About the organisation
An organisation that had been in operation for several years – that aimed to support people in need – applied for charity registration with the ACNC.
The organisation was structured as an incorporated association.
About the application
In its application, the organisation described its work as creating handmade gifts and other items.
The items, made by a group of volunteer crafters and hobbyists, were provided to partner organisations such as hospitals, mental health and social welfare agencies, schools and others who, in turn, donated the items to people in need.
The organisation’s governing document included clauses that required it to operate on a not-for-profit basis, and to provide surplus assets to a charity upon winding up.
Both its governing document and registration application also demonstrated compliance with ACNC Governance Standards.
About the registration process
In looking at the application and the information provided, the ACNC was able to learn more about the organisation and the work that it did.
During the application process, the organisation informed the ACNC that it conducted ‘commercial activities’ in addition to what it described as being its ‘charitable activities’.
This prompted the ACNC to request more detail about:
- the nature of its commercial activities
- who specifically the organisation worked with
- the organisation’s beneficiaries
- how it identified those who needed support, and
- the eligibility criteria it used as a basis for its decisions.
The ACNC needed to clarify whether the organisation’s activities, including its commercial activities, were undertaken only in furtherance of its charitable purposes, and whether adequate processes were in place to ensure that assistance was directed to eligible beneficiaries in need.
In response, the organisation explained that while it did undertake commercial activities, they were only undertaken to generate revenue, that revenue was being directed back into its charitable work.
A charity that undertakes commercial activities can do so and retain its charitable registration so long as the commercial activities are conducted to advance or further its charitable purpose.
It usually does this by ensuring that the profits generated from the commercial activities are used to fund its charitable work.
Sometimes the charitable purpose is directly related to the commercial activity (for example, a gift shop in an art gallery), and other times it might be unrelated (for example, an art gallery operating a commercial cleaning business).
The organisation also provided more detail about the range of beneficiaries it had.
They included people who may be suffering from medical issues or undergoing medical treatment, as well as the elderly and nursing home residents, families and young people experiencing disadvantage or enduring grief, and various multicultural communities.
It emphasised how its volunteers – those who made the items – were also among its beneficiaries. Many of the organisation’s volunteers were older, and they appreciated the social connection and involvement that their efforts and being part of the organisation provided.
The organisation was able to show the ACNC that it had formal policies and guidelines that outlined:
- eligibility criteria for those partner organisations receiving items to distribute to beneficiaries
- evaluation criteria against which it measured each request from a potential partner for items
- it was also noted that any request must detail what the items would be used for and what the expected outcomes were, as well as making it clear that any partner arrangement could be subject to periodic review
- an extensive list of situations, individuals and groups which the organisation would not support. This included requests that aimed to benefit private interests rather than charitable outcomes.
After reviewing the evidence provided, the ACNC was satisfied that the organisation’s purposes were solely charitable and that it had taken sufficient steps to address the potential for private benefits. The organisation’s commercial activities were carried out to further its charitable purposes.
Outcome
The ACNC approved the organisation’s application and registered it as a charity, with the charitable subtype of advancing social or public welfare.
The organisation’s charity registration was also backdated to its date of establishment after it confirmed to the ACNC that:
- there had been no change to its activities and purpose since its establishment
- its governing document had not changed since its establishment, and
- it had also retained significant financial records since its establishment and could produce them if required.