Abstract
In countries such as Australia, Canada, the United Kingdom, and the United States, whether certain classes of civil society groups are eligible to receive state support (by way of tax and other concessions) is primarily based on the entity’s intended purpose. Yet governments often view the advocacy, electioneering, or lobbying activities that are the means adopted by some civil society organizations to achieve their purposes, as unjustified attempts to intervene in the political process. Attempts to restrict these activities are, thus, not uncommon but raise challenges to fundamental tenets of liberal democracies. This article uses recent Australian experience as a case study to analyze such attempts through rule of law and freedom of expression lenses. It focuses on advocacy and electioneering via peaceful protest/civil disobedience activities and argues that charities have a valuable role to play as political actors and that any restrictions should meet the requirements of certainty and proportionality.
Introduction
In pursuit of the public good or the collective good of members, civil society organizations provide a range of fundamental goods—education, health care, spiritual life, etc.—by means of the voluntary action of individuals, rather than the administrative and coercive practices of the state. Charities are a major subset of these organizations, which seek to promote the public good by advancing “charitable purposes,” as defined in legislation or recognized in case law in many liberal democracies, such as the United Kingdom, United States, Canada, and Australia.
The means by which charities may pursue these purposes, however, are typically expressed in far less detail, if at all (Parachin, 2020). This, in turn, can be a source of significant controversy. Many charities see political advocacy and the pursuit of political change as central to their mission. In particular, this article focuses on peaceful protests or other civil disobedience activities aimed at retaining or changing the law or government policies or practices (“grassroots lobbying”), or retaining/changing the government itself (“electioneering”). 1 These protest activities are not necessarily unlawful, but often involve some risk of trespass or minor harm to property or persons. For example, organizing a protest march next to a public street but failing to obtain authorization for the march; a charity staff member placing a temporary placard in the lawn of Parliament House at a protest; using social media to actively promote peaceful protest events of other groups that end up involving trespass or altercations; or an environmental charity that trains members and volunteers in scaling buildings and boats, being a typical protest method for that organization (Amnesty International, 2021; Greenpeace of New Zealand Inc v. Charities Registration Board [2020] NZHC 1999).
Thus, insofar as charities are often critical of extant government policy, governments are—in return—sometimes hostile to such groups’ political advocacy. There is, thus, a constant temptation for governments to exhort charities to “stick to their knitting” (Mason, 2014) and restrict these political advocacy activities.
This article critically considers the appropriate role of political advocacy on the part of charities. It does so by employing an Australian case study of contemporary attempts to regulate peaceful protest activities by charities. That is because the regulatory restraints on electioneering and grassroots lobbying protest activities are more relaxed in Australia than Canada, the United States, and the United Kingdom, which has played a part in fomenting proposals for alternative measures. Most recently, this included regulations made under the Australian Charities and Not-for-Profits Commission Act 2012 (Cth) (the ACNC Act, which establishes Australia’s primary federal regulatory regime for charities). These regulations had not yet commenced when they were narrowly disallowed, meaning that they were effectively repealed, by the Federal Parliament. The regulations could have resulted in a charity losing charitable status and its associated benefits as a result of the protest march, temporary placard or training activities set out above, even if the charity was carrying out the activities in pursuit of a purpose such as the relief of poverty, which lacks any clear partisan dimension.
These attempted reforms raise broad questions concerning how states ought to regulate the political activism of charities. We, therefore, begin with a general account of such matters, which seeks to articulate principles that ought to guide states in their regulatory attempts. We proceed to compare the regulatory context for charity protest activities in the United States, Canada, England and Wales, and Australia to demonstrate that something akin to the attempted Australian reforms could be relevant in each jurisdiction. We then move to a close examination of the Australian reforms in light of the political theory account and conclude that the reforms would have posed deeply problematic challenges to fundamental tenets of liberal democracies.
The Value of Political Advocacy to the Liberal State
Any account of the principles that ought to guide regulation of political activism by charities must be informed by an account of the value of activism. We begin with the widely accepted idea that the value of the fundamental institutions of representative democracy—including fair elections, universal suffrage, and the rule of law—partly rests upon their protective function. Rights of political participation, in particular, afford citizens capacity to defend their interests by punishing at election time elected officials that neglect those interests. Democratic politicians, therefore, have powerful incentives to take account of the interests of a broad cross-section of the population in their decision-making.
However, it is widely accepted that though basic democratic institutions such as universal suffrage and fair elections may be necessary to ensure that the interests of each receive appropriate consideration, they are rarely sufficient. Democracies often fail to take appropriate account of the interests of all those affected by government decisions.
The most obvious cases are those concerning the interests of non-human animals and the natural environment. Though some such entities have been granted legal personhood in certain jurisdictions (New Zealand recently endowed the Whanganui River with such status, for instance), such entities do not possess rights of political participation and it is obviously infeasible to extend such rights to them. Standard electoral institutions can thus do little to guarantee the protection of such entities’ interests.
Consider, further, the position of vulnerable minority groups. Some such persons are denied rights of formal political participation altogether. Undocumented migrants, refugees, and felons are disenfranchised in many countries. In other cases, members of such groups may possess rights of participation, but be unable to effectively deploy them in defense of their interests. Sometimes, this will be because they belong to groups that are either too small or too widely dispersed across electoral districts for politicians to have incentives to attend to their interests. Other times, it will be because such persons face barriers in exercising the franchise. Political activity requires a range of resources (e.g., money, political knowledge, civic skills, time) that are distributed unequally (Verba et al., 1995). Members of socially and economically marginalized groups, therefore, under-participate in democratic politics (Schlozman et al., 2018). In the 2012 U.S. Presidential election, for instance, while around 54% of the voting-age population voted, overall, just 10% of the homeless population did so (Vertenten, 2020).
Thus, democracies typically feature a range of avenues for contestation including, importantly, affording citizens opportunities to engage in political activism—attempting to persuade their fellow citizens that some actual or proposed law or regulation takes insufficient account of legitimate interests, and pressure governments into taking better account of those interests. It is in this context that the value of political activism on the part of charities can best be understood. Of course, not all not-for-profits serve socially desirable ends. In the United States, for instance, several such organizations have been involved in ongoing efforts to undermine public confidence in the democratic process following the 2020 Presidential election (Mayer, 2021). Harder to categorize as socially desirable or not are those not-for-profits whose ends entail discrimination (see, broadly, Harding, 2014, Ch. 7). For instance, the case of Attorney-General (NZ) v. Family First New Zealand [2022] NZSC 80 involved an entity seeking to achieve grassroots endorsement of the “traditional family” and of traditional marriage between a man and a woman with the goal of causing legislative and policy changes to preference those “traditional” concepts. Although the New Zealand Supreme Court found an answer within charity law (Family First was found to have a non-charitable purpose) and the case itself does not concern civil disobedience, the principles of certainty and proportionality discussed in this article are likely to be relevant in such broader settings, along with other considerations (Murray, 2022).
However, among the charitable purposes of many not-for-profit organizations is the advancement of the interests of the very same kinds of vulnerable groups and entities that struggle to defend their own interests via the political process. Indeed, it is often partly in response to the failure of governments (and markets) to attend adequately to such entities’ interests that charities are established (Weisbrod, 1988). It is in virtue of the failure of governments to protect the basic interests of the poor that organizations like foodbanks and homeless shelters seek to ensure that such persons have access to food and housing. The failure of governments in the United Kingdom in the 19th century to protect non-human animals from cruel treatment led to the formation of the Society for the Prevention of Cruelty to Animals (today, the RSPCA).
This unique social role helps explain the distinctive value of their activism. Here, we draw partly on Goodin’s (1996, pp. 841–844) notion of “encapsulated interests.” Goodin holds that the interests of non-humans (e.g., the natural environment) ought to be given appropriate consideration in democratic decision-making. Yet, such entities cannot act independently to protect and promote their interests by voting. We must reach for the second-best alternative of encouraging voters to “encapsulate” the interests of such entities—that is, to see the interests of (say) the natural environment as constitutive of their own.
Goodin observes that this idea can be extended to persons unable to exercise the franchise. Young children, for instance, are not competent to act in the political arena and must, therefore, rely upon parents encapsulating their interests, such that politicians, in catering to the interests of parents, must cater to the interests of children. Yet, the idea is also useful in relation to entities that struggle to act effectively in the democratic process. Charities, then, encourage citizens to “encapsulate” the interests of entities and groups that cannot, or struggle to, advance their interests in the political process. Those charities whose purposes include the advancement of such entities’ and groups’ interests are uniquely well-positioned to give voice to, and offer effective public contestation on behalf of, the interests of persons and entities that would otherwise receive insufficient attention in the democratic process.
For non-human animals and the natural environment, charity advocacy often constitutes the only means by which the public might be made aware of the impact of government decisions in the relevant space and might, therefore, be mobilized in defense of such entities’ interests. In the 1970s, for example, confrontations between members of Greenpeace and Soviet whaling fleets helped drew attention to the harms of commercial whaling. In the early 1980s, the Tasmanian Wilderness Society played a crucial role in marshaling opposition to the construction of the Franklin Dam on the Gordon River in Tasmania. In recent decades, groups devoted to the protection of animals have devoted significant resources to agitating against factory farming and live animal exports.
There is a similar case to be made with respect to the interests of vulnerable persons. Although such persons may engage in political activism, in practice they often face barriers, just as they face barriers in exercising the franchise. Drawing on data from the 2012 American National Election Study, Schlozman et al. (2018, p. 99) found that just 3% of Americans in the bottom income quintile had attended a political protest. Australians without educational qualifications are significantly less likely to work for political campaigns at election time than citizens with tertiary degrees (Cameron & McAllister, 2019).
Here, too, charities devoted to such persons’ interests constitute valuable voices with the capacity to advocate effectively on their behalf, providing a means of drawing the wider public’s attention to their interests (see also Beard, 2019). Many charities see their mission as involving this role (Phillips, 2006). For example, the Australian Council of Social Services states that their mission is to “advocate for people affected by poverty, disadvantage and inequality,” and to “work at the national level, to influence changes to federal policies and laws” to realize a “fair social security system that ensures we all have an adequate income to cover the cost of living and to live with dignity, free from poverty.”
In our view, political activism on the part of charities has an essential role to play in ensuring effective contestation on behalf of the interests of persons and entities to whom elected officials are characteristically under-responsive. As such, we think that states generally ought to both (a) permit charities to engage in political activism, and (b) refrain from imposing unnecessary burdens—for example, depriving charities of tax-exempt status—upon their doing so (at least, where that activism bears a sufficiently close connection to the purposes of the charity in question).
Moreover, with respect to (b), the burdens in question need not be motivated by political hostility to activism on the part of charities to be problematic. As set out in the next part, in the United States, tax deductions for electioneering and lobbying are effectively denied or limited across the board to individuals, for-profit corporations and (indirectly) donors to charities. However, the role of the charity sector in engaging in peaceful political protests to advance the interests of disadvantaged groups raises real questions about purported equality or anti-democratic concern bases for such rules, given that the role we have outlined is aimed at reducing inequality in political participation (as to the contested bases for such rules, see Fishman et al., 2021, p. 488; Lapin, 2017). 2
Yet the matter is not straightforward. Charities’ political activism ought not be unregulated. No organization may permissibly pursue its objectives—no matter how compelling those objectives might be—by means that violate the rights of others. The state has a legitimate role to play in preventing such violations, even as they arise in the course of political activity. Democratic states, moreover, have legitimate authority to make and enforce law. It is also appropriate, then, for democratic states to reserve the right to take reasonable steps to prevent charities from violating the law, or commissioning such violations.
An adequate approach to regulation must, therefore, strike a balance between two considerations. Protecting the ability of charities to engage in forms of political advocacy that might help advance the interests of persons and other entities to whom the democratic process is often under-responsive on one hand, and preventing such organizations from violating the law and/or the rights of their fellow citizens in the course of these activities, on the other. We cannot hope to offer concrete institutional arrangements that might be appropriate to this end in all circumstances. There are significant differences between different sorts of political activity (compare peaceful protests with closed-door direct lobbying, for instance) that call for different sorts of regulation; and political communities confront varying institutional, political, and social conditions, and therefore might strike appropriate balances between these considerations in different ways. However, using an attempted set of Australian regulations governing the conduct of charities as an exemplar, we argue that regulation ought to be guided by general principles of certainty and proportionality. We derive these principles by examining the Australian reforms through the lenses of freedom of (political) expression, the value of which we have outlined above, and the rule of law, which, as a political ideal, is fundamental to the formulation and application of laws in liberal societies (Rawls, 1971, pp. 235–241).
Regulation of Charities’ Political Advocacy: Context and Case Study
In each of the United States, United Kingdom, Canada, and Australia, civil disobedience activities that are unlawful raise the risk of criminal penalties for individuals and, if the activities are material and form a pattern of behavior that is carried out or condoned by the charity, the charity may risk being found to have an additional non-charitable purpose of engaging in unlawful activities (see, e.g., Murray, 2019; Wright & Rotz, 1994 in Canada, by analogy with the public policy limit in Canada Trust Co v. Ontario HRC [1990] 69 DLR (4th) 321). However, as set out below, this still leaves substantial room for the deployment of peaceful protest activities and it may also be that Bills of Rights or constitutionally protected freedom of speech precludes the activities from being unlawful in the first place.
The United States and Canada prohibit charity electioneering through tax rules (§170(c)(2), §501(c)(3) IRC and other sections relating to charitable contributions; sections 149.1(6.1) and (6.2) Income Tax Act, RSC 1985, c 1). This may be partly because, in the United States and Canada, donation concessions are available for donations to most charities, such that permitting electioneering might be perceived as the state subsidizing electioneering. In the United States, in particular, this would potentially be anomalous as political campaign donations to candidates and political parties and direct expenditure by businesses on electioneering or lobbying, are generally not deductible (§162(e)[ IRC; 26 CFR §1.162-20].
Australia and the United Kingdom do not prohibit charity electioneering through tax rules, although the United Kingdom uses electoral laws to cap campaigning expenditure by charities (Morris, 2016). England and Wales, along with Canada, also retain a common law rule against political purposes, which precludes charities from having a purpose of advocating for changes in the law or government policy or promoting a political party (Morris, 2016; Parachin, 2015–2016). Although the Canadian political purpose rule has been partially abrogated (see below), it continues to apply to the validity of charitable trusts. There is support in some U.S. jurisdictions for a narrow version of the rule against political purposes, but the American Law Institute Restatements suggest that generally only purposes of promoting a political party or candidates are precluded, not purposes of changing the law or policy (American Law Institute, 2021, §1.01, reporters notes). In Australia, the country’s highest court determined in Aid/Watch Incorporated v. Commissioner of Taxation [2010] HCA 42 that there is no broad rule against political purposes. 3 Nevertheless, a charity cannot be, or have a purpose of supporting, a political party. 4 Australian electoral legislation also requires charities and non-charities to register and disclose donations and campaigning expenditure and restricts foreign funding of campaigning. 5 Even to the extent that the rule against political purposes applies, it is worth emphasizing that the rule invalidates purposes, not mere activities of electioneering or lobbying carried out in support of an otherwise charitable purpose (Charity Commission for England and Wales, 2022).
Moving on to grassroots lobbying, the rule against political purposes in England and Wales and Canada could potentially apply to such lobbying, but only if the lobbying amounts to a purpose of lobbying, rather than mere activities. For instance, Aid/Watch provides an example with its purpose of promoting public debate as to the best methods for the relief of poverty via foreign aid. However, charity law restrictions on being or supporting political parties in the United States and Australia would not capture grassroots lobbying. Indeed, Australia also features legislation that renders void any “gag” clauses in federal government funding agreements that seek to restrict charities from political advocacy. 6 The U.S. tax rules do cap charity grassroots lobbying activities (lobbying can be “no substantial part” of the charity’s activities), but not non-partisan education, relating to legislation, as did the Canada Revenue Agency’s interpretation of Canadian tax rules until the case of Canada Without Poverty v. A-G (Canada) (2018) ONSC 4147. The U.S. Treasury’s interpretation of the lobbying cap is complex, but relatively generous in permitting much lobbying that does not relate to specific legislation and, in some cases, that does not involve a specific call to action (26 CFR §56.4911-2(b)(2)). Thus, grassroots lobbying relating to government policy would not be caught. Furthermore, the U.S. institutional response to these rules has included the proliferation of tax concession categories to explicitly political lobbying and campaigning entities that can remain connected in various ways with registered charities (Fishman et al., 2021, pp. 539–542). 7 Moreover, this is in the broader U.S. context of the existence of some general electoral law regulation of campaign financing, but with that regulation materially limited by the Citizens United 130 S Ct 876 (2010) decision, albeit a range of disclosure obligations remain (Fishman et al., 2021, pp. 547–550). U.S. tax legislation also requires §501(c)(3) charities to disclose their lobbying attempts and expenditure (Fishman et al., 2021, p. 499). For federal tax purposes, the Canadian political purpose rule has been limited, with tax legislation expressly permitting non-partisan “public policy dialogue and development activities” (Income Tax Act (Canada) ss149.1(1), (10.1)).
Thus, a degree of charity electioneering is permitted in England and Wales, and especially so in Australia, and material grassroots lobbying is permitted in all four jurisdictions—though slightly less so in the United States.
Alongside Australia’s permissive regulation of charity political advocacy, broader trends have resulted in greater enmeshment between charities and government, raising a wider range of spaces in which charities may wish to advocate about law and government policy. First, the rise of “new public management” has resulted in increased reliance on market forces to address social problems and hence government funding for private actors such as charities to provide human and community services, along with a host of other functions formerly provided by the welfare state (Productivity Commission, 2010, pp. 300–303). Second, government oversight and regulation has increased in many fields, implemented despite the goal of smaller government, but with a broader range of regulatory tools (Braithwaite, 2008; Onyx et al., 2016).
Increasing spaces and opportunities for political advocacy make governments nervous. Unsurprisingly, 9 years of a center-right government in Australia, recently ending in May 2022 with the formation of a federal Labor government, witnessed a range of actions designed to disincentivize social justice and animal rights activism, as well as foreign funding of such activities. For instance, a review of environmental organizations recommended mandating at least 25% expenditure on “environmental remediation work” rather than political advocacy; 8 and electoral legislation reform that was partly motivated by concerns about foreign donor influence over charity campaigning. 9 In 2019, two animal rights charities (Vegan Rising and Aussie Farms) that had attracted significant public controversy as a result of their protest activities had their charity registrations revoked by Australia’s federal charity regulator, the Australian Charities and Not-for-profits Commission (ACNC). 10
Most recently, the previous Australian federal government proposed changes to the “governance standards” with which charities must comply to remain registered and eligible for federal tax concessions. Although ultimately disallowed by the Federal Parliament, the Australian Charities and Not-for-profits Commission Amendment (2021 Measures No. 2) Regulations 2021 (Cth) (the Regulations) would have required a registered charity to
(i) not engage in conduct or omit to engage in conduct if the conduct or omission may be dealt with as a summary offense under an Australian law relating to entering, remaining on, destroying, damaging, or appropriating real or personal property, or causing personal injury or impairment to an individual; and
(ii) maintain reasonable internal control procedures to ensure its resources (including its funds, officers and employees, websites, and social media accounts) are not used to actively promote another entity’s acts (or omissions) that may be dealt with as an indictable offense, a relevant summary offense, or a civil penalty of 60 penalty units (i.e., $13,320) or more.
Indictable offenses are typically more serious offenses, while summary offenses are less serious, including offenses against property such as trespass (Butt & Nygh, 2021). Failure to comply with the requirements could have led to sanctions, ranging from formal warnings and directions through injunctions and enforceable undertakings to suspension or removal of directors/trustees and revocation of charity registration (ACNC Act, pt 4-2). However, due to the way in which legislative power is shared federally in Australia, revocation would have been the only response for a substantial minority of charities that are not “federally regulated entities” (Murray, 2018).
The previous government identified two reasons for the Regulations. First, public trust and confidence in the charity sector might be eroded if charities use their resources for unlawful activities (Assistant Treasurer, 2021, pp. 1, 4, 11). Government statements suggested that this concern was centered on advocacy by “activist” environmental and animal rights charities that make them too similar to political parties and involves condoning criminal acts (Seselja, 2020).
Second, to “address uncertainty about when engaging in or actively promoting certain kinds of unlawful activity may affect an entity’s entitlement to registration under the Act” (Assistant Treasurer, 2021, p. 1). Uncertainty arises from the fact that charities cannot have an unlawful purpose and are disentitled to registration if they act in a way that may be dealt with as an indictable offense or by way of a civil penalty of 60 units or more (Australian Treasury, 2021). The concern was claimed to be linked to a recommendation arising from a statutory review of the ACNC Act (McClure et al., 2018, recommendation 20). However, recommendation 20 actually called for “[t]est case funding. . . to develop the law in matters of public interest, including disqualifying purposes.” A further recommendation of the statutory review, recommendation 9, called for the currently existing governance standard, to which the Regulations add, to be repealed. Therefore, while the purpose of the attempted Regulations was clearly to curb unlawful protest activities on the part of registered charities so as to promote public trust, there must be some doubt about the existence of a further purpose of achieving greater legal certainty about the activities that could jeopardize a charity’s registration.
Ultimately the Australian Senate narrowly voted to disallow the Regulations and they do not apply. The center-right government that made the Regulations also lost power in May 2022. However, concern over charity political advocacy and the history of attempts to limit such advocacy suggests that further regulatory attempts may be made in future. Therefore, we now examine whether the Regulations are consistent with rule of law principles that govern the formulation and application of laws in liberal societies and with freedom of expression, which we primarily conceptualize through the implied freedom of political communication guaranteed by the Australian Constitution (the Constitution).
The Rule of Law
There are many elaborations of the rule of law and the extent to which it is legally binding is contestable. However, as a political ideal, most commentators agree that it contains the following elements: First, the actions of government must be permitted by laws made in advance (including that these laws are made in accordance with constitutional requirements, where applicable (Saunders & Le Roy, 2003); second, the same laws should apply to all persons so that they are treated equally; and third, all persons are answerable before the law (Dicey, 1959). These general propositions have been developed to entail specific procedural protections, including that laws are sufficiently clear, coherent and stable to allow for guidance of persons; and that there is congruence between the law and official action [Fuller, 1969]. Legal certainty is thus a critical element of the rule of law.
It follows that charities ought to have been able to interpret and understand the attempted Regulations. Also, the Regulations should have helped illuminate the scope of unlawful activities that might have put a charity’s registration at risk. The rule of law also suggests that the ACNC Commissioner should have been able to apply the Regulations in a manner that charities could have predicted and that treated charities equally. In this regard, broad discretionary powers are often viewed as undermining certainty in the administration of the law (Dicey, 1959). There is obviously a need for administrative discretion to recognize the extensive involvement of government in society and the range of complex and unanticipated circumstances that may arise. However, legal certainty requires oversight and constraints on the manner of exercise of administrative discretion (Redford, 1969).
Turning to the Regulations, paragraph (i) is reasonably clear and coherent, although the fact that the Explanatory Statement did not contain a table of applicable summary offenses (Assistant Treasurer, 2021), suggests that charities would have faced practical difficulties in keeping track of a large body of offenses against persons or property.
More uncertain in meaning is paragraph (ii), which would have required charities to maintain reasonable internal control procedures to ensure that their resources were not used to actively promote acts or omissions that may have been dealt with as certain kinds of offenses. This is clearer than the initial proposal which referred simply to charities taking “reasonable steps” to ensure that their resources were not used by others for these unlawful purposes. Even so, paragraph (ii) is troublingly vague. The distinction between actively and passively promoting unlawful acts is likely to have been contentious and highly context dependent, as suggested by an Explanatory Statement example that distinguishes between promotion of a self-organized protest event, versus the “passive” activity of regularly posting about local community events, including another charity’s protest event, on social media (Assistant Treasurer, 2021, p. 7). Charity law contains no body of rules that would have helped with this process. “Reasonable” internal control procedures would also likely have been a fairly indeterminate requirement. Paragraph (ii) appears to impose a particular duty of care on registered charities and so it might be natural to hope that negligence cases could have helped provide some boundaries. Yet, in negligence cases, the court typically weighs the probability and seriousness of harm against the burden of precautions and social utility of the action (Wyong Shire Council v. Shirt [1980] 146 CLR 40). Paragraph (ii), in contrast, effectively deems the harm to be serious and it is unclear whether the Regulations would have left any scope to assert the social utility of promoting protest actions.
Uncertainty may also have arisen in the administration of the Regulations. Asking a charity commission to interpret a vague standard in respect of offenses under other laws that the commission is inexpert at regulating is unlikely to have produced clear and consistent administration. This risk is exacerbated by the ACNC’s enforcement powers which can be exercised if the Commissioner reasonably believes that a charity has, or it is more likely than not that it will, breach governance standards like the Regulations. Paragraph (ii) may therefore have required the ACNC to make a decision on a charity’s future internal control procedures before any offense was committed or before another regulator had decided to charge someone, or before a court had determined whether an offense was committed. Although the Commissioner must actually hold the relevant belief and have reasonable grounds, 11 this still would have left very broad discretion. The discretion would have extended to the choice of enforcement actions. Although the ACNC Commissioner’s enforcement policy is based on principles of responsive regulation that include proportionality, the factors to which the Commissioner must have regard under the ACNC Act are sufficiently diverse (including harm to public trust and confidence in the sector) as to enable some scope to respond to minor breaches with revocation (s35-10(2) ACNC Act). This risk is increased for those charities that are not federally regulated entities and for whom revocation is the main sanction.
There are also practical impediments to review of ACNC decisions. The ACNC can institute many enforcement actions (such as revocation of registration) without seeking a court order and its decision then stands pending any administrative tribunal review or court appeal proceedings. Furthermore, charities bear the burden of proof under provisions that have been drafted based on the onerous requirements for taxpayers seeking to appeal tax assessments (sections 165-40(b), 165-50, 170-10, 170-25 ACNC Act). This limits the scope to clarify the boundaries of the Commissioner’s discretion, thereby hampering the achievement of legal certainty.
All this, in itself, is problematic. Legal certainty is a sine qua non of liberal democracies; essential to ensuring that persons are able to predict whether their actions (or those of the associations to which they belong) are liable to be penalized by the state. But legal uncertainty also often entails other significant costs—including with respect to freedom of political expression.
Freedom of Expression
Freedom of expression is a key constitutional value in liberal democracies. Typically, freedom of expression is protected as a constitutional right. This is the case in the United States, Canada, and the United Kingdom. In contrast, Australia does not have a federal Bill of Rights and the Constitution does not confer an express right to freedom of expression. However, this does not mean that freedom of expression is without constitutional protection in Australia. The Constitution is regarded as giving rise to an implied freedom of political communication. The implied freedom is sourced in sections 7 and 24 of the Constitution, which require that members of the Senate and House of Representatives be directly chosen at periodic elections by the people of the States and the Commonwealth respectively. The rationale for the implied freedom is that free political communication is necessarily entailed by the system of representative government established by the Constitution.
The Australian High Court has repeatedly insisted that the implied freedom is not a right vested in individuals but rather a limit on Commonwealth, State, and Territory legislative competence. However, the doctrinal structure of the implied freedom is very similar to the rights to freedom of expression found in section 2 of the Canadian Charter of Rights and Freedoms and Article 10 of the British Human Rights Act 1998. In each of these jurisdictions, the courts first determine whether there is a burden on the right (or limit) and then ascertain whether the burden is justified in terms of a proportionality test. There are differences in the formulation and application of the proportionality test between these jurisdictions but there are also broad similarities. It is for this reason that commentators regard proportionality as establishing a “global model of constitutional rights” (Moller, 2012). Thus although the analysis that follows is primarily focused on the implied freedom under Australian constitutional law, the lessons that are drawn regarding the constitutional validity of the Regulations and the extent to which legislatures can regulate protest activities by charities are likely also to be relevant to Canada and the United Kingdom.
The First Amendment case law developed by the U.S. Supreme Court stands somewhat outside the “global model of constitutional rights” that applies in Canada, the United Kingdom and, to a large extent, Australia in the enforcement of the implied freedom. This is because the U.S. Supreme Court does not employ a standardized proportionality test but instead applies different standards of review in different categories of case. An analysis that is primarily focused on proportionality in Australian constitutional law, therefore, translates less easily to the United States than jurisdictions such as Canada and the United Kingdom. Nonetheless, the high level of protection accorded by the U.S. Supreme Court to political speech, coupled to the emphasis upon the “chilling effect” in First Amendment case law, casts doubt upon the acceptability of Regulation (ii) in U.S. constitutional law.
Turning more specifically to Australian constitutional law, in Lange v. Australian Broadcasting Corporation (1997) 189 CLR 520, the High Court formulated the following (Lange) test to determine when legislation breaches the implied freedom:
Does the law effectively burden freedom of communication about government or political matters either in its terms, operation or effect?
If “yes” to question 1, is the purpose of the law legitimate, in the sense that it is compatible with the maintenance of the constitutionally prescribed system of representative and responsible government?
If “yes” to question 2, is the law reasonably appropriate and adapted to advance that legitimate objective in a manner that is compatible with the constitutionally prescribed system of representative and responsible government?
Step (3) of this test has been developed by the High Court to incorporate a test of proportionality. The structured nature of this test bears a strong resemblance to the proportionality tests adopted by the Canadian Supreme Court in R v. Oakes [1986] 1 SCR 103 and the U.K. Supreme Court in De Freitas v. Permanent Secretary of Ministry of Agriculture, Fisheries, Lands and Housing [1999] 1 AC 69. In Australia, the proportionality test is formulated as follows:
Suitability. Does the law have a rational connection to the purpose of the provision?
Necessity. Is there an obvious and compelling alternative, reasonably practicable means of achieving the same purpose that has a less restrictive effect on the freedom?
Adequate in its balance. Is the law adequate in its balance? This step involves a value judgment, consistent with the limits of the judicial function, describing the balance between the importance of the purpose served by the restrictive measure and the extent of the restriction that it imposes on the freedom.
The first step of the Lange test is to establish whether the Regulations would have imposed a burden on free political communication. In Brown v. Tasmania (2017) 261 CLR 328 (Brown), the High Court said that historically protests have been a means of advocating for political and legal change on environmental issues. Thus, to the extent that the Regulations would have burdened the freedom of charities to engage in political communication through protests, this would have required justification under the Lange test.
However, the High Court also said in Brown that the implied freedom does not protect unlawful conduct, at least where the conduct is unlawful due to a law that is not itself unconstitutional. In other words, the implied freedom protects the freedom of charities to communicate political ideas through lawful protest activities. Where charities engage in unlawful protest activities there is no burden on the implied freedom. It is, therefore, difficult to argue that paragraph (i) would have imposed a burden on the implied freedom. The implied freedom does not protect unlawful conduct, even where the criminal nature of the conduct is relatively minor. This conclusion is also likely to apply in the United States, Canada, and the United Kingdom.
Of greater relevance to the implied freedom and freedom of expression more generally is paragraph (ii). At first glance, paragraph (ii) would also seem to target unlawful protest activities and not burden the implied freedom. But as noted in the preceding discussion on the rule of law, concerns have been raised that paragraph (ii) would have imposed a vague governance standard on charities and vested considerable discretion in the hands of the ACNC Commissioner that would not easily have been subject to review. Apart from the additional administrative burden imposed on charities, the practical effect of the amendment may have been to deter lawful protest activities as charities adopt an overly cautious approach.
This concern brings to mind the U.S. constitutional law doctrine of the “chilling effect” which occurs “when individuals seeking to engage in activity protected by the First Amendment are deterred from so doing by governmental regulation not specifically directed at that protected activity” (Schauer, 1978). The “chilling effect” has also been applied by the Canadian Supreme Court in cases such as R v. Keegstra [1990] 3 SCR 697 and the U.K. Supreme Court in Jameel v. Wall Street Journal Europe Sprl [2006] UKHL 44. The extent to which the concept forms part of Australian constitutional law is less clear. However, in Brown the High Court examined the validity of legislation that imposed restrictions on protests relating to forestry land. In considering the practical effect of the legislation, Kiefel CJ, Bell and Keane JJ, and Nettle J in a separate judgment, emphasized that the areas to which the legislation applied were vaguely defined. This created difficulties both for protestors and police officers tasked with enforcing the legislation. These judgments concluded that the legislation was likely to have significant deterrent effects on protestors, generating a burden on the implied freedom.
It is, therefore, arguable that paragraph (ii) is vague to an extent that would have burdened the implied freedom. Indeed, the “Hands Off Our Charities” coalition of charities released a laundry list of circumstances where the standard might have applied, including the use of social media to actively promote peaceful protest events of other groups that end up involving trespass or that have failed to obtain authorization to march next to a public street (Amnesty International, 2021). Failing to document a social media policy that requires staff to check such things before posting, might have breached the standard in-and-of itself (Amnesty International, 2021).
The next step of the Lange test is to ascertain the purpose of the law and to determine whether the purpose is legitimate. A complicating factor in this regard is that the Regulations had two stated purposes: first, to give the public trust and confidence that a registered entity is governed in a way that ensures its compliance with Australian law; and second, to address uncertainty about when engaging in or promoting unlawful activity may affect a charity’s entitlement to registration. It seems clear that both of these purposes are legitimate. It cannot reasonably be argued that either purpose is incompatible with the maintenance of Australian representative government.
Turning then to step (3) of the Lange test, the question is whether paragraph (ii) is suitable, in the sense that it has a rational connection to these purposes. In Australia, and other jurisdictions such as Canada and the United Kingdom where proportionality is applied, suitability is a highly different standard of review. The requirement is typically only that the means should be capable of realizing the aim (Barak, 2012, p. 305). Even so, it is doubtful that paragraph (ii) is rationally connected to either of its purposes. Most obviously, it is difficult to see that paragraph (ii) would have promoted greater legal certainty about when engaging in unlawful activity may have affected a charity’s registration. Given the vagueness of the standard, paragraph (ii) may actually have engendered greater uncertainty. It is also unclear that paragraph (ii) would have promoted greater public trust and confidence about the governance of registered charities. There is scant evidence that the Australian public have low levels of trust in the charity sector and by the government’s own admission only a “small number” of registered charities have engaged in serious unlawful conduct or used their resources to actively promote such conduct (Assistant Treasurer, 2021).
The difficulties with paragraph (ii) are even more apparent at the necessity stage of the structured proportionality test. The question at this stage is whether there is a hypothetical alternative that is capable of advancing the law’s purpose and that imposes a less restrictive burden on the implied freedom. The hypothetical alternative need not be equally effective as the impugned measure. The requirement is only that there should be an obvious and compelling, reasonably practicable alternative. Regarding the purposes of achieving greater legal certainty and public trust in the charity sector, it is not apparent why paragraph (ii) is required in addition to paragraph (i). Paragraph (i) constitutes an obvious and compelling, reasonably practicable alternative to paragraph (ii) that imposes a less restrictive burden on the implied freedom while also achieving the purposes of the Regulations—arguably more effectively in respect of legal certainty. Paragraph (i) therefore casts significant doubt upon the constitutionality of paragraph (ii).
The final stage of the structured proportionality test requires the court to weigh the benefits gained by the public against the harm caused to the implied freedom by the law. This means weighing the social importance of the benefits gained by the law against the social importance of the harm to the implied freedom (Barak, 2012). Balancing is the most controversial stage of structured proportionality and is approached cautiously by courts tasked with enforcing constitutional rights in many jurisdictions (Petersen, 2017). In McCloy v. New South Wales (2015) 257 CLR 178, the High Court said that balancing should be consistent with the limits of the judicial function and that the judiciary is not entitled to substitute its assessment for that of the decision-maker. Notwithstanding these qualifications, paragraph (ii) would arguably also have been invalid at the balancing stage. On one hand, the practical effect of paragraph (ii) may have been to deter protests involving registered charities at a clear cost to the implied freedom and the system of representative government upon which it is premised. On the other hand, the benefits of paragraph (ii) are unclear, and hence their social importance would have been limited.
Certainty and Proportionality
The Australian exemplar highlights two overlapping principles that ought to inform most approaches to the regulation of political activism by charities: certainty and proportionality.
When examining the attempted Regulations’ consistency with the rule of law, we noted the ambiguity over the legal meaning and scope of application of the Regulations, as well as difficulty in holding the regulator accountable for its administration of the Regulations. This need for certainty with respect to the legal meaning and administrative application of legal measures is our first principle. Vague regulations of unclear application accompanied by the threat of sanctions are likely to lead charities to engage in less effective public contestation on behalf of those whose interests they aim to advance. Many charities are relatively resource-poor and can little-afford legal advice or time spent responding to investigations, let alone the imposition of penalties or appeal costs. Since we should clearly wish to avoid this “chilling effect,” regulations should aim to deter specifically problematic activities, only, and should enumerate precisely which activities will be subject to sanction, and which will not.
In participating in charity activism, individuals are also exercising a range of rights—particularly freedoms of association and speech—that are centrally important in liberal democracies. It is crucial that regulations that apply to charity activities and burden these rights are consistent with the constitutional rules and principles that underpin the legitimacy of states’ claims to authority. That is a fundamental tenet of the rule of law. These constitutional rules vary between states but there is generally protection for freedom of expression and so it is useful to consider a further principle highlighted by the Australian example. That discussion shows that there will often be a legitimate aim for particular instances of regulation of charity advocacy. However, the discussion also demonstrates that such regulations should meet a requirement of proportionality. Paragraph (ii) of the Regulations is vague to an extent that would have burdened the implied freedom of political communication and not been proportionate to the stated aims of promoting public trust and confidence in the charity sector and fostering greater certainty about when engaging in or promoting unlawful activity may have affected a charity’s registration.
In comparative constitutional law, proportionality is widely understood as entailing three stages: suitability, necessity, and balancing (Alexy, 2002). Suitability is a different standard that asks only whether the means are capable of realizing the aim. More crucial is the necessity stage, where the question is typically whether there are hypothetical alternatives that are less harmful to the right while equally advancing the law’s purpose (Barak, 2012, p. 317). States, then, may take steps to regulate the activities of charities but only to the extent necessary to achieve legitimate objectives, for example, to prevent violations of the law, and to safeguard individuals’ rights. The state should take proportionate steps to deter charities from engaging in such activism. Yet there are many forms of political activism that are plainly unproblematic, such as peaceful protests in public parks and online petitions. The Australian Regulations would have applied to a wide range of infractions, such as using social media to actively promote peaceful protests that end up involving a single protestor failing to comply with a police move-on direction. Regulations that are liable to deter activism in this way may fail the test of necessity where the purpose of the law may be advanced by means that are less burdensome of the right.
Finally, regulations should be balanced, in the sense that the social importance of the benefits obtained by the Regulations outweighs the social importance of the harm to the right (Barak, 2012, 349). In undertaking this balancing exercise, it should be emphasized that charities serve an enormous range of socially valuable purposes—both with respect to their political activism, and more broadly in advancing education, health care, religion and the like. Charity regulations ought to deter specifically problematic activities committed by charities and mitigate their harmful effects, not impose excessive burdens such as loss of charity registration for tangential involvement in minor offenses. 12
Conclusion
The attempted Australian Regulations are inconsistent with core requirements for certainty under the rule of law and risk breaching the implied freedom of political communication. The net effect is that the Regulations would have threatened to undermine the crucial role of political activism by charitable organizations in a democratic society like Australia. By threatening charities with potentially serious sanctions such as deregistration for tangential involvement in minor offenses, they would have deterred charities from engaging in electioneering and grassroots lobbying on behalf of vulnerable and marginalized members of the political community. Thankfully, therefore, the Regulations were disallowed by the federal parliament. However, recent Australian history suggests that further attempts are likely. To better recognize the value of political activism on the part of charities, and to do so in a way that is consistent with rule of law values to which liberal states should adhere, we propose two principles for the regulation of charities’ political activities: certainty and proportionality. These observations are relevant beyond Australia to other liberal states such as Canada, the United Kingdom, and the United States where charities are a crucial part of civil society. Furthermore, the principles are likely to be particularly pertinent to states that still rely, or recently relied, to some extent on the common law rule against political purposes such as England and Wales (to a lesser extent, Canada). That is because the experience of Australia over the last decade suggests that the courts have become far readier to dispense with or curtail this rule. Governments and legislatures are then likely to be tempted to respond in some fashion as we have seen with the Regulations. The risk is also that even if governments and legislatures have taken some initially permissive steps (e.g., the Canadian federal tax amendments to permit greater lobbying flowing from the Canada Without Poverty case), judicial abolition of the political purpose rule might spark a more restrictive legislative intervention.
Footnotes
Acknowledgements
The authors thank Lloyd Mayer, Debra Morris, Mark Sidel and the participants at several Charity Law Association of Australia and New Zealand events in 2021 for their comments on the regulatory aspects of this article. Thanks are also due to the anonymous reviewers for their insightful comments.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.
