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Unpacking Public Benevolent Institutions

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Public Benevolent Institutions (PBIs) play a vital role in providing support and assistance to disadvantaged individuals and communities.
A PBI is both a subset of a charity and an NFP. But in order to be registered as a PBI and gain eligibility for the various tax concessions available, a PBI must satisfy certain requirements as stipulated by both the ATO and the ACNC. So let’s look further into PBIs and unpack these important organisations.

Creating purpose and impact

At what point does a charity become a PBI? Charities can be qualified as a PBI if and when they meet several criteria defined by the Charities Act 2013 (Cth).

The ACNC defines an organisation as a PBI if it meets the following requirements:

1. It fits the definition of a charity in accordance with the Act;

2. It’s an institution, meaning it’s an organisation or association created for the promotion and support of areas such as public, religious, educational etc

3. It must be an institution that exists with the main purpose of providing benevolent relief to people in need.

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What does 'benevolent relief' mean?

Wondering what ‘benevolent relief’ means? If work is to be considered benevolent relief, it must meet certain needs that:

  • Is significant enough to ignite compassion among those in the community, like educational and health needs.
  • Is focused on areas of suffering that go beyond what could be considered ordinary life, like asylum seekers and those without homes.
  • Is clearly requiring relief, like people affected by disability and the aging members of society.

PBIs are not-for-profit charities that are created in dedication to tackling large issues like poverty, sickness, disabilities and other vulnerabilities that many people face every day. Notable PBIs include hospitals, aged care services, subsidised housing and disability support services.

Like any charity, PBIs play a critical role in shaping a better society for Australians. They’re allowed significant tax concessions like income and fringe benefits tax exemptions and deductible gift recipient (DGR) status to support their endeavours, which allows them to stretch their funding further in pursuit of their purpose.
An organisation that receives DGR status has been considered officially recognised by the ATO. This status offers benefits such as the ability for people to deduct any gifts and donations in their personal income tax returns, and the ability to receive funds from philanthropic organisations and grantmakers (organisations who can only donate to NFPs with DGR status).

Not-for-profit Law has a valuable online tool that allows you to better identify your organisation’s eligibility for DGR status, as well as the relevant DGR category.

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PBIs in practice

Let’s look further into how PBIs support the wider community.

Working to fight poverty

One prominent focus area for PBIs is providing support for people living in poverty. These organisations provide essential resources, such as food, shelter, and financial assistance, to individuals and families experiencing economic hardship.

PBIs actively support refugees, asylum seekers, and migrants by providing services, language assistance and access to essential resources. This essential service aims to meet the unique needs of these marginalised populations and contribute to fostering a sense of belonging and support in our society.

Regardless of the main focus area of a PBI, they make a profound impact on the lives of those they help. Through their work, they promote a more inclusive and compassionate society for everyone.

Compliance and governance of PBIs

So what about the compliance and governance aspects of a PBI?
The need for strong governance and compliance management is paramount to promote and maintain transparency and ensure correct management of funding and resources.
Like most organisations, a PBI will need a board of directors as well as established policies and procedures that it adheres to. And in terms of risk management, PBIs face specific risks that require careful attention. One significant concern is the misuse of funds, given the reliance on donations and public trust.

To encourage strong public trust and improve risk management, PBIs should establish robust financial controls, internal audits and regular reporting processes to prevent mismanagement of funds.
Conflicts of interest should be identified and managed transparently so there can be confidence that decisions are made in the best interest of the PBI and the beneficiaries.
The threshold to be registered with the ACNC as a PBI is quite significant. An NFP cannot be considered a PBI unless they are already ACNC-registered and meet the ACNC’s definition of a charity.
In determining if an NFP should be listed as a PBI, the ACNC will look at several factors that either qualify or disqualify the organisation.

An organisation might be disqualified if they:

  • Are a sole trader or individual
  • Are a political or government party
  • Are a social, professional or sporting club
  • Act against public policy or engage in illegal activities

By registering, PBIs establish their status as recognised charitable entities, which allows them access to certain benefits and fulfils their obligations as PBIs.

Like any charity, PBIs also have a reporting obligation to submit an Annual Information Statement (AIS) each year, providing comprehensive details about their activities, finances, and governance practices.

This statement serves as a means of transparency and accountability, enabling stakeholders and the public to evaluate their impact and use of resources.

PBIs are integral to our communities

There are several other charity subtypes that an NFP can register as, which can cause confusion when it comes to fulfilling obligations and meeting compliance requirements.

Having an understanding of each subset is highly beneficial, especially for ensuring your organisation is registered in the most appropriate category for its purpose.

Read through more Accounting For Good articles for further information and resources about NFP organisations.

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