non-profit-fact-sheets
What is a Public Benevolent Institution (PBI) in Australia?
Published: August 1, 2023
Read Time: 8 minutes
A public benevolent institution (PBI) is one of several subtypes of charities able to register with the Australian taxation Office and apply for tax concessions. The purpose of a PBI is to ‘relieve poverty or distress’ in a community by providing services to people in need. Like other charities, PBIs have both legal obligations and benefits. One such benefit is that they are eligible to receive the deductible gift recipient status. This type of non-profit organisation is formed to give support to disadvantaged individuals and groups.
What is a Public Benevolent Institution?
The Australian Charities and Not-for-profits Commission (ACNC) defines a public benevolent institution as “a charitable institution with a main purpose of providing benevolent relief to people in need” 1. As such, a PBI has three main characteristics: it is a public entity, meaning that it performs a public function, it falls under the definition of an institution, and it is benevolent, a term whose meaning has changed significantly in the past century. Examples of PBI organisations include:
- Entities providing emergency or subsidized housing
- Not-for-profit hospices or hospitals
- Not-for-profit aged care facilities
- Disability support services
- Entities helping asylum seekers and refugees
- Not-for-profit legal services for people living in poverty
The term public benevolent institution (PBI) is not a legal structure per se, but it has been mentioned in some of Australia’s taxation statutes to describe organisations in a certain tax category. Registered public benevolent institutions must follow the same rules as other charitable organisations under the Australian Charities and Not-for-profits Commission Act 2012 (the ACNC Act).
Public Benevolent Institution Legal Obligations
A public benevolent institution is formed to deliver the charitable purpose and intention of its founders and translate them into an active solution that benefits the people it intends to help. Registered PBIs are, by definition, a charity and must therefore meet the same legal obligations. As charities, PBIs can register under the Australian Charities and Not-for-profits Commission (ACNC), the federal regulator of charitable organisations.
In Australia, a charity must be a not-for-profit entity, obtain an Australian Business Number, and comply with the non-profit industry’s governance and conduct standards. A PBI must show that it plans to operate within one year of being established or risk losing its registration status. PBIs are different from public funds, which are controlled by government authorities or operate by contributions from the public. Whether organisations are public or not can be determined by checking if they receive public funding, are publicly controlled and accountable to their community, and have a connection with government.
To maintain its charitable status, the public benevolent institution must meet certain criteria and functions. “A PBI is benevolent if it is organised, promoted or conducted for the relief of poverty or distress (sickness, disability, destitution, suffering, misfortune or helplessness).” 1 PBIs serve a specific segment of a community (rather than the community as a whole) identified as disadvantaged and in need of ‘benevolence. For example, a PBI can engage in the preservation and promotion of Indigenous culture, but only if it serves actual needs. A public benevolent institution’s activities must assist people, not animals, forest, or infrastructure like roads. PBIs must not engage in or support terrorist or other criminal activities and cannot be a government entity.
PBI Tax Concessions
Registered public benevolent institutions are registered charities and are eligible for tax deductions under the Income Tax Assessment Act 1997 (Cth) and the Fringe Benefits Tax Assessment Act 1986. PBI charities are eligible to receive the following tax concessions under these Acts:
Here is the information formatted as a markdown table:
| Income tax exemption | Charitable organisations are exempt from paying income tax if endorsed by the ATO. |
|---|---|
| FBT exemption | Registered PBIs are exempt from paying up to $30,000 in fringe benefits tax. |
| FBT rebate | Some PBIs may be entitled to an FBT rebate up to 47% of their gross FBT payable amount. |
| GST concessions | Goods and service tax concessions are available for certain expenses made by the organisation. |
| DGR endorsement | Organisations endorsed as deductible gift recipients by the ATO are entitled to receive gifts and can provide receipts to donors for income tax purposes. |
| Franking credits | Franking credits are available to company shareholders who pay income tax on revenue and distribute after-tax profits through franked dividends. |
Deductible Gift Recipient Status
In addition to the tax exemptions mentioned in this article, a public benevolent institution may be eligible for the deductible gift recipient (DGR) status. A DGR is an organisation endorsed by the Australia Taxation Office (ATO) to receive income tax deductible donations. PBIs with this status can provide their donors with a tax receipt, meaning that they are more likely to fundraise for their activities because donors will be more willing to give if they can claim a deduction on their income tax return.
Not all charities are eligible for DGR status and it’s a good idea to speak with a legal expert or visit the ATO website to find out if your organisation qualifies. As a registered public benevolent institution, your purpose must fall under one of the DGR categories listed by the ATO.
To find out more about how to obtain a DGR status, read Better Boards’ Deductible Gift Recipient Status fact sheet.
How do I register as a Public Benevolent Institution?
If you believe your organisation meets the three main criteria for registering as a public benevolent institution (public, benevolent, and an institution), you should apply to the Australian Charities and Not-for-profits Commission and ask to register as a PBI. To register, your organisation must obtain an Australian Business Number (ABN), provide governing documents and a list of Board or committee members, have written policies and procedures and a strategic or business plan, and provide an annual report and financial statements. You must also confirm your legal structure. A PBI can operate as a trust, an unincorporated association, or a corporation, as long as it is registered as a charity. Finally, you will also be asked to describe your purpose, activities, beneficiaries, and choose the tax concessions your organisation wishes to receive.
What is the meaning of 'main purpose of benevolent relief'?
Your main purpose of benevolent relief is your organisation’s purpose of existence. According to the ACNC, ‘benevolent relief’ means working for the relief of poverty or distress, such as sickness, disability, poverty, suffering, misfortune, or helplessness. Your purpose must fall under one of these categories. The distress must be significant and concrete enough to ‘arouse compassion’ and go beyond the day-to-day difficulties experienced in ordinary life. A purpose of benevolent relief can offer relief to people for needs other than poverty. They can involve counselling or skills building. Your PBI can also engage others to conduct its activities, as long as this benefits the people intended to receive relief.
Are public benevolent institutions still relevant? Aren’t they considered outdated?
While the term PBI is out of fashion, the work these organisations do is still relevant to Australian citizens. The High Court of Australia has publicly stated that the meaning of the term public benevolent institutions is determined from the ordinary and contemporary meaning of these three words. The problem is that their meaning has changed significantly since the 1930s and some of the terms are no longer widely used. The Law Council of Australia explains that words like ‘institution’ are now associated with schools, churches, and religious orders, which have fallen under scrutiny under the Royal Commission into Institutional Responses to Child Sexual Abuse. The terms ‘benevolent’ and ‘destitute” are thought to be dismissive and paternalistic concepts that recalls the days of soup kitchens, asylums, residential schools, and orphanages and portray people in need of services incapable of helping themselves, undesirable, and even burdensome. Yet, there are more than 3,000 registered PBIs in Australia, each providing vital services to communities in need.
What types of organisations are excluded from being PBIs?
Societies caring for animals are not eligible to become a Public benevolent institution, only organisations helping people. Unless community associations are providing relief exclusively to a disadvantaged community, they cannot register as a PBI. Other entities excluded from registering as a PBI are marriage counselling agencies, youth groups and social clubs (unless they are considered benevolent), private trusts not engaged in charitable purposes, government or non-charitable entities, and religious organisations working for the sole purpose of promoting religion. In addition, educational bodies, unless providing services specifically to students in need, cannot become PBIs.
Is a public benevolent institution a non-profit? Can PBIs charge a fee for their services?
Yes, a public benevolent institution is considered a non-profit organisation, which means that its primary purpose must not be to generate revenue. PBIs may still charge a fee for their services, or a partial fee. However, any profit generated from their activities will need to be re-invested into the organisation or distributed among the members. Non-profit or not-for-profit are umbrella terms used to describe an entity that works for the benefit of the public rather than for profit. While not all non-profits must become registered charities, PBIs are a type of charity and must therefore register as a charitable organisation. To learn the difference between a charity and a not for profit organisation, read this article.
Additional Resources
To learn about the different legal structure available to non-profit organisations in Australia, our NFP legal structures fact sheet.
To read the full Commissioner’s Interpretation Statement and learn more about how PBI status is determined, visit the ACNC website.
To find out more about available charity tax concessions, visit the Australian Tax Office’s tax concessions webpage.
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Australian Charities and Not-for-profits Commission. (2016). Commissioner’s Interpretation Statement: Public Benevolent Institutions. ↩︎ ↩︎
This fact sheet is intended as a simple overview. Non-profit law is incredibly complex and there are many components, allowances, restrictions, exceptions and important qualifications that are not described above. Dedicated legal advice should be sought from a legal practitioner before taking action.
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Better Boards connects the leaders of Australasian non-profit organisations to the knowledge and networks necessary to grow and develop their leadership skills and build a strong governance framework for their organisation.
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