Advocacy by charities: a delicate balance

Lucas Ryan GAICD explores the role of charities in advocacy and the delicate balance that must be achieved between regulatory limits on such activities and community expectations.

Advocacy has been an important part of the work of the charity sector since its earliest days.

Through working to address social and environmental issues, charities come to understand and, ultimately, seek to address the underlying causes of these challenges. This might be through education, promoting public awareness or through lobbying for changes to law and policy – advocacy.

Take, for example, a charity with the purpose of creating a community without homelessness. This might be pursued through providing services directly to people experiencing homelessness to support a transition to long-term, affordable housing.

While direct services are invaluable, in order to truly give effect to such a vision, resources must also be directed towards addressing the systemic causes of homelessness. Responding to both the symptom and the cause is a vital part of the strategy overseen by many charity boards.

For charities, advocacy is recognised under the Charities Act 2013 (Cth) as a legitimate activity where it is in furtherance of another charitable purpose. For example, advocacy that aims to address the systemic causes of homelessness will be considered charitable under this Act.

Some directors may be surprised by how broad the law is in this regard, even allowing charities to assess, critique, compare or rank policies of political parties and candidates. Since the landmark AidWatch case, it has been clear in law that there is no barrier to charities participating in political activity where it is consistent with their charitable purpose.

However, guidance released by the Australian Charities and Not-for-profits Commission (ACNC) prior to the 2016 election drew a sharp line around the limits of such activity: a charity cannot promote or oppose a particular political party or a candidate for political office. The focus must always be on matters of policy.

From the perspective of directors, overseeing advocacy work is a matter of delicate balance. Boards must ensure that their organisations are effective in achieving their missions – and for many boards this will include supporting an advocacy strategy in furtherance of a charitable purpose.

In doing this, boards must have regard for the limitations on advocacy established by regulation. The hard and fast rule for charity boards is that advocacy activities must not be party political.

However, ensuring your advocacy activities are in furtherance of a charitable purpose requires a more nuanced approach. All of a charity’s advocacy activities must fall squarely within a charitable purpose. This is in contrast to the broader work of a charity which may include purposes that are concomitant, incidental or ancillary to its dominant charitable purpose.

Recently, the role of charities in advocacy has come into sharp focus for the sector once more. An Australian Government consultation on tax deductible gift recipient (DGR) reform opportunities is currently contemplating, among other things, placing limits or imposing additional reporting requirements on advocacy activity by charities with DGR status.

This consultation draws on the findings of the House of Representatives Standing Committee on the Environment’s inquiry on the Register of Environmental Organisations (REO) which recommended that 25 per cent of annual expenditure from an environmental DGR’s public fund should be required to be spent on environmental remediation.

Although there is much that can be and is done by charities to address environmental and social issues directly, the most urgent challenges often require changes to law and policy.

In our submission to the public consultation, the AICD has voiced its support for advocacy as a legitimate charitable purpose under the law as well as an important part of the contribution made by the charity sector to the community. We do not support further limitations or additional reporting burdens on the advocacy activity of charities with DGR status.

Boards must be conscious that while the law has significant tolerance (up to a point) for advocacy by charities, this may not be consistent with views in the broader community. The ACNC’s recent compliance report revealed that a number of formal complaints had been made concerning advocacy by charities, but very few warranted regulatory action. This was conceptualised in the REO inquiry as a departure between the law and community expectations.

Recognising this, boards must endeavour to ensure that stakeholders are engaged in and informed about a charity’s advocacy activities. The support of the community is a powerful advocacy instrument for charities, but failure to understand and meet their expectations can have serious implications. Likewise, overstepping the regulatory limits of advocacy can have dire consequences, including the revocation of charity status.

Steering a course between legal requirements and community expectations can be a delicate balance for charity boards, but it is essential in giving effect to an advocacy strategy that supports a charitable purpose.

Questions for directors about advocacy

1. Is our advocacy work in furtherance of a charitable purpose? Do we know which one?
2. Do we communicate our advocacy work to our stakeholders?
3. Have we established a clear goal for our advocacy work and do we evaluate progress towards achieving it?
4. Are we complying with the law in undertaking advocacy activity? How do we know?
5. Are the limits of advocacy embedded in our policies and processes?