Aid/Watch does good work. The Sydney-based NGO monitors Australian and multinational aid programs overseas to ensure the recipients are getting a bang for the buck they are meant to be receiving from donors. But it is not a charity for the purposes of tax laws in Australia, which means that donations to it are not tax deductible for the donor, according to a ruling by the Federal Court last week.
A bench of three judges, Susan Kenny, Margaret Stone, and Nye Perram last week said that the Administrative Appeals Tribunal had been wrong to overturn a decision of the Commissioner of Taxation to refuse to grant Aid/Watch charitable status. According to the Federal Court, while Aid/Watch is undoubtedly concerned with poverty relief, a charitable purpose, it is also political organisation because, although it is not a lobby group, it attempts to persuade governments by monitoring, researching and campaigning. Aid/Watch does not directly alleviate poverty but rather seeks to influence government policy on aid, the court said.
Aid/Watch is looking at going to the High Court — and that court may be tempted to look at the issue of charities and tax deductibility given it has been a matter of some political controversy in recent years.
According to the reasoning in the Aid/Watch case, groups that are concerned with issues such as environmental protection, poverty, disabilities and the like need to demonstrate, if they are involved in any activities that can be characterised as seeking to influence public opinion or government policy, even indirectly through media and PR campaigns, that those political activities are merely incidental or ancillary to the charitable purpose of the organisation.
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One NGO that has long enjoyed status as a charity for tax purposes is the Tasmanian-based Wilderness Society. It is a multimillion dollar environmental protection and campaigning outfit that lives in the main off the considerable income it gets from tax deductible donations. But how is the Wilderness Society different to Aid/Watch?
The Wilderness Society is undoubtedly a political campaigner. It has a history of lobbying governments about the protection of forests, particularly in Tasmania. And while it claims to be politically non-aligned it most definitely seeks to influence the political process directly and indirectly on a range of contentious issues such as nuclear energy, the proposed Gunns’ pulp mill in Tasmania, forests policy and climate change.
Given the Aid/Watch ruling, would a court determine that the political and public influence activities of the Wilderness Society were merely incidental or ancillary to its charitable purpose — namely saving the physical environment? This is because even a cursory examination of the Wilderness Society’s modus operandi tells you that its main purpose these days is to change government policy on environmental issues — in fact that is its attractiveness to its donors.
The Wilderness Society ought to look at what has happened to Aid/Watch very carefully because if it lost is charity status, its effectiveness as one of the leading environmental lobby groups in the country would be put at risk.