Defining a charity

There’s been an interesting court case as to what constitutes a charity. Paul Matthews of the NZ Computer Society blogs:

As many of you will know we’ve been embroiled in a debate with the Charities Commission over the last year or so as to the educational nature of our activities. Earlier this week the High Court released their ruling, dismissing our appeal.

Without going into huge detail, in short we are of the view that we exist for the advancement of education, in various forms and in various contexts. When you break our activiites and purposes down we think it’s very hard to draw any other conclusion.

After all, in its purest form professionalism is simply education and the application of that (ie. experience) plus ethics.

If we exist for the advancement of education then by definition we are “charitable”. In practice this means two things. People can donate to our programmes (such as KiwiSkills, a programme focused on increasing the country’s digital literacy levels), and we don’t pay income tax on activities (although we still pay GST, PAYE, FBT, ACC etc).

So what did the High Court decide?

The Charities Commission granted us charitable status when we first applied. They reviewed our application in detail then agreed with us that we clearly existed for the advancement of education.

Some time after this decision the Commission began re-looking at charities they thought were in “grey areas” with a view to establishing precedents and after their investigation they concluded that we weren’t charitable after all. While we see our purpose as advancing education and our mandate wider than just our membership, they disagreed.

We appealed this decision to the High Court, and had our day in court. I must say, regardless of outcome our lawyers represented our position well and we got our day in court.

The High Court ruled on the appeal earlier this week, refusing to overturn the Commission’s decision.

What are the implications of this?

We’re still looking at this in detail, however the interpretation appears to suggest that if the result of having particular knowledge or skills imparted is that professionals or “the industry and profession” become more educated or skilled, this is not regarded as Educational under the Charities Act.

One of the primary reasons we appealed the Charities Commission ruling is because we were deeply, deeply concerned about this precedent, which is likely to have a significant impact on other education-focused organisations.

So NZCS conclude:

Frankly, we think this definition is daft and a law change is most likely necessary to clarify this. While we’re most likely not going to appeal the decision, we will be writing to the Minister responsible for this area expressing our very serious concerns.

Another organisation caught up in being deemed non-charitable is the National Council of Women. That one is less controversial as they are fairly overtly political – they submit on almost every single bill that goes through Parliament.