Playing by the Rules: New ACNC Guidance on Charities and the Promotion of Sport

Background

The Australian Charities and Not-for-profits Commission (ACNC) has published a new De-identified Registration Decision Summary (Decision Summary), which offers a rare glimpse of the Commonwealth regulator’s approach when considering the often-vexing issue of ACNC-registered charitable organisations engaging in community sporting activities.

The question of whether, and to what extent, a charitable organisation may undertake or promote sporting activities has historically caused a great deal of uncertainty, confusion, and tension because the purpose of ‘promoting sport’ is not recognised as a charitable purpose.

If an organisation is found to promote sport as an independent non-charitable purpose, then the organisation will not be eligible for endorsement as a charity – which could potentially have adverse legal and taxation consequences.

Decision Summary

The Decision Summary outlines important considerations for organisations pursuing, or seeking to maintain, registration as a charity.

In this case, an organisation applied to the ACNC for registration under the charitable subtype of ‘advancing culture’ in accordance with the Charities Act 2013 (Cth).

In assessing the application, the ACNC applied a ‘holistic approach’ to determine the organisation’s charitable purpose, including consideration of its governing rules, its actual activities, and the broader context in which it operates.

The governing document of the organisation stated that its objects were to conduct and host cultural events for an ethnic community. The document further stated that this would be achieved by:

• creating community sports events;

• organising special events for different age groups; and

• hosting a multicultural festival.

While the cultural and multicultural objectives aligned with the ‘advancing culture’ subtype, a deeper analysis was required to determine whether its object of engaging in community sport events amounted to an independent non-charitable purpose of promoting sport.

The ACNC reaffirmed that promoting sport is not, in itself, a charitable purpose. However, the ACNC acknowledges that sporting activities may be acceptable in some instances where these activities further a charitable purpose.

In this particular case, the ACNC was satisfied that the organisation’s sporting activities were not standalone objectives, but rather part of a broader strategy to engage the community and participate in fundraising appeals for other charities.

Key points for charities

Generally, promoting sport is not a recognised charitable purpose, so careful consideration is required when a charity engages in such activities to ensure compliance.

Executives, boards, and other responsible persons of charities, or organisations seeking registration, should ensure their governing documents and operations reflect a recognised charitable purpose, with any ancillary sporting activities clearly connected to reinforce that purpose.

Click here to read the ACNC’s Decision Summary.

Get in touch

If you require support for your Social Enterprise, Charity or Not-for-profit, get in touch with Hundt Law’s dedicated team of experts at: contact@hundtlaw.com.au.

Written by: Richard Hundt, Principal Lawyer & Charlotte Watson, Associate