases themselves, addresses the elephant in the room with the final rationale: that it is inappropriate for political organisations to benefit from the fiscal advantages given to charities.⁷¹

darryll k. jones