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Registered Charities

Political purposes: General guidance

Updated May 2011

Organisations established for exclusively charitable purposes can carry out political activities if these are a legitimate means of furthering their charitable purposes. Organisations established to carry out non-charitable political purposes, which are independent of their charitable purposes, will not meet registration requirements.

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Introduction

To be registered as a charitable entity under the Charities Act 2005 an organisation must have exclusively charitable purposes.

The Charities Act states that "charitable purpose includes every charitable purpose, whether it relates to the relief of poverty, the advancement of education or religion, or any other matter beneficial to the community".

The legal concept of "charitable purposes" was first introduced in 1601 when the Charitable Uses Act (or Statute of Elizabeth) came into force in England.

The four categories of charitable purposes set out in the Charities Act were originally identified by Lord Macnaghten in 1891[1] and have subsequently been applied by New Zealand courts.

Over time, what courts have considered to be charitable has developed and changed to reflect changes in society, but the underlying qualities of what is charitable have remained constant.

Courts have also recognised that, to be charitable, a purpose must provide identifiable benefits for a sufficient section of the public.[2]

(For more information, see our information sheets Charitable purpose and Guidance on the 'public benefit' test).

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What are political purposes?

New Zealand courts have identified three categories of political purposes:

  1. those that seek to secure or oppose a change in the law or the policy or decisions of central or local government[3]
  2. those that support a political party[4]
  3. those for the perpetual advocacy of a particular point of view.[5]

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Can political purposes be charitable?

It is well established law that political purposes are not charitable. The leading case in this respect is Bowman v Secular Society Ltd[6] where the House of Lords held that a trust for political purposes is not charitable because the court has no means of judging whether the proposed change in the law will or will not be for the public benefit:

Equity has always refused to recognize such objects as charitable… 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, and therefore cannot say that a gift to secure the change is a charitable gift.[7]

In New Zealand the Bowman case has been applied in Re Wilkinson (deceased),[8] Knowles v Commissioner of Stamp Duties,[9] and by the Court of Appeal in Molloy v Commissioner of Inland Revenue.[10]

In 2011 this line of authority was applied by the High Court in Re Draco Foundation (NZ) Charitable Trust[11] and Re Greenpeace of New Zealand Incorporated.[12]

The reasoning in Bowman has also been applied by Courts in England,[13] Canada,[14] Australia,[15] and India.[16]

In McGovern v Attorney-General,[17] Slade J cited two reasons why the Courts will not consider political purposes as charitable:

first, the court will ordinarily have no sufficient means of judging as a matter of evidence whether the proposed change will or will not be for the public benefit. Secondly, even if the evidence suffices to enable it to form a prima facie opinion that a change in the law is desirable, it must still decide the case on the principle that the law is right as it stands, since to do otherwise would usurp the functions of the legislature.[18]

This statement indicates that Parliament is responsible for making laws and it is not appropriate for the Courts, or the Charities Commission, to pre-empt that process by forming a view on whether a new law or a change to an existing law would benefit the public.

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Can charitable entities undertake political activities?

Under section 5(3)(a) of the Charities Act, an organisation with non-charitable purposes can still qualify for registration under the Act if its non-charitable purposes are ancillary and not independent purposes. This means that its non- charitable purposes are undertaken to further a main charitable purpose.

Many charitable entities registered by the Charities Commission undertake political activities in order to achieve their charitable purposes. As long as the organisation's main purposes remain charitable, the use of political activities to achieve these purposes is unlikely to disqualify the organisation from registration.

(For more information and examples, see our information sheet Political activities and registration under the Charities Act).

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How will the Commission decide whether an organisation has a non-charitable political purpose?

The Commission assesses each entity on its own particular facts. In making a decision about eligibility for registration, the Commission applies the test for charitable purposes set out in the Charities Act and the relevant case law. It also considers each entity's current and proposed activities and any other relevant information as required by the Act.[19]

To determine whether a noncharitable purpose is ancillary, the Commission undertakes both a quantitative and a qualitative assessment of the particular facts. These assessments are explained in Re Greenpeace:

[68] A quantitative assessment is one designed to measure the extent to which one purpose might have a greater or lesser significance than the another. That assessment is a question of degree. On the other hand, a qualitative assessment has regard to the particular function in issue. A qualitative assessment helps to determine whether the function is capable of standing alone or is one that is merely incidental to a primary purpose.

…

[73] On a quantitative assessment, the question of degree involved cannot be measured by the number of pages in a book or website. Rather, it is a way in which the philosophy is championed that must be measured against the relevant charitable purpose to determine whether, as a matter of degree, it is merely ancillary. Ultimately, that is an exercise of judgment, on the facts of any particular case[20]

If an entity appears to be pursuing independent political purposes that are not ancillary to a charitable purpose the Commission will inform the entity that it does not appear to have exclusively charitable purposes. The entity will have an opportunity to respond and the Commission will consider this response before it makes a final decision on the entity's ability to meet registration requirements

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What happens if the Commission decides that an entity has non-charitable political purposes?

A decision to decline an application for registration or to remove an entity from the Charities Register simply means that the Commission considers that the entity does not meet registration requirements. Such a decision does not affect that organisation's right to continue to exist and to pursue its political purposes, nor does it affect the freedom of thought, conscience and religion or the freedom of expression of the members of that organisation set out in section 13 and section 14 of the New Zealand Bill of Rights Act 1990.[21]

Similar issues were considered in Alliance for Life v Minister of National Revenue[22] when the Canadian Federal Court of Appeal held that there was no violation of freedom of expression for two charities that had their registered status revoked on the grounds that they were too political. In this case the court quoted with approval an earlier decision:[23]

With respect to the Charter argument based on an alleged infringement of freedom of expression, the basic premise of the appellant is untenable. Essentially its argument is that a denial of tax exemption to those wishing to advocate certain opinions is a denial of freedom of expression on this basis.

On this premise it would be equally arguable that anyone who wishes the physic satisfaction of having his personal views pressed on his fellow citizens is constitutionally entitled to a tax credit for any money he contributes for this purpose. The appellant is in no way restricted by the Income Tax Act from disseminating any views or opinions whatever. The guarantee of freedom of expression in paragraph 2(b) of the Charter is not a guarantee of public funding through tax exemptions for the propagation of opinions no matter how good or how sincerely held.[24]

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References

  1. ⇑ Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531.
  2. ⇑ See for example Jones v Williams (1767); McGovern v AttorneyGeneral [1982] 3 All ER 439; Travis Trust v Charities Commission (2009) 24 NZTC 23,273 at 23,281; Re New Zealand Computer Society Incorporated HC WN CIV-2010-485-924 [28 February 2011] at paras 13 and 14.
  3. ⇑ Re Wilkinson (deceased) [1941] NZLR 1065; Knowles v Commissioner of Stamp Duties [1945] NZLR 522; Molloy v Commissioner of Inland Revenue [1981] 1 NZLR 688 (CA); Re Collier [1998] 1 NZLR 81. (See also Royal North Shore Hospital of Sydney v Attorney-General for New South Wales (1938) 60 CLR 396 at 426; National Anti-vivisection Society v Inland Revenue Commissioners [1948] AC 31 (HL); McGovern v Attorney-General [1982] 1 Ch 321 at 340.)
  4. ⇑ Re Collier [1998] 1 NZLR 81. (See also Re Hopkinson (deceased) [1949] 1 All ER 346 at 352; McGovern v Attorney-General [1982] 1 Ch 321 at 340.)
  5. ⇑ Re Wilkinson (deceased) [1941] NZLR 1065; Re Collier [1998] 1 NZLR 81; Re Draco Foundation (NZ) Charitable Trust HC WN CIV 2010-485- 1275 [3 February 2011]; Re Greenpeace HC WN CIV 2010-485-829 [6 May 2011]. (See also Royal North Shore Hospital of Sydney v Attorney-General for New South Wales (1938) 60 CLR 396 at 412.)
  6. ⇑ [1917] AC 406 (HL).
  7. ⇑ [1917] AC 406 (HL) at 442.
  8. ⇑ [1941] NZLR 1065.
  9. ⇑ [1945] NZLR 522.
  10. ⇑ [1981] 1 NZLR 688.
  11. ⇑ HC WN CIV 2010-485-1275 [3 February 2011].
  12. ⇑ HC WN CIV 2010-485-829 [6 May 2011].
  13. ⇑ National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31; McGovern v Attorney-General [1982] 1 Ch 321; Southwood v Attorney-General [2000] WTLR 1199; Hanchett-Stamford v Attorney-General [2009] Ch 173 at 181-182.
  14. ⇑ Positive Action Against Pornography v Minister of National Revenue [1988] 2 FC 340; Action by Christians for the Abolition of Torture v Canada (2002) 225 DLR (4th) 99.
  15. ⇑ Royal North Shore Hospital of Sydney v Attorney-General for New South Wales (1938) 60 CLR 396; Re Cripps (deceased) [1941] Tas SR 19 at 22; Public Trustee v Attorney-General (NSW) (1997) 42 NSWLR 600 at 611.
  16. ⇑ Tribune Press, Lahore (Trustees) v Income Tax Commissioner, Punjab, Lahore [1939] 3 All ER 469.
  17. ⇑ [1982] 1 Ch 321.
  18. ⇑ [1982] 1 Ch 321 at 336-7.
  19. ⇑ Section 18(3)(a) Charities Act 2005.
  20. ⇑ Re Greenpeace of New Zealand Inc. HC WN CIV 2010-485-829 [6 May 2011] at paras [66]-[73].
  21. ⇑ Re Collier [1998] 1 NZLR 81 at 90.
  22. ⇑ 174 DLR (4th) 442; [1999] 3 FC 504
  23. ⇑ Human Life International in Canada Inc v Minister of National Revenue [1998] 3 FC 202 at 220-221
  24. ⇑ Alliance for Life v Canada (Minister of National Revenue) 174 DLR (4th) 442); [199] 3 FC 504

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