What is a Public Benevolent Institution (PBI)

Understanding what a Public Benevolent Institution (PBI) is can be crucial for charities looking yo maximise their impact and remain sustainable. For example, for many not for profits in Australia, gaining PBI Status is a key step toward achieven greater financial efficiency and broadening community support.

How PBIs can help your organisation

Definition of a Public Benevolent Institution

A Public Benevolent Institution (PBI) is a type of charity specifically established to provide direct relief for people experiencing poverty, sickness, disability, helplessness, suffering, or distress. These institutions operate on a not for profit basis and are legally recognised for thei charitable purpose.

To be classified as a PBI, an organisation must:

• Be a non-profit entity,

• Have a primary focus on providing benevolent relief,

• Operate in a way that directly supports individuals in need.

Benefits of Becoming a PBI

One of the key reasons charities seek PBI status is the range of tax concessions available. These may include:

• Income tax exemption,

• GST concessions and refunds of franking credits,

• Deductible Gift Recipient (DGR) status in a special category exclusive to PBIs,

• Fringe Benefits Tax (FBT) exemptions for eligible employers.

How to Qualify as a PBI

• Obtaining PBI status involves a number of steps and careful planning. First, an organisation must be registered with the Australian Charities and Not-for-profits Commission (ACNC). This involves demonstrating a genuine commitment to benevolent relief and operating in line with ACNC standards.

  
  

• Maintaining compliance is also critical. Organisations must regularly review their activities to ensure they continue to align with their charitable purpose and meet the ACNC’s ongoing requirements.

  
  

  Are PBIs Considered Non-Profit? Can They Charge Fees?

  Yes, PBIs are non-profit organisations. Their main objective must not be profit-making. However, they can charge fees for services, including partial or subsidised fees. Any income earned must be reinvested into the organisation’s operations and not distributed to members or stakeholders.

Governance and Compliance for PBIs

Good governance and strong compliance practices are essential for any PBI. These organisations depend heavily on public trust and funding, which makes accountability and transparency vital.

A PBI should:

• Establish a governing board,

• Maintain clear policies and procedures,

• Conduct regular reviews and audits,

• Implement effective risk management practices, especially concerning the use of funds and donor contributions.

  
  

Mismanagement of funds or poor governance can quickly erode public confidence and may result in the loss of charitable status or funding.

These benefits can significantly ease the financial burden on a charity and allow it to direct more resources toward its mission.

In Summary

Becoming a Public Benevolent Institution offers significant benefits for eligible charities but it also comes with responsibilities. Strong leadership, clear purpose, and adherence to legal and ethical standards are key to not only gaining PBI status but maintaining it for the long term.

If you company is part of an organisation considering PBI registration, it's worth seeking professional guidance to ensure your structure, goals, and operations are fully aligned with the requirements.

Contact us for more information on how to keep your charity compliant or visit us in our website: www.charitycompliance.com.au/contact