What Is A Public Benevolent Institution? - Sprintlaw

If you’re planning to set up a charity in Australia that delivers direct help to people in need, you’ll quickly come across the term Public Benevolent Institution (PBI). It’s a specific type of charity recognised by the Australian Charities and Not‑for‑profits Commission (ACNC) and the Australian Taxation Office (ATO), and it can unlock valuable tax concessions – including Deductible Gift Recipient (DGR) endorsement – if you meet the criteria.

In this guide, we’ll unpack what a PBI is, how it differs from other charities, the practical steps to set one up, and the key legal obligations to manage once you’re operating. Whether you’re a community leader, a social entrepreneur, or part of a group wanting to formalise your impact, understanding the PBI category will help you structure your charity the right way from day one.

What Is A Public Benevolent Institution?

A Public Benevolent Institution is a charity whose main purpose is to provide relief to people in need – typically those experiencing poverty, sickness, disability, distress, suffering, misfortune or helplessness. The relief must be direct, practical and targeted at alleviating that need, and the benefit must be for the public (or a sufficient section of the public), not just a closed group.

Common examples include organisations that deliver emergency food or housing support, domestic violence refuges, mental health crisis services, disability support, or programs for people experiencing homelessness. A PBI can operate nationally or locally, and it can deliver services itself or through controlled programs – the key is that its primary activity is benevolent relief.

PBIs are registered with the ACNC as a recognised “subtype” of charity. If the ATO also endorses the charity as a DGR under the PBI category, eligible donors can claim tax deductions for donations, and the organisation can access other tax concessions (like income tax exemption and GST concessions). These benefits make PBIs an attractive structure where your mission clearly centres on relieving need.

How Do PBIs Differ From Other Charities?

Not every charity is a PBI. The distinction matters because the eligibility tests and tax endorsements differ between charity subtypes. Here are the practical differences you should understand before you choose your path.

Primary Purpose Is Direct Relief

PBIs exist principally to relieve need directly. An organisation focused on advocacy, education or prevention may still be a charity, but it won’t usually qualify as a PBI unless those activities are incidental to a dominant program of direct relief.

Public Character

As the name suggests, PBIs must be “public”. In practice, that means being organised for the benefit of the public (or a sufficiently large or open class of people) and being controlled in a way that reflects that public character. This is one reason many PBIs incorporate as a company limited by guarantee with a community‑based board.

DGR Endorsement Pathway

PBIs commonly seek DGR endorsement under the PBI category. Other charity subtypes may need to apply under different DGR categories or may not be eligible for DGR at all. If tax‑deductible donations are critical to your funding model, this distinction is often decisive.

Governance And Activities

Because PBIs deliver front‑line relief, they tend to have heightened obligations around safeguarding, incident management, privacy, employment compliance and financial controls. In comparison, a purely philanthropic foundation that makes grants to other charities might adopt a different risk profile and policy suite.

How Do You Set Up A PBI In Australia?

Moving from an idea to a fully compliant PBI involves careful planning, clear governing documents and a staged registration process. Here’s a step‑by‑step overview.

1) Clarify Your Purpose And Activities

Write down your charitable purpose in plain language. Who will you help? What need will you relieve? How will your programs deliver direct relief?

This is more than a mission statement – your stated purpose must flow through to your governing documents and day‑to‑day operations. It’s what the ACNC and ATO will assess when deciding whether you’re eligible to be a PBI.

2) Choose Your Legal Structure

Most PBIs incorporate as a company limited by guarantee because it offers a national footprint, limited liability and a familiar governance framework for boards. Some groups use an incorporated association structure (regulated at state/territory level), but that can be less flexible if you plan to operate across Australia.

If you go the company route, you’ll register with ASIC and obtain an ACN, then apply to the ACNC for charity registration and PBI subtype. You’ll also need an ABN. Many founders work with a lawyer to streamline the Company Set Up and ensure the charity’s purpose is accurately reflected from the start.

3) Draft Fit‑For‑Purpose Governing Documents

Your constitution (or rules, if you’re an association) must clearly state your charitable purpose of benevolent relief, include appropriate not‑for‑profit and winding‑up clauses, and set out how the charity will be governed.

For companies, this usually means adopting or tailoring a Company Constitution that is PBI‑ready. It should address membership, the role and powers of directors, conflicts of interest, use of funds, and distribution of assets on winding up (typically to another PBI or charity with similar purposes).

4) Build Your Board And Governance Settings

Appoint directors with the right mix of skills and independence to guide a public charity. The ACNC looks closely at governance, so set up transparent decision‑making, clear delegations and robust financial oversight. A practical tool here is a Conflict Of Interest Policy to manage related‑party risks and protect public trust.

Board members must understand their duties, including acting in the charity’s best interests and with reasonable care and diligence. Many boards find it helpful to review the business judgment rule under section 180(2) of the Corporations Act alongside a charity context, such as the overview here on Section 180(2).

5) Apply For ACNC Registration And PBI Subtype

With your structure and constitution in place, apply to register as a charity with the ACNC and select the PBI subtype. You’ll need to evidence your charitable purpose and planned activities. If approved, the ACNC will register you as a charity and recognise your PBI subtype.

6) Seek ATO Endorsement For Tax Concessions

Once registered, apply to the ATO for DGR endorsement and other charity tax concessions (such as FBT rebate and GST concessions). Your constitution and program materials should align with your PBI purpose – inconsistencies can delay endorsement.

7) Put Policies, Contracts And Operational Settings In Place

Before delivering services, finalise key policies, staff and volunteer arrangements, safeguarding procedures and data protection. PBIs handle sensitive personal information and often operate in higher‑risk environments, so getting this foundation right is essential. We outline the key legal documents below.

8) Launch And Maintain Ongoing Compliance

Start delivering your programs and put reporting routines in place. PBIs must meet annual ACNC reporting, handle fundraising laws where relevant, keep accurate financial records, and maintain governance standards year‑round.

What Laws And Ongoing Obligations Apply To PBIs?

PBIs must comply with general charity law obligations as well as laws that commonly apply to front‑line service delivery. Here are the key areas to factor into your compliance framework.

ACNC Governance Standards

The ACNC’s Governance Standards set out core expectations for charities, including acting with a charitable purpose, accountability to members, duties of responsible persons (directors), and compliance with Australian laws. Your board and executive team should actively monitor and document compliance with these standards.

Fundraising Regulation

If you raise money from the public, you’ll need to comply with fundraising laws. Australia’s regime is state‑based, so the licences or notifications you require depend on where you fundraise and how (online appeals, events, raffles, etc.). Many PBIs adopt a national compliance plan that maps the rules by state and sets up clear approval and record‑keeping processes.

Employment And Volunteers

Hiring staff means complying with the Fair Work system (awards, minimum entitlements, payroll, and workplace safety). Role clarity is crucial, so issue a tailored Employment Contract for employees and a separate Volunteer Agreement for volunteers. This helps you manage obligations, set expectations, and avoid misclassification.

Privacy And Data Security

PBIs frequently handle sensitive information, such as health, disability or family violence data. If you collect personal information (including through your website, service intake or fundraising forms), you should publish a compliant Privacy Policy and implement privacy-by-design practices. Given the sensitivity of data, it’s also prudent to maintain a tested Data Breach Response Plan so your team knows how to respond quickly to an incident.

Safeguarding And Incident Management

Depending on your programs, you may be subject to mandatory reporting, NDIS or child safety frameworks. Even if not legally mandated, adopt clear safeguarding and incident management procedures suitable for your client group. Train your workforce and embed reporting channels and escalation steps.

Work Health And Safety (WHS)

PBIs have a primary duty of care to workers and participants under WHS laws. Conduct risk assessments for your programs, provide training, and implement controls for foreseeable hazards (for example, home visits, transport, on‑site client services, or after‑hours operations).

Financial Management And Reporting

Maintain proper books and records, prepare annual financial statements, and meet ACNC annual information statement requirements. Larger PBIs may require reviewed or audited financials. Establish internal controls over donations, grants, expenditure and asset management.

Tax Compliance

Even with charity tax concessions, monitor your GST and FBT positions, issue compliant receipts for tax‑deductible gifts where relevant, and keep tax records up to date. Many PBIs also manage grant funding with specific reporting and acquittal requirements – build these into your finance calendar.

Whistleblowing And Integrity

Encourage a speak‑up culture. Some PBIs adopt a formal Whistleblower Policy so staff and volunteers can report wrongdoing safely, with clear procedures for handling disclosures and preventing victimisation.

What Legal Documents And Policies Should A PBI Have?

Your governing documents are the starting point, but front‑line delivery requires a bundle of practical policies and agreements. Not every PBI will need every document on day one, but most will require several of the following.

• Constitution: Sets your purpose, not‑for‑profit and winding‑up clauses, membership, board powers and meetings. For companies, adopt a PBI‑ready Company Constitution that aligns with ACNC and ATO requirements.
• Conflict Of Interest Policy: Explains how directors, officers and key staff disclose and manage conflicts to protect decisions and reputation; a practical template is available as a Conflict Of Interest Policy.
• Board Charter/Delegations: Clarifies roles, responsibilities and decision‑making authority, including financial thresholds and program approvals.
• Employment Contracts: Provide role clarity, confidentiality, IP, and termination settings for staff. Use a tailored Employment Contract for employees and separate templates for contractors if needed.
• Volunteer Agreement: Sets expectations, duties, safety and confidentiality for volunteers without creating employment entitlements; see Volunteer Agreement.
• Safeguarding Policies: Child safety, vulnerable persons and incident management procedures appropriate to your programs.
• Privacy Policy: Explains how you collect, use and store personal information, especially if you handle sensitive data or run digital forms; a tailored Privacy Policy is essential.
• Data Breach Response Plan: Sets out roles and steps to contain, assess and notify after a cyber or privacy incident; implement a practical Data Breach Response Plan.
• Website Terms And Conditions: If you accept donations, event registrations or service enquiries online, set user rules, disclaimers and liability caps via Website Terms and Conditions.
• Funding And Grant Agreements: If you sub‑grant or partner with other organisations, use clear contracts that set deliverables, reporting and safeguarding expectations.
• Service Agreements/Client Terms: For fee‑for‑service programs (see below), set eligibility, service scope, fees and client rights in accessible terms.
• Finance And Fundraising Procedures: Internal controls over receipting, cash handling, restricted funds and fundraising approvals.
• Work Health And Safety (WHS) Policies: Risk management, training, incident reporting, and hazard controls relevant to your activities.

Having these documents tailored to your programs and risk profile will save time and reduce disputes. It also shows funders, regulators and donors that your charity is governance‑ready.

Can A PBI Operate A Social Enterprise Or Charge Fees?

Yes – a PBI can charge fees or run trading activities as long as its dominant purpose remains benevolent relief and the fees or trading activities are aligned with that purpose. For example, a disability support PBI may charge NDIS‑funded fees for services that directly relieve need; a homelessness PBI may operate a low‑cost social enterprise that trains and employs participants as part of their pathway out of homelessness.

The key legal and practical points are:

• Purpose Alignment: Activities should further your PBI purpose. If you grow a substantial unrelated trading arm, consider ring‑fencing it or reviewing your structure to protect PBI status.
• Constitution And Policies: Ensure your governing documents permit relevant revenue activities and that you have clear pricing, eligibility and hardship policies for fairness and transparency.
• Consumer And Privacy Compliance: Where you provide services or sell goods, comply with the Australian Consumer Law and maintain robust privacy and data security practices (your Privacy Policy should cover service intake and payments if applicable).
• Tax Considerations: Monitor GST, FBT and any commercial activity thresholds. Even for charities, correct tax treatment still matters.
• Reinvestment: Surpluses must be applied to your charitable purpose. No profits can be distributed to members.

If in doubt, get advice before launching a new revenue stream so you keep your PBI purpose and endorsements secure.

Key Takeaways

• A Public Benevolent Institution is a charity whose main purpose is to relieve people in need through direct, practical support, with a public character and governance suited to a public charity.
• PBIs often seek DGR endorsement, enabling tax‑deductible donations, but they must meet the ACNC’s PBI criteria and maintain alignment in their constitution and activities.
• Set‑up typically involves selecting a structure (commonly a company limited by guarantee), adopting a PBI‑ready Company Constitution, building a suitable board, and applying for ACNC registration and ATO endorsements.
• Ongoing compliance spans fundraising licences, ACNC governance, employment and volunteer management, WHS, privacy and data security – supported by practical documents like a Privacy Policy and Data Breach Response Plan.
• PBIs can charge fees or operate social enterprises if activities advance their benevolent purpose and all surpluses are reinvested into that purpose.
• Strong governance, clear policies and tailored contracts reduce risk, build donor and funder confidence, and let you focus on delivering impact.

If you’d like a consultation on setting up or reviewing a Public Benevolent Institution, you can reach us at 1800 730 617 or [email protected] for a free, no‑obligations chat.

Bella Duncan Bella has experience in boutique and large law firms with particular interest in privacy and business law. She is currently studying a double degree in Law and Psychology at Macquarie University.

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