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Beyond Charity: Outlines of a Jurisprudence for Civil Society By Matthew Dwight Turnour Bachelor of Economics, University of Queensland Bachelor of Laws, University of Queensland Master of Arts (Research), Queensland University of Technology Solicitor of the Supreme Court of Queensland Solicitor of the High Court of Australia The Australian Centre for Philanthropy and Nonprofit Studies Faculty of Business Queensland University of Technology Submitted in full requirement for the award of Doctorate of Philosophy on 23 September 2009

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Page 1: Beyond Charity: Outlines of a Jurisprudence for Civil Society · Beyond Charity: Outlines of a Jurisprudence for Civil Society By ... civil society and pressures to strengthen social

Beyond Charity: Outlines of a

Jurisprudence for Civil Society

By

Matthew Dwight Turnour

Bachelor of Economics, University of Queensland

Bachelor of Laws, University of Queensland

Master of Arts (Research), Queensland University of Technology

Solicitor of the Supreme Court of Queensland

Solicitor of the High Court of Australia

The Australian Centre for Philanthropy and Nonprofit Studies

Faculty of Business

Queensland University of Technology

Submitted in full requirement

for the award of Doctorate of Philosophy

on 23 September 2009

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I venture to think that there is no subject the study of which benefits more than does law from the liberalising influence of contact with other spheres of life and knowledge.

Lord Macmillan 1937 Law and Other Things 39.

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KEYWORDS

altruism – association – benefit – charitable purpose – charities – civil society – civil society

organisation – coercion – deductibility – intermediaries – jurisprudence – nonprofit – not-

for-profit – NGO – nongovernment organisation – preamble – public benefit – social

economy – Statute of Elizabeth – tax exemption – third sector – voluntarism

The thesis relies upon case law and statute up to 31 December 2008.

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ABSTRACT There is not a single, coherent, jurisprudence for civil society organisations. Pressure for a clearly enuciated body of law applying to the whole of this sector of society continues to increase. The rise of third sector scholarship, the retreat of the welfare state, the rediscovery of the concept of civil society and pressures to strengthen social capital have all contributed to an ongoing stream of inquiry into the laws that regulate and favour civil society organisations. There have been almost thirty inquiries over the last sixty years into the doctrine of charitable purpose in common law countries. Those inquiries have established that problems with the law applying to civil society organisations are rooted in the common law adopting a ‘technical’ definition of charitable purpose and the failure of this body of law to develop in response to societal changes. Even though it is now well recognised that problems with law reform stem from problems inherent in the doctrine of charitable purpose, statutory reforms have merely ‘bolted on’ additions to the flawed ‘technical’ definition. In this way the scope of operation of the law has been incrementally expanded to include a larger number of civil society organisations. This piecemeal approach continues the exclusion of most civil society organisations from the law of charities discourse, and fails to address the underlying jurisprudential problems. Comprehensive reform requires revisiting the foundational problems embedded in the doctrine of charitable purpose, being informed by recent scholarship, and a paradigm shift that extends the doctrine to include all civil society organisations. Scholarly inquiry into civil society organisations, particularly from within the discipline of neoclassical economics, has elucidated insights that can inform legal theory development. This theory development requires decoupling the two distinct functions performed by the doctrine of charitable purpose which are: setting the scope of regulation, and determining entitlement to favours, such as tax exemption. If the two different functions of the doctrine are considered separately in the light of theoretical insights from other disciplines, the architecture for a jurisprudence emerges that facilitates regulation, but does not necessarily favour all civil society organisations. Informed by that broader discourse it is argued that when determining the scope of regulation, civil society organisations are identified by reference to charitable purposes that are not technically defined. These charitable purposes are in essence purposes which are: Altruistic, for public Benefit, pursued without Coercion. These charitable puposes differentiate civil society organisations from organisations in the three other sectors namely; Business, which is manifest in lack of altruism; Government, which is characterised by coercion; and Family, which is characterised by benefits being private not public. When determining entitlement to favour, it is theorised that it is the extent or nature of the public benefit evident in the pursuit of a charitable purpose that justifies entitlement to favour. Entitlement to favour based on the extent of public benefit is the theoretically simpler – the greater the public benefit the greater the justification for favour. To be entitled to favour based on the nature of a purpose being charitable the purpose must fall within one of three categories developed from the first three heads of Pemsel’s case (the landmark categorisation case on taxation favour). The three categories proposed are: Dealing with Disadvantage, Encouraging Edification; and Facilitating Freedom. In this alternative paradigm a recast doctrine of charitable purpose underpins a jurisprudence for civil society in a way similar to the way contract underpins the jurisprudence for the business sector, the way that freedom from arbitrary coercion underpins the jurisprudence of the government sector and the way that equity within families underpins succession and family law jurisprudence for the family sector. This alternative architecture for the common law, developed from the doctrine of charitable purpose but inclusive of all civil society purposes, is argued to cover the field of the law applying to civil society organisations and warrants its own third space as a body of law between public law and private law in jurisprudence.

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CONTENTS PAGE

PART ONE – CHARITIES.....................................................................................................1

I Beyond Charities ..................................................................................................................3

A. Preamble .......................................................................................................................3

B. Introduction...................................................................................................................3

C. Context..........................................................................................................................5

1. The Law of Charities in Context...................................................................................5

2. Academic Discussion of the Law of Charities and Civil Society ...............................12

3. Charitable Purpose in the Context of Civil Society ....................................................17

4. Charitable Purpose in its Legal Context .....................................................................21

D. An Analogy.................................................................................................................25

E. How to Move Beyond Charities? Introducing the Research Question ......................30

F. Beyond Charities to Civil Society: Introducing the Hypothesis ................................31

G. How the Jurisprudence will be Developed: Explaining Methodology ......................32

H. The Scope and Limitations of Beyond Charities ........................................................45

I. Definitions Needed to Develop a Jurisprudence for Civil Society .............................50

J. Moving Towards a Jurisprudence for Civil Society: An Overview of the Thesis .....57

K. Postscript.....................................................................................................................59

II Why Go Beyond Charities?..............................................................................................61

A. Preamble .....................................................................................................................61

B. Introduction.................................................................................................................61

C. Addressing the Threshold Problems of Foundation, Genus and Form .......................64

1. Charities are without an Essential, Theoretical Foundation........................................64

2. The Essence of Charitable Purpose and its Other .......................................................71

3. Problems of Form .......................................................................................................73

D. Problems Arising from the Four Principal Divisions of Charitable Purpose..............75

1. Introduction.................................................................................................................75

2. The Broad and Unsophisticated Scope of Relief of Poverty ......................................75

3. Education as a Class is Too Broad..............................................................................79

4. Problems with Advancement of Religion ...................................................................81

(a) Distinguishing Between Regulating and Favouring ...................................................82

(b) Excluding Others and Political Purposes ....................................................................86

(c) Uneven Contributions .................................................................................................89

5. Problems with Other Purposes Beneficial to the Public .............................................91

(a) Public Benefit is Central to Charities but what is it in Essence? ................................92

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(b) The Delimiter Does Not Work ................................................................................... 93

(c) The Levels of Public Benefit..................................................................................... 96

E. Problems that go Beyond the Doctrine of Charitable Purpose................................... 98

1. Family and Social Breakdown, Private Purposes and Civic Participation................ 98

2. Problems with Civic Engagement and Third Party Government ............................. 102

3. Problems Distinguishing Business from Charities ................................................... 105

F. Conclusion................................................................................................................ 111

G. Postscript .................................................................................................................. 112

III How to go Beyond Charities ........................................................................................ 115

A. Preamble................................................................................................................... 115

B. Introduction .............................................................................................................. 115

C. Three ‘Principle’ Problems ...................................................................................... 116

1. Principle 1: The Preamble was not Intended to Define Anything........................... 118

2. Principle 2: The Overlooked but Underlying Jurisprudence of Pemsel’s Case ...... 120

3. Principal 3: There is not a Definition. ..................................................................... 126

D. How the Definitional Problems Arose ..................................................................... 128

E. Wider Taxonomy Problems: Distinguishing Charitable Purpose from Related

Purposes ................................................................................................................................ 133

F. Problems with Measuring Charitable Purpose and some Alternative Approaches .. 135

G. Going beyond Charities: the Foundation of the Problems in Philosophic Contests. 139

H. Conclusion................................................................................................................ 145

I. Postscript .................................................................................................................. 146

PART TWO – CIVIL SOCIETY....................................................................................... 147

IV Benefit ............................................................................................................................ 149

A. Preamble................................................................................................................... 149

B. Introduction .............................................................................................................. 149

1. Overview .................................................................................................................. 149

2. Introduction to Economic Theories in their Historic and Social Context ................ 151

C. When the Government is the Other.......................................................................... 154

1. Burton Weisbrod ...................................................................................................... 154

2. Estelle James and the Public/Private Continuum..................................................... 159

3. Lester Salamon’s Voluntary Sector Failure Theory................................................. 162

D. When Business is the Other...................................................................................... 164

1. Henry Hansmann, Market Failure and Trustworthiness Theory .............................. 164

2. John Colombo and Mark Hall’s Donative Theory ................................................... 172

3. Myles McGregor-Lowndes ...................................................................................... 174

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4. Interim Summary ......................................................................................................175

E. When Family is the Other .........................................................................................175

1. Introduction...............................................................................................................175

2. Conceptions of Family and Problems of Definition .................................................176

(a) The Nuclear Family is not Necessarily the Norm.....................................................176

(b) Extended Family and Kin Support can Extend beyond Nation States......................177

(c) Distinguishing between Family and Religion can be Problematic ...........................178

3. Theoretical and Philosophical Ambiguity and Problems of Definition ....................178

F. Conclusion ................................................................................................................180

G. Postscript...................................................................................................................183

V Altruism ...........................................................................................................................185

A. Preamble ...................................................................................................................185

B. Introduction...............................................................................................................185

C. Altruism as a Concept...............................................................................................188

1. A Definition of Altruism...........................................................................................189

2. Altruism is: An Overview of Research.....................................................................190

3. What Drives Altruistic Behaviour?...........................................................................192

4. No Universal Measure or Ranking of Altruism but a Continuum ............................193

5. Interim Summary ......................................................................................................194

D. Theorising Altruism for Jurisprudential Development .............................................195

1. Introduction...............................................................................................................195

2. Theorising Altruism: Two Alternatives ....................................................................195

3. Nothing, Except Vanity ............................................................................................197

4. A Kind of Human Demigod......................................................................................199

5. Interim Summary ......................................................................................................201

E. Altruistic Associations..............................................................................................202

1. Introduction...............................................................................................................202

2. Robert Atkinson and a Weak Form of Altruism.......................................................203

3. Rose-Ackerman ........................................................................................................207

4. Avner Ben-Ner..........................................................................................................211

5. Richard Steinberg......................................................................................................213

6. Interim Summary regarding Altruistic Associations ................................................215

F. Conclusion ................................................................................................................216

G. Postscript...................................................................................................................219

VI Coercion..........................................................................................................................221

A. Preamble ...................................................................................................................221

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B. Introduction .............................................................................................................. 221

C. Coercion and Community ........................................................................................ 223

1. Saint Augustine ........................................................................................................ 223

2. Thomas Aquinas....................................................................................................... 226

3. From Thomas More to Shawn Kimmel.................................................................... 227

4. Interim Summary...................................................................................................... 230

D. Coercion and Contract.............................................................................................. 230

1. Nicolo Machiavelli ................................................................................................... 230

2. Thomas Hobbes........................................................................................................ 231

3. Adam Smith, Adam Ferguson and David Hume...................................................... 232

4. Jean Jacques Rousseau ............................................................................................. 233

5. Fredric Bastiat .......................................................................................................... 236

6. Karl Marx ................................................................................................................. 238

7. John Stuart Mill........................................................................................................ 239

8. Interim Summary...................................................................................................... 240

E. Conceptualizing Coercion, Communities and the Social Contract .......................... 241

1. Ferdinand Tönnies.................................................................................................... 242

2. Evelyn Brody, Arthur Jacobson and Sovereignty Theory........................................ 246

3. Will Kymlicka .......................................................................................................... 249

4. Helmut Anheier and the Civil Society Diamond...................................................... 252

F. Conclusion................................................................................................................ 256

G. Postscript .................................................................................................................. 258

PART THREE – JURISPRUDENCE ............................................................................... 261

VII Association law ....................................................................................................... 263

A. Preamble................................................................................................................... 263

B. Introduction .............................................................................................................. 263

C. Locating Jurisprudence in Civil Society Theory and Civil Society in Jurisprudence265

D. Space to Associate is Protected by the Common Law ............................................. 269

E. Space to Associate and International Conventions .................................................. 277

F. The Scope of Application of Association Law........................................................ 283

G. Regulate All Civil Society Organisations by Reference to Purposes....................... 291

1. Introduction .............................................................................................................. 291

2. Form is an Accident of History ................................................................................ 292

3. Including the Excluded Others ................................................................................. 294

4. Focus on Purpose not Activities............................................................................... 296

H. Principles of Regulation of Associations ................................................................. 297

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I. Conclusion ................................................................................................................302

J. Postscript...................................................................................................................303

VIII Benefit law ..............................................................................................................305

A. Preamble ...................................................................................................................305

B. Introduction...............................................................................................................305

C. Pemsel’s Case ...........................................................................................................308

1. The Facts...................................................................................................................308

2. The Ratio Decidendi of the Decision and the Orthodox Reading of the Case..........310

D. Two Charitable Purposes: Defining Jurisdiction and Justifying Favour ..................315

E. Reintroducing Altruism in Going Beyond ‘Spirit and Intendment’..........................317

F. Reintroducing Coercion in Going Beyond ‘Spirit and Intendment’ .........................323

G. Reintroducing Public Benefit as a Justification for Favour ......................................326

1. A Continuum of Public Benefit ................................................................................326

2. Categories of Public Benefit. ....................................................................................328

3. Beyond Relief of Poverty to Dealing with Disadvantage .........................................330

4. Beyond Advancement of Education to Encouraging Edification .............................333

5. Beyond Advancement of Religion to Facilitating Freedom .....................................335

6. Reasons for Adopting Liberty, Equality and Fraternity............................................341

H. From Charities to Eleemosynary Corporations to Civil Society Organisations........344

I. Conclusion ................................................................................................................345

J. Postscript...................................................................................................................346

IX A Jurisprudence for Civil Society ................................................................................349

A. Preamble ...................................................................................................................349

B. Introduction...............................................................................................................349

C. One Dimension: Rediscovering the heart of charitable purpose.............................352

D. Two Dimensions: Rediscovering differentia ............................................................354

1. Introducing the Components of the Theory ..............................................................354

2. Altruism ....................................................................................................................355

3. Benefit.......................................................................................................................357

4. Coercion....................................................................................................................358

E. Civil Society Space...................................................................................................360

F. Introducing Dynamic Boundaries .............................................................................363

G. Three Dimensions: Adding Depth by Favour ...........................................................365

1. Introducing the Elements of Favour..........................................................................365

2. Dealing with Disadvantage .......................................................................................366

3. Encouraging Edification ...........................................................................................367

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4. Facilitating Freedom ................................................................................................ 367

5. Summary of Third Dimension of Favour ................................................................. 368

H. Moving Beyond ‘Nominal’ Measurement of Charitable Purpose............................ 371

I. A More Powerful Analytical Framework is Available for Legal Theorising.......... 373

J. Applying a Jurisprudence for Civil Society to Go Beyond Charities....................... 375

1. Introduction .............................................................................................................. 375

2. Resolving Foundational Puzzles and Identifying Genus and Form ......................... 377

3. Practical Guidance for Determining Public Benefit................................................. 385

4. Applying A Jurisprudence for Civil Society to Income-Tax Issues......................... 388

5. Applying the Principles in Foundational Philosophical Contests ............................ 392

K. An Analytical Framework that may be Difficult to Implement .............................. 393

L. Location in Current Jurisprudential Theory ............................................................. 396

M. Paths for Further Reseach ........................................................................................ 398

N. Conclusion................................................................................................................ 400

O. A Final Postscript ..................................................................................................... 402

Bibliography ........................................................................................................................ 403

TABLE OF FIGURES

Figure 1 Jurisprudence without Civil Society......................................................23

Figure 2 Jurisprudence without Civil Society Law..............................................25

Figure 3 Schematic of Steinberg’s Complete Theory........................................213

Figure 4 Illustration of the Civil Society Diamond............................................254

Figure 5 Altruism Continuum............................................................................356

Figure 6 Benefit Continuum ..............................................................................358

Figure 7 Coercion Continuum ...........................................................................359

Figure 8 Charity Continua .................................................................................361

Figure 9 Charity Continua and Civil Society Space ..........................................362

Figure 10 Defining Boundaries and Expanded Civil Society ..............................362

Figure 11 Defining Boundaries and Constrained Civil Society...........................363

Figure 12 Dynamic Boundaries for Civil Society Space .....................................365

Figure 13 Extent of Benefit Guide to Essential Characteristics...........................369

Figure 14 Civil Society Space and the Favour Dimension Pyramid....................371

Figure 15 Variables on a Continuum Quantitatively Measured...........................372

Figure 16 Type of Charitable Goods and Public Benefit Guide ..........................387

Figure 17 Tax Exemptions and Charitable Purpose Continuum..........................390

Figure 18 Jurisprudence with a ‘third’ Space for Civil Society...........................398

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STATEMENT OF ORIGINAL AUTHORSHIP

The work contained in this Doctorate of Philosophy has not been previously submitted for a

degree or diploma at any other higher education institution. To the best of my knowledge and

belief, the thesis contains no material previously published or written by another person

except where due reference is made.

The thesis relies upon case law and statute up to 31 December 2008.

Signed: _______________________

Matthew Dwight Turnour

Date: Monday, 28 September 2009

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ACKNOWLEDGEMENTS

The magnitude of a project such as this is daunting and undertaking it part time increases the

challenge. It has though been a great pleasure for me and one of the main reasons for that

has been the phenomenal support I have received. Myles McGregor-Lowndes has

consistently been supportive and has pushed me to deliver better quality work than I would

have been inclined to without his challenges. I have always looked forward to our

supervisory meetings and come away with more than that for which I could have hoped. My

wife, Wendy has been constant in her encouragement and support, as have my four children.

My partners in the practice of law, Shayne Neumann, Steve Potts, Simon Fisher and Mark

Fowler have encouraged and helped resource my efforts.

The following people also made helpful comments on summaries of ideas and drafts of the

manuscript: Helmut Anheier, Richard Copp, Simon Fisher, Mark Fowler, Reid Mortenson,

Elizabeth Turnour and Wendy Turnour.

Kristina Ngweso, Amy Ruben, Nathan Rieck, Anne Overell, Joan Turnour, Meryl Young

and Sarah Wright all played important roles at different stages in the development of the

thesis by helping variously with typing, proof reading, filing, and keeping organised the

2,000 odd documents that inform the development of this thesis.

To each of these people I am very thankful.

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PART ONE – CHARITIES

Charities are the subject of this first part. Chapter I is devoted to contextualising challenges

facing common law countries as they endeavour to move beyond the strictures of the

common law doctrine of charitable purpose to a jurisprudence for civil society. Methods that

will be utilised to progress theory development are introduced and an overview of the

argument to be advanced is offered. Chapter II explores problems driving development of

this body of the law. Foundational challenges are considered first. Difficulities inherent in

the doctrine of charitable purpose per se are at the centre of the discussion. Social concerns

that the doctrine is supposed to address are then considered. Chapter III explores

methodological problems that make development of the doctrine of charitable purpose so

difficult in legal theory. The chapter begins with three principles that usually are integral to

common law development. The three principles are: that a preamble is not a definition; that

the ratio decidendi of a case is an expression of jurisprudential reasoning giving effect to

public policy; and a useful definition defines something. The way these principles were

disregarded in the historic development of the doctrine of charitable purpose is discussed.

Deeper taxonomy problems are also identified. Inadequate methods of measurement and

contested a priori assumptions to be addressed in developing the doctrine of charitable

purpose are considered. The part closes noting that the contested a priori assumptions

elucidated through Chapters II and III relate to three subject areas: public benefit, altruism

and the coercive role of government.

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I BEYOND CHARITIES

A. Preamble

As an innocent, uneducated, young seamstress approached the guillotine she was fearful but

accepting. She accepted that the decision of the government to execute her was for the

public good. She did not understand the detail but it was fledgling democracy in action:

liberty, equality, fraternity or death. Behind her in the queue was a middle-aged, male

lawyer. He offered her support. He too was innocent, but his decision to die was of his

making. He had decided to give his life that his client might live. As the seamstress and the

lawyer were beheaded, a banker, at great risk to his own person, and going well beyond the

expections of his business retainer, ferried the client, and his family, to safety. With these

images, Charles Dickens closed A Tale of Two Cities.1 In choosing this medium – of city

comparisons – he wrote in the spirit of Augustine who took two cities – the City of God and

the City of Man – as typologies to explore similar ideas: altruism, public benefit and the

coercive role of government. This thesis revisits these great themes but in a very specific

context.

B. Introduction

The very specific context in which the great themes of altruism, public benefit and coercion

are explored is in the common law doctrine of charitable purpose. It is a doctrine rich in

history, steeped in controversy and full of possibilities. Lord Macnaghten, in the landmark

case of The Commissioners for Special Purposes of the Income Tax v Pemsel observed that

‘[t]he Court of Chancery has always regarded with peculiar favour those trusts of a public

nature which, according to the doctrine of the Court derived from the piety of early times, are

considered to be charitable.’2 This favouritism, based in ‘piety’ and ‘public benefit’ is still a

1 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 388-389.

2 The Commissioners for Special Purposes of the Income Tax v Pemsel [1891] AC 531, 583 (Lord Macnaghten). In the remainder

of this thesis this case is referred to as Pemsel’s case. For the status of charitable purpose as a doctrine see also: National Anti-

Vivisection Society v Inland Revenue Commissioners [1948] AC 31, 52 (Lord Porter).

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part of the common law applied in almost all common law countries. It is a source of

controversy because that which was favoured in former centuries is not necessarily the same

as that which twenty-first century, common law countries now wish to favour. The doctrine

has not developed with the times. It has ossified. Some jurists have all but given up hope

that this doctrine is capable of developing in response to social needs in the way that a

common law doctrine usually develops.3 To ameliorate the problems many common law

countries have added to the categories of charitable purposes by statute.4 Those additions do

not develop the common law doctrine. They are an acknowledgement of the failure of this

body of law to develop. There are, though, possibilities for development of this common

law doctrine. It is these possibilities that this thesis explores.

The last thirty years have seen significant changes in the roles and expectations of

organisations that enjoy ‘peculiar favours’.5 Charitable contributions of a ‘public nature’,

rooted in the altruism that may once have been called ‘piety’, continue in the twenty-first

century but the concept of ‘charities’ no longer adequately defines the organisational

expression. The context in which these organisations serve is now often described as civil

society. The organisations that are expressions of civil society transcend the traditional

concept of charities. These civil society organisations compete for entitlement to the

‘peculiar favours’ that were once the exclusive domain of charities. Twenty-first century

3 Blake Bromley, 'Contemporary Philanthrophy - Is the Legal Concept of "Charity" Any Longer Adequate?' in Donovan Waters

(ed), Equity, Fiduciaries and Trusts (1993) 59; Gino Dal Pont, 'Why Define 'Charity'? Is the Search for Meaning Worth the

Effort?' (2002) 8(1) Third Sector Review: Charity Law in the Pacific Rim 5; Arthur Drache, 'Hostage to History: The Canadian

Struggle to Modernise the Meaning of Charity' (2002) 8(1) Third Sector Review: Charity Law in the Pacific Rim 30; George

Keeton, 'The Charity Muddle' in Current Legal Problems 1949 (1949); Hubert Picarda QC, 'The Preamble to the Statute of

Charitable Uses 1601: Peter Pan or Alice in Wonderland?' (2002) 8(1) Third Sector Review: Charity Law in the Pacific Rim 229;

See also Reverend Richard Harries, 'Is there a Role for Charity in a Modern State?' (Speech delivered at the First Annual Lecture

on Philanthropy: Association of Charitable Foundations and the Allen Lane Foundation, London, 10 November 1993).

4 Extension of Charitable Purpose Act 2004 (Cth); Charities Act 1979 (Barbados) Volume VIII, Title XVIII, Chapter 243; Charities

Act 2006 (Eng.&W) c 50; Charities and Trustees Investment Act 2005 (Scotland), and Charities Act 2008 (NI).

5 Vancouver Society of Immigrant and Visible Minority Women v MNR [1999] Can Sup Ct Lexis 12, 70-71 (Gontier J), 200-

201(Iacobucci J); Con Alexander and Jos Moule, Charity Governance (2007) 1; Kerry O'Halloran, Myles McGregor-Lowndes

and Karla Simon, Charity Law & Social Policy: National and International Perspectives on the Functions of the Law Relating to

Charities (2008) 73-79; Ian Leigh, 'The Legal Framework for Community Involvement' in Alison Dunn (ed), The Voluntary

Sector, the State and the Law (2000) 9, 11.

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common law countries require a relevant and responsive common law jurisprudence

underpinning these developments but such a jurisprudence is not to be found.

This thesis takes up the challenge of sketching the outlines of such a jurisprudence. Far from

abandoning the doctrine of charitable purpose, this thesis is a plea for its release from the

technical, legal definition that imprisons it. It is argued that a jurisprudence for civil society

is outlined in the law of charities and, more distinctly, when contextualised in those branches

of law that regulate and favour altruism and voluntary contributions of public benefit. Set

free from the technical meaning and informed by scholarship from disciplines other than law,

it is theorised that the doctrine of charitable purpose can underpin a jurisprudence for all civil

society organisations. Beyond Charity: Outlines of a Jurisprudence for Civil Society

provides a framework for reconciling into a cohesive jurisprudential architecture, all of the

laws applying to civil society organisations, not just charities.

In this chapter, first the argument is contextualised in legal discourse and civil society

literature. An analogy is then offered, which leads into a statement of the research question

and then the hypothesis. The exploration of the research question leads to a discussion of the

methodologies adopted, including a discussion of weaknesses in those methodologies.

Discussion of those weaknesses flows logically to the challenges related to the scope of the

thesis and its limitations. In an endeavour to overcome some of the language problems

embedded in cross-disciplinary inquiry, a statute-like definition section is provided,

beginning at page 50. The chapter closes with an overview of the thesis.

C. Context

1. The Law of Charities in Context

The law of charities is centred on a technical legal definition of charitable purpose – not the

common or ordinary meaning. The requirement that, at law, charitable purpose must take a

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‘technical definition’ is traced to the 1891 House of Lords decision known as Pemsel’s case.6

In that case a majority agreed with the opinion of Lord Macnaghten who stated that the

concept of ‘charitable purpose’, applied by the Courts of Chancery to determine that Courts

jurisdiction over trusts for charitable purposes also applied for the purpose of determining

entitlement to the peculiar favour of income tax exemption.7 The consequence is that this

definition of charitable purpose – used for determining the jurisdiction of the old English

Courts of Chancery – set by reference to the preamble8 of an English Act of 1601 which has

become known as the Statute of Elizabeth, is still also applied to determine entitlement to

favour throughout common law countries in the twenty-first century.9

As the common law stands at present a purpose is charitable if it is within the spirit and

intendment of the Preamble and for public benefit.10 As the spirit and intendment of the

Preamble is central to determining the meaning of ‘charitable purpose’ it is convenient to set

out here the critical phrase of the Preamble. It is, rendered into modern English, as follows:

The relief of the aged, impotent and poor people; the maintenance of sick and maimed soldiers

and mariners, schools of learning, free schools and scholars in universities; the repair of bridges,

ports, havens, causeways, churches, sea-banks and highways; the education and preferment of

orphans; the relief, stock or maintenance of houses of correction; the marriage of poor maids, the

supportation, aid and help of young tradesmen, handicraftsmen and persons decayed; the relief or

redemption of prisoners or captives; and the aid or ease of any poor inhabitants concerning

payment of fifteens, setting out of soldiers and other taxes.11

6 Pemsel’s case [1891] AC 531.

7 Pemsel’s case [1891] AC 531, 584 (Lord Macnaghten).

8 A reference to the Preamble throughout this thesis is a reference to the preamble to the Statute of Charitable Uses 1601, 43 Eliz c

4 (Statute of Elizabeth). See definitions from 50.

9 Guild v Inland Revenue Commissioners [1992] 2 AC 310; Central Bayside General Practice Association Limited v Commissioner

of State Revenue (2006) 229 ALR 1, 15-37 (Kirby J); AYSA Amateur Youth Soccer Association v Canada (Revenue Agency) 2007

SCC 42; and Auckland City Mission v Brown [2002] 2 NZLR 650.

10 J Warburton, D Morris and N F Riddle, Tudor on Charities (2003) 4.

11 Statute of Charitable Uses 1601, 43 Eliz c 4. Modern English expression utilised in Vancouver Regional FreeNet Association v

Minister of National Revenue [1996] FC 880 at note 1 adopted.

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This approach, to defining both the scope of operation of the law and entitlement to favour

by reference to the spirit and intendment of the Preamble, has proved problematic.12 It is

now almost universally agreed that ‘the definition of charity is a continuing and topical

problem’,13 that ‘the law’s concept of “charitable” is haphazard and confused’14 and that the

present legal framework is inadequate.15 The apology with which a leading Australian, legal

academic, Gino Dal Pont, prefaces his text on the law of charities exemplifies the situation.

He begins:

Whilst every effort has been made to use a readable and easily understandable style, it must be

emphasised that even after some 400 years of development (or perhaps because of it) there are

certain aspects of Charity law that remain unclear, and others that simply defy logical

explanation.16

Dal Pont’s comments join a chorus of dissatisfaction and frustration with the present law

expressed by judges. Take as an example of judicial frustration the observations of Viscount

Simonds who held in Gilmour v Coats17 in relation to the law of charities that:

[A] great body of law has thus grown up. Later it may appear illogical and even capricious. It

could hardly be otherwise when its guiding principle is so vaguely stated and is liable to be so

differently interpreted in different ages.18

12 Peter Luxton, The Law of Charities (2001) 16; Christine R. Barker, 'The Reform of Charity Law in Scotland' in Paul Bater, Frits

Hondius and Penina Kessler Lieber (eds), The Tax Treatment of NGOs: Legal, Ethical and Fiscal Frameworks for Promoting

NGOs and their Activities (2004) 33, 44.

13 Hubert Picarda, The Law and Practice Relating to Charities (2nd ed, 1995) xi.

14 Michael Chesterman, Charities, Trusts and Social Welfare (1979) 7; Inquiry into the Definition of Charities and Related

Organisations Report of the Inquiry into the Definition of Charities and Related Organisations (2001), 29.

15 Blake Bromley, 'Contemporary Philanthrophy - Is the Legal Concept of "Charity" Any Longer Adequate?' in Donovan Waters

(ed), Equity, Fiduciaries and Trusts (1993) 59.

16 Gino Dal Pont, Charity Law in Australia and New Zealand (2000) xvii.

17 [1949] AC 426.

18 Gilmour v Coats [1949] AC 426, 442.

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Indeed ‘it is difficult to dispute that the law of charity has been plagued by a lack of coherent

principles on which consistent judgment may be founded’.19

The source of the problem is in language.20 As one Law Lord put it ‘the legal meaning and

the popular meaning of the word “charitable” are so far apart that it is necessary almost to

dismiss the popular meaning from the mind as misleading before setting out to determine

whether a gift is charitable within the legal meaning’.21

This dissatisfaction and frustration have been of such a magnitude that common law

countries have had almost 30 inquiries into the law and regulation of charities over the last

60 years.22 Australia,23 Barbados,24 England and Wales,25 Northern Ireland26 and Scotland,27

19 Vancouver Society of Immigrant and Visible Minority Women v MNR [1999] Can Sup Ct Lexis 12, 202 (Iacobucci J).

20 That this has been the source of the problem from the outset was opined by Lord Macnaghten himself who held:

Is it true, as a matter of fact, that we always find in these taxing Acts that the words used are words of ordinary meaning,

understood by everybody in the three kingdoms in the same sense, and not technical legal terms in use in one part of the

United Kingdom? I could wish it were so. But we are not living in Utopia, where a perfect or ideal lawgiver may be had

very readily.

Pemsel’s case [1891] AC 531, 576.

21 Verge v Sommerville [1924] AC 496, 502 (Lord Wrenbury). This comment is not an isolated exception. Jenkins LJ also observed:

‘This exception cannot be accounted for by reference to any principle’. Harman LJ commented that some ‘cases stick out like a

sore thumb from the general rule’ in The Inland Revenue Commissioners v Educational Grants Association Ltd [1967] 2 All ER

893, 898; See also Incorporated Council of Law Reporting (Qld) v Federal Commissioner of Taxation 125 CLR 659, 667

(Barwick CJ).

22 See: Charitable Trusts Committee (UK), Report of the Committee on the Law and Practice Relating to Charitable Trusts, Cmd

8710 (1952-53); Chief Justice's Law Reform Committee, Report on Charitable Trusts (1965); Queensland Law Reform

Commission, A Report of the Law Reform Commission on the Law Relating to Trusts, Trustees, Settled Land and Charities

(1971); National Council of Social Service, 'Report of an Independent Committee of Inquiry to Examine the Effect of Charity Law

and Practice on Voluntary Organisations (Goodman Report)' (1976); United States Department of the Treasury, Regulation,

Research Papers Volume V (1977); New Zealand Property Law and Equity Reform Committee, 'Report on the Charitable Trusts

Act' (Department of Justice, 1979); Victorian State Government Interdepartmental Working Party, 'Administration of Charities

(First Report)' (Victorian Government, 1980); Victorian State Government Interdepartmental Working Party, 'Administration of

Charities (Second Report)' (Victorian Government, 1982); Law Reform Commission of Tasmania, Report on Variations of

Charitable Trusts Report No 38 (1984); Victorian Department of Health, Regulation of Health Care Agencies and Charities:

Discussion Paper No.8 (1987); P Woodfield et al, 'Efficiency Scrutiny of the Supervision of the Law of Charities: Report to the

Home Secretary and the Economic Secretary to the Treasury' (1987); Great Britain National Audit Office, 'Monitoring and Control

of Charities in England and Wales' (HMSO, 1987); New Zealand Government, 'Report to the Minister of Finance and the Minister

of Social Welfare by the Working Party on Charities and Sporting Bodies' (New Zealand Government Printer, 1989); United

Kingdom Secretary of State for the Home Department, Charities: A Framework for the Future (1989); Great Britain

Parliamentary Panel on Charity Law, Charity Supervision in the 1990s: A Response to the White Paper (HMSO, 1990); Scottish

Council for Voluntary Organisations, Head and Heart. The Report of the Commission on the Future of the Voluntary Sector in

Scotland (1997); Katz Commission Report, Ninth Interim Report of the Commission of Inquiry into Certain Aspects of the Tax

Structure of South Africa (1997); Voluntary Sector Round Table Panel on Accountability and Governance in the Voluntary Sector,

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have passed legislation defining and or extending the common law definition of charitable

purpose. None of the 22 African, Caribbean Island, and Pacific Island states that are

members of the Cotonou Agreement have a statutory definition of ‘charity’ although there is

reference to ‘charity’ in legislation of those states, and statutory extensions to the common

law ‘definition’ are common across those jurisdictions.28 Perhaps surprisingly, then, in each

jurisdiction the statutory extended definitions remain dependent on the precedent developed

through the common law cases, and the method of proceeding by way of analogy

continues.29 In Barbados, where what appears to be an exhaustive list has been passed into

statute, the common law continues to inform legal development.30 A similar approach has

been taken in the United States of America where the Supreme Court has relied upon the

common law doctrine to deny access to deductibility on at least one occasion to a civil

Building on Strength: Improving Governance and Accountability in Canada's Voluntary Sector (1999) (Broadbent Report);

Charity Scotland, Report of the Scottish Charity Law Review Commission (2001) (McFadden Report); Canada Revenue Agency,

Final Consultations and Validation of Charities Directorate Action Plan (2002); The New Zealand Treasury, Second Report by

Working Party on Registration, Reporting and Monitoring of Charities (2002); Council of Europe, Fundamental Principles on the

Status of Non-Governmental Organisations in Europe: Open Meeting of Contacting Parties to the European Convention on the

Recognition of the Legal Personality of International Non-Governmental Organisations (ETS No 124) (2002); Arthur Cox &

Centre for Voluntary Action Studies, 'Charity Law Review: Report to the Department of Community, Rural and Gaeltacht Affairs

Ireland Sector Study' (13, Department of Community, Rural and Gaeltacht Affairs, 2002); Rural and Gaeltacht Affairs Department

of Community, 'Establishing a Modern Statutory Framework for Charities' (Department of Community, Rural and Gaeltacht

Affairs, 2003); Irish Law Reform Commission Consultation on Charitable Trust Law General Proposals (2005); Joint Committee

on Taxation, 'Historical Development and Present Law of the Federal Tax Exemption for Charities and other Tax-Exempt

Organisations, Scheduled for a Public Hearing Before the House Committee on Ways and Means on April 20, 2005.' (JXZ-29-05,

2005); Office of the Scottish Charity Regulator, 'Monitoring Scottish Charities' (2005); Panel on the Nonprofit Sector,

Strengthening Transparency Governance Accountability: A Final Report to Congress and the Nonprofit Sector (2005); Canada

Revenue Agency, 'Consultation on Guidelines for Sport and Charitable Registration under the Income Tax Act' (Canada Revenue

Agency, 2008); Canada Revenue Agency, 'Consultation on Proposed Policy on Fundraising by Registered Charities' (Canada

Revenue Agency, 2008); Canada Revenue Agency, 'Consultation on Proposed Guidelines for Research as a Charitable Activity'

(Canada Revenue Agency, 2008); and Parliament of Australia Senate, 'Inquiry into the Disclosure Regimes for Charities and Not-

For-Profit Organisations' (2008).

23 Extension of Charitable Purpose Act 2004 (Cth).

24 Charities Act 1979 Volume VIII, Title XVIII, Chapter 243.

25 Charities Act 2006 (Eng.&W) c 50.

26 Charities Act 2008 (NI) c 12.

27 Charities and Trustees Investment Act 2005 (Scotland) 10, s 7.

28 Chaitanya Lakshman, 'The Contonou Agreement, Civil Societies and Charities in Pacific Member States of the ACP' (2002) 8(1)

Third Sector Review: Charity Law in the Pacific Rim 173, 184-187.

29 Peter Luxton, The Law of Charities (2001) 111. See also in Vancouver Society of Immigrant and Visible Minority Women v MNR

[1999] Can Sup Ct Lexis 12, 199-200, 207 where the Canadian Supreme Court by majority encouraged parliament to amend the

law and set out a model put forward by one of the parties in the appeal.

30 Corporate Affairs and Intellectual Property Office, The Charities Act, Cap.243 (2001) Corporate Affairs and Intellectual Property

Office, <http://www.caipo.gov.bb/corp/inner/charities.html> at February 18 2008.

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society organisation even though there is no express reference to charitable purpose in the

omnibus list of civil society organisations entitled to favours under section 501(c)(3) of the

Internal Revenue Code.31

From these reports, statutes and the surrounding literature, what is known can be stated quite

simply: there are multitudinous difficulties due in part to the way the casuist methodology of

the common law (sometimes known as precedent or case-based method) has been applied to

the development of the doctrine of charitable purpose. Reform proposals have accepted that

the problems are rooted in the Preamble and the way the cases have developed following the

Pemsel’s case categorisation into ‘four principal divisions’. Proceeding by way of a list and

analogy from already accepted charitable purposes remains, though, the accepted method –

even after legislative intervention purporting to remedy defects in the common law.32

It follows that legislative patches to the common law are a fix that is becoming more

frequently used to overcome the problems but this does not address the underlying lack of a

genus. Jurists required to differentiate these listed and analogous charitable purposes from

other purposes remain without explicit rationale for differentiation. Ostensibly recognising

these problems, New Zealand,33 Scotland,34 England and Wales35 have empowered regulators

of charities to assist in defining the boundaries for a definition. A similar approach has been

followed in Northern Ireland.36 Revenue Canada discharges this role in Canada. In South

Africa, the South African Revenue Service discharges this role, but in that jurisdiction

31 Bob Jones University v United States, 461 US 574, 591 (1983) discussed in Rob Atkinson, 'Nonprofit Symposium: Theories of the

Federal Income Tax Exemption for Charities: Thesis, Antithesis, and Syntheses' (1997) 27 Stetson Law Review 395, 426. The US

Internal Revenue Service on its web page states: ‘Organisations described in section 501(c)(3) are commonly referred to as

charitable organisations.’ See The US Internal Revenue Service, http://www.irs.gov/ last accessed at 25 September 2007.

32 See Arthur Drache, 'Hostage to History: The Canadian Struggle to Modernize the Meaning of Charity' (Paper presented at the

Charity Law in the Pacific Rim Conference, Ottawa, Ontario, 4-6 October 2001); Blake Bromley, 'Contemporary Philanthrophy -

Is the Legal Concept of "Charity" Any Longer Adequate?' in Donovan Waters (ed), Equity, Fiduciaries and Trusts (1993) 59.

33 Charities Act 2005 No 39 (NZ) s 8.

34 Charities and Trustees Investment Act 2005 (Scotland) s 1(1).

35 Charities Act 2006 (Eng.&W) c 50, s 6.

36 Charities Act 2008 (NI) Part 2 particularly s 6(1).

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charitable purposes is defined narrowly, ‘to mean direct poverty relief.’37 The issues are

addressed, in part, in an Australian context by the Australian Taxation Office endeavouring

to discharge an interpretive function through public and private rulings.

The underlying problems confronting jurists across the common law world are, then,

fundamentally the same and so are the unsatisfactory answers. The first and central puzzle is

how to define the relevant organisations to be regulated. The class of organisation called

charities must form part of a larger class from which common law judges and legislators

have drawn to add further purposes to the class called charities. But what is it? How is this

class to be defined and what is its relationship with charitable purposes? Without a

definition of this broader class of organisation that is capable of jurisprudential application

there does not seem to be a way forward. Without a definition of this broader class of

organisation, that takes cognizance of the centuries of development of the doctrine of

charitable purpose, the prospect of common law development is even more remote.

This central puzzle compounds to a second layer of difficulty when judges, legislators and

regulators must determine which organisations will be granted entitlement to favours based

on the doctrine of charitable purpose. As the law is presently understood there is not a

clearly defined justification for entitlement to favour founded in reason; the law is simply

that organisations pursuing purposes within the four principal divisions set out by Lord

Mcnaghten in Pemsel’s case, perhaps with reference to statutory extensions, are entitled to

‘peculiar favours’. An overlay, intended to remedy some of the apparent injustice with this

approach, now applied in the United Kingdom is for charities to be required to prove public

benefit. Currently in Scotland and Ireland judges and regulators are required to assess this

‘public benefit’ having regard to certain factors. There is little of substance to assist the

37 Karen Nelson, 'Tax and the Non-profit Sector - The South African Experience' in Paul Bater, Frits Hondius and Penina Kessler

Lieber (eds), The Tax Treatment of NGOs: Legal, Ethical and Fiscal Frameworks for Promoting NGOs and Their Activities

(2004) 193-194.

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judges or regulators in deciding how this duty is to be discharged when considering these

factors.38 The probem is not, though, simply one of challenges with interpreting ‘public

benefit’. This is a problem that goes to the heart of favours given to particular classes of

civil society organisations under taxation laws across the common law world in the twenty-

first century. The fundamental problem is how to understand the doctrine of charitable

purpose in a way that enlights rather than obsfucates entitlement to taxation and other favour

in twenty-first century common law countries. The response of legislative patches is

unsatisfactory. It compounds rather than addresses the source of dissatisfaction and

frustration.

2. Academic Discussion of the Law of Charities and Civil Society

Academics have suggested alternatives. From beginnings traceable to the initially more

tentative suggestions of Michael Chesterman in his Doctoral Dissertation of the late 1970s,39

there has been a steady stream of contributions flowing towards the emergence of what Mark

Freeland called a ‘coherent basis for the law for civil society in general’.40 These

contributions anticipate ‘a tailored legal regime’ addressing the ‘confusion over what law to

apply to the private enforcement of charitable gifts’ because ‘the existing legal classifications

are not working’.41 They do not, however, provide an alternative.

38 Charites Act 2008 (NI) s. 3; Charities and Trustees Investment Act 2005 (Scotland) 10, s 8; See also Explanatory Memorandum to

Charities Act 2008 (NI) at

http://www.opsi.gov.uk/legislation/northernireland/acts/acts2008/en/niaen_20080012_en_1.htm and Expanatory Memorandum

Charities and Trustees Investment Act 2005 (Scotland) at

http://www.opsi.gov.uk/legislation/scotland/acts2005/en/aspen_20050010_en_1 both last accessed 22 December 2008. In

England and Wales that task has fallen to the Charities Commision under Charities Act 2006 (Eng.&W) s.4. The Charities

Commission released further guidelines in December 2008. See The Charity Commission for England and Wales, Charities and

Public Benefit: The Charity Commission's General Guidance on Public Benefit (2008).

39 Michael Chesterman, Charities, Trusts and Social Welfare (1979).

40 Mark Freedland, 'Charity Law and the Public/Private Distinction' in Charles Mitchell and Susan Moody (eds), Foundations of

Charity (2000) 111, 123.

41 Evelyn Brody, 'From the Dead Hand to the Living Dead: The Conundrum of Charitable-Donor Standing' (2007) 41(4) Georgia

Law Review 1183, 1274.

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During the Blair government in the United Kingdom, the Home Office became a conduit for

the gathering and dissemination of many of these ideas.42 At a broader international level,

are the publications of the International Center for Non-Profit Law.43 To this contribution

must be added the work of its former director, Leon Irish: the World Bank Handbook on

Good Practices for Laws Relating to Non-governmental Organisations44

and other

publications with Karla Simon.45 Karla Simon herself proposed a set of principles to guide

‘nonprofit’ law reform.46 From a quite different, but also international, perspective is the

contribution of Kerry O’Halloran which focused on social inclusion as a central theme to be

explored.47 The former Charities Commissioner for England and Wales, Richard Fries, has

offered a more radical alternative framework.48 The Australian, Myles McGregor-Lowndes,

building on work of Henry Hansman, has offered a gift transfer model.49 Following in that

genre of building from economic concepts, is the recent contribution of Evelyn Brody from

42 The Home Office Research and Statistics Directorate and Tony Marshall, Local Voluntary Activity Surveys (LOVAS) Research

Manual LOVAS PAPER 1 (1997); The Home Office, Charity Registration: When Should it be Voluntary? A Consultation

Document from the Charity Commission and the Home Office (2000); Home Office, 'Charities and Not-for-Profits: A Modern

Legal Framework - The Government's response to 'Private Action, Public Benefit'' (Home Office, 2003); The Home Office,

Charities Bill Will Back Voluntary and Community Sector's Work to Change Lives (2004).

43 International Center for Not-for-Profit Law, 'Integrity, Good Governance, and Transparency' (International Center for Not-for-

Profit Law, 1998); International Center for Not-for-Profit Law, 'Regulating Not-for-Profit Organisations' (International Center for

Not-for-Profit Law, 1998); International Center for Not-for-Profit Law, 'The Tax Treatment of Nongovernmental Organisations -

A Survey of Best Practices from Around the World' (International Center for Not-for-Profit Law, 1998).

44 International Center for Not-for-Profit Law, 'Handbook on Good Practices for Laws Relating to Non-governmental Organisations

(Discussion Draft)' (The World Bank, 1997).

45 Leon E Irish, 'The Role and Purpose of the Not-for-Profit Sector' (Paper presented at the Working Conference: "Regulating Not-

for-Profit Organisations in New Democracies", The Interchurch Center, New York City, 1995).

46 Karla W Simon, 'Principles of Regulation for the Not-for-Profit Sector' (International Centre for Not-for-Profit Law, 1998); Karla

W Simon and Leon E Irish, 'Legal Mechanisms to Encourage Development Partnerships' (1998) 1(1) The International Center for

Not-for-Profit Law 10; see also Leon E Irish, Robert Kushen and Karla W Simon, 'Guidelines of Laws Affecting Civil Society

Organisations' (Open Society Institute, 2004) and Karla W Simon, The Role of Law in Encouraging Civil Society (2001)

International Center for Not-for-Profit Law <www.icnl.org/gendocs/Arabconf.htm> at 19 June 2002.

47 See the various papers and recent book of Kerry O’Halloran, particularly: Kerry O'Halloran, Charity Law and Social Inclusion:

An International Study (2007) and for earlier papers see: Kerry O'Halloran, 'Charities, the Law and Public Benefit: Ireland as a

Case Study for the Use of Charity Law to Promote the Development of Social Capital' (Working Paper No 49, International

Society for Third Sector Research, Toronto Conference, 2002); Kerry J O'Halloran, 'Charity Law and Alienation in Northern

Ireland: The Findings of a Research Project and The Resonance Between Events in New York and Belfast.' (2002) 4(23) The

International Journal of Not-for-Profit Law 20.

48 See Richard Fries, 'The Legal Environment of Civil Society' in Helmut Anheier, Mary Kaldor and Marlies Glasius (eds), Global

Civil Society Yearbook (2003) 221.

49 See Myles McGregor-Lowndes, The Regulation of Charitable Organisations (PhD Thesis, Griffith University, 1994).

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the United States of America.50 Her fellow American, Rob Atkinson, also building from

Hansmann’s economics roots, elucidated the centrality of altruism to legal theory

development and more broadly, has offered reform proposals which go beyond charities and

take cognisance of the sector as a whole.51 The Australian, Gino Dal Pont, perhaps drawing

on the examples from the United States, has encouraged Parliament to abandon ‘charitable’

as a concept, stating that the time has come to ‘encourage parliament to carefully define the

scope of statutory privileges and to make the regulation of collections independent of a

charitable moniker’.52 These various authors do not offer, though, an alternative

jurisprudence for civil society developed from the common law. None offers an overarching

framework that seeks to develop the common law doctrine of charitable purpose to a

jurisprudence for civil society in a manner consistent with common law’s casuist method (so

that it could be applied by common law judges) yet explores the deeper philosophic issues

underpinning the definitional problems.

50 See Evelyn Brody, 'Are Nonprofit Organisations Different?' in Helmut Anheier and Avner Ben-Ner (eds), The Study of Nonprofit

Enterprise - Theories and Approaches (2003) 239 and her work as a reporter for the American Law Institute’s project on the

‘Principles of the Law of Nonprofit Organisations’ from 2004 (co-reporter from 2001-2004).

51 Rob Atkinson, 'Third Parties' Tax-Exempt Status can be Challenged According to New Decisions' (1985) 63 Journal of Taxation

166; Rob Atkinson, 'Impact of the 1986 Tax Reform Act on Exempt Organisations' (1987) 66 Journal of Taxation 344; Rob

Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501; Rob Atkinson, 'Neutral Partisan

Lawyering and International Human Rights Violators' (1994) 17 Fordham International Law Journal 531; Rob Atkinson,

'Reforming Cy Pres Reform' (1993) 44 Hastings Law Journal 1111; Rob Atkinson, 'Nonprofit Symposium: Theories of the

Federal Income Tax Exemption for Charities: Thesis, Antithesis, and Syntheses' (1997) 27 Stetson Law Review 395; Rob

Atkinson, 'Unsettled Standing: Who (Else) should Enforce the Duties of Charitable Fiduciaries?' (1998) 32 Journal of Corporation

Law 655; Rob Atkinson, 'Problems with Presbyterians: Prolegomena to a Theory of Voluntary Associations and the Liberal State'

in Charles Mitchell and Susan Moody (eds), Foundations of Charity (2000) 125; Rob Atkinson, 'The Reformed Welfare State as

the Radical Humanist Republic: An Enthusiastic (if Qualified) Endorsement of Matthew Adler's Beyond Efficiency and

Procedure' (2000) 28 Florida State University Law Review 339; Rob Atkinson, 'Reviving the Roman Republic: Remembering the

Good Old Cause' (2003) 71 Fordham Law Review 1187; Rob Atkinson, 'Connecting Business Ethics and Legal Ethics for the

Common Good: Come Let Us Reason Together' (2004) 29 Journal of Corporation Law 469; Rob Atkinson, 'Theories of the

Federal Income Tax Exemption for Charities: Thesis, Antithesis and Synthesis' in Paul Bater, Frits Hondius and Penina Kessler

Lieber (eds), The Tax Treatment of NGOs: Legal, Ethical and Fiscal Frameworks for Promoting NGOs and their Activities (2004)

253; Rob Atkinson, 'The Low Road to Cy Pres Reform: Principled Practice to Remove Dead Hand Control of Charitable Assets'

(2008) Unpublished 58; Rob Atkinson, 'Rediscovering the Duty of Obedience: Toward a Trinitarian Theory of Fiduciary Duty'

(2008) Unpublished 58.

52 Gino Dal Pont, 'Why Define 'Charity'? Is the Search for Meaning Worth the Effort?' (2002) 8(1) Third Sector Review: Charity

Law in the Pacific Rim 5, 30.

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The English academic, Jonathan Garton has laid the platform for extension of the doctrine of

charitable purpose to the bounds of civil society regulation in his thesis The Regulation of

Charities and Civil Society.53 Garton undertook a ‘comprehensive analysis of the legal

boundaries of the English charitable sector’ and concluded ‘that there are no theoretical

grounds on which to differentiate between the [charitable] sector and wider organised civil

society for regulatory purposes’.54 Garton argued cogently ‘that regulation of the charitable

sector in isolation is untenable because (i) no meaningful distinction between this and the

wider organised civil society can be drawn on the basis of either organisational structure or

social function and (ii) the reasons traditionally given by successive governments for treating

charities as a special case are inadequate’.55 In consequence, he declared at the outset that

‘charities form a subset of wider civil society’.56 Locating charities as central to civil

society, he quoted authors who described charities as the ‘heart and soul’ and ‘centre of

gravity’ of civil society.57 Garton also pointed to one purpose at the centre of civil society

declaring that, in theory at least, ‘all the players in the sector have “the same ultimate goal”

and should not need to compete with each other’.58

What Garton did not do, is declare what that goal was. Until that goal is declared the

common features, essential to a jurisrudentially adequate definition of the organisations that

make up the sector, remain illusive. Instead, having declared that there are no theoretical

grounds for a boundary between charities and civil society, having concluded that charities

are the ‘heart and soul’ and ‘centre of gravity’ of civil society, and having identified that

53 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005).

54 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 28,152.

55 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 152-153 and

Chapter 5.

56 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 14.

57 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 14, 42, citing

Graham Dawes and R Tolley, Charity, Accountability and Compliance (1998-99) 1.2; and Lester Salamon and Helmut Anheier,

Defining the Nonprofit Sector: A Cross-National Analysis (1997) 16.

58 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 124.

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there is a body of literature arguing that civil society organisations in theory pursue the same

goal, he concluded that there is no single overarching purpose of organised civil society.

This he could do because he is only setting out normative, regulatory principles developed in

a tradition traceable through Henry Hansmann into the discipline of neoclassical

economics.59 The challenge of identifying the unique characteristics of civil society

organisations must be comprehensively addressed, though, if jurisprudence is to progress

beyond charities to encompass all civil society organisations. It remains for the apparently

elusive genus of civil society organisations to be articulated. It is the absence of this genus

which is, arguably ‘a’, if not ‘the’, source of the puzzle. It is the failure to resolve this

critical question that has led to the frustrations and dissatisfactions.

Further, and perhaps because Garton has confined his thesis to regulatory theory, the

significant issues embedded in justifications for favour are not elucidated. Acting as a

gateway to entitlement to favour is, though, equally as significant a function of doctrine of

charitable purpose as its role in setting out a jurisdiction It remains for that distinction

between these two roles to be explored in the context of a more comprehensive alternative

jurisprudence.

Finally, Garton does not explicitly give voice to the deeper philosophic contests that are

embedded in both the existing law and any attempts to change it. Rather than setting out a

framework in which philosophic ideas may contest, Garton offers normative possibilities.

Law reform might embrace these normative suggestions, but there remains a need for the

philosophic contests that lie beneath any law reform – including common law development –

to find voice in the architecture of an alternative jurisprudence.

59 See discussion at pages 165 to 171.

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There remains a need for an overaching jurisprudence, developed from the common law that

identifies the unique characteristics of the organisations that are the expressions of civil

society and facilitates contests over both the regulation of these organisations and their

entitlement to favour.

What is needed is a fresh approach. Justice Kirby of the High Court of Australia has invited

an alternative jurisprudence and his fellow judges have observed that without an alternative

being argued before the court, the court is obliged to remain within the current orthodoxy.60

This thesis proposes an alternative. It does so by beginning with conceptions of society and

civil society as a subset of that. It does not take the concept of charitable purpose as it is

defined technically at common law as the starting point. Introducing that alternative begins

with considering charitable purpose in the context of civil society.

3. Charitable Purpose in the Context of Civil Society

‘Voluntary and charitable organisations, almost everyone is agreed, lie at the very heart of a

vibrant and dynamic civil society.’61 The heart though, is not the whole. In fact charities are

but a small, albeit exemplar, part of a large sector and must be located in that sector.62 That

sector is called civil society in this thesis. Civil society in turn must be located in society as

60 Central Bayside General Practice Association Limited v Commissioner of State Revenue (2006) 229 ALR 1, 15-37 (Kirby J). The

Australian High Court stands alone in this request. The Canadian Supreme Court has eschewed responsibility for this

development declaring that, ‘wholesale reform [as distinct from] incremental change… is best left to Parliament. … [and]

substantial change in the definition of charity must come from the legislature rather than the courts.’ See AYSA., Amateur Youth

Soccer Association v Canada (Revenue Agency) 2007 SCC 42 [44] (Rothstein J delivering the judgment of McLachlin C.J.,

Bastarache, Binnie, LeBel, Deschamps, Fish, Charron and Rothstein JJ).

61 Nick Seddon, Who Cares? How State Funding and Political Activism Change Charity (2007) 1. See also Vancouver Regional

FreeNet Association v Minister of National Revenue [1996] FC 880, 901-902.

62 Kristin A Gronbjerg and L Paarlberg, 'Extent and Nature of Overlap between Lisitngs of IRS Tax-Exempt Registration and

Nonprofit Incorporation: The Case of Indiana' (2002) 31 Nonprofit and Voluntary Sector Quarterly 565 ; Michael Hall, Larry

McKeown and Karen Roberts, 'Caring Canadians, Involved Canadians ' (2005) 2000 National Survey of Giving, Volunteering and

Participating, Statistics Canada ; Mark Lyons, Third Sector - The Contribution of Nonprofit and Cooperative Enterprises in

Australia (2001); Kathleen Day and Rose Anne Devlin, 'Backgrounder: The Canadian Nonprofit Sector' (Canadian Policy

Research Networks, 1997); Marion R Fremont-Smith, Governing Nonprofit Organisations – Federal and State Law and

Regulation (2004).

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a whole, if its context is to be appreciated. This fresh approach begins by contextualizing

charitable purposes and more broadly the law for civil society within a conception of society.

Society is complex and so, for analytical purposes, the literature often divides society into

four sectors:63

1. Business (the first sector);

2. Government (the second sector);

3. Not-for-profit, non-government, voluntary, intermediary, (the third sector); and,

4. Family (the fourth sector).

In this broader literature, organisations with charitable purposes are discussed as a part of the

third sector which is here caught up in the concept of civil society.64 It is important to note at

the outset, though, that the third sector or civil society is much more expansive than

charities.65 More broadly, and to use the language of the United Kingdom Prime Minister’s

Strategy Unit, it is the sector ‘dedicated to community benefit or social purposes’.66 It is

identified as the sector of voluntary participation and its inhabitants colourfully described as

‘a congeries of tribes who acknowledged fealty to neither Caesar nor the Invisible Hand,

who were accountable in neither the arena of politics nor the marketplace of economics’.67

These ‘tribes’, which are increasingly becoming known as civil society organisations, are the

object of the operation of law and are the subject of this thesis. Conceptually, because law

63 Analysis of society in terms of sectors, particularly when discussing civil society organisations, came to prominence through the

United States Filer Commission, although it was initially suggested by Amitai Etzioni. See: Helmut Anheier and Regina List, A

Dictionary of Civil Society, Philanthropy and the Non-Profit Sector (2005) 264. The black market arguably amounts to a fifth

sector to be considered. See: Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of

London, 2005) 44A. That there should be any division at all is contested. See Simone Chambers and Will Kymlicka, Alternative

Conceptions of Civil Society, The Ethikon Series in Comparative Ethics (2002). Margaret Thatcher’s famous quote: ‘There’s no

such thing as society’ evidences that even the concept of society is contested. See Brian Deer, Epitaph for the Eighties? 'There is

no such thing as society' (2006) <http://briandeer.com/social/thatcher-society.htm> at 30 January 2006.

64 Civil society is a term sometimes used to describe the amalgam of third and fourth sectors, but refers throughout this thesis only to

the third sector. This division is important for legal analysis as part of resolving the definitional puzzle of which the ‘poor

relations cases’ are an example. See discussion in Chapter II.

65 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 14.

66 UK Government, 'Private Action, Public Benefit' (Strategy Unit, Cabinet Office, UK Government, 2002) para 2.12.

67 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 501.

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cannot act upon ‘sectors’ only ‘juridic persons’, the focus on organisations, both as

gatherings of individuals and as entities in their own right, cannot be avoided.

So, whilst the law focuses on a particular form of organisations (those with charitable

purposes), the broader literature does not.68 The broader literature is significantly informed

by the sectoral analysis of society with a focus on civil society organisations as the

organisational expression of the third sector – not just charities. This broader literature

informs my focus on civil society organisations rather than charities, and my object of

sketching outlines of an architecture for a jurisprudence for civil society. This broader

approach is necessary because, as will become evident from this section, there is a gap in

legal theory relative to the organisations that make up civil society. The scope of this

alternative jurisprudence is determined, then, by the scope of the definition of civil society.

Defining civil society is difficult.69 Civil society is a contested concept70 used to label a

significant space.71 A very succinct summary of the scope of the literature as at 2005,

introduced the Journal of Civil Society in the following terms:

There is little agreement on its precise meaning, though much overlap exists among core

conceptual components. Some scholars adopt an abstract, systemic view and see civil society as a

macro-sociological attribute; others take on individualistic views and emphasize the notions of

agency and social capital; while others yet see civil society as a set of institutions and

organisations located in the public sphere, complementing what some refer to as ‘political

68 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 14, 30.

69 Helmut Anheier, Civil Society Measurement, Evaluation, Policy (2004). See also Brian O'Connell, 'Civil Society: Tufts

University' (2000) 29 Nonprofit and Voluntary Sector Quarterly 471, 474 whose model I do not adopt, in part because it labours

under (what I consider to be) the definitional difficulties that beset legal analysis, in that he excludes some charities and some

other civil society organisations from civil society.

70 Whilst foundations of the contest are traceable into the roots of occidental philosophy the foundational work setting out the two

dominant alternative contested views lies in the work of one of the founders of sociology. See John Ehrenberg, Civil Society - The

Critical History of an Idea (1999); Ferdinand Tönnies, Community and Civil Society (Jose Harris trans, 2001 ed).

71 Jon Van Til, Growing Civil Society - From Nonprofit Sector to Third Space (2000).

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society.’ Yet in its very essence, the combination of being both contested and strategically located

makes civil society a very fruitful and intellectually lively concept.72

A challenge, when considering civil society, then, is to avoid being taken captive by one

perspective or swamped by the diversity. It is possible, though, to seek and find explanatory

theory for the laws that operate upon the organisations in this space. Helmut Anheier’s

definition of civil society is taken as the working definition of civil society for the purposes

of this thesis. It is as follows: ‘Civil society is the sphere of institutions, organisations and

individuals located between family, the state and the market in which people associate

voluntarily to advance common interests.’73

It follows from the discussion so far, that it is the organisations, as distinct from individuals

or institutions, that are the focus of this thesis. There are two reasons for this. First, it is the

purposes pursued through organisations that are critical to the identification of charitable

purposes (and non-charitable purposes). Thus it is at this level of identifying the purposes for

which an organisation exists that the legal theory discussion is framed. Second, and at a

more general level, it is the gathering of people to pursue common purposes through

organisations that are the dominant expression of civil society. With this brief introduction

of civil society and its organisations, and foreshadowing further exploration, I turn now to

introduce the way in which law has come to be analysed.

72 Helmut Anheier, 'Introducing the Journal of Civil Society: An Editorial Statement' (2005) 1 Journal of Civil Society 1.

73 Helmut Anheier, Civil Society Measurement, Evaluation, Policy (2004) 22. This definition has been chosen as it underpins the

structural-operational model that was used for much early research and it now underpins the civil society diamond concept which

is used in more recent research. The structural-operational model has been utilised in a number of different systems of accounts

including, the Global Non Profit Information System Project, the European System of National Accounts, and various national

accounting methods including for example, the Australian Non Profit Data Project and the Australian Bureau of Statistics. The

Global Non Profit Information System Project was a joint project of the United Nations Statistical Division and Johns Hopkins

Centre for Civil Society Studies. The System of National Accounts is a definitional system, which was developed jointly by

various bodies including the United Nations. The civil society diamond was utilised for further research in 50 countries between

2003 and 2005 and research using the framework is ongoing. In my quest to avoid normative paradigms it is the best definition I

have found. It is never entirely possible to avoid normative implications as all analysis has implicit philosophic assumptions. For

example the South African users of the civil society diamond have criticised the definition of civil society at its foundation as the

‘free market assumptions’ were not accepted by many South Africans. See: Helmut Anheier, Civil Society Measurement,

Evaluation, Policy (2004) 128. It is, then, arguably the most widely used, internationally accepted, definition of civil society and

the most useful available for cross disciplinary theory development.

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4. Charitable Purpose in its Legal Context

Law is complex and so, for analytical purposes, it, too, is often divided according to sectors.

A common, initial division of law, now well established in the literature of jurisprudence, is

between public law and private law.74 The division between public law, which relates to

government (second sector), and private law, which relates to business and family (first and

fourth sectors), can be traced back into Roman law.75 It is still widely adopted in common

law jurisdictions.76 In the United States, where the division is ‘not uncommon’,77 although

not as popular78 it was described by Justice Jackson in 1953 as a ‘handy classification

[which] is doubtless valid for some purposes’.79 The division significantly informs European

law.80

I conceptualize public law, for the purposes of this thesis, as principally concerned with

delimiting and regulating the use of coercive powers by government.81 Private law is

concerned with legal relations between citizens as citizens.82 A major subset of private law

within its own jurisprudential framework is commercial law, which is founded in contract

law and its focus is the facilitation and regulation of an informed market to ensure that

74 John Farrar, Introduction to Legal Method (1977) 15; Carol Harlow, ''Public' and 'Private' Law: Definition Without Distinction'

(1980) 43 The Modern Law Review 241, 242.

75 Paul Girard, A Short History of Roman Law (2000).

76 John Farrar, Introduction to Legal Method (1977); Carol Harlow, ''Public' and 'Private' Law: Definition Without Distinction'

(1980) 43 The Modern Law Review 241 and Anne Deegan, 'The Public/Private Dichotomy and its Relationship with the

Policy/Operational Factors Distinction in Tort Law' (2001) 18 QUT Law & Justice Journal 24.

77 E Allan Farnsworth, An Introduction to the Legal System of the United States (3rd ed, 1996) 96.

78 In the United States this jurisprudential division can be traced into the work of Henry Terry in the 1880s whom Herget describes

as ‘the first American author of a significant text on jurisprudence’. James E Herget, American Jurisprudence, 1870-1970 (1990)

357.

79 Garner v Teamsters Union 346 US 485, 494 (1953).

80 Geoffery Samuel, 'Government Liability in Tort and the Public Private Division' (1988) 8 Legal Studies 277, 278.

81 Sue Arrowsmith, 'The Impact of Public Law on the Private Law of Contract' in Roger Halson (ed), Exploring the Boundaries of

Contract (1996) 3, 3.

82 Sue Arrowsmith, 'The Impact of Public Law on the Private Law of Contract' in Roger Halson (ed), Exploring the Boundaries of

Contract (1996) 3, 3.

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profits are acquired justly.83 Laws enabling and regulating association for non-commercial

purposes, are often analysed as a part of commercial law.84 The further division of private

law does not follow neat categorisation but for present purposes, it is sufficient to note that

within private law there is a further separation of commercial law from that which regulates

families as families. Families have family law and estate law85 to ensure persons within

families are treated equitably.86 Equity is a subsection of private law that applies to both

business and families.87 As Lord Mcnaghten pointed out: ‘Charitable uses or trusts form a

distinct head of equity.’88 The division between public and private is foundational to the law

of charities.89

Returning to the sector analysis of society mentioned earlier, it is important to highlight that

the third sector is absent in this subsegmentation of law, but that analysis of law has loosely

followed the sectoral divisions for the other sectors, into which analysis of society has been

divided.90 In legal analysis it is possible to identify segmentation into:

83 See for example the Trade Practices Act 1974 (Cth) where the intent is expressed in Section 2 as ‘…to enhance the welfare of

Australians through the promotion of competition and fair trading and provision for consumer protection.’

84 A reason for this is possibly that the association may be understood as a contract between members; but in situations where the

purpose of the association is not the pursuit of self interest but provision of charitable goods the division is by no means tidy. As

Ford & Lee note ‘In so far as a body corporate is formed to advance some purpose or the interests of a class of persons the body

corporate may be thought to be like a trustee.’ See H A J Ford and W A Lee, Principles of the Law of Trusts (1996) [1560].

85 Succession law, whilst technically different from estate law, is for present purposes, incorporated as within estate law.

86 See for example the Family Law Act 1974 (Cth) which regulates family disputes that cannot be resolved privately and the

Succession Act 1981 (Qld) which provides for the passing of property justly, following death.

87 For the purpose of this thesis, the distinction between law and equity is not important. In this thesis the practice now adopted by

legislators like the Queensland Government of not distinguishing between equitable or legal forms chosen for pursuit of charitable

purpose, is adopted. For example in the Trusts Act 1973 (Qld) s106(5), the following definition appears: ‘…“charity” means any

institution, whether or not incorporated, which is established for charitable purposes.’ The proliferation of incorporated

associations and companies limited by guarantee (see eg, Corporations Act 2001 (Cth) s150) as vehicles through which charitable

purposes are pursued (in lieu of charitable trusts) has the effect of making the distinction, at least for the purposes of this inquiry

irrelevant. The interrelation of the law of charities and company law raises, though, very significant issues in the context of

charitable purposes.

See also the Charities Act 2006 (Eng & W.). And note that the distinction between the institution and the trust it conducts can be

critical see Re Christian Brothers of Ireland in Canada 37 O.R (3d) 367; 1998 (Blair J); Michael Chesterman, Charities, Trusts

and Social Welfare (1979) 394-396.

88 Pemsel’s case [1891] AC 531, 580 (Lord Macnaghten).

89 The Charity Commission for England and Wales, Charities and Public Benefit: The Charity Commission's General Guidance on

Public Benefit (2008) 13; J Warburton, D Morris and N F Riddle, Tudor on Charities (2003) 9-10.

90 For discussion of why the common law seems fixed around private law see Colin Howard, 'Public and Common Law' in D J

Galligan (ed), Essays in Legal Theory (1984) .

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Public law for government;

Private law for citizens as citizens with further subdivision into:

Commercial law for business; and

Estate and family law for families;

but a jurisprudence for the third sector91 here called civil society has not developed.92

The figure below illustrates this point.

Figure 1 Jurisprudence without Civil Society

91 The concept of third sector is virtually absent from the legal landscape. For example a search of all databases of Australian Legal

Information Institute (http:\\www.austlii.edu.au) conducted to 31 December 2008 for the phrase ‘third sector’ elucidated only six

cases. None referred to that sector of society under discussion in a legal sense but for one reference to a conference paper using

the term in this way. One, RRT Reference: N02/43616 [2003] RRTA 290 was a reference to the Refugee Review Tribunal and the

reference to third sector there was a reference to subject matter of a conference. ‘Third sector’ referenced the definition of ‘trades’

in M202 Mis 106/86 MD Print G2415 (7th April, 1986) which was a decision of the Australian Industrial Relations Commission.

In 624/1989 (25th August, 1989) a decision of the Australian Industrial Relations Commission, the following sentence appears:

‘One of the assistant superintendents and a foreman is in charge of 22 employees who maintain the large parks, another such pair

are in charge of 18 who work on the smaller parks and reserves, street trees, etc. The third sector groups together 12 mechanics,

carpenters, streetscaping, the nursery, the major park, and city hall gardens.’ In Joyce v Ku-Ring-Gai Council [2002] NSWLEC

46 which was a decion of Land and Environment Court of New South Wales ‘third sector’ was a reference to a section of land. In

Woodward - Brown v Qantas Airways Limited - [2007] AIRC 360 the reference was to the leg of a flight path. In 0802534 [2008]

RRTA 369 the reference was to the title to an academic paper.

92 The phrase ‘civil society’ has begun to appear more in Australian judicial decisions. Six recent High Court of Australia cases

where the term is used (at 31 December 2008) illustrate its application to freedom of association, freedom of communication and

(reward for) voluntary contribution. There is suggestion that its scope should be defined having regard to the values of the

relevant society at that time. The first five cases are: MZWKN v Minister for Immigration and Citizenship & Anor [2008] HCASL

359; Harriton v Stephens [2006] HCA 15; CSR Limited v Eddy (2005) 226 CLR 1; APLA Limited v Legal Services Commissioner

(NSW) [2005] HCA 44; Applicant S v Minister for Immigration and Multicultural Affairs [2004] HCA 25. In the sixth case Justice

Kirby held, in the context of a case involving the internet that: ‘…courts throughout the world are urged to address the immediate

need to piece together gradually a coherent transnational law appropriate to the "digital millennium". The alternative, in practice,

could be an institutional failure to provide effective laws in harmony, as the internet itself is, with contemporary civil society -

national and international.’ Dow Jones and Company Inc v Gutnick [2002] HCA 56; 210 CLR 575, 194.

Law

Public Law Private

Law

Family

Law

Estate

Law

Equity Commercial

Law

Association

Law

Law of

Charities

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The law of charities, (which sometimes arises for consideration in the context of estate law)

remains a subset of equity and consequently is a subset of private law.93 There is ‘no single

structure in English law specifically designed for charities’ and ‘charities have had to make

do with a legal structure fashioned largely (in the case of trust) for family property holding,

or (in the case of the company) for commercial endeavour’.94

So, whilst it may be said that jurisprudential divisions follow divisions of the first, second

and fourth sectors and distinct heads of law for those sectors are readily identifiable, the

same cannot be said for the laws applying to the civil society. At the beginning of the third

millennium, there is not a clearly identifiable jurisprudence for the third sector. Analysis of

its law seems to have lagged in development in a way similar to the way analysis of the third

sector has lagged.95 The division of society into the four sectors discussed above (business,

government, civil society and family) which is common in a range of social science

discourses, including economics, sociology and politics, has not, to date, flowed into

jurisprudence.96 It is suggested in this thesis, that the time has come for this division to

93 Although Luxton avers that: ‘We are witnessing the encroachment of trusts law by stealth.’ Peter Luxton, The Law of Charities

(2001) 17.

94 Peter Luxton, The Law of Charities (2001) 17.

95 See Rob Atkinson, 'Problems with Presbyterians: Prolegomena to a Theory of Voluntary Associations and the Liberal State' in

Charles Mitchell and Susan Moody (eds), Foundations of Charity (2000) 125.

96 Jon Van Til, Growing Civil Society - From Nonprofit Sector to Third Space (2000); Martti Muukkonen, The Familiar Unknown -

Introduction to Third Sector Theories (Licentiate Thesis, University of Joensuu, 2000); Helmut Anheier, 'Dimensions of the Third

Sector: Comparative Perspectives on Structure and Change' (Paper presented at Centre for Civil Society, London School of

Economics, August 2000); Mark Lyons, Third Sector - The Contribution of Nonprofit and Cooperative Enterprises in Australia

(2001); Lester Salamon and Stefan Toepler, 'The Influence of the Legal Environment on the Development of the Nonprofit Sector'

(Center for Civil Society Studies, Institute for Policy Studies, The Johns Hopkins University, Baltimore, 2000); Ian Leigh, 'The

Legal Framework for Community Involvement' in Alison Dunn (ed), The Voluntary Sector, the State and the Law (2000) 11;

Susan Moody, 'Policing the Voluntary Sector: Legal Issues and Volunteer Vetting' in Ann Lyon (ed), The Voluntary Sector, The

State and the Law (2000) 39; Evelyn Brody, 'The Legal Framework for Nonprofit Organisations' in Powell and Steinberg (eds),

For The Nonprofit Sector: A Research Handbook (2002) 243; Mark Lyons, 'The Legal and Regulatory Environment of the Third

Sector' (2003) 25 Asian Journal of Public Administration 87; Arthur Drache, 'Hostage to History: The Canadian Struggle to

Modernise the Meaning of Charity' (2002) 8(1) Third Sector Review: Charity Law in the Pacific Rim 30; Jeremy Kendall, The

Voluntary Sector (2003); Helmut Anheier, 'The Third Sector in Europe: Five Theses' (LSE, 2002); Susannah Morris 'Defining the

Non-Profit Sector: Some Lessons From History' (Working Paper No 3, London School of Economics, 2000); Jeremy Kendall,

'The third sector and the development of European public policy: A framework for analysis' (LSE, 2001); Roselyn Melville, 'The

State and Third Sector Organisations: Renegotiating the Relationship in the 1990s' (1998) ; Helmut Anheier and Lester Salamon,

'In search of the non-profit sector II: The problem of classification' (1992) 3 Voluntas: International Journal of Voluntary and

Nonprofit Organisations 267; Helmut Anheier and Lester Salamon, 'In search of the non-profit sector - I: the question of

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inform legal theory development in relation to civil society organisations. To illustrate: the

‘?’ in the sector divisions below must be replaced with a body of law:

Figure 2 Jurisprudence without Civil Society Law

Sector No. 1 2 3 4

Sector Name Business Government Civil Society Family

Sector Law Commercial law based in contract

Constitutional and

administrative law based on limitation of power

?

Family law and estates based on justice within families

An analogy may help to introduce the argument.

D. An Analogy

The present description and legal analysis of civil society organisations within the common

law framework of the law of charities (plus some heads added by statute in some

jurisdictions) with assistance from commercial, association and corporation law, is like

explaining the solar system in pre-Copernican terms. It is possible, but is becoming

progressively more difficult. A simpler theory that more completely explains this ‘legal

universe’ is required.97 So, just as Copernicus urged upon his readers the acceptance of ‘that

which is easiest to grasp’98 and pointed out that his ideas were not that radical for they could

definitions' (1992) 3 Voluntas: International Journal of Voluntary and Nonprofit Organisations 125; Estelle James, The Nonprofit

Sector in International Perspective (1989); Alberto Bacchiega and Carlo Borzaga, 'The Economics of the Third Sector - Toward a

more Comprehensive Approach' in Helmut Anheier and Avner Ben-Ner (eds), The Study of the Nonprofit Enterprise - Theories

and Approaches (2003) 27.

97 A qualification about this metaphor is central to the thesis, and that is that a PhD in the natural sciences involves the discovery of

immutable patterns but the discovery of similar patterns in law, which is an artificial construct, is an incidental exercise in

(re)organisation and definitions. Were that not so then this thesis would not be possible for it postulates not that the law is

different but that by adopting an alternative way of viewing the object – law – a better understanding of it evolves. Tolstoy

applied the Copernican analogy to the march of history see Leo N Tolstoy, War and Peace, Great Books (Louise and Aylmer

Maude trans, first published 1889, 1992 ed), 696; Evelyn Brody problematised civil society law in the context of a ‘universe’:

The American Law Institute, 'Principles of the Law of Nonprofit Organisations, Discussion Draft Submitted by the Council to the

Members of The American Law Institute for Discussion at the Eighty-Third Annual Meeting on May 15, 16 and 17, 2006' (The

American Law Institute, 2006); as did Peter Dobkin Hall, 'Law, Politics, and Charities in the Post-Liberal Era' (2000) 27 New

Directions for Philanthropic Fundraising 5, 8.

98 Nicolaus Copernicus, On the Revolutions of the Heavenly Spheres (2nd ed, 1542) 508.

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be found in a pedigree leading back to the early Greeks,99 so in this thesis I argue that a

simpler theoretical framework is discernible in the common law. I suggest that this simpler

framework is identifiable in the ancient roots of the law of charities but has been lost in the

present convolution. I begin by asking questions such as: if the presently recognised

charitable purposes are planets, to what particular universe do they belong? What else

belongs in that universe? What distinguishes these planets from planets that belong to other

universes? What is the gravitational force that holds these planets together? The great

puzzle for lawmakers has been the difficulty in recognising what purposes truly belong to

this legal universe.100

Under the doctrine of charitable purpose, as it has evolved in common law jurisdictions, only

advancement of religion, poverty relief and advancement of education have had a secure

place.101 Beginning with Barbados in 1979,102 where a complete statutory definition of

charitable purpose was provided, it has become progressively more fashionable for common

law countries to add by legislative fiat to the common law heads of charities.103 The

legislation for England and Wales includes as charitable purposes, a broad range of purposes

that edify society, and promote the basic freedoms essential to the foundational enjoyment of

citizenship.104 In Australia, certain childcare, self-help groups and closed and contemplative

99 Nicolaus Copernicus, On the Revolutions of the Heavenly Spheres (2nd ed, 1542) 508.

100 Levin suggests that ‘all [l]aw is a puzzle at least to the ordinary individual, uninitiated in the mysteries and ritual of the legal

process’: Joel Levin, How Judges Reason: The Logic of Adjudication (1992) 13.

101 See Pemsel’s case [1891] AC 531.

102 Charities Act 1979, (Barbados) Volume VIII, Title XVIII, Chapter 243.

103 Charities Act 1979 (Barbados) Volume VIII, Title XVIII, Chapter 243; Extension of Charitable Purpose Act 2004 (Cth); Charities

and Trustees Investment Act 2005 (Scotland) s. 10; Charities Act 2006 (Eng. & W) c 50; and Charities Act 2008) (NI). The

Supreme Court of Canada considered and rejected the idea of adding a head on the grounds that it would ‘do little to enhance the

fairness or flexibility of the law’ See Vancouver Society of Immigrant and Visible Minority Women v MNR [1999] 1 SCR 10, 206

(Iacobucci J).

104 The relevant section of the Charities Act 2006 (Eng.&W) , is 2(2) and is in the following terms:

2 Meaning of “charitable purpose”

(2) A purpose falls within this subsection if it falls within any of the following descriptions of purposes—

(a) the prevention or relief of poverty;

(b) the advancement of education;

(c) the advancement of religion;

(d) the advancement of health or the saving of lives;

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religious orders enjoy that status also by legislative fiat.105 The Barbados list included such

things as the provision of facilities for family planning and the relief of distress caused by

natural disaster and catastrophe.106 These statutory extensions amounted to securing a place

in this legal universe for those purposes so added. What, though, is the underlying rationale

for these inclusions? What has led these Governments to ‘bolt on’ these particular, yet

different, purposes and not others to the law of charities? It is not enough, theoretically, to

add to or take away from a list. The additions must all share some common characteristics.

Whether purposes belong to this particular area of law or not should be determined by

reference to characteristics – real definable essence and distinguishing features.

I theorise that the characteristics may be labelled ‘charitable purpose’. In labeling this

characteristic ‘charitable purpose’ I recognise the risk of confusion. The title is kept because

the doctrine of charitable purpose is to be developed beyond the current ‘technical’

conception – not abandoned. In taking this approach I am returning to the juncture in the

development of the doctrine where one overruled superior court held:

‘Charitable’ must …be understood in its ‘popular’ sense. That does not admit of any rigid or

undeviating connotation. It is flexible to an immeasurable degree, as can be seen by reference to

(e) the advancement of citizenship or community development;

(f) the advancement of the arts, culture, heritage or science;

(g) the advancement of amateur sport;

(h) the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial

harmony or equality and diversity;

(i) the advancement of environmental protection or improvement;

(j) the relief of those in need by reason of youth, age, ill-health, disability, financial hardship or other disadvantage;

(k) the advancement of animal welfare;

(l) the promotion of the efficiency of the armed forces of the Crown, or of the efficiency of the police, fire and rescue

services or ambulance services.

105 Extension of Charitable Purpose Act 2004 (Cth) ss 4-5.

106 Trevor A. Q.C. Carmichael, 'Charity Law Development in the Commonwealth Caribbean' in Paul Bater, Frits Hondius and Penina

Kessler Lieber (eds), The Tax Treatment of NGOs: Legal, Ethical and Fiscal Frameworks for Promoting NGOs and their

Activities (2004) 5961.

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the judgments of such eminent masters of law and language as the Judges who sat in Pemsel's

Case.107

The many reports mentioned so far ennumerate the problems with the ‘technical’ legal

approach.108 I suggest, ‘charitable purpose’ is a very broad concept which at its very

weakest, evidences the moral sentiment Adam Smith pointed to; as the glue that holds

society together. 109 At its weakest, this moral sentiment evinces some concern for others

which is voluntarily and results in the pursuit of purposes for their benefit. It can be deeply

infused, even dominated by self interest. At the other extreme, is the pursuit of purposes that

are entirely other regarding and self-sacrificing. I propose that charitable purpose is the

gravitational force holding all civil society organisations together. I suggest that this

charitable purpose, like gravity, is evident at different strengths, in different contexts.110 At

the weakest level, it is the fellowship and friendliness that sustains voluntary association.111

Those purposes that are sufficiently charitable are considered to be included within this legal

universe. It will be evident from the discussion so far, that I suggest that legal theory could

107 Chesterman v Federal Commissioner of Taxation [1923] HCA 24 (6 June 1923); (1923) 32 CLR 362, 384 (Isaacs J). This was

also the position taken in overruled decisions in lower courts in Pemsel’s case as Lord Watson observed: ‘The learned judges of

the Court of Session refused to attach to "charitable purposes" the comprehensive meaning which the words admittedly bear in

English law, being of opinion that they have no technical significance in the law language of Scotland.’ Pemsel’s case [1891] AC

531, 556 (Watson).

108 See footnote 22.

109 Adam Smith, The Theory of Moral Sentiments (first published 1789, 1971 ed) Ch I.

110 Charity is often viewed from two (allegedly) antithetical perspectives: one, that charity is voluntary gift, the other, that it is the

fulfilment of a positive duty. Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce

Chapman and David Stevens (eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87, 87. It is

not the function of this thesis to arbitrate between the two perspectives but rather to lay out a platform for a debate that may

encompass both. This debate (about why people behave charitably) is of significance to this thesis though, for altruism is a

justification for favouring and therefore is of importance later, when setting out an alternative basis for favouring from the

Preamble. The view that the perspectives are necessarily the reverse is also not well founded. There is a pedigree of ideas leading

back to at least the thirteenth century which positions charitable acts on a continuum between self interest and self-sacrifice. For

the eight degrees of charity drawn from ancient Jewish roots see Rabbi Maimonides, The Laws of the Hebrews, Relating to the

Poor and the Stranger (1840).

111 At its very basest it is rudimentary pro-social behaviour. For a brief introduction to the scientific study of pro-social behaviour see

J A Piliavin and Hong-Wen Charng, 'Altruism: A Review of Recent Theory and Research' (1990) 16 Annual Review of Sociology

27; Jen-Chieh Ting and Jane Allyn Piliavin, 'Altruism in Comparative International Perspective' in Jim Phillips, Bruce Chapman

and David Stevens (eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 51 and L.A. Penner,

J.F. Dovidio, J.A. Piliavin, D.A. Schroeder, 'Prosocial Behavior: Multilevel Perspectives: Abstract' (2005) 56 Annual Review of

Psychology 365 for the literature to 1990, to 2001 and to 2005 respectively.

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divide the legal cosmos into four universes and that the third be a universe held together by

the gravitational force called in common parlance ‘charitable purpose’.

The issue is complicated though, because acceptance into that legal universe currently brings

with it access to favourable treatment. There is not under the common law doctrine of

charitable purpose, as it is presently understood, a differentiator between those organisations

that evidence weak charitable purpose and those that evidence charitable purpose strongly.

Once recognised as belonging to the universe of ‘charitable purpose’ at common law

favourable treatment follows. I argue that it is necessary to distinguish within the class,

between civil society organisations that show only weak evidence of charitable purpose, and

those where charitable purpose is incontrovertibly and overwhelmingly evident. I suggest

that the weaker the evidence of charitable purpose the weaker the claim to favour. The

stronger the evidence of charitable purpose the stronger the claim to favour. For the purpose

of assessing strength of charitable purpose for the purpose of accessing favour I suggest the

extent or nature of public benefit is the appropriate measure.

I theorise that ‘charitable purpose’ understood in the way discussed in this thesis, is the

gravitational force that holds all of the laws of this legal universe together. Closer to the

centre of the universe, ‘charitable purpose’ (as here defined) is more evident.112 In this

context, the purposes recognised as ‘charitable purposes’ at law are but the characteristics of

some planets in this legal universe. Scanning this legal universe in search of ‘charitable

purposes’ has not brought, and cannot bring, clarity and certainty. Discerning a legal

framework for civil society appropriate for, and adapted to, the needs of common law

countries among the myriad relevant laws requires a different approach. A vantage point is

needed to view this legal universe which is not obscured, blurred, dominated and distorted

112 The idea that charity may be analysed in this gradutated way is both ancient and current. For the ancient roots see Rabbi

Maimonides, The Laws of the Hebrews, Relating to the Poor and the Stranger (1840); see also Jen-Chieh Ting and Jane Allyn

Piliavin, 'Altruism in Comparative International Perspective' in Jim Phillips, Bruce Chapman and David Stevens (eds), Between

State and Market: Essays on Charity Law and Policy in Canada (2001) 51.

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by the technical-meaning-of-charitable-purpose lens. To address these challenges the

applicable laws need to be viewed as a whole in their political, social and economic context

in twenty-first century, common law countries.

A reseach question that presupposes such a vantage point is essential.

E. How to Move Beyond Charities? Introducing the Research Question

A theoretical framework bringing together the laws applicable to this third sector of society

called, in this thesis, civil society is needed. There is a gap in legal theory. The law of

charities has not been located in a wider jurisprudence linked to the sectoral analysis

discernible in the jurisprudential analysis of other categories of law.113 Further, people

associate and transfer goods voluntarily in common law countries in the twenty-first century

in a variety of ways. Many of these ways were not foreseen prior to the twentieth century

when the framework of law of charities was moulded. Information technology transfer is an

obvious example but the assistance provided to indigenous people groups and the emergence

of the Human Rights agendas are other examples. Charities comprise only a small

percentage of the total number of these civil society organisations.114 Common law and

equitable doctrines facilitating these associations and transfers remain ossified around

ancient conceptions of charitable purposes. Accommodating these changes has required

statutory assistance in some jurisdictions and so by legislation the definition of charitable

purpose has been extended. Given the increasing importance of civil society organisations

for both enabling association and as vehicles for the provision of charitable goods115 the

research question shaping the thesis is: ‘How can the common law be developed beyond the

orthodox understanding of the law of charities to a jurisprudence for civil society?’

113 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 30.

114 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 14, Myles

McGregor-Lowndes and Matthew Turnour 'From Charity to Civil Society' (Paper presented at the ARNOVA Conference, Atlanta,

15 - 17 November 2007) 3.

115 Alan Ware, Between Profit and State (1989) Chapters 1 and 5 in particular.

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F. Beyond Charities to Civil Society: Introducing the Hypothesis

The hypothesis to be tested is that the common law doctrine of charitable purpose can be

developed into a jurisprudence for civil society. This principal hypothesis anticipates sub-

hypotheses:

1. There are at least some aspects of the law of charities that warrant development

and are capable of development.

2. The law of charities is capable of development using the common law method

and there are enough foundational principles in common law to facilitate that

development. Put differently, it is possible to abandon the ‘technical’ one

dimensional concept of charitable purpose by which:

a. charities are defined and by which, the jurisdiction of the law of charities is

determined; and

b. entitlement to favour is determined,

in favour of a jurisdiction derived from common law principles yet determined

by reference to civil society organisations.

3. The law applying to civil society organisations has two dimensions which

correspond to the two functions performed by the law of charities and they are

first, determining jurisdiction for the application of laws and second,

determining entitlement to favour. Civil society organisations are identified by

reference to charitable purposes that are not technically defined and entitlement

to favour is also not technically defined.

4. The charitable purposes by which civil society organisations are defined are in

essence purposes which are:

a. altruistic;

b. for public benefit;

c. performed without coercion.

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These charitable puposes differentiate civil society organisations from the three

other organisational forms and purposes, namely:

a. business, which is manifested by the pursuit of self-interest; that is lack of

altruism;

b. government, which is characterised by coercion, lack of voluntariness or

freedom; and

c. family, which is characterised by being private not public.

5. The charitable purposes by which entitlement to favour is determined are those

purposes pursued through a civil society organisation by which charitable goods

are supplied for public benefit. Charitable goods supplied for public benefit are

usually supplied through a civil society organisation and are:

a. private goods supplied to a person for the purposes of Dealing with

Disadvantage; thereby advancing equality;

b. quasi-public or public goods supplied to people for the purposes of

Encouraging Edification; thereby advancing fraternity; or

c. ligaments binding the polis together which Facilitate Freedom to advance

liberty.

6. These developments amount to the outline of an alternative jurisprudence which

warrants its own space in legal theory.

I now discuss the method by which this hypothesis is argued.

G. How the Jurisprudence will be Developed: Explaining Methodology

‘Jurisprudence … has no method of its own.’116 ‘Philosophy concerns itself with conceptual

clarification, and with providing structures for further analysis.’117 As this jurisprudence for

civil society is to provide structures for use within the common law, common law method is

116 Joel Levin, How Judges Reason: The Logic of Adjudication (1992) 9.

117 Joel Levin, How Judges Reason: The Logic of Adjudication (1992) 10.

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utilised. A central problem confronting the law of charities is one of definition of charities

and more broadly civil society organisations. Clarification of the subject is, then, the

objective. It follows that within that methodology, the principal sub-methodology applied is

definitional and the classical method of definition is chosen.118 That method is used to

elucidate propinquity and alternatively, remoteness or difference between subjects that are

not necessarily seen as related or, as the case may be, different.

Classical definition theory is chosen as this sub-methodology because it traverses legal and

non-legal disciplines and thus offers a bridge for concepts from wider civil society discourse

to crossover and inform legal theory development. These issues of definition have been

addressed in disciplines other than law and Helmut Anheier’s mapping of civil society and

the concept of a civil society diamond119 is utilised within the classical definitional sub-

methodology to locate this jurisprudence in wider civil society discourse.120

Once propinquity is patent, and boundary definition is established, it is possible to allow for

differences in relation to where these boundaries are drawn from one common law country to

another. Once differences of degree become significant, measurement theory becomes

relevant. I adopt Stanley S. Stevens’ widely used and well known categorisation of

measurement121 to argue how the present nominal approach to measurement of charitable

purpose (charitable purpose or not) can be extended at least to ordinal and possibly to

118 The value this method has to wider social science inquiry has more recently come to be appreciated. See, eg, Thomas H. Murray,

'Moral Reasoning in Social Context' (1993) 49 Journal of Social Issues 185 but for a contrary view see Michael Chesterman,

Charities, Trusts and Social Welfare (1979) 404. Exploration of definitions by elucidation of the genus and the differentia is

referable originally to Aristotle see David Charles, Aristotle on Meaning and Essence (2002).

119 Helmut Anheier, Civil Society Measurement, Evaluation, Policy (2004).

120 In adopting this wider cross-disciplinary approach a beginning is made which takes cognisance of ‘the role of charity in the

welfare state’, that is, a perspective that starts with the needs of societies rather than law. Such an approach might avoid the

criticism that ‘lawyers have little to offer to the current debate on charity law reform’ because they take a ‘lawyer’s lay view of

charity’ which reduces to a ‘counsel of despair’ that should not be allowed to circumscribe the future role of the law of charity. J

C Brady, 'The Law of Charity and Judicial Responsiveness to Changing Social Need' (1976) 27 Northern Ireland Legal Quarterly

198, 214-15.

121 Stanley Smith Stevens, 'On the Theory of Scales of Measurement' (1946) 103 Science 677, 678.

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interval and even ratio forms of measurement. In this section, I introduce these methods,

outline my reasons why they are adopted, and highlight some of the inherent weaknesses.

The common law method is a process of casuist reasoning whereby courts take into

consideration reasons given in former similar cases. There is a heirachy of courts and an

inferior court must follow the reasons given by a higher court in the judicial heirachy. As a

body of precedent cases develops the reasons for judgment distil into a body of rules or

principles and what become known as doctrines emerge.122 The common law method is

adopted because the law of charities has developed within that tradition to this point and, in

my view, the doctrine of charitable purpose is capable of further development from within

this method.123 This method is extremely flexible and is capable of taking cognisance of

theory development in other disciplines.124 I acknowledge the view that ‘any adjustment to

the legal framework regulating philanthropy … is the business of legislatures’.125 However,

‘this is an area of law where legislators seldom venture’126 and if the common law is capable

of development, as I suggest it is, there is a case for exploration of this possibilty. So, the

approach I take is to argue from the leading precedent, Pemsel’s case, the law which

preceded it, and the way it has been applied. I argue that there are foundational principles

evident in the precedents from which a more satisfactory jurisprudence can be developed.

This method is explained by Justice Gummow of the High Court of Australia extra curia in

the following way:

122 Alastair Macadam and John Pyke, Judicial Reasoning and the Doctrine of Precedent (1998) 13-14.

123 The contribution of the following authors to understanding the common law method inform my approach: P L Waller, D P

Derham and F K H Maher, An Introduction to Law (2000); John Wade, ‘Writing Theses and Reports - An Acronym for Structure

in the Wilderness: TCAGONARM’ (1999) 11(1) Bond Law Review 1; A Brockbank and I McGill, 'Reflection and Reflective

Practice' in Facilitating Reflective Learning in Higher Education (1998) 70; E Clark, 'Comparative Research in Corporate Law'

(1996) 3(1) Canberra Law Review 62; S Corcoran, 'Comparative Corporate Law Research Methodology' (1996) 3(1) Canberra

Law Review 54; and Baron Charles de Montesquieu, The Spirit of the Laws, Great Books of the Western World (Thomas Nugent

trans, first published 1748, 1992 ed).

124 Terry Hutchinson, Researching and Writing in Law (1st ed, 2001) 89-90.

125 Kerry O'Halloran, Charity Law and Social Inclusion: An International Study (2007) 3.

126 Kerry O'Halloran, Charity Law and Social Inclusion: An International Study (2007) 3.

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The most difficult questions that come before appellate courts in the end and more often than not

are to be answered by recourse to basic principle. If there is one characteristic which, for the

whole of life, has distinguished the approach taken in the High Court of Australia it is the

grounding of new developments in basic principle.127

The thesis is an attempt, to use Justice Gummow’s phrase, to find a way out of the present

legal cunundrum by ‘recourse to basic principle.’ Applying this method, I suggest, adopting

the famous words of Lord Atkin in Donoghue v Stevenson, that ‘there must be, and is, some

general conception of relations …of which the particular cases found in the books are but

instances’.128

This casuist method is a method not dissimilar from the methodology which philosopher and

jurist John Rawls’ explicated, to carry forward his arguments, and is now commonly known

as reflective equilibrium.129 The acceptability or otherwise of the overall argument is, in

Rawls’ terms, best described as ‘a matter of the mutual support of many considerations, of

everything fitting together into one coherent view’.130 It is an approach which is at least as

old as Aristotle who, in Nicomachean Ethics, states, ‘with a true view all of the data

harmonize’.131

I adopt the common law method not only because it is the method by which this body of law

developed, but also because it avoids the need to accept a particular modernist meta-

narrative. More than twenty years working as a practising lawyer, with this common law

methodology and consideration of the attacks upon modernity by postmodern thinking, have 127 William Gummow, 'Equity: Too Successful?' (Paper presented at the The 2002 WA Lee Equity Lecture, Supreme Court of

Queensland, 31 October 2002).

128 Donoghue v Stevenson [1932] AC 562, 580.

129 John Rawls, A Theory of Justice (1972) 20. For a similar approach to elucidate the Spirit of the Laws from the eighteenth century

see Baron Charles de Montesquieu, The Spirit of the Laws, Great Books of the Western World (Thomas Nugent trans, first

published 1748, 1992 ed).

130 John Rawls, A Theory of Justice (1972) 21.

131 Aristotle, Nicomachean Ethics Book 1 (1991) 344.

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developed in me both a renewed appreciation of the strengths of the common law’s casuist

approach and a deep insecurity about modernist meta-narratives. I am acutely aware that I

write at a time of great, philosophic uncertainty and ambiguity.132 This impact of

postmodern thinking, whilst limited, finds expression in three significant ways in the

development of this jurisprudence for civil society. First, it has reinforced my commitment

to utilising the casuist method of legal analysis by which case law usually develops and

which eschews reference to meta-narratives discussed above. This fits well with developing

a jurisprudence that seeks only to express ‘a general public sentiment’;133 that sets out to

describe the ‘legal connections’ that make sense of a body of law: a jurisprudence that seeks

to map certain inter-related ideas into a paradigm for analytical purposes.134 Second, I adopt

a classical, rather than a modern approach to analyse and to define both charitable purpose

and civil society organisation. That distinction is discussed in the next part of this section.

Third, and perhaps most significantly, for this theory development, I find useful Foucault’s

suggestion of a concept of a table on which ideas can be laid out and rearranged.135 This

approach may, then, also make the jurisprudence more acceptable to postmodern thinkers

such as Richard Rorty who might not accept a metanarrative, but may embrace the pragmatic

solutions embedded in the paradigm.136

132 It will be interesting to watch the way jurisprudence develops in the context of the challenges of postmodernism. For a discussion

of the way in which Richard Posner has abandoned the modernist grounding of his economic theory of law and how its

underpinnings may be reworked into a postmodern jurisprudence see: Daniel T Ostas, 'Postmodern Economic Analysis of Law:

Extending the Pragmatic Visions of Richard A. Posner' (1998) 36 American Business Law Journal 193. For an example of the

possibility that there is a move away from postmodernism even in France see the June 2006 edition of the Philosopher’s Forum in

particular the introduction of Lackey where he states that the authors there published ‘set the stage for the revival of a

contemporary French rationalism’: Douglas Lackey, 'Introduction: French Philosophy and Science' [2006] Philosophical Forum

11, 2.

133 Donoghue v Stevenson [1932] AC 562, 580.

134 R W M Dias, Jurisprudence (5th ed, 1985) 3.

135 Michel Foucault, 'Preface' in The Order of Things - An Archaeology of the Human Sciences (2002) xvi.

136 Richard Rorty, 'Solidarity or Objectivity?' in Lawrence Cahoone (ed), From Modernism to Postmodernism - An Anthology (1st ed,

1996) 573. Some postmodern thinkers will not accept this. There will be those, who like Quirrell, have beeen shown by Lord

Voldemort: ‘There is no good and evil, there is only power, and those too weak to seek it.’ J.K. Rowling, Harry Potter and the

Philosopher's Stone (1997) 211. Concepts of common good and public benefit central to this thesis require acceptance of ‘good.’

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There are significant weaknesses with this methodological approach upon which I comment

next. Weaknesses that go beyond methodology are not raised until the following section.

The weaknesses of the common law’s casuist method are substantial both theoretically and

practically. Vandevelde summarises the basic problems with legal method in the following

way:

First, although the legal reasoning process in form is structured as if it were based on mechanical

logic, in reality legal reasoning is impossible without reference to policies underlying the law.

Second, these policies are in conflict, and thus legal reasoning requires a lawyer to make

judgments about which policies are to prevail in particular circumstances.137

At the level of theory, then, common law method is inherently contestable and underpinned

by value judgments. The rules of interpretation are esoteric and can be applied differently

with different emphasis, at different times, leading to different results. Every decision

reached by majority over dissenting judgments bears witness to this point. There is a general

principle underpinning the development of the common law, that precedents are to be

followed but that, too, can lead to fine distinctions which even lawyers find difficult to

understand - as some of the earlier cited judicial observations noted. A second criticism is

that at a practical level the common law method is not suited to voluminous disparate data.

The development of the doctrine of charitable purpose requires (recalling the earlier

comments of Viscount Simon) a strategy to address volume.138 There is a ‘great body of

law’, and a way of dealing with what appears ‘illogical and even capricious’139 is needed to

manage the substantial inconsistency.

A defense to the first criticism is that the value judgments are based on the precedents and

those precedents rest on public reasons justifying the choices made. My response to the

137 Kenneth Vandevelde, Thinking Like a Lawyer (1996) 3.

138 [1949] AC 426.

139 Gilmour v Coats [1949] AC 426, 442.

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second of these weaknesses is to remember that this thesis is a disquisition about law – that

is the development of jurisprudence – and not an exposition of the law.140 There are two

consequences that flow from this. First, I do not seek to explain or exposit how ‘the

thousands of cases’141 on charitable purpose came to be corralled within the four heads of

Pemsel’s case. Second, whilst I comment on a range of cases and legislation from across the

common law world, I discharge my disquisitive object by focusing on limited examples of

what I suggest are foundational principles.

The classical method of defining is adopted because the strictures of the classical method

bring a discipline that requires confrontation of the issues creating the problems which the

modernist, nominative method does not. The modernist, sometimes called ‘nominal’

approach to definitions is, to use the judicially accepted words of Humpty Dumpty, ‘a word

means just what I choose it to mean – neither more nor less’142 for it is my ‘inviolable …

liberty’ (as a modernist) to make a word mean what I say it means.143 By contrast, the

classical method of definition development begins by taking hold of the characteristics that

evidence uniqueness and differentiates from that which it is not. As Socrates explained to

Theaetetus, when people ‘lay hold only of the common and not of the characteristic

notion’144 confusion arises but if ‘you get at the difference and distinguishing characteristics

of each thing then, as many people affirm, you will get at the definition or explanation of

it.’145 I adopted the classical approach so I am compelled to seek to elucidate the ‘real’

definition.

140 R W M Dias, Jurisprudence (5th ed, 1985) 4.

141 Peter Luxton, The Law of Charities (2001)17.

142 Lewis Carroll, Through the Looking Glass and what Alice Found There (1899) 123 cited in Liversidge v Anderson [1942] AC 206,

244-5 (Lord Atkin). For a discussion of the threats to political integrity embedded in the modernist approach see George Orwell,

Politics and the English Language (1946); for a more polemic Australian critique see David Flint, 'The 'Shock Jocks' are in Tune

with the Silent Majority', The Australian (Sydney) 15 December 2005,<http://www.onlineopinion.com.au/view.asp?article=3963>

at 10 September 2007.

143 See J Locke, Concerning Human Understanding (1952) 254 (Book III chapter II paragraph 8).

144 See Plato, Sophist (1991 ed, 1952) in Theaetetus, 548.

145 See Plato, Sophist (1991 ed, 1952) in Theaetetus, 548.

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In the classical sense, a ‘real’ definition signifies a thing’s essence146 and locates it in the

context of its other. In searching out its other, the development of such a definition requires

the draftsperson to explore the differentia.147 It is in the search for essence and differentia,

that the philosophic battles problematising the language of the doctrine of charitable purpose

are uncovered.148

The adoption of a nominal approach to definition of civil society would enable papering over

of the difficulties for, as Blaise Pascal poignantly observed in relation to the nominal

approach, ‘…there is great freedom of definition and definitions are never subject to

contradiction, for nothing is more permissible than to give whatever name we please to a

thing we have clearly pointed out.’149 By returning to the approach of the classics the

confusion must be confronted. At the outset, though, it must be acknowledged that the

weakness of the common law, in that it involves policy choices over what is selected and

what is not, applies also to the selection of the essence and differentia using the classical

method of defintion. 150

I return to the strictures of the classical method of definition development not only in my

investigation of the problems with the meaning of ‘charitable purpose’ but also in the way

the concept of civil society is expressed. This avoids the criticisms of a modernist approach

to definitions but I prefer it also for another reason.

146 See Aristotle, Nicomachean Ethics Book 1 (1991) see Topics Book I Chapter 5, 144.

147 Exploration of definitions by elucidation of the genus and the differentia is referable originally to Aristotle: see David Charles,

Aristotle on Meaning and Essence (2002).

148 Anup Malani and Eric A. Posner, 'The Case for For-Profit Charities' (Working Paper No 304, The Law School, The University of

Chicago, 2006).

149 See Blaise Pascal, Scientific Treatises (1952); Plato, Sophist (1991 ed, 1952) 431.

150 One of the more colourful, if disingenuous, comments on the weakness of the method comes from William James who expressed

it as follows:

The only a priori advice that can be given to a man embarking on life with a certain purpose is the somewhat barren counsel: Be

sure that in the circumstances that meet you, you attend to the right ones for your purpose. To pick out the right ones is the

measure of the man. ‘Millions’, says Hartmann, ‘stare at the phenomenon before a Genialer Kompf pounces on the concept’. The

genius is simply he to whom, when he opens his eyes upon the world, the 'right' characters are the prominent ones. The fool is he

who, with the same purposes as the genius, infallibly gets his attention tangled amid the accidents.

See William James, The Principles of Psychology (first published 1890, 1991 ed) footnote 3 at 670.

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Elucidating the solution to the definitional puzzle involves drawing upon the insights of

disciplines other than law. As the classical method of definition is at least acceptable and

frequently utilised across all of the disciplines informing the architecture developed here, it is

possible to draw upon definitional insights from those other disciplines then apply those

insights in the development of a definition for jurisprudential purposes using this method.

By utilising a well accepted, but more rigorous, way of defining key concepts in different

disciplines, it is possible to set out relationships that are not immediately apparent across

disciplines.

Dynamic boundaries emerge from such an approach to definitions. This is because there

will be contests over where the boundaries are. If these contests are to be embraced rather

than supressed, a framework capable of accommodating divergence is needed. This leads to

incorporation of dynamic boundaries into the definitions. Dynamic boundaries are built into

this jurisprudence through a combination of Helmut Anheier’s civil society diamond,151 and

S. S. Stevens’ segmentations of forms of measurement.152 S. S. Stevens’ categorisation of

measures is adopted because it is adequate and widely understood. The insight to actually

redraw the boundaries comes from Foucault. A concept similar to Foucault’s table153 is

employed to explore this region in which the boundaries between civil society organisations

on the one hand and each of businesses, government organisations, and families on the other

are in contest. It is a definition arrived at by developing the notion of civil society

organisations in the context of their relations with their others.154

151 Helmut Anheier, Civil Society Measurement, Evaluation, Policy (2004).

152 Stanley Smith Stevens, 'On the Theory of Scales of Measurement' (1946) 103 Science 677.

153 Michel Foucault, The Order of Things (1994) xvii.

154 Thus within a classical framework the notion of relational signs rooted in the linguistics of de Saussure is allowed to speak and

inform but it is not given untamed freedom. The overarching structure remains fundamentally classical. See Ferdinand de

Saussure, Course in General Linguistics (1966) for the foundations of this approach.

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Underpinning this framework development is my Christian faith, which provides, in

modernist terms, a meta-narrative which gives meaning to all facets of my life, yet I am

willing to live with the inexplicable mysteries as if a pre-modern or postmodern, for my faith

is essentially about relationships not propositional truths.155 This combination of influences

causes me to question, and then to challenge, the present dominant frameworks from within,

as a practising charities lawyer, whilst seeking to offer a constructive alternative. The

approach taken is designed to undermine the present, dominant, orthodox, legal framework

centred in a conception of ‘four principal divisions’ of charitable purpose. What drives me

to write this thesis is a passion to deconstruct a framework that results in injustice because

there is little or no way for some voices within it to be heard.156 Whilst I have views on the

matters in debate it is the absence of a satisfactory framework for philosophic battle – the

absence of a paradigm in which the divergent voices may debate – that troubles me most. So

for me, deconstruction of the orthodox understanding of the law of charities is not an end. It

is a part of a rebuilding process.

My central object is to offer an alternative architecture – one that explicitly seeks to facilitate

debate over regulation of voluntary association and favouring of altruistic contribution for

public benefit from diverse worldviews. I set this out because the choice of casuist method,

the adoption of a classical method for definition, and the quest for a middle region below the

meta-narratives are all tainted with subjective prejudices.157 In elucidating the essence or

differentia of charitable purpose or civil society, the selection of the relevant ‘essence’, it

155 Central to this understanding is the great commandment recorded in Mark 12:28-31 in The Holy Bible New International Version

(1984).

156 Kerry O'Halloran, Charity Law and Social Inclusion: An International Study (2007) 100.

157 This broad attempt at maintaining philosophic independence means that to the extent that this approach could be described as

consistent with the Rawlsian method of reflective equilibrium it is so in only a very limited way as I adopt the Rawlsian method

but resist adoption of Rawlsian liberalism. This is because in taking this approach I consistently seek to anchor it back into the

classical method proposed by Aristotle and which is central to the common law method and away from the fundamentally

modernist premises in which Rawls’ framework is set. The substantive weaknesses flowing from this are discussed under

limitations below.

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must be conceded to William James, is ‘a teleological instrument’.158 All aspects of

charitable purpose and civil society organisations are not explored. What is elucidated is ‘a

partial aspect’, that which for ‘our purpose we regard as its essential aspect’, and ‘the

essence, the ground of conception, varies with the end we have in view.’159 Adopting these

methods, helps to overcome the weaknesses emerging in modernist approaches, but it

replaces them with the problems inherent in the casuist method,160 classical definitions and

Foucault’s middle region. By not adopting Rawls’ modernist, liberal premises I also must

concede that I cannot explicate logically a general theory from very limited premises as he

does in A Theory of Justice.161

Could other methods of research be better suited to the project undertaken? The work

arguably lends itself to various methodologies including analysis within economic theories

of law, a critical approach, grounded theory or even historical method.

The extent to which insights from the discipline of economics informs theory development

suggests that perhaps the thesis could have been written from within an economic analysis of

law or even a comparative law and economics model.162 Economics, even applied in a

comparative law context, and even though it can take cognisance of broader scholarship;

158 William James, The Principles of Psychology (first published 1890, 1991 ed) 670.

159 T Honderich, The Oxford Companion to Philosophy (1995) 181-182.

160 The definition is for jurisprudential purposes so it will uniquely and distinctly shape the essence identified; for as William James

observed:

A substance like oil has as many different essences as it has uses to different individuals. One man conceives it as a

combustible, another as a lubricator, another as a food; the chemist thinks of it as a hydrocarbon; the furniture-maker as a

darkener of wood; the speculator as a commodity whose market-price today is this and tomorrow that. The soap-boiler, the

physicist, the clothes-scourer severally ascribe to it other essences in relation to their needs. Ueberweg's doctrine that the

essential quality of a thing is the quality of most worth is strictly true; but Ueberweg has failed to note that the worth is

wholly relative to the temporary interests of the conceiver. And, even, when his interest is distinctly defined in his own

mind, the discrimination of the quality in the object which has the closest connection with it is a thing which no rules can

teach.

William James, The Principles of Psychology (first published 1890, 1991 ed) 670-671.

161 See John Rawls, A Theory of Justice (1972).

162 See Nicholas Georgakopoulos, Principles and Methods of Law and Economics (2005); R Hunter, R Ingleby and R Johnstone,

'Law and Economics' in Thinking About Law (1995) 62; and for a postmodern twist see Daniel T Ostas, 'Postmodern Economic

Analysis of Law: Extending the Pragmatic Visions of Richard A. Posner' (1998) 36 American Business Law Journal 193.

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could not accommodate, in my view, the breadth of material considered in this work.

Further, neo-classical economic analysis requires presumptions to be made regarding

contested a priori assumptions and my object is to accommodate these contests, rather than

decide those contests within neo-classical economic premises.163

A cursory review of the layout of the thesis, considered in the context of comments made so

far, suggests influence from critical legal theories.164 A critical approach was not taken,

because common law method, in my view, gave greater freedom to deal with the difficulties

of ‘nebulous and conflicting’ streams of thought.165

In returning to the cases, and in the elucidation of principles from those cases, my approach

might suggest grounded theory method. Aspects of my approach resonate with the process

of grounded theory in looking for ‘codes then concepts and finally categories’.166 I begin

with preconceived ideas, though, and it is evident from the work as a whole that I proceed in

a more traditional way, proposing and testing an hypothesis.

If ‘history is nothing more than the raw material of law’167 and ‘the rational study of law is

still to a large extent the study of history’168 then arguably the thesis could have been written

163 Contrary to the now more frequent practice of utilising economic method in social science analysis it is the fruit of the economic

analysis – the content – that informs this thesis not the method. The method adopted here eschews the strictures that attend

adopting (exclusively) neoclassical economics’ rational actor homo economicus as the underpinning anthropology. The

jurisprudential paradigm developed is designed to permit other denizens of the discourse (such as homo sociologicus) to contest

for supremacy as the paradigm seeks to serve a philosophically diverse society. For discussion of these terms see Bruce Chapman,

'Rational Voluntarism and the Charitable Sector' in Jim Phillips, Bruce Chapman and David Stevens (eds), Between State and

Market: Essays on Charity Law and Policy in Canada (2001) 127, 127-28. In this thesis, for utilisation of economics insights see

Chapter IV and V; for discussion of method see method section above and for the final outcome of accommodating

anthropological dissonance within the thesis see Chapter IX.

164 See Oliver Brand, 'Conceptual Comparisons: Towards a Coherent Methodology of Comparative Legal Studies' (2007) 32

Brooklyn Journal of International Law 405.

165 Terry Hutchinson, Researching and Writing in Law (1st ed, 2001) 53.

166 George Allan, 'A Critique Of Using Grounded Theory as a Research Method' (2003) 2(1) Electronic Journal of Business Research

Methods 1, 1.

167 D J Boorstin, 'Tradition and Method in Legal History' (1941) 54(3) Harvard Law Review 424, 424.

168 O W Holmes, 'The Path of the Law' (1897) 10 Harvard Law Review 457, 469.

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from within an historical precedent approach.169 History is, though, too limiting in and of

itself, for this project. Oliver Wendell Holmes observed over one hundred years ago: ‘For

the rational study of the law the blackletter man may be the man of the present, but the man

of the future is the man of statistics and the master of economics.’170 The need to

accommodate insights from economics and other disciplines in the development of this

thesis obliged me to work beyond historical methods alone. So I adopt the common law’s

casuist, sometimes called case-based, approach as my method.

Legal reasoning is ‘a distinctive mixture of logic and judgment’.171 So, I must concede at

the outset, that ultimately the method is subjective. Using logic and judgment I set out an

argument in a fashion utilised by lawyers for centuries - but that is all. My values therefore

cannot but permeate every aspect of the thesis.172 This is a major weakness that runs through

the whole thesis. It cannot be avoided, however, as it is central to legal method.

It is my judgment that the cross disciplinary literature and the legal literature have developed

to a point where it is logical to look at the cases on the doctrine of charitable purpose

differently and to organise information in relation to those cases in a different way. The

argument in the thesis, like any common law opinion, reduces ultimately to a judgment of

whether the reader is satisfied that this alternative whole fits together. 173

It should also be stated in this context that prejudice does not just apply to the writer but is

relevant to the reader. There are a number of possible responses to the analysis undertaken.

Those responses will be shaped by the reader’s perspective on two issues. The first of these

is the problems with the present law of charities. The second is the extent to which the

169 Robert Spector, 'Legal Historian on the United States Supreme Court: Justice Horace Gray, Jr, and the Historical Method' (1968)

12(3) The American Journal of Legal History 181.

170 O W Holmes, 'The Path of the Law' (1897) 10 Harvard Law Review 457, 469.

171 Kenneth Vandevelde, Thinking Like a Lawyer (1996) 3.

172 Karl R. Popper, Conjectures and Refutations: the Growth of Scientific Knowledge (1989).

173 See William James, The Principles of Psychology (first published 1890, 1991 ed) footnote 3 at 670.

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concept of civil society, particularly as mapped in this thesis, is, for the reader, a satisfying

idea. To pick the two extremes: if the reader is an academic researcher who finds the

concept of civil society very satisfying, and finds the present law of charities an impenetrable

fog, then the reader is far more likely to readily embrace the architecture developed in this

thesis. On the other hand, if the reader is a professional lawyer, practising in the area of

charity law, who finds the present form of the law of charities entirely satisfying and

considers the emerging concept of civil society an irrelevant fad of the social sciences, then

embracing the idea of a jurisprudence for civil society will be much more difficult. We are

all prejudiced.174 These prejudices ought to be acknowledged at the outset. It must also be

stated that any and every method that could be adopted will labour under limitations but the

advantage of adopting the common law’s casuist approach is that those limitations are

recognised, accepted and integral to the process of legal theory development.

H. The Scope and Limitations of Beyond Charities

The thesis is centred on the doctrine of charitable purpose and its scope is as broad as is

practicably possible. Taking such a broad approach requires prioritising. The analogy of a

magnifying glass illustrates the approach taken to this challenge of prioritzing and setting the

scope for discussion. Under a magnifying glass the central subjects are enlarged and

dominate the observations. Also, though, where the subject ends is fuzzy and difficult to

make out. Thus, discussion of the central subjects of the doctrine of charitable purpose – the

Preamble and Pemsel’s case – dominates the legal analysis. Other less central cases on the

doctrine, and even developments in the law in Europe that may influence the development of

the common law, occupy the fuzzy edges. The scope is set always, though, with reference to

the common law doctrine of charitable purpose – as it is presently formulated and how it

might be developed. There are significant limitations with this approach and these are now

considered.

174 The former professional now academic Michael Powell opined: ‘Professions tend to be conservative whereas the best research is

not.’ Michael Power, The Audit Society: Rituals of Verification (1999) xiii.

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First, there are limitations in relation to method. These were discussed in the earlier

methodology section and are not repeated here.

Second, there are limitations due to the international scope of the work. As the law of

charities applies throughout most of the common law countries,175 cases decided in one

jurisdiction tend to significantly inform developments in others, so the scope of the analysis

is not limited to one jurisdiction. Furthermore, the challenges which the common law

countries face are also quite similar and so the role of the common law principles in

addressing social challenges is also similar. The economic research and broader civil society

scholarship into the voluntary supply of public and quasi-public goods, which is the subject

of the law of charities, also tends to be of international application. This all affirms an

international scope for the work but adopting an international perspective creates a

significant drawback. The relevant law is not only case based. It is constructed in diverse

constitutional contexts and the common law principles frequently find different statutory

overlays. Without reference to this body of constitutional and statute law which is

jurisdiction specific, jurisprudential theorising is at best incomplete and at worst

disingenuous. I address these challenges in two ways. First, in relation to constitutional

contexts, I argue that the constitutional frameworks of common law countries rest upon

common law foundations and I advance the discussion within that broad premise. That

argument occupies the early part of Chapter VII. In relation to specific laws, I have to make

choices. I endeavour to illustrate points with statutes from a variety of jurisdictions but the

default jurisdiction is the jurisdiction of Queensland, Australia where this thesis is submitted

for examination. Having said that, the law of that jurisdiction is taken principally to

illustrate more general principles and the thesis is seasoned with cases relied upon across the

175 Kerry O'Halloran, Charity Law and Social Inclusion: An International Study (2007) 3.

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common law jurisdictions. As to time, the thesis takes cognisance of the law as at 31

December 2008.

The usefulness of the thesis will also vary from jurisdiction to jurisdiction as the way in

which the concept of charitable purpose is applied varies. For example, the discussion

regarding favours based on charitable purpose, will be much more relevant in Australia, the

United Kingdom and Canada where the term is a gateway to income tax exemption than in

the United States where the concept is not as central to that regime. Income Tax legislation

in India references charitable purpose176 but the Indian courts have made it clear that in their

view ‘[t]he Indian legislature has evolved a definition of the expression 'charitable purpose'

which departs in its material clause from the definition judicially supplied in Pemsel's case

and decisions of English courts, which proceed upon the interpretation of language different

from the Indian statute, have little value.’177 Consequently, much of that discussion might be

of little relevance to Indian jurists. In setting out the discussion I have, then, to acknowledge

that the argument remains very abstract and at a broad conceptual level with the law of

particular jurisdictions used to illustrate points rather than for detailed analysis. This

commitment to broad philosophical reasoning, which is a strength in providing an underlying

theoretical rationale for policy decisions, is also a major weakness. This is because in the

twenty-first century, common law principles – particularly the doctrine of charitable purpose

– are embedded in statutory contexts that are beyond the scope of this thesis to explore in

any depth. The statutory context is, though, critical to appreciating the way the law in each

of these jurisdictions has developed.

Third, in this thesis the discussion is limited to the law applying to charities and other

organisational expressions of civil society. The law applying to individuals as individuals is

176 Income Tax Act 1967 (In), s 11(1).

177 CIT v Andhra Chamber of Commerce [1965] 55 ITR 722, 734; CIT v FICC AIR 1981 SC 1408, 1414-1415 (Venkataramiah J).

See also Municipal Corporation of Delhi v Children’s Book Trust AIR 1992 SC 1456.

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excluded from discussion. Similarly institutions, such as the rule of law, which are central to

legal theory development in Chapter VII are discussed only to the extent necessary to

develop the argument. This approach follows the common law which focuses on charities as

organisations and is necessary to contain the scope of the thesis. It is, though, arguably a

significant limitation. The law applying to civil society applies to individuals as individuals

and not just to their involvement in organisations. Similarly these broader institutions upon

which the common law rests are important and worthy of more explicit exploration. Two

points can be made in support of this limitation to only the organisational form. First, by

focusing on the organisational form I build logically from the present law. Second, in

focusing on the organisational form I focus on the principal area of the law’s operation and

consequently even if the theory developed here does not encapsulate all of the laws applying

to civil society it encapsulates most.

Fourth, there are problems for theory development inherent in applying ancient, legal

concepts to contemporary conceptions of civil society organisations. The legal foundations

of charities, and more broadly the freedoms upon which charities depend at common law,

developed in times when there was not government, business or family as they are now

known. Current conceptions of civil society organisations, as discussed here, did not exist. I

endeavour to do justice to the development of the concepts in their religious, feudal context

but that involves extrapolation, as ‘modern institutions did not exist in the Middle Ages’.178

This is a limitation and a weakness that must also be acknowledged from the outset.

Fifth, I theorize that there is a division between laws that facilitate association (Association

law) and laws that facilitate favours to certain civil society organisations (Benefit law). The

doctrine of charitable purpose does not explicitly segment the regulatory dimension from the

favouring. I develop an argument that the division of the doctrine of charitable purpose

178 Gary Richardson, 'Craft Guilds and Christianity in Late-Medieval England' (2005) 17(2) Rationality and Society 139, 169.

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known as advancement of religion is predicated on freedom of religion. Further I theorise

more generally that the broader freedom to associate underpins the freedom to pursue other

charitable purposes. The common law protections were, though, fundamentally for religious

organisations not broadly for civil society organisations and some conceptual stretching is

required to bridge the chasm. These are my contentions, but they are latent not patent. My

theory is consequently open to the criticism that the presupposition is erroneous and the

value of the theory is quite limited if that conceptual step is not taken.

A sixth major limitation, implicit in the earlier five limitations, is the generality with which I

address the law. Frequently, it is necessary to set out in deft, general strokes principles

which summarize the law but which do not do justice to the context or background. In

Chapters II and III where I set out problems with the law in common law countries at present

I make judgments to include or exclude some arguments. Others could well have made a

different judgment on what to include and what to exclude. In Chapter VI, I select only a

limited number of philosophers and give even more limited attention to some of their ideas.

Similarly in Chapter VII my attention to constitutional context is only passing although it is

fundamental to legal theory and practice. In Chapter VIII the only theoretical analysis is of

Pemsel’s case. These are but four examples of decisions to limit discussion to generalities

where the subject matter warrants attention to particulars. In like vein is my frequent appeal

to, and discussion of, the law in Australia, New Zealand, Canada, the United States,

Scotland, Ireland, England and Wales, for example. A thesis such as this, which is an outline

of a completely different architecture, arguably cannot but labour under such limitations.

Seventh and finally, I labour under the same limitation as Garton in that like his theory of

civil society so my theory also is untested and no empirical evidence, either qualitative or

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quantitative, was gathered in order to test its central propositions. Like he, I also rely upon

theories that are themselves untested.179

I. Definitions Needed to Develop a Jurisprudence for Civil Society

It will be evident from the discussion in the methodology section that in offering definitions,

the object is to state the shared common meaning for clarity, not to make a word mean ‘just

what I choose it to mean – neither more nor less.’180 As Dias observed, there is usually a

shared common meaning to most words even if the margins are contested181 and, true to the

classical method, these definitions operate as explanations of shared meanings and clarify,

where there are contested margins, at just what point a meaning line is drawn. So, in this

thesis, unless otherwise stated below, words have the meaning set out in the Oxford English

Dictionary. It is helpful to set out as clearly as possible what is meant by a word or phrase

and consequently I adopt the style of a practising lawyer rather than an academnic to state

that in this thesis the following words have the following more precise definitions:

‘Association law’ is one of the two divisions of a jurisprudence for civil society; the other is

Benefit law. Association law is the area of law concerned with the freedom of persons to

associate and the freedom of organisations by which those associations occur. For example

people associate through churches, clubs, trade unions and professional organisations.

Sometimes these associations are incorporated. Sometimes they are not. Association law is

the body of law that applies to all of these asssociations as associations. An example of a

common law association case is Grace Bible Church v Reedman.182 Examples of association

law statutes include the recent legislation passed by Vermont in the United States to enable

179 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 33.

180 Lewis Carroll, Through the Looking Glass and what Alice Found There (1899) 123.

181 R W M Dias, Jurisprudence (5th ed, 1985) 3.

182 (1984) 54 ALR 571, 585, discussed in Chapter VII.

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and regulate for-profit charities called L3Cs183 and the Scottish Charitable Incorporated

Organisations Act.184

‘Benefit law’ is one of the two divisions of a jurisprudence for civil society; the other is

Association law. Benefit law is the area of law concerned with favourable treatment

accorded to persons who, and organisations by which, charitable goods are provided.

‘Charitable goods’ are private goods supplied to deal with disadvantage, and public goods

and quasi-public goods supplied to edify society and facilitate the freedom upon which

society rests. To be charitable the goods must be supplied altruistically, voluntarily and

result in public benefit. The definition can include services and range from the provision of

religious services broadly understood through to the delivery of food to those in need and

choral performances.

‘Charitable purpose’ means when used in the context of the law of charities ‘[a]n object

listed in the Preamble to the Statute of Charitable Uses Act 1601, or within the “spirit and

intendment” of that statute’185 but which is argued to be capable of a broader reading to

include all purposes that manifest altruism, public benefit and which are pursued voluntarily.

‘Charities’ are civil society organisations ‘established for charitable purposes only.’186

Charitable trusts are included in the class, as the concept of organisation is given the widest

possible meaning. Some of the more well known charities include the St Vincent de Paul

Society that provides assistance to persons in financial need, Red Cross International which

183 Low-Profit Limited Liability Companies VT STAT ANN (2008).

184 Charities and Trustees Investment Act 2005 (Scotland) s. 49.

185 Peter E Nygh and Peter Butt (eds), Butterworths Concise Australian Legal Dictionary (2nd ed, 1998) 67.

186 Charities Act (Eng.&W) s 1(1)(a). The section continues importantly to limit the definition to the relevant jurisdiction. J

Warburton, D Morris and N F Riddle, Tudor on Charities (2003) 1.

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provides medical related services, and Harvard University which provides educational

services.

‘Civil society’ is the sphere of institutions, organisations and individuals located between

family, the state and the market, in which people associate voluntarily to advance common

interests.187 The expression ‘civil society’ takes on a technical meaning. Importantly, the

concept of civil society has developed significantly beyond the original idea of an alternative

to rude or uncivilised society.188

‘Civil society organisation’ means an entity which is more public and usually larger than a

family, by which people voluntarily associate to pursue common altruistic objects which are

not commercial.189 These organisations can include car enthusiast clubs, child care centres

conducted on a not-for-profit basis and orders of contempative nuns.

‘Coercion’ is the opposite of freedom. Coercion does not have to be direct and could be

through subtle means.190 It is most patent in taxation where money is taken by force of law

from some citizens and given to others. At a subtler level, it is evident in the degree of

difficulty and the costs levied on the formation and conduct of an association.

‘Common law’ for the purposes of this thesis includes the equity case law. I adopt

Simpson’s observation that ‘equity is just another form of common law’.191

187 Helmut Anheier, Civil Society Measurement, Evaluation, Policy (2004) 22.

188 For the history of the original idea see Adam Ferguson’s essay An Essay on the History of Civil Society (1767); for the

development of the idea in recent times see John Ehrenberg, Civil Society - The Critical History of an Idea (1999) and Helmut

Anheier, Civil Society Measurement, Evaluation, Policy (2004).

189 The term is replacing NGO in international discourse. Anna-Karin Lindblom, Non-Governmental Organisations in International

Law (2005) and is becoming accepted in legal discourse Jonathan Edward Garton, The Regulation of Charities and Civil Society

(D Phil Thesis, University of London, 2005) 519.

190 See R v Big M Drug Mart Ltd [1985] 69 SCC 95 (Dickson J).

191 William Twining (ed), Legal Theory and Common Law (1986) 8.

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‘Common law countries’ broadly means countries that still apply the common law

principles derived from England. Principally, in this thesis, the definition focuses on those

countries which also share the cultural, philosophic heritage of England. This is because it is

necessary to draw from that broader cultural (particularly religious), philosophic context to

develop the argument set out in that thesis. That means the following jurisdictions take

centre stage: Australia, Canada, New Zealand, the United States of America and the United

Kingdom.

‘Donor favoured’ means deductible gift recipient or tax credited. Examples of such favours

are contained within the Income Tax Assesment Act 1997 (Cth), Division 30; the Internal

Revenue Code (US) s 501(c)(3) and section 170; Income Tax Act 2004 (NZ) s BD 2, DV 8

and DV 9; Income Tax Act 2007 (UK) c 3, s 521-523; Income Tax Act (Can) (1985) c 1 (5th

Supp) s 110.1(1)(a)(ii), 118.1(1)(b) and s 118.1(3), and 149(1)(l)).

‘Equality’ is a value. I acknowledge diversity of meanings. For example, in classical

Greek theory, three kinds of equality are recognised: isonomia (equality before the law);

isotimia (equal respect for all); and isegoria (equal freedom of speech and political action).

In post-enlightenment theory, the three kinds tend to be covered by one of a trilogy of

principles (liberty, fraternity, and equality).192 My limited purpose is to label an ideal. A

particular jurisprudential worldview or common law country may give shape and expression

to the value in a particular context.

‘Exemption’ means exemption from income tax. Examples of such favours are contained

within the Income Tax Assesment Act 1997 (Aus), Division 50; the Internal Revenue Code

(US) s 501(c)(3); Income Tax Act 2004, (NZ) s CW36; Income Tax Act 2007 c.3 (UK);

Income Tax Act (Can) (1985, c 1 (5th Supp)).

192 Peter E Nygh and Peter Butt (eds), Butterworths Concise Australian Legal Dictionary (2nd ed, 1998) 152.

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‘Family’ is the word used to describe the informal sector outside of civil society. I avoid the

title ‘informal’ as it does not capture the essentially private, usually small, nature of the

gatherings that are not civil society. Private gatherings, such as gatherings of friends,

extended kin relations and informal networks which lack the necessary public dimension to

be considered civil society organisations, are within the definition of family in this thesis.

The term goes beyond the usual definitions of family for policy analysis.193 The term can be

confused also with civil society organisations.194 I avoid this by defining family as

essentially private and civil society organisations as essentially public.

‘Favour’ is the blanket descriptor of ‘peculiar favours’195 afforded to organisations because

they are charities or, more generally, because they belong to civil society or a sub-class of it.

The more well known are exemption and donor favoured status.

‘Fraternity’ is also a value and I eschew the contest over its expression as I do with equality

and liberty.

‘Freedom’ means ‘liberty’, and includes expression in the four freedoms recognized at law:

freedom of association, freedom of assembly, freedom of speach and freedom of religion.196

‘Grantee’ means a recipient of a government grant.

‘Law of charities’ means the currently orthodox, overarching framework or jurisprudence

that operates to include or exclude from the class of charitable purposes according to the

‘technical’ meaning of ‘charity’ drawn from a particular reading of the judgment of Lord

193 K H Tillman and C Nam, 'Family Structure Outcomes of Alternative Family Definitions' (2008) 27 Population Research and

Policy Review 367.

194 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 14, 40B.

195 Pemsel’s case [1891] AC 531, 583.

196 S E Klingelhofer and David Robinson, 'The Rule of Law, Custom and Civil Society in the South Pacific: An Overview' (2002)

8(1) Third Sector Review: Charity Law in the Pacific Rim 211, 211.

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Macnaghten in Pemsel’s case.197 That reading focuses exclusively upon the four heads set

out in Lord Macnaghten’s judgment to the exclusion of reference to an underlying

jurisprudence. Whilst the body of law is principally case based, to the extent that statutes

rely upon and incorporate this case law, the law of charities includes that statute-based law.

That means, for the purposes of determining jurisdiction, it is the body of law which the

Court of Chancery and its successor, the High Court of Justice, evolved from a consideration

of the Statute of Elizabeth, in particular the Preamble.198

Importantly for jurisdiction

development, this body of law involves looking primarily to the Statute of Elizabeth, and not

behind it, for the definition of charitable purpose.

‘Liberty’, like equality and fraternity, is a value and labels ‘freedom from arbitrary or undue

external restraint, especially by a government’.199

‘Non-distribution constraint’ is a clause or collection of clauses in the constituent

documents of an organisation which prevent the organisation distributing income or capital

to members of the organisation. Such a constraint is the most common evidence that an

organisation does not operate for the purposes of benefiting its members.200 To be effective,

a non-distribution constraint must be married with a fair compensation constraint that

prevents excessive compensation for goods or services to stakeholders such as executives.

The expression ‘non-distribution constraint’ in this thesis includes both forms of restraint.

197 Pemsel’s case [1891] AC 531, 583-584 (Lord Macnaghten).

198 The definition is taken from Gilmour v Coats [1949] AC 426 (Lord Simon). Although Lord Simon refers to this body of law as

‘the law of charity’ using the singular not ‘the law of charities’ which is plural, I have adopted the plural, as Picarda does, see H

Picarda, The Law and Practice Relating to Charities (3rd ed, 1999) Chapter 1. I have done this to avoid confusion with the verb

charity and because it focuses attention on the organisations which are usually described as charities and which are the object of

the law’s attention.

199 Bryan A Garner (ed), Black's Law Dictionary (7th ed, 1999) 930-31.

200 Henry Hansmann, 'Reforming Nonprofit Corporation Law' (1981) 129 University of Pennsylvania Law Review 500, 501. Richard

Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W Powell and Richard Steinberg (eds), The Nonprofit

Sector: A Research Handbook (2nd ed, 2006) 117, 118.

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‘Organisations’ include trusts and any other entities by which charitable purposes and more

broadly, association in civil society are pursued.

‘Pemsel’s case’ means: The Commissioners for Special Purposes of the Income Tax v

Pemsel [1891] AC 531.

‘Pemselian partitioning’ means the division of charitable purposes into the four heads set

out by Lord Macnaghten in Pemsel’s case.

‘Pemselian purpose’ means only ‘the four principal divisions’ of charitable purpose stated

by Lord Macnaghten in Pemsel’s case, namely ‘trusts for the relief of poverty; trusts for the

advancement of education; trusts for the advancement of religion; and trusts for other

purposes beneficial to the community, not falling under any of the preceding heads’201 but

applies to organisations other than charitable trusts.

‘Preamble’ means the Preamble to the Statute of Elizabeth.

‘Public’ means the community as an aggregate, but not as an organized whole. It is often

confined to mean such members of the public as require the particular goods or services

concerned, or a significant section of the public, and not the public at large.202

‘Statute of Elizabeth’ means Statute of Charitable Uses 1601, 43 Eliz.c.4.

‘Voluntary’ means the opposite of coerced.

201 See Pemsel’s case [1891] AC 531, 583.

202 Peter E Nygh and Peter Butt (eds), Butterworths Concise Australian Legal Dictionary (2nd ed, 1998) 351.

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J. Moving Towards a Jurisprudence for Civil Society: An Overview of the Thesis

The thesis is an interpretation and synthesis of cases and published research to suggest an

alternative architecture – a new way forward – for jurisprudence developed from the doctrine

of charitable purpose as it is presently understood but which expands to include all civil

society organisations. It involves setting out and building from diverse disciplines, theories

and insights. The thesis is divided into three parts.

Part One is devoted to identifying the law of charities, the reasons why it needs to be

developed, and obstacles to that development. It foreshadows how these obstacles might be

addressed. In this chapter only literature locating the discussion has been mentioned.

Chapter II is a discussion of foundational, definitional and conceptual inadequacies with the

law as it is presently understood. It includes a discussion of difficulties in applying the

common law to contemporary social challenges. The inability of the common law to develop

is due to the failure to address problems of method. I argue that there are three common law

principles which have not been followed. The abandonment of these principles makes sense

in their historical context. Chapter III begins with these three principles and discusses them

in their historical context. It goes deeper, though, and identifies taxonomy problems,

inadequate methods of measurement and contested a priori assumptions to be addressed in

developing the doctrine of charitable purpose.

The contested a priori assumptions elucidated through Chapters II and III relate to three

subject areas: public benefit, altruism and the coercive role of government. These three

subject areas are explored in the second part which is titled, Civil Society. Civil society is

the broader framework within which charities are located. I theorise that it is in

rediscovering the doctrine of charitable purpose as central to civil society that its capacity for

development lies. That rediscovery requires exploration of the three subject areas: public

benefit, altruism and the coercive role in the context of broader theorising regarding civil

society. One Chapter is devoted to each. Benefit as a public and private concept is explored

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in Chapter IV. Altruism is considered in Chapter V. The place of charities in particular and

civil society organisations in general cannot be understood without taking cognisance of

worldviews in relation to the coercive role of government. Those worldviews cannot be

separated from the philosophy that underpins theoretical understandings of civil society.

Insights from political philosophy on the coercive role of government therefore dominates

Chapter VI and closes Part Two.

Part Three is dedicated to jurisprudential development. In Chapter VII the foundations for

enabling and regulating charities, and more generally civil society organisations, to pursue

their purposes are considered under the heading of Association law. In Chapter VIII the

Preamble and the decision in Pemsel’s case (from which the present difficulties are derived)

is revisited with a view to finding an alternative reading beyond the orthodox. An alternative

architecture for the common law, developed from the doctrine of charitable purpose but

inclusive of all civil society purposes is outlined in Chapter IX.

In summary, the thesis argued is that the doctrine of charitable purpose, freed from the

Pemselian partitioning, can continue to perform useful service in the development of the law

applying to civil society organisations. In sketching the outlines of a jurisprudence for civil

society, I develop a framework consistent with such a reading of Pemsel’s case. I set out an

argument as to how this reading can be rediscovered. One caveat is required at the outset. A

central argument is that the doctrine of charitable purpose can evolve to include all civil

society organisations. It is necessary, therefore, to discuss the idea of charity in both its

present form, which is riddled with definitional difficulties, and the evolved form, which

extends to include all civil society organisations. These conceptual challenges are managed

by foreshadowing the objective in mind and extensive reliance on the nuanced definitions set

out in the section above. These challenges cannot be completely avoided, however, and it

may be necessary for the reader to refer frequently to these definitions and read the thesis,

particularly chapter II and III with the end in view.

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K. Postscript

As in Dickens’ Tale, the confusion flowing from court hearings and the ostensible injustices

arise, not because of the fine distinctions made in those hearings, but because of the way

they unfold in the broader social and political context. It is the inadequate way that jurists

have developed the doctrine of charitable purpose to respond to the changed social and

political context that has generated the challenges now facing common law jurists

considering civil society. The starting place for this discussion is not, then, the doctrine of

charitable purpose but the broader social and political context in which the doctrine of

charitable purpose is located. By reflecting upon the challenges facing common law

countries, it becomes apparent why it is important to go beyond charities to a jurisprudence

for civil society and what that jurisprudence should address. It is to those social challenges

that the next chapter first turns.

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II WHY GO BEYOND CHARITIES?

A. Preamble

In A Tale of Two Cities, Charles Dickens paints a tragic picture of a physician, Dr Alexandré

Manette, who was imprisoned for so long that when his daughter and banker came to get

him, they found him voluntarily locked in a room and cobbling shoes. His interminable

confinement caused Dr Manette to completely forget his original vocation and he could not

take advantage of his changed circumstances. Like Dr Manette, the doctrine of charitable

purpose seems disconnected from related disciplines, imprisoned within its Pemselian

partitioning, unable to respond to changed circumstances and unable to fulfill its proper role

in society. Just as Dr Manette could not recognise the banker who cared for him and came to

help, so the doctrine of charitable purpose seems to be incapable of connecting with the

economic discourse that can lead it out of its isolation. Just as his daughter – who was his

closest but unknown relative – was unrecognisable to Dr Manette, so the doctrine of

charitable purpose cannot recognise the proximity of the civil society discourse that can

relocate it in the wider family of purposes voluntarily pursued, often for the benefit of others.

Just as there was a deep commitment on the part of the banker and daughter to see Dr

Manette through the challenges he faced and reformed in his role in society, so there is a

deep commitment on the part of societies throughout the common law world to address the

challenges facing the doctrine of charitable purpose and see it reformed in its role in society.

B. Introduction

From Chapter I it will be recalled that there is extensive academic literature expressing

dissatisfaction with the law of charities. Beginning with that literature, identifying problems,

puzzles, gaps and inadequacies and then building, from that, towards a solution or alternative

would be usual in a thesis such as this. The problem with that approach is that it is

insufficient. Whilst there is a recognised need to build from the law of charities to a

jurisprudence for civil society that legal literature, as Garton has observed, focuses ‘almost

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exclusively on the charitable sector as opposed to wider organised civil society’.203 Garton

was writing in a regulatory context and the objective of this work is to progress beyond both

Garton’s regulatory proposals and the more general confines of the doctrine of charitable

purpose. It is to provide a framework that is useful to address the broader challenges facing

civil society as a whole, not just theoretical problems embedded in the doctrine of charitable

purpose. As Lord Porter noted:

... the difficulty does not lie in the origin of the doctrine alone. It is, I think, inherent in the subject

matter under consideration. ... It is not the law but the diversity of subjects which creates the

difficulty. 204

So, whilst academic insights in relation to the law of charities inform and substantially frame

sections of the chapter, the difficulties with the doctrine and the diversity of subjects are

marshalled principally by having regard to the classical definition theory methodology

mentioned in Chapter I with a view to defining, not just charitable purpose, but civil society

organisations. The problems, puzzles, gaps and inadequacies identified are woven through

the discussion rather than determining the point of embarkation.

The threshold problems of definition, and the way regulation is carried out, cannot be

addressed adequately without returning to the usually overlooked foundation of all civil

society organisations, not just charities, which is the freedom to associate.205 Discussion of

foundations, genus and form therefore introduces the problems explored in this chapter. A

second usually overlooked threshold problem is that the law regulating charities in particular,

203 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 27. In his

footnote 109 Garton explained that these limitations were due in part to the scope of the briefs given to the respective Inquiries.

204 See: National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31, 52 where Lord Peorter held:

But the difficulty does not lie in the origin of the doctrine alone. It is, I think, inherent in the subject matter under consideration.

Whether any two persons would agree in all cases as to what ‘charity’ should include is at least doubtful. It is not the law but the

diversity of subjects which creates the difficulty.

205 Charitable Trusts Committee (UK), Report of the Committee on the Law and Practice Relating to Charitable Trusts, Cmd 8710

(1952-53) 1-2; Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London,

2005) 27.

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but more generally civil society organisations, varies according to the form taken. Even

though certain trusts, companies limited by guarantee, incorporated associations and

unincorporated associations could all be charities pursuing identical purposes they are

subject to different regulatory regimes. This also frequently overlooked problem compounds

the problems set out later in the chapter so it is also introduced in the first section. The

substantive problems, related to the doctrine of charitable purpose that explicitly concern the

inadequacy of the Pemselian purposes, are considered in the second substantive part. In the

second section, the impact of the law on social concerns, rather than the more esoteric legal

agendas, informs the issues chosen for exploration and the way they are considered. Beyond

the narrow agenda of the doctrine of charitable purpose, is a plethora of other problems,

eluded to in the introduction, that are central to civil society, and these are discussed in the

third substantive section. Problems with entitlement to income taxation favours, which are

also integrally linked to charitable purpose across the common law world, are considered in

this last section as part of the problems distinguishing businesses from charities.

This chapter and the next chapter are paired. This chapter discusses the presenting problems

– that is problems with the content – that point to the need to go beyond charities to a

jurisprudence for civil society. Chapter III focuses on elucidating the underlying problems

of methodology rooted in philosophic a priori assumptions that make analysis of these

problems within common law jurisprudence so difficult. Many of the problems discussed in

this chapter apply broadly to civil society organisations, not just charities, but in this chapter

the problems discussed are contextualised in a discussion of charities. This is because the

problems embedded in the doctrine of charitable purpose lie at the heart of the challenges

addressed in this thesis. Later it will be theorised that many of these problems are resolved

by abandoning the ‘technical’ definition of charitable purpose in favour of a definition of

charitable purpose that extends to include all civil society organisations. Charities and civil

society organisations would then be one and the same. It will also be theorised that linking

entitlement to favours to the ‘technical’ definintion of charitable purpose only further

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complicates the discourse. Those developments take shape in Part Three. The task at hand

is to address the threshold problems. The foundations is where this begins.

C. Addressing the Threshold Problems of Foundation, Genus and Form

In the first part of this section, the essence and foundational freedom to pursue charitable

purposes and regulation of that freedom begin the discussion. In the second part, the always

difficult problem of finding the boundary between charities and non-charities is discussed.

1. Charities are without an Essential, Theoretical Foundation

Identifying the essence of charitable purpose is a first step to a classical definition. A

definition is the first step to clarifying which organisations should be regulated and which

should not. Beneath that question is the larger question: what freedom is there to pursue

civil society purposes in general and charitable purposes in particular? Following from the

answer, if there is any such freedom, is the question: why does this freedom exist? This is an

entry point to the crux of many of the problems.

Freedom of association and charities are integrally linked because, at the heart of almost all

charitable purpose, can be found voluntary association for public benefit. Freedom to

associate and give is the heart, not just of charities, but of the whole of civil society.

Defourny and Develtere go so far as to state that ‘it is fair to say that the genesis of the social

economy [their descriptor of civil society] parallels to a large extent the gradual emergence

over the centuries of freedom of association.’206 Writing in 2005, Garton observed that this

oversight led to a giant theoretical leap. Summarising the common themes running through

the reform agendas of the many common law jurisdictions addressing the doctrine of

charitable purpose, he noted that:

206 Jacques Defourney and Patrick Develtere, 'The Social Economy: The Worldwide Making of a Third Sector ' in Jacques

Defourney, Patrick Develtere and Bénédicte Fonteneau (eds), L'economie Sociale au Nord et au Sud (1999) 4.

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all focus almost exclusively on the charitable sector as opposed to wider organised civil society;

all are concerned with ensuring that the definition of charity reflects contemporary social needs;

and all except England are concerned with establishing new sector specific regulatory agencies.

However, what is most striking is the fact that all the reform proposals have been made on the

assumption that regulation of organised civil society – and more specifically, regulation of the

charitable sector – is justified. None of the reform bodies take a step back to consider whether

this is indeed the case, and ask whether flourishing civil society might achieve, and whether

regulation would enable this. Instead, they simply consider the form that regulation should

take.207

This analysis of the framework for addressing problems begins by taking that step back and

considering the justification for all and any regulation.

The invitation to take that step back and begin analysis of charities in the context of freedom

of association in civil society, has been flagged for further exploration since at least 1952.

The Introduction to the Nathan Report quoted Lord Beveridge from page 10 of Voluntary

Action: A Report on Methods of Social Advance as pointing to this. It noted that Lord

Beveridge’s first recommendation, to ‘enable the voluntary movement, was a review of

charities and the law within which they operate’.208

Taking that step back is the first step forward. Lord Beveridge’s recommendation

presupposes a particular view of society. A view of society where ‘voluntary movement’ is

to be encouraged. The substance of freedoms, though, ‘depends on what the community or

society demands and this in turn is often a function of what it is prepared to trust and types of

risk to which it feels vulnerable’.209 The prevalence of that worldview, in an age of

207 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 27. In his

footnote 109 Garton explained that these limitations were due in part to the scope of the briefs given to the respective Inquiries.

208 Charitable Trusts Committee (UK), Report of the Committee on the Law and Practice Relating to Charitable Trusts, Cmd 8710

(1952-53)1-2.

209 Michael Power, The Audit Society: Rituals of Verification (1999) 3.

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terrorism, might be different. 210 If a society is consumed by what Michael Power called ‘the

pathologicality of excessive checking’, is there any space left, at common law, for free

association and giving? Is there a place where government cannot intrude without

trespassing on common law freedoms? 211 As an Australian Senate Committee asked in

December 2008:

Should regulatory reform apply to the whole not-for-profit sector, or only to segments of the

sector? For example, to charities; to bodies receiving public funds, whether through grants or tax

concessions; to bodies with a financial turnover about a specified threshold etc? 212

The way a society answers these questions determines more than the definition of ‘charitable

purpose’ and consequently the scope of operation of the doctrine of charitable purpose, it

informs the common law jurisprudence for the whole of civil society.

Charities in common law countries have felt the pinch of these limitations nowhere more

acutely than in legislation that has resulted from the War Against Terror.213 The United

Nations Security Council has called upon member states to take action to monitor, control

and seize funds collected for terrorist acts.214 The scope of the resolutions require, or at least

encourage, member states to bring what has formerly been a private matter – giving – within

210

Mark Sidel, 'Fallout from the War on Terror' in Yale Global Online <http://yaleglobal.yale.edu/display.article?id=5865> last

accessed 22 February 2007; Ian Barker, 'Human Rights in an Age of Counter Terrorism' (2005) 26 Australian Bar Review 1, 7.

211 Michael Power, The Audit Society: Rituals of Verification (1999) viii.

212 The Senate Standing Committee on Economics, 'Disclosure Regimes for Charities and Non-Profit Organisations' (Parliament of

the Commonwealth of Australia, 2008) 135.

213 Mark Sidel, 'Fallout from the War on Terror' in Yale Global Online <http://yaleglobal.yale.edu/display.article?id=5865> last

accessed 22 February 2007; Ian Barker, 'Human Rights in an Age of Counter Terrorism' (2005) 26 Australian Bar Review 1, 7.

214 There is a series of relevant resolutions commencing with the resolution on Threats to International Peace and Security Caused by

Terrorist Acts SC Res 1373, UNSCOR, 4385th mtg 0155743 (2001), which:

1. Decides that all States shall:

(a) Prevent and suppress the financing of terrorist acts;

(b) Criminalize the wilful provision or collection, by any means, directly or indirectly, of funds …

See also the following United Nations Security Council Resolutions: Threats to International Peace and Security Caused by

Terrorist Acts SC Res 1566, UNSCOR, 5053rd mtg 0454282 (2004); Threats to International Peace and Security Caused by

Terrorist Acts SC Res 1535, UNSCOR, 4936th mtg 0428641 (2004); High-level Meeting of the Security Council: Combating

Terrorism SC Res 1456, UNSCOR, 4688th mtg 0321605 (2003).

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the purview of government scrutiny.215 Governments are to decide whether or not any

particular gift is within the definition of a terrorist act, as defined by that state, in the light of

the resolutions. In an endeavour to guide charities the Charities Commission of England and

Wales had issued a policy on charities and their alleged links to terrorism. This policy does

not make any reference, though, to the deeper theoretical principles.216 That Commission’s

Simplification Plan, stated that it is presently ‘developing a risk and proportionality

framework’.217 The Commission seeks to regulate charities in ways that are ‘proportionate,

accountable, consistent, transparent and targeted’. 218 Having stated this, the Commission

does not ground these principles in fundamental human rights.219 As a consequence the

framework for resolving clashes between freedom to associate and give in the context of

charities remains without a theoretical framework. This is not simply a problem for

theorists. Baker has stated, as an illustration of the use of ‘terrorism’ powers, that ‘counsel

for the US government went so far as to argue the executive had authority to detain a little

old lady in Switzerland who sent cheques to what she believed was a charity for Afghans in

Afghanistan but which was in fact a front for Al Queda.’220 The arrest of the little old lady in

Switzerland might sound an extreme example; it is not. Recently, in Haneef’s case,221 the

Full Federal Court in Australia has had cause to restate the fundamental common law

freedoms in just such a situation. Dr Haneef was imprisoned in Queensland under the

Australian government’s anti-terrorism laws on the basis of his association and his gifts. The

charges, which were subsequently dropped, were based on an alleged association with ‘a

terrorist organisation consisting of two persons including his two second cousins.’222 The

215 John Mowbray, Lewin on Trusts (18th ed, 2008) 1327.

216 The Charity Commission for England and Wales, Counter-Terrorism Strategy (2008).

217 The Charity Commission for England and Wales, Charity Commission Simplification Plan 2008 (2008) 4.

218 The Charity Commission for England and Wales, Charity Commission Simplification Plan 2008 (2008) 6.

219 The Charity Commission for England and Wales, Charity Commission Simplification Plan 2008 (2008).

220 Ian Barker, 'Human Rights in an Age of Counter Terrorism' (2005) 26 Australian Bar Review 1, 12 citing Hamdi v Rumsfeld, 542

US 507 (2004) 6 and Rasul v Bush, 542 US 466 (2004); Al Odah v United States, 542 US 466 (2004).

221 Minister for Immigration and Citizenship v Haneef [2007] FCAFC 203 (Unreported, Black CJ, French and Weinberg JJ, 21

December 2007).

222 Minister for Immigration and Citizenship v Haneef [2007] FCAFC 203 (Unreported, Black CJ, French and Weinberg JJ, 21

December 2007) [2].

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arrest ostensibly resulted because Dr Haneef made a gift. He was alleged to have

‘intentionally provided resources’ to a terrorist organisation by giving to his second cousin ‘a

“subscriber information module” (SIM) card’ for a mobile telephone.223

The link between charitable association and giving on the one hand and its foundations in

freedom to associate and freedom to give on the other, remains largely unexplored. As

Garton observed:

there are no existing theories of civil society regulation on which the laws would be placed.

English charity law, for example, is based on a statute which predates sector-based analysis of

society altogether, and its development has been influenced by factors which attempt to

undermine civil society. For example, the law of mortmain, which dates back to the Magna Carta

in 1215, prohibited certain testamentary gifts of land to charities, partly so as not to deprive the

crown of revenue and partly out of “hatred ... and contempt” for charities and their benefactors.224

With the exception of the three old United States cases (pointing to freedom of religion as

underpinning not just the advancement of religion but society in general), jurists both on and

off the bench have tended to pass over this fundamental nexus.225 That is not to say that the

common law foundations of freedom have not been revisited more recently. In Haneef’s

case, on appeal, the Full Court of the Federal Court of Australia held that ‘[f]reedom is not

merely what is left over when the law is exhausted’226 but that ‘the common law, ... has its

own set of constitutional rights, even if these are not formally entrenched against legislative

223 Minister for Immigration and Citizenship v Haneef [2007] FCAFC 203 (Unreported, Black CJ, French and Weinberg JJ, 21

December 2007) [2].

224 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 44B

(citations removed).

225 Holland v Peck (1842) 37 NC 255, 258; Gass v Wilhite (1834) 32 Ky 170, 180; People ex rel Seminary of our Lady of Angels v

Barber (1886) 3 NY St Rep 367 affirmed in (1887) 13 NE 936.

226 Minister for Immigration and Citizenship v Haneef [2007] FCAFC 203 (Unreported, Black CJ, French and Weinberg JJ, 21

December 2007) [113].

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repeal.’227 Nor is the judical reaffirmation of common law freedoms unique to Australia in

the twenty-first century. Ahdar and Leigh writing in 2005 and referring to freedom of

religion summarise the position internationally as: ‘in the past two decades, courts across the

common law world have purported to find that certain fundamental rights existed – either as

limitations on legislative capacity (Australia) or in the form of a strong presumption against

legislative encroachment (New Zealand and the United Kingdom).’228 What has not been

theorised is the link between these freedoms and charitable giving.

Exploration of the nexus is not driven only by terrorism laws. Revenue concerns in

particular, and more generally regulation of fundraising are also driving inquiry into the

division between charitable giving and freedom. In 2007, the head of the United States

Senate Finance Committee, Senator Grassley, sent a letter to Kenneth and Gloria Copeland

the leaders of a Christian religious ministry.229 The letter, which is one of six sent to ‘media-

based ministries’230 asked for ‘a detailed explanation of the personal use of assets’.231

Senator Grassley stated that his object was fiscal integrity. He wanted the American people

to be ‘assured that all donations are being used for the tax-exempt purpose of the

organisation.’232 The letter from Senator Grassely to the Copelands has implications for

basic freedoms discussed earlier in this chapter. When should a religious charity be free to

conduct its ministry as it sees fit? There is a long tradition under the common law, linked to

the concept of the call to religious ministry, that integrates a religious practioner’s public and

227 Minister for Immigration and Citizenship v Haneef [2007] FCAFC 203 (Unreported, Black CJ, French and Weinberg JJ, 21

December 2007) [113] citing TRS Allan.

228 Rex Ahdar and Ian Leigh, Religious Freedom in the Liberal State (2005) 102 (citing Australian Capital Television Pty Ltd v

Commonwealth (No 2) (1992) 177 CLR 106 as authority for the situation in Australia; R v Lord Chancellor, Ex parte Witham

[1998] QB 575; R v Secretary of State for the Home Department, ex parte Simms [2000] AC 115; and R (on the application of

Daly v Secretary of State for the Home Department [2001] 2 WLR 1622 as authority for the situation in the United Kingdom,

Fraser v State Services Commission [1984] 1 NZLR 116, 121 and Taylor v New Zealand Poultry Board [1984] 1 NZLR 394, 398

as authority for the position in New Zealand).

229 Letter from Charles Grassley to Kenneth and Gloria Copeland, 5 November 2007, available at

http://finance.senate.gov/sitepages/grassley2007.htm.

230 Senator Chuck Grassley, 'Ministries' response to the Nov. 5 Inquiry' (Press Release, 6 December 2007).

231 Joe Maxwell and Rob Moll, 'Senate Crackdown', Christianity Today 2008, 15.

232 Letter from Charles Grassley to Kenneth and Gloria Copeland, 5 November 2007, available at

http://finance.senate.gov/sitepages/grassley2007.htm.

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private life. How is a common law country to respond to the challenge of wanting to

encourage people to give their lives in the service of God and others in a charitable way on

the one hand, and on the other restraining the use of religion as a vehicle for self indulgence?

Put in United States’ constitutional language; the ‘danger here is that [Grassley’s letter

requesting information] can become a fishing expedition ... into areas where the First

Amendment protects ministries – for example, their beliefs and views of the gospel.’233

Senator Grassley’s expressed concern was that: ‘Jesus comes into the city on a simple mule,

and you got people today expanding his gospel in corporate jets’.234 How is a common law

society to distinguish the religious practitioner that rides into town on a mule from the one

that enters in a private jet? Should it? How can the doctrine of charitable purpose, as

presently understood, provide architecture for this discussion? As presently understood it

cannot. The calls for greater regulation in such a context may be very understandable, but

without a theoretical framework to assist, legislators, regulators and judges are in a

quandary.

These concerns, regarding the scope of legislative inquiry into giving in the United States,

are likely to cross the Atlantic sooner than might be expected. The European Court of

Justice has ruled that member states, which include the countries of the United Kingdom,

should allow the same tax advantages for cross-border donations as for donations to

domestic organisations. This is likely to trigger significant reflection on the theoretical

foundations for freedom when giving as the Bristish Treasury considers how to protect its

revenue base. For example, upon what common law principles (of sovereignty or otherwise)

could a British court decide whether a charitable gift by a British citizen to a Portuguese

Nursing Home entitled that citizen to claim a tax deduction for the gift in Great Britain?235

So, whilst at this point, it may not seem critical to anchor principles of regulation in common

233 Joe Maxwell and Rob Moll, 'Senate Crackdown', Christianity Today 2008, 15.

234 Laurie Goodstein, Senator Questioning Ministries on Spending (2007) The New York Times at 16 May 2008

235 See: Hein Persche v Finanzamt Lüdenscheid [2008] ECJ C318/07.

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law history and development because the issues are not usually considered in common law

countries, in the context of issues regarding freedom and sovereignty there are international

developments driving change.

Explicating the link between giving charitably and the freedom upon which it is predicated,

has become a priority. Senators, regulators, practitioners and citizens who send cheques to

aid workers in Afganistan, need foundations to guide them on the appropriate limits to

regulation of charities in the context of fundamental freedoms. At the source these questions

cannot be answered without defining the essence and foundations of the doctrine of

charitable purpose.

2. The Essence of Charitable Purpose and its Other

This section of this chapter began with a subsection identifying a foundational problem.

That problem was difficulty identifying the common law foundation of freedom to associate

to pursue charitable purposes and give. Equally important is differentiating charities, and

more broadly civil society organisations, from other organisations. Differentiation is

particularly critical for lawmakers and enforcers in common law countries struggling with

how to justly regulate a plethora of organisations. As presently theorised, the doctrine of

charitable purpose segregates from other organisations those organisations that are pursuing

Pemselian purposes. There is not a satisfactory theoretical basis for distinguishing the

organisations presently defined as charities from those presently not defined as charities.

The problem arises from the way charitable purpose is ‘defined’. To be pursuing a charitable

purpose an organisation:

1. must be pursuing purposes that are within the ‘spirit and intendment’ of the

Preamble;

2. must pursue only those purposes; although incidental other purposes will not

necessarily vitiate the charitable purpose; and

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3. the entity must exist for the benefit of the public.236

These criteria are inadequate as a tool for differentiating between organisations. It will be

recalled from Chapter I, that the Preamble sets out a long list of items and it seems that for a

very long time it was ‘the practice of the Court to refer to [the Preamble] as a sort of index or

chart.’237 The list did not prove particularly helpful so, following Lord Macnaghten’s

decision in Pemsel’s case, the ‘spirit and intendment’ of the Preamble has come to mean

falling within one of four Pemselian purposes, namely relief of poverty, the advancement of

education, the advancement of religion and other purposes beneficial to the community.238

The net effect of taking the Preamble as a definition, and the categorisation in Pemsel’s case

as the framing jurisprudence, is this: the method a twenty-first century citizen of a common

law country must adopt to ascertain if a purpose is a charitable purpose today involves

understanding how a court, in exercising this jurisdiction, would interpret a list in the

Preamble of an English seventeenth century statute, having regard to a classification in a

nineteenth century English case. The existing cases from all over the common law world

may act as a guide as to whether a purpose is within the ‘spirit and intendment’ of that list,

but there is not, as one Chief Justice of the High Court of Australia observed, a relevant

genus.239

Without a relevant genus it is impossible to adequately define the subject to be regulated,

and that presents problems for legislators. In the section on foundation and essence that

preceded this discussion, limits on inquiry into giving and sovereignty were discussed.

These challenges of defining what organisations are within and what are outside the scope of

regulation apply also to the more general issue of fundraising. The Irish Parliament has

236 J Warburton, D Morris and N F Riddle, Tudor on Charities (2003) 2.

237 Pemsel’s case [1891] AC 531, 581 (Lord Macnaghten).

238 Pemsel’s case [1891] AC 531, 583 (Lord Macnaghten).

239 Incorporated Council of Law Reporting (Qld) v Federal Commissioner of Taxation (1971) 125 CLR 659, 667 (Barwick CJ).

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added a full two chapters of fundraising regulation in its Charities Act 2008240 but its scope

is limited to charities as defined at common law and exended by the Act.241 The Australian

Senate Committee on Economics has conducted an inquiry into the Disclosure Regimes for

Charities which focused on fundraising and has recommended a whole-of-sector approach,

but it cannot define the organisations that will fall within the sector.242 It found that the

sector had to be considered in a legal context as a ‘third sector’, but concluded that ‘an

accurate descriptive analysis of the Sector was impossible to achieve’.243 Having come to

this conclusion its first recommendation was, nevertheless, for a uniform nomenclature

across all Australian Governments.244 A beginning must be made, then, towards defining the

organisations that make up this sector. If legislation is to apply to all of the organisations

that make up the sector it must go beyond adding to the Pemselian heads, as Ireland and

other British jurisdictions have done. A definition of these organisations is needed.

Defining generally the organisations that make up the sector will not resolve all of the

problems because whilst the lack of definition is fundamental to the challenges it is not

exhaustive of them. Integral to the problems are the diverse organisational forms that

charitable institutions and other forms of voluntary participation take. Problems of form are

considered next.

3. Problems of Form

Common law countries have provided a plethora of means for citizens to voluntarily

associate and give. The institutions and guilds which were early vehicles for philanthropy in

medieval England gave way to the trust, so dominant from the sixteenth to the close of the

240 Charities Act 2008 (NI) Part 13 Fund of Charitable Institutions.

241 Charities Act 2008 (NI) s 1-5, 16-25.

242 The Senate Standing Committee on Economics, 'Disclosure Regimes for Charities and Non-Profit Organisations' (Parliament of

the Commonwealth of Australia, 2008).

243 The Senate Standing Committee on Economics, 'Disclosure Regimes for Charities and Non-Profit Organisations' (Parliament of

the Commonwealth of Australia, 2008) 11.

244 The Senate Standing Committee on Economics, 'Disclosure Regimes for Charities and Non-Profit Organisations' (Parliament of

the Commonwealth of Australia, 2008) 154 (Recommendation 1).

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nineteenth century. Charitable trusts continue as a vehicle for philanthropy but the twentieth

century witnessed the emergence of a variety of other legal forms which carry across into the

twenty-first century. The ancient forms of association through institutions and guilds re-

emerged in the form of companies, associations (both incorporated and unincorporated),

Royal Charters, Letters Patent, incorporated bodies and statutory forms of association.

These bodies, whether charities or not, all share one characteristic with the charitable trust

which is critical but rarely stated. All of these organisations, be they incorporated or

unincorporated, are a vehicle for holding assets to be applied to purposes which are not

commercial, family or government. The concept of purpose has been central to the

development of the law of charitable trust. Charitable trusts, as a vehicle for social

contribution, are on the wane even in the United Kingdom.245 Remaining fixated on the trust

form, and locating this discussion of purposes within the law of trusts, is hindering common

law development. It is the pursuit of charitable purposes, not the packaging of the purposes

in the form of a trust, that is central to jurisprudence in this emerging area of law.

The problem arises because the common law has, for the last four hundred years or so, been

focused on trusts for purposes, whilst legislation has been enabling and regulating the

245 For a summary of the decline of the trust form and the emergence of other forms internationally see: Myles McGregor-Lowndes

and Matthew Turnour 'From Charity to Civil Society' (Paper presented at the ARNOVA Conference, Atlanta, 15 - 17 November

2007) 2-4; See also Kathleen Day and Rose Anne Devlin, 'Backgrounder: The Canadian Nonprofit Sector' (Canadian Policy

Research Networks, 1997); David Smith, 'Grassroots Associations Are Important: Some Theory And A Review Of The Impact

Literature' (1997a) 26 Nonprofit and Voluntary Sector Quarterly 269 ; David Smith, 'The Rest Of The Nonprofit Sector:

Grassroots Associations As The Dark Matter Ignored In Prevailing “Falt Earth” Maps Of The Sector' (1997b) 26 Nonprofit and

Voluntary Sector Quarterly 114 ; Australian Bureau of Statistics, Standard Economic Sector Classifications of Australia (SESCA),

Cat. No 1218.0 (1998); Kristin A Gronbjerg and L Paarlberg, 'Extent and Nature of Overlap between Lisitngs of IRS Tax-Exempt

Registration and Nonprofit Incorporation: The Case of Indiana' (2002) 31 Nonprofit and Voluntary Sector Quarterly 565 ; Marion

R Fremont-Smith, Governing Nonprofit Organisations – Federal and State Law and Regulation (2004); Marion R Freemont-

Smith, 'The Search for Greater Accountability of Nonprofit Organisations: Recent Legal Developments and Proposals for Change'

(Working Paper No 33.8, The Hauser Center for Nonprofit Organisations, Harvard University, 2007); Marion Fremont-Smith,

'Comments on US Senate Committee on Finance Staff Discussion Draft of June 21, 2004' (2004) Urban Institute 7 at 5 September

2008; Michael Hall, Larry McKeown and Karen Roberts, 'Caring Canadians, Involved Canadians ' (2005) 2000 National Survey

of Giving, Volunteering and Participating, Statistics Canada; UK Government, 'Private Action, Public Benefit' (Strategy Unit,

Cabinet Office, UK Government, 2002); Givewell, Important Statistics on the State of Australian Philanthropy (2006)

<www.givewell.com.au/statistics.asp> at 30 June 2006; National Center for Charitable Statistics, Number of Nonprofit

Organisations in the United States 1996-2006 (2007) <http://nccsdataweb.urban.org/PubApps/profile.php?state=US> at October

2007.

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formation of associations under different regimes based on form, not the purposes pursued.

Addressing problems of form requires resolving the question of whether purpose or form

should be the principal indicium determining regulation. If purpose is to be the dominant

criterion, then methods more sophisticated than the current methods of identifying charitable

purpose and, more generally civil society purposes would be helpful. The diverse forms of

charities and more generally civil society organisations compound the problems of

identifying charitable purpose in particular and civil society purposes generally.

D. Problems Arising from the Four Principal Divisions of Charitable Purpose

1. Introduction

The first and second heads illustrate fundamentally antithetical problems. In the case of

poverty relief, what is needed is greater subsegmentation to separate those at a significant

disadvantage from those that simply have some financial necessity. In the case of

advancement of education, the problem is the opposite – the class has been stretched, and

stretched again, in the hope of finding an appropriate outer limit, when what is needed is

reclassification beyond education. The broad and unsophisticated scope of relief of poverty

is discussed first. The issues embedded in advancement of education follow. Issues set out

in the section above will be revisited under the third head, advancement of religion, as that

discussion logically follows the discussion of the last section in relation to fundamental

freedoms. The section closes with consideration of three fundamental problems with the

fourth general head of other purposes beneficial to the community.

2. The Broad and Unsophisticated Scope of Relief of Poverty

The word ‘poverty’ is a word of ‘wide and somewhat indefinite import; and it may not

unfairly be paraphrased as meaning persons who have to ‘go short’ in the ordinary

acceptation of that term, due regard being had to their status in life.’246 Going short can be a

246 Re Coulthurst [1951] Ch 661, 666.

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long way from poverty but those comments by an English judge have been adopted by

Justice Walsh of the High Court of Australia. These observations illustrate the quite

generous interpretation of what amounts to poverty. Justice Walsh summarised the law in

1971 in the following terms and it remains an adequate summary for present purposes:

A person may be in need without being destitute. The word ‘poverty’ and similar expressions, as

used in the law in relation to charities, refer to persons who, although they may not be in abject

poverty, are subject to some degree of financial necessity. That view accords with the view stated

by Kitto J in Ballarat Trustees Executors and Agency Co Ltd v Federal Commissioner of

Taxation… and also with that stated by Vaisey J and by the Court of Appeal in Re Coulthurst,

deceased; Coutts and Co v Coulthurst… In the latter case there was a discussion of the degree of

need in which persons must be, in order that a gift for the purpose of assisting them financially

may be held to be a gift for the relief of poverty.247

This generous approach obscures rather than resolves problems which centre around the

‘degree of need [required for a gift to be] for the relief of poverty.’248 That is a problem.

There is a vast continuum between persons in abject poverty who are without the necessities

of life and who will die if not given food or medical attention on the one hand; and those

whose poverty amounts to ‘some degree of financial necessity.’ Some criterion is needed,

beyond the notion of relief of poverty as a head of charitable purpose, to sort cases into more

discriminating categories for different levels of need.

One size does not fit all. This has led in Australia to the creation, for taxation purposes, of

two other classes which arguably could be treated as charitable; but the way the doctrine of

charitable purpose has developed this has not been possible. The two examples are the

classes called Public Benevolent Institutions and Necessitous Cirumstances Funds.249 Public

247 Downing v Commissioner of Taxation (1971) 125 CLR 185, [7] (Walsh J).

248 D v Bryant Trust Board v Hamilton City Council [1997] 3 NZLR 342, 350 (Hammond J). See also Re Scarisbrick; Cockshott v

Public Trustee and Others [1951] Ch 622 (Evershed MR)

249 Income Tax Assesment Act 1997 (Cth) Division 30, particularly items 4.1.1 and 4.1.3 of section 30-45.

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Benevolent Institutions are ostensibly charities that provide direct relief to those in need.

Necessitous Circumstances Funds provide funds to those at a disadvantage. For example, as

the law presently stands in Australia, 'the current disadvantaged position in Australia of

Aboriginals is such that any valid trust for their benefit must also be for public benevolent

purposes...'250 and a trust to establish [only] Australian Aboriginals in the profession of

barrister may, in appropriate cases, amount to a category entitling gifts to that trust to tax

deductibility on the basis that such a gift is for the relief of necessitous circumstances.251

The doctrine of charitable purpose knows of no such broad category as the public benevolent

institution or the necessitous circumstances fund, and they are not incorporated into the

extant jurisprudence, yet both stand so close to charitable purpose and are clearly a

development of a poverty-relieving jurisprudence. The need for such categories as Public

Benevolent Institution and Necessitous Circumstances Fund legislatively is because the

categorisation of charitable purpose is inadequate.

The same issues arise with respect to the relief of the ‘aged’ and the ‘impotent’. The

common law requires that they be treated as separate concepts but there is no clarity as to

why ‘aged’ is relevant if the aged is a very rich person capable of acquiring by purchase all

their needs. There are clearly sometimes disadvantages with being ‘aged’; and with being

‘impotent’; but, if it is the disadvantage not the age or impotence that is important, then

should not that be the classifier?

The mirror of aged is infancy and the challenges associated with granting favour to infants is

even more problematic. Picarda doubts that ‘any of the decided cases justify the assertion

that gifts or trusts for the care, upbringing and establishment in life of children and young

people generally is charitable.252 He notes, though, that if the child or children are

250 Maclean Shire Council v Nungera Co-operative Society Ltd 84 LGERA 144 (Handley JA, Priestley and Sheller JJA agreeing).

251 See Trustees of the Indigenous Barristers' Trust – The Mum Shirl Fund v Federal Commissioner of Taxation [2002] FCA 1474.

252 H Picarda, The Law and Practice Relating to Charities (3rd ed, 1999) 155.

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‘defenceless, under privileged or otherwise necessitous’,253 that a gift or trust to assist those

children would be charitable.’254 The question which a citizen might reasonably ask is, why

old age generally should be a gateway to charitable purpose and not young age. Second, if it

is the disadvantage that attaches to the age, why is not dealing with this disadvantage the

gateway to charitable purpose instead of age?

At the source of much of the confusion, is the problem that much of what previously was a

charitable purpose is not a charitable purpose any more. Since 1601, when the Preamble

was passed into law and indeed since 1891, when Pemsel’s case was decided, the division of

responsibility for poverty relief has changed. Whereas poverty relief was principally the

responsibility of family and those pursuing charitable purposes, through the twentieth and

into the twenty-first century the government has taken over much responsibility for poverty

relief and care for the aged poor. Pensions, some low cost accommodation and also the

provision of some low or no cost health services, are commonly provided by government in

many common law countries. Whilst many hospitals, to pick the clearest example, remain

controlled by charities, they are now substantively funded by government with the next

largest contribution to funding being fees paid by patients. Charitable donations provide a

very small part of revenue. In such a market, it is not surprising that hospitals run by civil

society organisations compete directly with businesses which also run hospitals but do not

enjoy the favours that attend being within the scope of operation of the doctrine of charitable

purpose. In such a market, justifying the favours that hospitals run by charities enjoy is

problematic. This problem applies generally to other industries where government funding

has enabled businesses to enter the market and conduct activities profitably.

What this means is that whilst the concept of charitable purpose may remain meaningful in

common parlance, as a legal concept imprisoned within the Pemselian partitioning of the

253 H Picarda, The Law and Practice Relating to Charities (3rd ed, 1999) 155.

254 H Picarda, The Law and Practice Relating to Charities (3rd ed, 1999) 155.

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four Pemselian purposes, it is relatively meaningless. It now describes purposes that are

pursued by organisations that are charitable in simple language and instead of the categories

when they do apply being useful, they are too broad or too narrow. In relation to the

problems of breadth, take the following problems with the second Pemselian purpose.

3. Education as a Class is Too Broad

In contrast with the need to narrow relief of poverty, age and impotence, there is an apparent

need to expand the class of education. To date, the practice has been to extend the concept

of education – perhaps to ludicrous extents. The common law has expanded the concept of

education beyond mental education to include physical education.255 It has expanded beyond

physical education to include prizes for sport in a school.256 It has expanded beyond prizes

for sport at school to the the point where, as Justice Fawell opined with reference to the

education of young persons,

‘A ride on an elephant may be educational. At any rate it brings the reality of the elephant and its

uses to the child’s mind, in lieu of leaving him to mere book learning. It widens his mind, and in

that sense is educational.’257

Expanding advancement of education, or finding other community benefiting purposes as

analogous to the purposes set out in the Preamble, have stretched the Pemselian purposes

arguably beyond rational limits. There is a need to theorise how purposes such as

advancement of human rights (as has been added by statute in the United Kingdom)258 fit

within classes of cases that make up the law of charites. What also of the other purposes that

edify society and are presently, if at all, caught up in the fourth head? What is to be made of

purposes such as:

255 J Warburton, D Morris and N F Riddle, Tudor on Charities (2003) 4.

256 Peter Luxton, The Law of Charities (2001) 120 citing Re Mariette [1915] 2 Ch 284.

257 In Re Lopes Bence-Jones v Zoological Society of London [1931] 2 Ch 130, 136.

258 Charities Act 2006 (Eng.&W) c 50, s 2(2)(g).

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1. Culture;

2. Environmental protection;

3. Recreational purposes;

4. Sport; and

5. Technology development?259

Those problems cannot be addressed by remaining within the category of advancement of

education, and overloading the catch-all fourth head. Foreshadowing conclusions, it might

be addressed by acknowledging that education is but one dimension of social edification.260

The deeper issue behind this is that preoccupation with the categories of ‘relief of poverty’

and ‘advancement of education’ suppresses common law development of other

classifications that more appropriately segment charitable purposes from the purposes of

government, business and family. It also surpresses the development of categories within

charitable purpose that are more theoretically useful. This is fundamentally a problem of

differentiation.

If it is neither education, as the second head of charitable purpose, nor the relief of poverty,

aged or impotence, as the first head, that mark out the boundary of the doctrine of charitable

purpose (as these services are provided by government, business and families), what is it that

uniquely characterises such civil society organisations? Until this problem is adequately

addressed, development of the doctrine of charitable purpose will remain difficult.

259 The Australian Charities Definition Inquiry recommended expanding the list of heads of charitable purpose to include similar

purposes but this recommendation was not taken up by the Australian government. The United Kingdom parliament added such

purposes to the list of charitable purposes of the common law. See Inquiry into the Definition of Charities and Related

Organisations Report of the Inquiry into the Definition of Charities and Related Organisations (2001); and the Charities Act 2006

(Eng.&W) c 50.

260 Note this approach was rejected by Iacobucci J in Vancouver Society of Immigrant and Visible Minority Women v MNR [1999]

Can Sup Ct Lexis 12, 166-179 but is arguably consistent with the dissenting judgment of Gontier J. who considered the current

law capable of very broad application see particularly 90-92.

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4. Problems with Advancement of Religion

Religion is private and yet has very public outworkings. It is credited with providing the

social infrastructure of society by some judges261 but can be a source of war and offensive to

international covenants.262 In an increasingly pluralist society the role of religion must be

scrutinized and there are significant problems with the way the common law theorises the

role of advancement of religion in the doctrine of charitable purpose. Theorising

advancement of religion is, then, both deeply problematic and increasingly contested. In this

section the challenges are considered from within three fundamental categorisation

problems. Each problem builds from, and is related to, the others. The three problems

considered are:

1. The doctrine of charitable purpose is incapable of distinguishing between

regulation and favouring and in the context of the distinction between freedom

of religion and favouring religion that is particularly problematic.

2. Why is advancement of religion favoured but not advancement of political

purposes?

3. If positive social contribution justifies favouring religion, why should other

sources of social contribution not be favoured also? Alternatively, if a religion

is not making a positive social contribution, should it not be excluded from the

category of charitable purposes?

In this section these three problems are explored.

261 Holland v Peck (1842) 37 NC 255, 258; Gass v Wilhite (1834) 32 Ky 170, 180; People ex rel Seminary of our Lady of Angels v

Barber (1886) 3 NY St Rep 367 affirmed in (1887) 13 NE 936.

262 Kerry O'Halloran, Charity Law and Social Inclusion: An International Study (2007) 179-180; Peter Luxton, The Law of Charities

(2001) 45 and 125-128. See also: The International Covenant on Civil and Political Rights (ICCPR), opened for signature 16

December 1966, GA Res 2200A (XXI) (entered into force 23 March 1976); and Declaration in the Elimination of All Forms of

Intolerance and of Discrimination Based on Religion or Belief, GA Res 36/55, 36 UN GAOR Supp (No 51), 171, UN Doc

A/36/684 (1981).

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(a) Distinguishing Between Regulating and Favouring

There is a fundamental distinction that can be drawn in logic, but not within the doctrine of

charitable purpose, between regulating and favouring. This distinction is embedded in an

argument advanced by Jonathan Garton. When he considered justifications for regulation of

civil society he declared that it is necessary to divide the relevant law into two classes.

First, we can distinguish between regulation that is designed to prevent or rectify specific

problems that may occur in the course of the sector’s operation and [second] regulation that is

designed to encourage the already successful sector to flourish further.263

This distinction is critical. A common law country might wish to enable, but not necessarily

favour a charitable purpose but the common law does not separate the two functions in the

context of charitable purpose. This lack of distinction is particularly problematic in the

context of advancement of religion as a head of charitable purpose. Furthermore, religion is

given an expansive reading in the context of the doctrine of charitable purpose. Concern for

religious liberty is given as the justification for this very broad reading.264 Adopting a quote

from Dal Pont, the Australian Charities Definition Inquiry noted:

The principal reason for the breadth of the definition of ‘religion’ is that it promotes religious

liberty which is enshrined in the Australian Constitution…and it is moreover consistent with the

law’s concern with protecting minorities. The law’s protection in this context is not directed to

safe-guarding the tenets of each religion — it is accorded to preserve the dignity and freedom of

persons to adhere to the religion of their choice.265

263 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 115.

264 Cf the attitude of the courts to the Roman Catholic Religion discussed in R. Ombres, 'Charitable Trusts: The Catholic Church in

English Law' (1995) 126/127 Law & Justice 72.

265 See Gino Dal Pont, Charity Law in Australia and New Zealand (2000) 148, adopted by the Inquiry into the Definition of Charities

and Related Organisations Report of the Inquiry into the Definition of Charities and Related Organisations (2001) 175.

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Religions and religious denominations often spring from unpopular minorities266 and whilst

the lawmaker might wish to protect the freedom of association and speech, which is the

hallmark of a healthy democracy, it might not wish to extend the favourable treatment

associated with charitable purpose to the transfer to, and holding of, assets by the

organisational expression of the religion. As Max Wallace noted in The Purple Economy:

Churches would pay their electricity, gas and other related expenses. But when they put their

garbage out to be collected, when a church catches fire, or should there vandalism, they expect

garbage collection, fire trucks and police without paying for them. Similarly, they expect

footpaths, roads and other infrastructure to be paid for by other rates and taxpayers while making

little or no contribution themselves. There is room for reform here which would save the states

considerable amounts in revenue foregone.267

Why should this favour be extended to religious organisations in preference to other

organisations? A society might wish not to do so. Alas the doctrine of charitable purpose

does not permit this distinction between freedom of association and giving on the one hand,

and exemption from taxation and sometimes donor favoured charitable gifts on the other.

It does not matter how irrational and fringe a religion may be, once it is found to be pursuing

the purpose of advancement of religion, its organisational form is entitled to all of the

266 Church of the New Faith v Commissioner of Pay-Roll Tax (1983) 154 CLR 120, 159 (Murphy J). See also: Rocco Buttiglione,

'The Moral Mandate for Freedom: Reflections on Centesimus Annus' (Action Institute for the Study of Religion and Liberty,

2001); W T Cavanaugh, 'Does Religion Cause Violence?' (2006) Spring Zadok Papers 1; Silvio Ferrari, 'Individual Religious

Freedom and National Security in Europe After September 11' (2004) 2 Brigham Young University Law Review 357; Paul

Horwitz, 'The Sources and Limits of Freedom of Religion in a Liberal Democracy: Section 2(a) and Beyond' (1996) 54(1)

University of Toronto Faculty of Law Review 1; David Little, 'Religion and Human Rights: A Personal Testament' (2002-2003) 18

Journal of Law and Religion 57; H. Picarda, 'New Religions as Charities' (1981) 131 New Law Journal 436; Steve T Woodfield,

'Doing God's Work: Is Religion Always Charitable?' (1996-1999) 8 Auckland University Law Review 25; T S Carter and A M

Langan, 'Advancing Religion as a Head of Charity: What are the Boundaries?' (Paper presented at the Canadian Bar Association/

Ontario Bar Association: 3rd National Symposium on Charity Law, Toronto, May 6 2005); Ian Ellis-Jones, Beyond the Scientology

case: Towards a Better Definition of What Constitutes a Religion for Legal Purposes in Australia Having Regard to the Salient

Judicial Authorities from the United States of America as well as Important Non-Judicial Authorities (PhD Thesis, Sydney

University of Technology 2007); Craig Furneaux, Russia's Religious Revival: Exploring the New Paradigm of the Sociology of

Religion (MA Thesis, Griffith University, 2002)

267 Max Wallace, The Purple Economy: Supernatural Charities, Tax and the State (2007) 114.

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favours that accompany pursuit of a charitable purpose.268 Thus, a trust for the promulgation

of the writings of a woman such as Joanna Southcote (who thought that she was going to

give birth to another Messiah, and claimed she was with child by the Holy Ghost), would be

entitled to all of the favours that attend the advancement of a charitable purpose.269 By

contrast, the promulgation of secular, ethical writings is not a charitable purpose entitled to

those favours unless falling within the fourth Pemselian purpose.270 It does not matter how

integral to the foundations of Occidental society the ethical writings might be, if they do not

satisfy the criteria for advancement of religion, the promulgation of the writings will not

enjoy the favours enjoyed by writings that advance religion at common law.271

The anomaly may be taken a step further. O’Halloran and Luxton both observed that the law

in this area tends to discriminate in favour of theistic religions – notwithstanding a broad

reading of the meaning of religion at common law. Both suggest that this discrimination is

offensive to international covenants prohibiting discrimination.272 Ellis-Jones has mapped in

detail the inherent illogicality of the current approach.273 In secular, pluralist, common law

268 I acknowledge that since the decision in Gilmour v Coats [1949] AC 426 there is an unsettled debate over the extent to which, at

common law, public benefit is deemed and the extent to which it must be established in the context of religious organisations

pursuing advancement of religion. It is also noteworthy that legislatures have taken different approaches to the issue. My purpose

is only to flag the problem generally. For a discussion of the issues see H Picarda, The Law and Practice Relating to Charities (3rd

ed, 1999) 84-93 and compare Charities Act 2006 (Eng.&W) and Extension of Charitable Purpose Act 2004 (Cth). See also Rocco

Buttiglione, 'The Moral Mandate for Freedom: Reflections on Centesimus Annus' (Action Institute for the Study of Religion and

Liberty, 2001); H. Picarda, 'New Religions as Charities' (1981) 131 New Law Journal 436; Steve T Woodfield, 'Doing God's

Work: Is Religion Always Charitable?' (1996-1999) 8 Auckland University Law Review 25; Ian Ellis-Jones, Beyond the

Scientology case: Towards a Better Definition of What Constitutes a Religion for Legal Purposes in Australia Having Regard to

the Salient Judicial Authorities from the United States of America as well as Important Non-Judicial Authorities (PhD Thesis,

Sydney University of Technology 2007).

269 Thornton v Howe (1862) 31 Beav. 14. See also Ashfield Municipal Council v Joyce and Others (1975) 34 LGRA 253 (exclusive

Brethren allowed rates exemption).

270 See Bowman v Secular Society Ltd [1917] AC 406; National Anti-Vivisection Society v Inland Revenue Commissioners [1948]

AC 31.

271 See Bowman v Secular Society Ltd [1917] AC 406; National Anti-Vivisection Society v Inland Revenue Commissioners [1948]

AC 31.

272 Kerry O'Halloran, Charity Law and Social Inclusion: An International Study (2007) 179-80; Peter Luxton, The Law of Charities

(2001) 45 and 125-128. See also The International Covenant on Civil and Political Rights (ICCPR) and the Declaration on the

Elimination of All Forms of Intolerance and of Discrimination Based on Religion or Belief.

273 Ian Ellis-Jones, Beyond the Scientology case: Towards a Better Definition of What Constitutes a Religion for Legal Purposes in

Australia Having Regard to the Salient Judicial Authorities from the United States of America as well as Important Non-Judicial

Authorities University of Technology 2007).

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countries, if this head of the doctrine of charitable purpose is discriminatory, and offensive to

International Covenants, to which the common law country is a signatory, then, ostensibly

there is need for reform of this area of the law.274 As the many inquiries referenced earlier

demonstrate, this is easier said than done.

The issues are further complicated by the extent to which governments sometimes favour

religion. The United Kingdom government now requires every student every day to ‘take

part in an act of collective worship’ subject to limited exceptions.275 For many years,

Australians have been allowed tax deductibility for gifts to organisations for the teaching of

religion in schools.276 To that tax favour the Australian Government has now added $165

million to fund school chaplaincy as part of the National School Chaplaincy Program.277 If

there are to be increased favours extended to organisations for advancement of religion

because of the contribution, how is this to be theorised?

Dal Pont raises one other issue relevant in this context and that is whether it is appropriate to

adopt different definitions of religion according to the issue under consideration. He points

to the possibility of having a narrower definition of religion apply for the right to access the

favours but perhaps a broader definition when considering the right to associate.278

274 Ironically perhaps the intention not to discriminate lies at the heart of the common law favouring of all religions. See Gino Dal

Pont, Charity Law in Australia and New Zealand (2000) 149.

275 School Standards and Framework Act 1998 (Eng.&W) c 31, s 70.

276 Income Tax Assessment Act 1997 (Cth) Division 30B s 30-25(1) Items 2.1.8 and 2.1.9.

277 Australian Government, Department of Education, Employment and Workplace Relations, Chaplaincy Program Overview (2008)

Commonwealth of Australia <http://www.deewr.gov.au/Schooling/NationalSchoolChaplaincyProgram/Pages/home.aspx> at 31

August 2009.

278 Gino Dal Pont, Charity Law in Australia and New Zealand (2000) 151 -152. See also Patrick M Garry, 'Religious Freedom

Deserves more than Neutrality: The Constitutional Argument for Non-Preferential Favouritism of Religion' (2005) 57(1) Florida

Law Review 1; T S Carter and A M Langan, 'Advancing Religion as a Head of Charity: What are the Boundaries?' (Paper

presented at the Canadian Bar Association/ Ontario Bar Association: 3rd National Symposium on Charity Law, Toronto, May 6

2005); Ian Ellis-Jones, Beyond the Scientology case: Towards a Better Definition of What Constitutes a Religion for Legal

Purposes in Australia Having Regard to the Salient Judicial Authorities from the United States of America as well as Important

Non-Judicial Authorities University of Technology 2007); HR Sorensen and A K Thompson, 'The Advancement of Religion is

Still a Valid Charitable Object' (Paper presented at the Charitable Law in the Pacific Rim Conference, QUT, October 2001).

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Separating regulating from favouring gives due place to the question of what space is

enabled for participation in civil society including religious liberty and yet provides the

possiblility of different criterion for access to favourable treatment under the common law.

Until this distinction is adequately addressed these problems evident in advancement of

religion as a charitable purpose are likely to persist.

(b) Excluding Others and Political Purposes

If the advancement of religion is charitable and a broad construction of religion is

appropriately based on the foundational role of freedom of religion in society,279 then why

are other purposes that contribute to the foundations of society not also favoured at common

law in a way similar to charities? Political parties, lobby groups and other institutions whose

purposes are committed to the expression of fundamental freedoms and even the

promulgation and maintenance of these fundamental freedoms are, at common law,

expressly excluded from the class of organisations pursuing charitable purposes.280 The door

into charitable purpose is bolted shut against them. This is so irrespective of the contribution

279 Holland v Peck (1842) 37 NC 255, 258; Gass v Wilhite (1834) 32 Ky 170, 180; People ex rel Seminary of our Lady of Angels v

Barber (1886) 3 NY St Rep 367 affirmed in (1887) 13 NE 936.

280 National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31. For an example of statutory amendments see

the Charities Act 2006 (Eng.&W) c 50. For discussion of the relevant theory see: Perri 6 and Anita Randon, Liberty, Charity and

Politics: Non-Profit Law and Freedom of Speech (1995); B Oonagh Breen, 'EU Regulation of Charitable Organisations: The

Politics of Legally Enabling Civil Society' (2008) 10(3) International Journal of Not-for-Profit Law ; Abraham Drassinower, 'The

Doctrine of Political Purposes in the Law of Charities: A Conceptual Analysis' in Jim Phillips, Bruce Chapman and David Stevens

(eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 288; Alison Dunn, 'Charity Law as a

Political Option for the Poor' in Charles Mitchell and Susan Moody (eds), Foundations of Charity (2000) 57; Alison Dunn, 'Shoots

among the Grassroots: Political Activity and the Independence of the Voluntary Sector' in Alison Dunn (ed), The Voluntary

Sector, The State and the Law (2000) 143; Alison Dunn, 'To Foster or to Temper? Regulating the Political Activities of the

Voluntary and Community Sector' (2006) 26(4) Legal Studies 500; James Fishman, 'The Political Use of Private Benevolence:

The Statute of Charitable Uses' (2008) Pace Law Faculty Publications <http://digitalcommons.pace.edu/lawfaculty/487/> at 26

September 2008; Jeffrey Hackney, 'The Politics of the Chancery' in Faculty of Laws University College London (ed), Current

Legal Problems (1981) Vol 33, 113; Peter Dobkin Hall, 'Law, Politics, and Charities in the Post-Liberal Era' (2000) 27 New

Directions for Philanthropic Fundraising 5; Gary Johns, 'Desirability of Regulating Political Parties' (2001) 8 Agenda 291; Gary

Johns, 'Political Parties: From Private to Public' (1999) 37 Commonwealth and Comparative Politics 89; Graham Moffat, 'Charity,

Politics and the Human Rights Act 1998: Much Ado About Nothing?' (2002) 13 King's College Law Journal 1; G F K Santow,

'Charity in its Political Voice - A Tinkling Cymbal or a Sounding Brass?' (1999) 18 Australian Bar Review 225; Nick Seddon,

Who Cares? How State Funding and Political Activism Change Charity (2007); Ethan G Stone, 'Adhering to the Old Line:

Uncovering the History and Political Function of the Unrelated Business Income Tax' (2005) 54 Emory Law Journal 1475;

Stephen Swann, 'Justifying the Ban on Politics in Charity' in Alison Dunn (ed), The Voluntary Sector, The State and the Law

(2000) 161.

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to public good they make. The common law, perhaps surprisingly, justifies this exclusion on

a similar basis to the embracing of advancement of all religion. Just as the courts do not

wish to arbitrate between religions, and consequently place a broad reading upon ‘religion’

and thus accord charitable purpose status to all; so, when it comes to choosing between

political purposes, courts do not wish to be seen to be favouring any political activity (or

perhaps cannot make an informed choice) and therefore, deny all political purposes

charitable status.281 The problem is, though, that ‘it is still not clear whether jurisprudential

rationales are able to explain the fact that only common law countries constrain charitable

campaigning.’282

This reasoning compounds the problem and weaves the puzzle into a Gordian knot.

Religion, at least in its organisational expression, when it acquires the power that attends

having many adherents, is fundamentally political. As Tocqueville observed:

Every religion has some political opinion linked to it by affinity. The spirit of man, left to follow

its bent, will regulate political society and the City of God in uniform fashion, it will, if I dare put

it so, seek to harmonize earth with heaven.283

The Ontario Law Reform Commission also declared that at ‘certain times in Anglo-Canadian

legal history, the dominant regulatory concern has been the fear that charitable organisations

would grow to the point where they would begin to usurp the functions of the state or the

commercial economy’ and that ‘[h]istorically, this concern applied almost wholly to

religious institutions.’284 Anglicare Australia, which is the welfare arm of the Anglican

Church, one of the largest religious denominations in Australia submitted to the Australian

281 Stephen Swann, 'Justifying the Ban on Politics in Charity' in Alison Dunn (ed), The Voluntary Sector, The State and the Law

(2000) 161, 161-75.

282 Perri 6 and Anita Randon, Liberty, Charity and Politics: Non-Profit Law and Freedom of Speech (1995) 105.

283 Alexis De Tocqueville, Democracy in America, Great Books of the Western World (George Lawrence trans, first published in

1835, 1992 ed) 150.

284 Ontario Law Reform Commission, Report on the Law of Charities (1996) 16.

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Charities Definition Inquiry that advocacy was integral to its functioning.285 It is less than

completely honest for this power of religion not to be acknowledged.

Religion has persuasive power that can rival, and indeed trump, the coercive powers of the

state. It should not be forgotten that at one time in common law history ‘the majority of its

activities were funded by taxation.’286 Richardson, drawing lessons from the Reformation

for the present day, concluded:

that non-economic cultural beliefs can influence the structure of economic institutions and

efficiency of the economy by changing the structure and equilibrium of the collective action

game. In addition, the realization that Reformation represented a large scale transformation of

European society from a collectivist to an individualistic framework suggests that exogenous

changes in beliefs, such as beliefs about the afterlife, that alter the relative costs and benefits of

individualistic and collectivistic organisations, can alter the trajectory of societal organisation.287

The place of religion in the ‘velvet revolution’ in Czechoslovakia, that brought down

communism and brought to power Vaclav Havel, is a potent recent reminder of this power.288

Further, engagement by citizens in the development of law is almost always likely to be

good for that society and generally healthy for democracy. In the rare situations when it is

not, it is probably a criminal offence, such as treason, and can be addressed in that context.

Accepting political purposes as charitable purposes is not hard. Garton put the situation

simply as follows:

285 Inquiry into the Definition of Charities and Related Organisations Report of the Inquiry into the Definition of Charities and

Related Organisations (2001) 214.

286 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 15.

287 Gary Richardson, 'Craft Guilds and Christianity in Late-Medieval England' (2005) 17(2) Rationality and Society 139, 177.

288 See John Ehrenberg, Civil Society - The Critical History of an Idea (1999) 186-196.

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In fact, if the courts were of a mind to tolerate greater political action by charities, it is submitted

that it would be a simple matter to find that there is significant public benefit inherent in pursuing

a charitable purpose (or some other social good, for that matter) through political means. 289

From Garton’s perspective this is the only logical development, for in his view ‘it is clear …

the politically active [civil society organisations] are structurally synonymous with charitable

[civil society organisations].’ 290 In his view ‘there are no theoretical grounds on which to

differentiate between the charitable sector and organised civil society when justifying and

designing a regulatory strategy.’291

If it ‘is still not clear whether jurisprudential rationales are able to explain the fact that only

charity law countries constrain charitable campaigning’292 and if as Garton contended – and

his arguments are compelling – there is no reason justifying exclusion of organisations

pursuing political purposes from the sector which includes charities, a way must be found to

bring these organisations within the one theoretical framework. As presently framed, there is

not a way of developing this within the Pemselian purposes.

(c) Uneven Contributions

Social contribution can be uneven and contributions can be unevenly valued. Once the

purpose is declared as charitable, though, the access to favours is constant. Evaluating the

contribution is difficult but the favours enjoyed are constant. There is a view that ‘religion is

a private matter, with private not public benefits and that therefore ít should not be

subsidized by citizens who have no interest in it.’293 On the other hand, it is sometimes

suggested that religion is favoured on the basis that it is a wellspring of good.294 But religion

289 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 198.

290 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 201.

291 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 201.

292 Perri 6 and Anita Randon, Liberty, Charity and Politics: Non-Profit Law and Freedom of Speech (1995) 105.

293 Australian National Secular Association, Submission to The Senate Economics Committee, Parliament of Australia (2008).

294 Ian Williams, 'The Development of Purpose and Strategy Within British Charitable Organisations: Historical Impressions' (1999)

4(2) International Journal of Nonprofit and Voluntary Sector Marketing 135 , 137.

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is not always a wellspring of good. Nor is that a basis for excluding other wellsprings of

good. Religion can be a source of social cohesion.295 It can also be a foundation of war and

a source of unacceptable discrimination. The Preamble to the Declaration on the

Elimination of All Forms of Intolerance and of Discrimination Based on Religion or Belief,

observed many wars have flowed from religion.296 The common law position is that

attendance at worship improves a person and, as a consequence, the favour is founded on the

‘benefit [that] accrues to the public from the attendance at places of worship of persons who

live in this world and mix with their fellow citizens’297 The famous dictum of Lord Cross

summarised the law: ‘As between the religions the law stands neutral, but it assumes that any

religion is at least likely to be better than none.’298 This is foundationally an approach

grounded in religious toleration299 but the common law will not accept religion as charitable

if it is ‘adverse to the very foundations of all religion, and subversive of all morality.’300 In a

twenty-first century context where religious Jihad is a source of terror,301 it is only those

religions that are adverse to the very foundations of all religion, and subversive of all

295 See Terrance Carter, Anne-Marie Langan and Nancy Claridge, 'Supreme Court Gives Strong Endorsement to Freedom of

Religion' (2006) 17 Carters Church Law Bulletin 1; Patrick M Garry, 'Religious Freedom Deserves more than Neutrality: The

Constitutional Argument for Non-Preferential Favouritism of Religion' (2005) 57(1) Florida Law Review 1; Kevin J Hasson,

'Religious Liberty and Human Dignity: A Tale of Two Declarations' (2003) 27 Harvard Journal of Law and Public Policy 81;

Mark Janis (ed), The Influence of Religion on the Development of International Law (1991); Nancy Theresa Kinney, 'When

Religion Speaks for the Poor: Religious Groups and the Formulation of Public Welfare Policy' (University of Colorado at Denver,

2001); David Little, 'Religion and Human Rights: A Personal Testament' (2002-2003) 18 Journal of Law and Religion 57; Lord

Macmillan, 'Law and Religion' in Law and Other Things (1937) 55; James A Nafziger, 'The Functions of Religion in the

International Legal System' in Mark W Janis (ed), The Influences of Religion on the Development of International Law (1991)

147; Greg Smith, 'Religion, and the rise of social capitalism: the faith communities in community development and urban

regeneration in England' (2002) 37(2) Community Development Journal 167; James E Wood, 'Religious Human Rights and a

Democratic State' (2004) 46(4) Journal of Church and State 739; Craig Furneaux, Russia's Religious Revival: Exploring the New

Paradigm of the Sociology of Religion (MA Thesis, Griffith University, 2002); Amy M. Godfrey, Divine Benevolence to the Poor:

Charity, Religion and Nationalism in Early National New York City, 1784-1820. (PhD Thesis, Northern Illinois University, 2007);

Reid Mortensen, The Secular Commonwealth: Constitutional Government, Law and Religion (D Phil Thesis, University of

Queensland, 1995); HR Sorensen and A K Thompson, 'The Advancement of Religion is Still a Valid Charitable Object' (Paper

presented at the Charitable Law in the Pacific Rim Conference, QUT, October 2001).

296 Declaration in the Elimination of All Forms of Intolerance and of Discrimination Based on Religion or Belief, GA Res 36/55, 36

UN GAOR Supp (No 51), 171, UN Doc A/36/684 (1981).

297 Neville Estates v Madden [1962] 1 Ch 832, 853 (Cross J). More generally see R.H Tawney, Religion and the Rise of Capitalism

(1948) 274-275.

298 Neville Estates Ltd v Madden [1962] 1 Ch 832, 853.

299 Peter Luxton, The Law of Charities (2001) 125.

300 Peter Luxton, The Law of Charities (2001) 129.

301 Mahmood Mamdani, 'Whither Political Islam? Understanding the Modern Jihad' (2005) 84 Foreign Affairs 148, 148.

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morality that are excluded from charitable purpose. This is theoretically problematic.

Under the doctrine of charitable purpose, the extent to which the religion has provided and

continues to contribute to the social infrastructure of a common law country is irrelevant. It

does not matter the extent to which the pursuit of a religion is for the common good. All

religion is (theoretically) treated alike. The self-sacrificing religious expression that leads to

the charitable service and underpins community is not different under the doctrine of

charitable purpose from the the religious self-sacrifice that leads a person to suicidally ‘kill

in the name of God’302 – until a threshold of subversion of democracy, morality and arguably

religion303 is crossed. The common law seems to need ways of distinguishing between

religions, at least with respect to access to favours, if religion is to be favoured on the basis

that it is a wellspring of good.

The root of the definition of ‘religion’ in ‘ligament’ suggests a way of conceptualising the

role of religion as that which binds a body together, 304 but that is not the way the common

law has developed. These problems that attend advancement of religion under the common

law will continue to plague theory development until a way is found of distinguishing

between religions that lead to the charitable conduct that binds people to one another in

society, and those that divide.

5. Problems with Other Purposes Beneficial to the Public

Public benefit lies at the heart of the concept of charity in common parlance and and it is

central to the ‘technical definition’ employed by the common law, yet it is unsatisfactorily

theorised for jurisprudential reasoning.305 These problems with public benefit can be divided

302 Silvio Ferrari, 'Individual Religious Freedom and National Security in Europe After September 11' (2004) 2 Brigham Young

University Law Review 357, 358.

303 Cock v Manners (1871) L.R. 12 Eq. 574, 585.

304 Oxford English Dictionary Online, Definition of Ligament (2008) <http://dictionary.oed.com> at 7 June 2008.

305 The Charity Commission for England and Wales, Charities and Public Benefit: The Charity Commission's General Guidance on

Public Benefit (2008); The Charity Commission for England and Wales, Commentary on the Descriptions of Charitable Purpose

in the Charities Act 2006 (2007); P.S. Atiyah, 'Public Benefit in Charities' (1958) 21(March) The Modern Law Review 138; G S

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into broad classes. Its essential character is not known. Where it ceases cannot be marked. It

is not subsectionalised in a way useful for theoretical development. These challenges are

explored in this subsection.

(a) Public Benefit is Central to Charities but what is it in Essence?

It is a well-established principle that public benefit is central to the doctrine of charitable

purpose306 but what public benefit is, is quite confusing. The following passage from the

opinion of Lord Simmonds for the majority in Oppenheim’s case summarises the law and

illustrates the difficulties:

It is a clearly established principle of the law of charity that a trust is not charitable unless it is

directed to the public benefit. This is sometimes stated in the proposition that it must benefit the

community or a section of the community. Negatively it is said that a trust is not charitable if it

confers only private benefits. In the recent case of Gilmour v. Coats [1949] A.C. 426, this

principle was reasserted. It is easy to state and has been stated in, a variety of ways, the earliest

statement that I find being in Jones v. Williams (1767), Ambler 651, in which Lord Chancellor

Hardwicke is briefly reported as follows: "Definition of charity: a gift to a general public use,

which extends to the poor as well as to the rich…." With a single exception, to which I shall refer,

this applies to all charities. We are apt now to classify them by reference to Lord Macnaghten's

division in Pemsel's case and, as I have elsewhere pointed out, it was at one time suggested that

the element of public benefit was not essential except for charities falling within the fourth class,

"other purposes beneficial to the community". This is certainly wrong except in the anomalous

case of trusts for the relief of poverty with which I must specifically deal. In the case of trusts for

educational purposes the condition of public benefit must be satisfied. The difficulty lies in

determining what is sufficient to satisfy the test, and there is little to help your Lordships to solve

it.307

Plowright, 'Public Benefit in Charitable Trusts' (1975) 39 The Conveyancer 183; Wino Van Veen, 'Public Benefit from a

Comparative Perspective' in Paul Bater, Frits Hondius and Penina Kessler Lieber (eds), The Tax Treatment of NGOs: Legal,

Ethical and Fiscal Frameworks for Promoting NGOs and their Activites (2004) 239; UK Charity Commission, Consultation on

Draft Public Benefit Guidance (2007).

306 H Picarda, The Law and Practice Relating to Charities (3rd ed, 1999) 19-20; J Warburton, D Morris and N F Riddle, Tudor on

Charities (2003) 7.

307 Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297, 305.

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This problem of lack of essential character troubled the Ontario Law Reform Commission

which reviewed the concept and concluded that the concept is vague and that it is applied

variously to purposes, effects and people.308 The Goodman Report pointed out ‘a highly

successful commercial venture’ can be ‘of immense benefit to the community.’309 John

Colombo, discussing the problem in the context of United States revenue law interpretation

has observed that ‘practically any transaction undertaken by an exempt charity will result in

benefit to some private party outside of the charitable class’.310 What then is public benefit

within the doctrine of charitable purpose? Perhaps little can be said beyond the conclusion

that it is a central but poorly theorised concept in the common law. In the body of law

known as negligence, there are tests of remoteness and forseeability used to theorise a

continuum of possibilities. The doctrine of charitable purpose offers no such conceptual tool

and as a consequence, at least in the United States, ‘no one even knows what to balance’ and

‘charites [are] completely at sea’.311 If public benefit is central but seemingly anything can

be for public benefit, then jurists really do not know what public benefit is in essence and

how it is to be distinguished from private benefit. That is a problem.

(b) The Delimiter Does Not Work

Building on the last problem is the problem that the delimiter of public benefit does not

work. Take as an example the division between organisations for private benefit on the one

hand, and charities on the other. An organisation is not charitable if it is for private

benefit.312 The reason is that a charitable purpose must be for public benefit.313 There are

308 See Ontario Law Reform Commission, Report on the Law of Charities (1996).

309 National Council of Social Service, 'Report of an Independent Committee of Inquiry to Examine the Effect of Charity Law and

Practice on Voluntary Organisations (Goodman Report)' (1976) 2; See also Metropolitan Borough of Battersea v British Iron and

Steel Research Association [1949] 1 KB 434 (Jenkins L J).

310 John Colombo, 'In Search of Private Benefit' (2006) 58(5) Florida Law Review 1063, 1065.

311 John Colombo, 'In Search of Private Benefit' (2006) 58(5) Florida Law Review 1063, 1065.

312

William Taylor v Mathew Taylor (1910) 10 CLR 218, 237 (Isaacs J). John Colombo, 'In Search of Private Benefit' (2006) 58(5)

Florida Law Review 1063, 1065.

313 Kerry O'Halloran, Charity Law and Social Inclusion: An International Study (2007) 172; J Warburton, D Morris and N F Riddle,

Tudor on Charities (2003) 6.

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two tests, one focused on the purpose and the other focused on those who may benefit.314

The first question is whether the purpose is a public purpose recognised by law. The second

is whether the class that will benefit is properly considered to be the public or a ‘sufficient

segment of the community.’315 A charity will be for private benefit if it is:

1. referable to a particular individual or entity; or

2. referable to a numerically small number of persons.316

The first problem which has been discussed above is that almost all charitable purpose is

reducible to private benefit.317 As Chief Justice Herning pointed out in Re Godfree

(deceased),318 ‘[t]he ‘real’ beneficiaries of charitable trusts are the persons who derive the

benefits from them.’319 So the issue becomes not the identity of the beneficiary but the basis

upon which it is received. Thus a trust to benefit John and Joan Doe is not a charitable trust

but if the gift benefits them as a part of a class, even if they are identifiable as the only likely

beneficiaries, that does not destroy the charitable nature of the trust.320

On its face this makes sense but that ‘rule’ is not an absolute rule. Gifts to private

individuals may be for a charitable purpose provided the individuals are ‘poor relations’ or

‘poor employees.’ This ‘rule’ is not, then, a rule at all. One exception could be treated as an

exception or otherwise explained. It seems, though, that the ‘rule’ does not apply to gifts for

very small groups of religious practitioners either. In the High Court of Hong Kong decision

of Cheung Man Yu v Lau Yuen Ching, that court held that a trust for the charitable purpose of

advancement of religion did not lose that charitable purpose merely because the participants

314 J Warburton, D Morris and N F Riddle, Tudor on Charities (2003) 7.

315 Lloyd v Federal Commissioner of Taxation (1955) 93 CLR 645, 662 (McTiernnan J), 667 (Fullagar J), 670 (Kitto J).

316 H Picarda, The Law and Practice Relating to Charities (3rd ed, 1999) 21.

317 National Council of Social Service, Report of an Independent Committee of Inquiry to Examine the Effect of Charity Law and

Practice on Voluntary Organisations (Goodman Report) (1976) 13, 22, 123.

318 [1952] VLR 353.

319 [1952] VLR 353, 366.

320 Re Compton [1945] 1 Ch 123, 129 (Lord Greene MR). Lord Justice Harman remarked in Inland Revenue Commissioners v

Educational Grants Association Ltd [1967] 2 All ER 893, 899 that the size of a class is not relevant, it is the ‘connecting link

between members of a class that matters.’ See also Denis Ong, Trusts Law in Australia (3rd ed, 2007) 334-338.

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in the religion were numerically very small and they were also linked by family connections

and private friendships, as long as they remained in the community and were not a cloistered

religious order.321 The breaking of the rule has progressed even further. In New Zealand,

Justice Heron, after considering the cases on public and private benefit, decided that it was

possible for ‘private benefits to members [to be] for charitable purposes’ in the context of a

fund to support retired Ministers of Religion. He held this was a situation ‘where the

charitable altruistic purposes and the private benefits of the members as distinguised in the

cases referred to coincide’.322 The simplistic way in which public and private benefit is

analysed within the doctrine of charitable purpose at present cannot cope with this. The

addition of contemplative prayer to the list of charitable purposes by the Australian

Extension of Charitable Purpose Act 2004 may also complicate the public benefit test for the

doctrine of charitable purpose as presently understood. Thus, it seems that the ‘publicness’

test for charitable purpose is undermined not only for poor individuals who are employees or

relatives but also for religious practitioners, both in terms of not benefiting private

individuals, and also in terms of not benefiting too few individuals. Perhaps not surprisingly

Garton reviewed the discussion of public benefit as a tool for ‘delineating between the

private sector and organised civil society’ and noted that ‘the test is under-inclusive.’323

The converse problem also arises. Charities to benefit poor relations or employees may well

be for a small number of people. But the same problem can arise with a very large

workforce.324 Dal Pont observed in relation to the numeric requirement, ‘[a]t the outset it

must be noted, however, that the first such requirement is unlikely of itself325 to be a

disqualifying factor.326

321 Cheung Man Yu v Lau Yuen Ching (2007) CACV 213/2006; 265/2006.

322 Presbyterian Church of New Zealand Beneficiary Fund v Commissioner of Inland Revenue [1994] 3 NZLR 636, [28]. Cf Douglas

and Others v Commissioner of Taxation (1997) 77 FCR 112, 124.

323 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 202.

324 Oppenheim v Tobacco Securities Trust Co [1951] AC 297, 317-18 (Lord MacDermott dissenting).

325 Emphasis in original.

326 Gino Dal Pont, Charity Law in Australia and New Zealand (2000) 16.

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The two distinguishing criteria to establish that the benefit is not private, namely not for

individuals, and not a ‘numerically negligible class’ are both problematic. Viscount

Simonds in Inland Revenue Commissioners v Baddeley and Others 327

sought to explain this

difficulty in the context of the sea-walls mentioned in the Preamble and discussed by Lord

Watson in Pemsel’s case.328 He opined that the critical point was not that only a small

number benefit but that the good or service was available to all. Having offered this

explanation, he concluded that he ‘doubt[ed] whether this sort of rationalisation helps to

explain [this] branch of the law’ which implicitly was incapable of rational explanation.329

So there are significant theoretical problems for jurists endeavouring to rationalise the

centrality of public benefit as a concept when it seems that its application to two of the four

Pemselian purposes (relief of poverty and advancment of religion) is hard to distinguish

from private benefit. This problem is compounded when the different tests discussed next

are considered.

(c) The Levels of Public Benefit.

Public benefit is subject to different tests for the different Pemselian purposes. The

Pemselian partitioning has resulted in different concepts of public benefit and ostensibly

different notions of public benefit applicable to each of the four heads. Even if the law could

manage four different conceptions of ‘public benefit’ applicable to each of the four heads,

the trend which is emerging in common law countries of adding to the heads by statute but

maintaining a ‘closed system’ of listed charitable purposes rather than an ‘open system’

based on broad concepts,330 arguably has taken the idea of charitable purpose in a common

law context beyond that which is reasonable. As Peter Smith observed in commentary on

the position in England and Wales: ‘now we are faced with thirteen heads rather than four, it

327 [1955] AC 572, 590.

328 Pemsel’s case [1891] AC 531, 559 (Lord Watson).

329 Internal Revenue Commissioners v Baddeley [1955] AC 572, 590.

330 Wino Van Veen, 'Public Benefit from a Comparative Perspective' in Paul Bater, Frits Hondius and Penina Kessler Lieber (eds),

The Tax Treatment of NGOs: Legal, Ethical and Fiscal Frameworks for Promoting NGOs and their Activites (2004) 239, 248.

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may be difficult to correlate a particular test of public benefit with one of the new heads.’331

Smith also noted that the problem does not end there. If it is intended to apply one

conception of public benefit across all of the new heads for England and Wales he observed

as follows:

... this would, I suggest, cause grave problems and inequities in its application and could create a

fundamental distortion and reappraisal of what might or might not be charitable in the future.

Gifts for religious purposes, I would suggest, may be particularly susceptible to any such

realignment of the public benefit criterion.332

Smith’s reference to religion and public benefit is an important one. The religious liberty

foundation of the advancement of religion head (which I will explore in some detail in

Chapters VII and VIII), becomes very vulnerable to extinguishment if the presumption

formerly afforded advancement of religion must be proved. As Ong has observed: ‘How can

it ever be possible to prove that any religious (supernatural) purpose is capable of conferring

earthly (natural) benefits’.333 This challenge might be more acute for common law countries

that are signatories to international conventions obliging maintenance of this fundamental

right.334

In addition to the problems considered above, the power of the categorisation of all that

remains of charitable purpose as ‘other purposes beneficial to the public benefit’ suppresses

all other voices.

The extent of the problems is magnified when they are considered in the more natural way

that they come packaged. The problems are but microcosms of broader challenges facing

331 Peter Smith, 'Religious Charities and the Charities Act 2006' (2007) 9(3) The Charity Law & Practice Review 57, 70.

332 Peter Smith, 'Religious Charities and the Charities Act 2006' (2007) 9(3) The Charity Law & Practice Review 57, 70.

333 Denis Ong, Trusts Law in Australia (3rd ed, 2007) 349.

334 Kerry O'Halloran, Charity Law and Social Inclusion: An International Study (2007) 172.

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common law societies. It is to the location of these challenges in the ebb and flow of life

together in common law communities, that the next section turns.

E. Problems that go Beyond the Doctrine of Charitable Purpose

It will be recalled, from the beginning of the thesis and the comments of Lord Porter at the

beginning of this chapter, that, central to my argument is the propostition that charitable

purpose cannot be considered as an organising idea separate from the broader, social

agendas. In this section, the even broader challenges arising from social developments are

discussed as they touch upon the definition of charitable purpose and the role of charities in

contemporary common law countries. The subject areas discussed are organised according

to the differentiators. In the first subsection, the differentiator is families, as defined in this

thesis,335 and the challenges associated with the need to encourage civic participation are

considered. The orthodox way that charitable purpose distinguishes (or does not distinguish)

public from private benefit is simply not a useful tool. This section is, then, a logical

development of the last section where public benefit was discussed. In the subsection that

follows, problems exacerbated by the retreat by government from service delivery and the

emergence of what has become known as third party government, are considered. In the

third and final subsection, problems in distinguishing civil society organisations from

businesses are discussed.

1. Family and Social Breakdown, Private Purposes and Civic Participation

The private, informal social supports that have been an integral part of common law societies

since at least medieval times are in decline and this decline has been accompanied by ‘a rise

in the more calculating, selfish norms.’336 This ‘rise in the more calculating, selfish norms’

has had social consequences.337 As Anthony Gittens bluntly observed:

335 See definition at page 54.

336 Ilana Krausman Ben-Amos, The Culture of Giving: Informal Support and Gift-Exchange in Early Modern England` (2008) 2.

337 Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The

Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117, 123.

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Civic decline is real and visible and in many sectors of contemporary societies, not just an

invention of conservative politicians. It is seen in the weakening sense of solidarity in some local

communities and urban neighbourhoods, high levels of crime, and in the break-up of marriages

and families.338

In practical terms, this means that if people do not participate in charities and other civil

society organisations in a voluntary capacity, such as occurs in churches, trade unions, and

service clubs, they do not have the informal social support networks that former generations

could rely upon.339 This is because ‘volunteering itself is considered a strong indicator of

social capital’.340 The value of these informal supports and the impact of their erosion is

illustrated by the story from which the title to Robert Putnam’s book, Bowling Alone, 341 is

taken. A 33-year-old, African-American accountant gave his kidney to a 64 year-old,

retired, white, hospital worker because they got to know each as ‘they bowled together’.342

Putnam’s thesis is that if people do not participate in civil society activites (like bowling)

they do not form the extended networks they need to help them when a crisis (like the need

for a kidney) arises.343

As Giddens noted, the problems associated with lack of social networks are compounded by

weakened family supports. In the twenty-first century, family breakdown is also occurring at

an unprecedented rate,if divorce statistics are taken as an idicator.344 The decline in

338 Anthony Giddens, The Third Way (1998) 78.

339 Mark Lyons, Third Sector - The Contribution of Nonprofit and Cooperative Enterprises in Australia (2001) 221.

340 Australian Bureau of Statistics, Australian Social Trends – Voluntary Work, Cat. No 4102.0 (2008) 5.

341 Robert D Putnam, Bowling Alone - The Collapse and Revival of American Community (1st ed, 2001). See also Bob Edwards and

Michael Foley, 'Civil Society and Social Capital Beyond Putnam' (1998) 42(1) The American Behavioral Scientist 124.

342 Robert D Putnam, Bowling Alone - The Collapse and Revival of American Community (1st ed, 2001) 100.

343 See also Anthony Giddens 'Arnold Goodman Charity Lecture' (Speech delivered at the 16th Arnold Goodman Lecture, London,

15th June 1999).

344 The Family Law Council in Australia summarised the situation as follows: ‘The divorce rate increased dramatically following

implementation of the Family Law Act. The [number of decrees absolute granted during the calendar year per 1,000 estimated

resident population for the year] increased from 1.8 in 1975 to 4.6 in 1976, but has fluctuated between 2.4 and 2.9 over the past 20

years. The rate was between 2.7 and 2.9 during 1980–84 and between 2.4 and 2.5 during 1985–89. By 1996, the rate had

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participation in civil society organisations and increase in family breakdown in common law

countries at the beginning of the twenty-first century, places increased pressure on

governments and charities to provide the necessary social supports. However, the late

twentieth century witnessed the retreat by government from welfare services provision.345

This has increased the pressure on charities.

Ironically perhaps, in this period when government is in retreat and when participation in

civil society organisations that are rich in social engagement is in decline there has been an

increase in the total number of civil society organisations. A proliferation of civil society

organisation letterheads does not equate with ‘a boom in grass roots participation.’346

Writing in a United States context, Putnam observed that ‘over this quarter of a century [to

2001] the number of voluntary associations roughly tripled, but the average membership

seems to be roughly one-tenth as large – more groups, but most of them much smaller.’347

At one extreme, for example, is what Putnam called ‘mailing list organisations’ where

‘membership … means moving a pen not making a meeting.’348 If members’ participation in

an association is limited to payment of money, and members never or rarely meet, it is self

evident that the contribution to social capital, and consequently the public benefit of that

association, is significantly less than that of a group where the level of voluntary

participation is high and members regularly meet and support one another.

The challenge for common law societies is how to respond to this increasing social need in

the context of a decline in the institutions by which those needs have traditionally been met.

gradually increased to 2.9, and since that year has been between 2.6 and 2.8. The crude divorce rate was 2.6 in 2000, 2.8 in 2001

and 2.7 in both 2002 and 2003’. See Commonwealth Attorney-General's Department, Statistical Snapshot of Family Law 2002-03

(2005) 7. See also United Nations Statistics Division, Demographic Yearbook 2005 (2005) for the most recent divorce statistics

from the United Nations.

345 Lester Salamon, 'Of Market Failure, Voluntary Failure, and Third Party Government: Toward a Theory of Government-Nonprofit

Relations in the Modern Welfare State' (1987) 16 Journal of Voluntary Action Research 35; Lester M. Salamon, Partners in

Public Service: Government-Nonprofit Relations in the Modern Welfare State (1995).

346 Robert D Putnam, Bowling Alone - The Collapse and Revival of American Community (1st ed, 2001) 49.

347 Robert D Putnam, Bowling Alone - The Collapse and Revival of American Community (1st ed, 2001) 49.

348 Robert D Putnam, Bowling Alone - The Collapse and Revival of American Community (1st ed, 2001) 49, 51.

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The problem is one of how to identify, and possibly to encourage, the organisations that

contribute to the building of social capital without extending all the favours to be enjoyed by

these organisations to mere ‘mailing list organisations’.

Perhaps as a response to the decline in organisational participation, the definition of

charitable purpose in Australia has been extended to include certain self-help groups. This

was on the recommendation of the Charities Definition Inquiry which as its eighth

recommendaiton suggested ‘that self-help groups which have open and non-discriminatory

membership be regarded as having met the public benefit test’.349 Are not self-help groups,

though, essentially for private benefit?350 Is not private benefit anathema to the concept of

charitable purpose?

How is this extension of what seems to be private benefit into a public one to be theorised

within the orthodox common law understanding of charitable purpose? Is there a balancing

and weighing of private and public benefit to be undertaken? If, as Putnam has noted,

‘[s]ocial capital can … be simultaneously a “private good” and a “public good”’351 is it

possible to form an aggregated assessment of the extent of public benefit? In the alternative

is the justification of favour found in the nature of the public benefit? For example, when

considering self help groups could the justification for the entitlement to favour be that by

encouraging self help groups society as a whole is strengthened by being bound together

more tightly, or could it be that self help groups help people who are at a disadvantage to

address that disadvantage? In either of these possibilities it is the nature of the public benefit

(strengthening society or dealing with disadvantage) that justifies one person or a small

349 Inquiry into the Definition of Charities and Related Organisations Report of the Inquiry into the Definition of Charities and

Related Organisations (2001) 14

350 Inquiry into the Definition of Charities and Related Organisations Report of the Inquiry into the Definition of Charities and

Related Organisations (2001) 111.

351 Robert D Putnam, Bowling Alone - The Collapse and Revival of American Community (1st ed, 2001) 20.

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group of people enjoying the favours that extend to charities. As presently conceptualised

charitable purpose offers no explanation.

Voluntary participation is a critical indicator of social capital forming organisations. But

while the concept of charitable purpose at common law remains locked behind the Pemselian

partitioning, it remains impossible for voluntary participation to inform conceptions of

charitable purpose. This combination of social challenges obliges a re-think of the doctrine

of charitable purpose and a clearer statement of why charitable purpose is a gateway to

favour and why self help groups should be included within the definition of charities.352

2. Problems with Civic Engagement and Third Party Government

The welfare state is now in retreat.353 Through the first seventy or so years of the twentieth

century, governments took over more and more of the functions performed by charities. The

tide turned toward the end of the 1970s and governments, beginning with Margaret

Thatcher’s conservative government in Britain, began to look to other sectors of society,

particularly charities, to take an ‘enhanced role’354 in discharging these responsibilities.355 At

the same time governments increased funding for the supply of charitable goods by non-

government organisations including businesses.356 Historically, funding had been by way of

grants, but as funding increased so did the controls exercised by goverment.357 The rise of

regulated grants, payment for performance of contracts or grants to acomplish specified

352 Extension of Charitable Purpose Act 2004 (Cth) ss 4-5.

353 Federal Commissioner of Taxation v Word Investments Ltd [2007] FCAFC 171 (Unreported, Stone, Allsop and Jessup JJ, 14

November 2007) [81]. See also Alan Ware, Between Profit and State (1989) 108-109, 143.

354 Auckland City Mission v Brown [2002] 2 NZLR 650 (Richardson P, Gault and Anderson JJ) [40].

355 Peter Luxton, The Law of Charities (2001) 10-11.

356 E.g. Director-General of Social Welfare v De Morgan [1996] 3 NZLR 677. See also Nicholas Seddon, Government Contracts:

Federal, State and Local (3rd ed, 2004); Lester Salamon, 'Of Market Failure, Voluntary Failure, and Third Party Government:

Toward a Theory of Government-Nonprofit Relations in the Modern Welfare State' (1987) 16 Journal of Voluntary Action

Research 35; Lester M. Salamon, Partners in Public Service: Government-Nonprofit Relations in the Modern Welfare State

(1995).

357 Myles McGregor-Lowndes and Matthew Turnour, 'Recent Developments in Government Community Service Relations: Are You

Really My Partner?' (2003) 9(1) The Journal of Contemporary Issues in Business and Government 25.

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outcomes,358 led to what has become known as the ‘contract culture’.359 Contracts,

predominantly with civil society organisations, particularly charities (although sometimes

with businesses), have been used increasingly to provide social services by governments of

common law countries. The extent of this method of funding has significantly changed the

relationship between charities and other civil society organisations on the one hand, and

governments on the other.360 The extent of the changes led the Australian Charities

Definition Inquiry to conclude:

The overall relationship between government and the non-government sector regarding the

provision of services can be characterised as a ‘purchaser-provider’ relationship, with government

as the purchaser exercising a high degree of authority over the way in which the non-government

provider organisation makes use of the funds provided.361

The benefits to governments of having civil society organisations delivering services (and

also in shifting risks and responsibilities) is such that sometimes goverments have acted to

establish civil society organisations.362 The more common practice remains, however, to

fund projects and encourage civil society organisations to apply for the funding and carry out

the projects.363

Whilst contracting with civil society organisations such as charities is a logical way for

governments to ensure that the society continues to enjoy public benefits, the effect of these

contracts is to seriously undermine the uniqueness of these charities in two regards. First,

358 E.g. Central Bayside General Practice Association Limited v Commissioner of State Revenue (2006) 228 CLR 168, 175.

359 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 15.

360 Helmut Anheier, Stefan Toepler and S Sokolowski, 'The Implications of Government Funding for Non-profit Organisations: Three

Propositions' (1997) 10 International Journal of Public Sector Management 190; Industry Commission, Charitable Organisations

in Australia, Report No 45 (1995).

361 See Inquiry into the Definition of Charities and Related Organisations Report of the Inquiry into the Definition of Charities and

Related Organisations (2001) 59.

362 Mark Lyons, Third Sector - The Contribution of Nonprofit and Cooperative Enterprises in Australia (2001) 114.

363 Mark Lyons, Third Sector - The Contribution of Nonprofit and Cooperative Enterprises in Australia (2001) 183-190 for models of

funding.

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the ‘altruistic character’ that is the ‘mark or test of what is truly charitiable’364 is lost to the

extent that the service is provided for payment.365 Second, voluntariness is lost to the extent

that government takes control of the purposes pursued by the charities through the terms of

the contract or outcome-based funding.

The loss of altruism is more than a sentimental sadness. In legal terms, to the extent that a

civil society organisation’s overall purpose amounted to discharging contracts it seems to be

a business. The the extent that the purpose amounted to discharging government purposes

throught contracts, the contracting charities were, arguably, agents of the government. If that

is so, then should such organisations, in that context at least, be seen as agents of government

or not? That is – to which sector does such an organisation really belong: business,

government or civil society? This is a problem for legal theory. In the Central Bayside case,

the total revenue of the organisation in a relevant period was $1,048,973, and of this

$1,006,997 came from Australia (not Victorian) government grants366 and so the argument of

the Victorian Commissioner of State Revenue was in a nutshell that:

because about 93 percent of its income came from Commonwealth funding, with about half of

those funds being outcomes based funding grants received pursuant to its outcomes based funding

Agreement, there was control and influence by government to such an extent that the appellant

was carrying out, not its own purposes, but the purposes of … a government department, [it] could

not have charitable purposes.367

364 Educational Fees Protection Society Inc v Commissioner of Inland Revenue [1992] 2 NZLR 115 [33] (Gallen J.).

365 National Council of Social Service, 'Report of an Independent Committee of Inquiry to Examine the Effect of Charity Law and

Practice on Voluntary Organisations (Goodman Report)' (1976) 2.

366 Central Bayside General Practice Association Limited v Commissioner of State Revenue (2006) 228 CLR 168, 175.

367 Central Bayside General Practice Association Limited v Commissioner of State Revenue (2006) 228 CLR 168, 181.

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This argument was ultimately unsuccessful before the High Court of Australia but the case

illustrates how the boundaries between civil society, business and government can become

so blurred it is almost impossible to discern which is which in some contexts.368

This confusion for legal theory evolves into the second broader challenge for common law

societies – the loss of autonomy. In the United Kingdom:

…one organisation which received funding from a government department had to send an

advance copy of its newsletter as a condition of the grant. A message was received in response to

one such newsletter that, if it went out, there would be no more funding, as it contained criticism

of a government bill before parliament.369

It is for society as a whole to determine the role of government on the one hand and civil

society organisations on the other in delivery of goods and services of public benefit. The

common law architecture does not, though, enable this discussion in the context of the

common law. It forces the debate into the structures of the Pemselian partitioning. In that

context, the coercive character of government and control are poorly theorised. These

challenges, inherent in the move to third party government, oblige a rethink of the doctrine

of charitable purpose to clarify just what is and what is not a government organisation. How

far can jurists theorise government control of an organisation to delineate it from charitable

purpose?

3. Problems Distinguishing Business from Charities

Not only is the boundary between civil society organisations and government blurred,370 so

too is the boundary between civil society organisations and businesses.371 If services are to

368 See Myles McGregor-Lowndes and Ted Flack, 'The Border Between Government and Charity: A Case Study of Queensland

Hospital Foundations' (2002) 8(1) Third Sector Review: Charity Law in the Pacific Rim 99.

369 Nick Seddon, Who Cares? How State Funding and Political Activism Change Charity (2007) x.

370 Kevin Davis, 'The Regulation of Social Enterprise' in Jim Phillips, Bruce Chapman and David Stevens (eds), Between State and

Market: Essays on Charity Law and Policy in Canada (2001) 485; Bronwyn Dalton and John Casey, 'Money for Mission or Moral

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be supplied under a contract it is the price and quality, not whether the organisation is a

business or civil society organisation, that is important. Consequently, there has been

increased involvement by business in the supply of charitable good for reward.372 If, as

could be the case, all of the purposes of a civil society organisation are actually pursued by

the discharge of government contracts then the means of differentiating that organisation,

from a business pursuing profits through the same means, are quite limited.

To confuse matters further, charities and other civil society organisations have increasingly

relied upon business activities not only to pursue their missions373 but to resource their

missional purposes.374 As Justice Sundberg of the Federal Court observed in the

Commissioner of Taxation v Word Investments Limited 375 (‘the Word Investment Case’):

With the decline of the welfare state, charitable organisations are expected to do more with the

same resources. Reliance on donations alone will, in many cases, be insufficient. Hence many

charitable organisations have established business ventures to generate the income necessary to

support their activities.376

So whereas charities were once clearly distinguished from businesses by volunteers and

donations, many charities increasingly look like businesses. In some charities, most people

Minefield? The Opportunities and Risks of Not-for-profit Business Venturing' in Jo Barraket (ed), Strategic Issues for the Not-for-

profit Sector (2008) 163, 167-171.

371 Alan Ware, Between Profit and State (1989) 58-59; Liz Fisher, 'The Charity Business - Playing Politics' (2004) 134(1336)

Accountancy 36; Liz Fisher, 'The Charity Business - Turning Professional' (2004) 134(1336) Accountancy 31.

372 See C W Massarsky and S L Beinhacker, Enterprising Nonprofits: Revenue Generation in the Nonprofit Sector (2002) Yale

School of Management <http://ventures.yale.edu/docs/Enterprising_Nonprofits.pdf> at 14 February 2006.

373 Bronwyn Dalton and John Casey, 'Money for Mission or Moral Minefield? The Opportunities and Risks of Not-for-profit

Business Venturing' in Jo Barraket (ed), Strategic Issues for the Not-for-profit Sector (2008) 163, 171-174. For case examples

see: Fasold and Another v Roberts and Another (1997) 70 FCR 489 where disemination of creation literature by sale was argued

to be misleading and in breach of the Trade Practices Act 1974 (Cth) s 51 and Inland Revenue Commissioners v Oldham Training

and Enterprise Council [1996] STC 1218, 69 Tax Cas 231 where a purpose of ‘promoting trade, commerce or enterprise’

prevented an ‘altruistic organisation’ being for the pursuit of a ‘charitable purpose’.

374 Inquiry into the Definition of Charities and Related Organisations Report of the Inquiry into the Definition of Charities and

Related Organisations (2001) 58.

375 Federal Comissioner of Taxation v Word Investments Ltd (2006) 64 ATR 483; [2007] FCAFC 171.

376 Federal Comissioner of Taxation v Word Investments Ltd (2006) 64 ATR 483; [2007] FCAFC 171 [60] (Sundberg J.).

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involved are paid as employees and most of the income comes from sales at market rates of

private goods.377 This is not an abstract legal nicety. In Australia as Bronwen Dalton and

John Casey observed ‘there is fierce competition between the two breakfast cereal makers:

Kelloggs Pty Ltd and the Seventh Day Adventist Church-owned Sanitarium Health Food

Company’.378 The level of involvement by civil society organisations, including charities, in

business, and the dependence upon government funding had reached a point by 1995 where

revenues from fees and charges of not-for-profits in Australia accounted for 62.5 percent of

income; in the United States of America 57 percent and in the United Kingdom 44

percent.379 In addition to this, funding from Government is also substantial. In the United

Kingdom it was the dominant source of funding comprising 47 percent of total income and

in the United States it comprised 30 percent.380 So, far from being funded by donations, the

bulk of funding of civil society organisations has been increasingly business enterprises and

grants.381 To complicate analysis further there are mutual benefiting organisations that ‘seem

to straddle the boundary between the for-profit sector and [civil society]’.382

There is a need to clarify the distinctives because the charitable contributions of volunteers

and donors do not sum in the assessment of Pemselian partitioned charitable purpose. The

differentiation of one form of organisation from the other is therefore problematic. How, if

at all, should civil societies be regulated differently from businesses? Why, if at all, should

377 Anup Malani and Eric A Posner, 'The Case for For-Profit Charities' (Working Paper No 304, The Law School, The University of

Chicago, 2006).

378 Bronwyn Dalton and John Casey, 'Money for Mission or Moral Minefield? The Opportunities and Risks of Not-for-profit

Business Venturing' in Jo Barraket (ed), Strategic Issues for the Not-for-profit Sector (2008) 163, 171.

379 Bronwyn Dalton and John Casey, 'Money for Mission or Moral Minefield? The Opportunities and Risks of Not-for-profit

Business Venturing' in Jo Barraket (ed), Strategic Issues for the Not-for-profit Sector (2008) 163, 169-170.

380 Bronwyn Dalton and John Casey, 'Money for Mission or Moral Minefield? The Opportunities and Risks of Not-for-profit

Business Venturing' in Jo Barraket (ed), Strategic Issues for the Not-for-profit Sector (2008) 163, 169-170.

381 Inquiry into the Definition of Charities and Related Organisations Report of the Inquiry into the Definition of Charities and

Related Organisations (2001) 50; Alan Ware, Between Profit and State (1989) 88-92; Bronwyn Dalton and John Casey, 'Money

for Mission or Moral Minefield? The Opportunities and Risks of Not-for-profit Business Venturing' in Jo Barraket (ed), Strategic

Issues for the Not-for-profit Sector (2008) 163, 169-170.

382 Alan Ware, Between Profit and State (1989) 58-59.

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civil society organisations be favoured? To which sector do mutual benefiting organisations

belong and why?

If, in common law countries, the two organisational forms, businesses and civil society

organisations, are increasingly finding themselves in competition for the supply of charitable

goods paid for by government, or the supply of private goods at market rates, why should the

civil society organisation enjoy tax favour and business, not? Are the tax favours granted to

civil society organisations simply ‘cushions’ protecting inefficient organisations against

market forces?383 If charities are ‘businesses’ then on what basis is the favour they enjoy

justified? In England and Wales and also in the United States and Canada the tax laws

distinguish unrelated business activities from the core charitable purpose but that is not the

law in Australia where the contrary position holds.384 Given these different approaches in

different jurisdictions, should the organisation engaged in what is arguably an unrelated

business activity through a separate company be classified as one of the nation’s charities (as

has been confirmed as the law in Australia by the High Court in the Word Investment

Case385) or as a business? What are the consequences for favours in this context?386 These

are issues of practical concern with revenue implications for businesses, charities and tax

collectors.387 They are issues that cannnot be discussed within the common law doctrine of

charitable purpose.

The introduction of the corporate social responsibility discourse into the mix of issues further

highlights the inadequacy of the current law. The decline in participation in civil society

383 Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The

Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117, 127.

384 Commissioner of Taxation v Word Investments Limited (2008) 236 CLR 204.

385 See Commissioner of Taxation v Word Investments Limited (2008) 236 CLR 204, 240 where the appeal was dismissed and at 218

where the court concluded Word’s purposes were charitable.

386 Kevin Davis, 'The Regulation of Social Enterprise' in Jim Phillips, Bruce Chapman and David Stevens (eds), Between State and

Market: Essays on Charity Law and Policy in Canada (2001) 485.

387 See for example Living Faith, Inc. v Commissioner, 950 F.2d 365, 371 (7th Cir. 1991) where the court (Wood Jr. Flaum and

Ripple) found that two restaurants conducted in accordance with the Seventh Day Adventist faith were commercial operations and

not entitled to exemption under s.501(c) of the Internal Revenue Code (US).

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organisations, the increase in family breakdown and the retreat by governments from service

delivery has left a lacuna which socially responsible businesses have sometimes sought to

fill. When a business makes voluntarily altruistic contributions to public good, perhaps

following a lead and encouragement from the Government,388 what distinguishes it from a

civil society organisation? Is it in fact more charitable than one of the legally recognised

charities that simply provide a service for a fee? The debate over the entitlement of charities

to exemption is well aired but the flip side of business entitlement to favours for comparable

contributions to public benefit is not. When, if ever, should business be entitled to the same

favours as civil society organisations? Business already enjoys favours in the form of a tax

deduction for research and development (ostensibly because of the public benefit of that

research and development) in some jurisdictions.389 Various grants are made to businesses to

assist the pursuit of activities such as exporting, on the basis that they too are considered to

be for public benefit.390 If there is to be a denial of favours to civil society organisations, to

the extent that their activities are commercial, then conversely is it not appropriate to

consider favouring businesses to the extent that their activities are for public benefit,

particularly where altruism is evident?391 How is a common law society to explain these

differences or perhaps integrate the favours theoretically? The case law so far has rejected

exploration of this notion.392

388 Prime Minister's Community Business Partnership, Taxation Initiatives to Encourage Philanthropy (2005)

<http://www.partnerships.gov.au/pdf/fact_sheets/(6)%20taxation%20philanthropy.pdf#search=%22taxation%20initiatives%22> at

31 August 2009.

389 See Income Tax Assessment Act 1936 (Cth) s 73B.

390 See Export Expansion Grants Act 1978 (Cth).

391 Eg Larne Enterprise Development Co Ltd v Commissioner of Valuation for Northern Ireland [1998] RVR 221 where a company

limited by guarantee with non-distribution constraints was held to be an ‘altruistic organisation’ but was denied charitable

exemption from rates.

392 See Re Ontario Jockey Club and City of Toronto [1986] 53 OR (2d) 151, [155]-[156] where Reid J held:

A business carried on for the purpose of making a profit remains a business notwithstanding that the profits are wholly

devoted to some altruistic, religious or charitable purpose. That is how I interpret the decision in Re Loma Linda Foods (Canada)

and City of Oshawa [1964] 1 OR 313, 42 DLR (2d) 120.

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Taxation favours are linked to the pursuit of charitable purposes but there is not a uniform

benefit associated with the pursuit of charitable purposes.393 There is also not any uniformity

393 See Michael Kobetsky et al, Income tax: text, materials & essential cases (2005). See also Rob Atkinson, 'Third Parties' Tax-

Exempt Status can be Challenged According to New Decisions' (1985) 63 Journal of Taxation 166; Christine R. Barker, 'The

Reform of Charity Law in Scotland' in Paul Bater, Frits Hondius and Penina Kessler Lieber (eds), The Tax Treatment of NGOs:

Legal, Ethical and Fiscal Frameworks for Promoting NGOs and their Activities (2004) 33; Paul Bater, Frits Hondius and Penina

Kessler Lieber (eds), The Tax Treatment of NGOs: Legal, Ethical and Fiscal Frameworks for Promoting NGOs and their Activites

(2004); Chauncey Belknap, 'Appendix - The Federal Income Tax Exemption of Charitable Organisations: Its History and

Underlying Policy' (1989) 2025; Marcelo Bergman, 'Who Pays for Social Policy? A Study on Taxes and Trust' (2002) 31(2)

Journal of Social Policy 289; Boris Bittker and George Rahdert, 'The Exemption of Nonprofit Organisations from Federal Income

Taxation' (1976) 85(3) The Yale Law Journal 301; David Brennen, 'The Charitable Tax Exemption is About More Than Efficency'

(2007) The Nonprofit Quarterly 67; Evelyn Brody, 'Of Sovereignty and Subsidy: Conceptualizing the Charity Tax Exemption'

(1998) (Summer) The Journal of Corporation Law 585; Neil Brooks, 'The Tax Credit for Charitable Contributions: Giving Credit

where None is Due' in Jim Phillips, Bruce Chapman and David Stevens (eds), Between State and Market: Essays on Charity Law

and Policy in Canada (2001) 457; Andrew Chamberlain and Mark Sussman, 'Charities and Public Goods: The Case for

Reforming the Federal Income Tax Deduction for Charitable Gifts' (2005) (137) Special Report - Tax Foundation 8; Charles T

Clotfelter, Federal Tax Policy and Charitable Giving (1985); John Colombo and Mark Hall, The Charitable Tax Exemption

(1995); Committee on Ways and Means, 'Hearing on Tax Exempt Charitable Organisations: Before the Subcommittee on

Oversight of the Committee on Ways and Means, U.S House of Representatives, One Hundred Tenth Congress, First Session.'

(2007); Ian Dawson, 'Taxation of Trades in the Charities Sector' in Alison Dunn (ed), The Voluntary Sector, The State and the Law

(2000) 177; James Douglas and Peter Wright, 'English Charities - Legal Definition, Taxation and Regulation' (Nonprofit

Organisation Working Paper No 15, Yale University, no date); David G Duff, 'Charitable Contributions and the Personal Income

Tax: Evaluating the Canadian Credit' in Jim Phillips, Bruce Chapman and David Stevens (eds), Between State and Market: Essays

on Charity Law and Policy in Canada (2001) 407; Graham Elliott and Nick Vaughton, 'Charity Tax Consulting Fatigue - Can We

Go the Last Mile?' (1999) 123(1270) Accountancy 70; Michael Flynn, ‘The Tax Consequences of Testamentary Gifts to Tax

Exempt Bodies’ (Speech delivered to STEP Queensland, Brisbane Club, 19 August 2008); Timothy Goodspeed and Daphne

Kenyon, 'The Nonprofit Sector's Capital Contraint: Does it Provide a Rationale for the Tax Exemption Granted to Nonprofit

Firms?' (1993) 21(4) Public Finance Quarterly 415; Henry Hansmann, 'Unfair Competition and the Unrelated Business Income

Tax' (1989) 75(3) Virginia Law Review 605; Henry Hansmann, 'Unfair Competition and the Unrelated Business Income Tax'

(Yale Law School, Yale University, 1988); Bruce Hopkins, The Tax Law of Charitable Giving (2000); International Center for

Not-for-Profit Law, 'The Tax Treatment of Nongovernmental Organisations - A Survey of Best Practices from Around the World'

(International Center for Not-for-Profit Law, 1998); Olof Johansson, 'Optimal Pigovian Taxes under Altruism' (1997) 73(3) Land

Economics 297; Joint Committee on Taxation, 'Historical Development and Present Law of the Federal Tax Exemption for

Charities and other Tax-Exempt Organisations, Scheduled for a Public Hearing Before the House Committee on Ways and Means

on April 20, 2005' (JXZ-29-05, 2005); Louis Kaplow, 'Tax Policy and Gifts' (1998) The American Economic Review 283; Ineke

Koele, International Taxation of Philanthropy (2007); James R. Malone Jr., 'Taxation and Constitutional Law - The Internal

Revenue Service has the Power to Revoke the Tax-exempt Status of Private Schools which Practice Racial Discrimination Due to

Religious Belief, Since These Schools are not Charitable, and Revocation does not Violate the Free Exercise or the Establishment

Clauses of the First Amendment.' (1984) 29 Villanova Law Review 253; Myles McGregor-Lowndes and Sandra Carr, 'A Select

and Annotated Bibliography of Nonprofit Taxation' (Working Paper No 35, Queensland University of Technology, 1993); Karen

Nelson, 'Tax and the Non-profit Sector - The South African Experience' in Paul Bater, Frits Hondius and Penina Kessler Lieber

(eds), The Tax Treatment of NGOs: Legal, Ethical and Fiscal Frameworks for Promoting NGOs and Their Activities (2004) 193;

Barry Rickert, 'The Differing Tax Treatment of Investment Advisory Fees and Brokerage Fees; a General Analysis and an

Analysis in the Context of Charitable Investments' (2006) 4(2) International Journal of Civil-Society Law 68; Lucinda Schmidt,

'Tax Perk for 'Benevolent' Workers' (2005) (24-30 March) Business Review Weekly 52; Ethan G Stone, 'Adhering to the Old Line:

Uncovering the History and Political Function of the Unrelated Business Income Tax' (2005) 54 Emory Law Journal 1475; Max

Wallace, The Purple Economy : Supernatural Charities, Tax and the State (2007); Harrison Wellford, 'Unfair Competition? The

Challenge to Charitable Tax Exemption' (1988); Basil Wunsh, 'The Taxation of Charitable Institutions and Trusts' (1995); Michael

Gousmett, The Definition of Charity and Its Nexus with Tax Preference Issues (PhD Thesis, Queensland University of

Technology, 2002).

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in explanatory theory setting out why favours are granted. Across the common law world,

the concept of charitable purpose is integral to favourable treatment under a variety of

income-tax regimes but the application of the principles is such that:

1. Charities can be taxed like businesses;

2. Charities can be partially exempt from income tax;

3. Charities can enjoy full exemption from income tax without being donor

favoured;

4. Charities can enjoy the full exemption from income tax and be donor favoured;

5. Charities can also enjoy full exemption from income tax, be donor favoured and

be in receipt of government grants.

There is a need for some uniformity or at least a rationale for difference but the case law is

‘illogical and even capricious’.394 Charitable purpose is criticised because it is the language

used to decide the relevant classes. Sorting out the language will help but the root problem

will remain. The underlying problem needs to be stated clearly. It is that common law

countries lack a way of classifying organisations to which particular favours are to be

extended. The language of charitable purpose is used but it is inadequate and contributes to

the confusion.

F. Conclusion

From the analysis so far, it is possible to point toward the underlying problems that will be

explored further in the next chapter. All of these content problems are related to, or derived

from, an unwillingness or inability of the doctrine of charitable purpose to satisfactorily

address three contests.

The first contest, is the inevitable contest between the state and voluntary association. At its

foundation, the doctrine of charitable purpose buried this and it remains buried in the

394 Gilmour v Coats [1949] AC 426, 442.

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oppression of political objects. The problems manifest in the expansive definition of religion

based on the concern for freedom of religion, but this has not, and perhaps cannot, be

adequately addressed without addressing the concerns about unjustified favour for

organisations with charitable purposes and genuine freedom of association (not just freedom

of religion).

The second contest is over the struggle to make sense of charity as altruistic and distinct

from a self-interested act. That clash is inherent in having the common meaning giving way

to the technical meaning of charitable purpose. It finds expression in the problematic nature

of charitable but discriminatory action and in the dificulty in distinguishing between public

and private benefit.

The third contest is over the distinction between public and private benefit. This manifests

itself most poignantly in the context of poverty relief but it is embedded in all dimensions of

the doctrine of charitable purpose. The judicial approach is to look to a decision on similar

facts and to revert to ‘spirit and intendment’ when what is needed is a theory to explain

identifiable factors shaping public benefit, to which the courts may revert.

Addressing the challenges identified in this chapter requires a whole-of-sector approach

which enables the philosophic contests to be ventilated adequately and the excluded voices

to be heard. The doctrine of charitable purpose is inadequate because, behind the content

problems raised in this chapter, are problems of method, measurement and a priori

assumptions that cannot find voice. These issues of method, measurement and a priori

assumptions are considered in the next chapter.

G. Postscript

When Dr Manette found himself giving evidence against his own son-in-law, he was

shocked and disturbed by the way his past came back to condemn. The inherent injustice in

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a system that granted favours to those who should not have enjoyed them and deprived of

freedom those who should have enjoyed it, unleashed awful, uncontrollable, remedial forces.

Dickens’s point in the Tale is that if there is a need to enable freedom and reallocate favours,

it is prudent to do so before there is revolution. The challenge when confronted with 400

years of precedent is how to do this. Progress requires understanding how the common law

could be developed. That is the topic of the next chapter.

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III HOW TO GO BEYOND CHARITIES

A. Preamble

In A Tale of Two Cities, Dickens paints the stark choice between maintaining unjust privilege

and the difficulty in relinquishing it through the two Marquis Evremonde. The two marquis

personify two quite different responses to changes. The Senior Marquis Evremonde, the

uncle, lamented the limitations on his ancestral right over the life and death of citizens

complaining, ‘[w]e have lost many privileges; a new philosophy has become the mode; and

the assertion of our station, in these days, might … cause us real inconvenience.’ In contrast,

his nephew, Charles Darnay, fled France for England rather than participate in the privileges

he enjoyed as a marquis in France. Darnay described his position as ‘bound to a system that

is frightful to me, responsible for it, but powerless in it; seeking … to have mercy and to

redress; and tortured by seeking assistance and power in vain.’395 Evremonde Senior lost

everything and Evremonde Junior (Darnay) almost lost his life when change swept through

France in 1789.

B. Introduction

It will be recalled that Chapter II and this chapter are paired. In Chapter II the presenting

problems which related to content were explored. In this chapter the focus is on elucidating

the underlying problems of methodology rooted in philosophic a priori assumptions that

make analysis of the problems discussed in Chapter II so difficult. The commitment to

overcome these difficulites is evident in the number of inquiries that have been held over the

last 60 years and the proliferation of legislative patches in this century.396 The critical issue

is not whether there will be change, but the method by which change is facilitated. Change

has been inhibited at common law by problems of method. Problems of method are often

deeply rooted in philosophic a priori assumptions. Copernicus’s model may have been

395 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 129.

396 See pages 6 to 9.

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simpler and easier to understand but it was not going to be accepted until distorted a priori

assumptions regarding the universe were squarely confronted. In a similar way, there cannot

be developments in the doctrine of charitable purpose until the methodological inhibitors of

development of the common law, at the deepest level of a priori assumptions, are addressed.

In this chapter, layer by layer, the methodological assumptions and their causes are peeled

back until the root a priori assumptions are exposed.

There are three well-founded principles underpinning common law development which have

been ignored or misapplied in the development of the present, orthodox doctrine of

charitable purpose. These three principles, and the context and consequence of their

abandonment, are explored first. In the second and third sections, how the concept of

charitable purpose lost its genus and differentia are discussed as these expose the definitional

problems. This leads to a discussion of wider taxonomical problems in the fourth section.

Developing a more sophisticated theory requires ways of measuring charitable purpose that

go beyond the mere charitable-or-not, nominative approach of the current regime and so the

fifth section discusses methods of measurement. In the sixth and final section is a discussion

of three, contested, philosophic a priori assumptions, that underpin differences in the

discourse. It is intended then, by the end of this chapter to have elucidated and explored the

methodological problems that inhibit development of the common law doctrine of charitable

purpose down to the level of contested a priori assumptions.

C. Three ‘Principle’ Problems

The puzzle to be resolved is how the common law painted itself into this corner. If the

casuist method of the common law generated similar problems in other areas of law then it

might reasonably be considered that the method is the cause of the problem. But the casuist

method has served well, though, in other branches of law.397 Why, then, have these

397 For discussion of casuist method see pages 34 to 38.

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problems arisen in the context of the doctrine of charitable purpose? The answer is that three

basic, well-known principles, used in the development of the common law, have been

ignored or misapplied in the development of the doctrine. Had these three principles, usually

applied in casuist method, not been ignored or misapplied, the problems discussed in the last

chapter would not have arisen. The three legal principles not followed were:

Principle 1: The preamble to an act of parliament sets out (only) background and

context. This means it is not essential to the validity of the Act.398 Unless

the operative part of the Act otherwise declares, the preamble does not

contain the definition (of anything).399

Principle 2: In the reading of a case, there is a presumption that there is jurisprudence

giving effect to a public policy in the ratio decidendi of the case.400 Sound

jurisprudential reasoning may dissent from that reasoning and it may be

overruled, but it does not overlook it.401

Principle 3: A definition defines something.402 The definition should always be

consistent with the matter defined. A good definition, at least in the

398 D C Pearce and R S Geddes, Statutory Interpretation in Australia (5th ed, 2001) 15.

399 Attorney-General v Prince Ernest August of Hanover [1957] AC 436, 463 (Viscount Simonds); Wacando v Commonwealth (1981)

37 ALR 317, 333 (Mason J). AYSA Amateur Youth Soccer Association v Canada (Revenue Agency) 2007 SCC 42 [16]. This

recognition of the contextual role played by the preamble can be compared to the more conservative approach, from which the ‘no

recourse rule’ stems, whereby the preamble should only be consulted if an ambiguity arises. See Anne Winckel, 'The Contextual

Role of a Preamble in Statutory Interpretation' (1999) 23 Melbourne University Law Review 184, 185-6; D C Pearce and R S

Geddes, Statutory Interpretation in Australia (5th ed, 2001) 191-2.

400 Julius Stone, 'The Ratio of the Ratio Decidendi' (1959) 22(6) Modern Law Review 597 ; Kenneth Vandevelde, Thinking Like a

Lawyer (1996) 3, 20-21.

401 Distinguishing obiter remarks from the ratio decidendi of a case is not without controversy. For an introduction to the debate and

its more recent developments see: J L Montrose, 'Ratio Decidendi and the House of Lords' (1957) 20 The Modern Law Review

124; A.L Goodhart, 'The Ratio Decidendi of a Case' (1959) 22(2) The Modern Law Review 117; H K Lucke, 'Ratio Decidendi:

Adjudicative Rational and Source of Law' (1989) 1(1) Bond Law Review 36 and Robert Scofield, 'Goodhart's Concession:

Defending Ratio Decidendi From Logical Positivism and Legal Realism in the First Half of the Twentieth Century' (2005) 16 The

King's College Law Journal 311.

402 Lucy Melville, The Draftsman's Handbook (1979) 10 referring to the second of Sir Henry Thring’s two points about the drafting

of definitions.

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classical sense, sets out the genus and differentia ensuring that all

subcategories are mutually exclusive and collectively exhaustive.403

These three principles are now considered in the context of the doctrine of charitable

purpose.

1. Principle 1: The Preamble was not Intended to Define Anything

In Pemsel’s case Lord Macnaghten stated that the object of the Statute of Elizabeth ‘was

merely to provide new machinery for the reformation of abuses in regard to charities’.404 In

this section, I return to that purpose and plunge back into the history of the Preamble

pointing out that it was ‘merely’ a part of a machinery Act and was not intended to define

anything.405

The problem with the Preamble is not with the Preamble itself, but with what has become

the orthodox reading of it.406 It is elementary legal method to look not to a preamble, but to

the Act as a whole, and in particular, to the operative part of an Act to determine the law.407

That is if, in fact, the function of the Act is to declare the law in a particular area. Not all

Acts declare the law. Some Acts principally function as machinery provisions to enable

403 See No. 20 Cannon Street Ltd v Singer & Friedlander Ltd [1974] Ch 229, 240 (Megarry J).

404 Pemsel’s case [1891] AC 531, 581 (Lord Macnaghten).

405 For discusison of purpose and context generally see Gareth Jones, History of the Law of Charity 1532-1827 (1969) 27,107; H

Picarda, The Law and Practice Relating to Charities (3rd ed, 1999) 8-11; James Fishman, 'The Political Use of Private

Benevolence: The Statute of Charitable Uses' (2008) Pace Law Faculty Publications

<http://digitalcommons.pace.edu/lawfaculty/487/> at 26 September 2008, 28-42 and Kerry O'Halloran, Myles McGregor-

Lowndes and Karla Simon, Charity Law & Social Policy: National and International Perspectives on the Functions of the Law

Relating to Charities (2008) 28-30.

406 See Marjorie K. McIntosh, 'Poverty, Charity, and Coercion in Elizabethan England' (2005) 35 Journal of Interdisciplinary History

457.

407 See for example the summary of Justice Rothstein:

It is well known that the modern approach to interpretation applies to taxation statutes no less than it does to other statutes,

that is, ‘the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with

the scheme of the Act, the object of the Act, and the intention of Parliament’: Placer Dome Canada Ltd v Ontario (Minister of

Finance) [2006] 1 SCR 715, 2006 SCC 20 [21]; E A Driedger, Construction of Statutes (2nd ed, 1983) 87. However, because of

the degree of precision and detailed characteristics of many tax provisions, an emphasis has often been placed on textual

interpretation where taxation statutes are concerned: Canada Trustco Mortgage Co v Canada [2005] 2 SCR 601, 2005 SCC 54

[11]; Placer Dome [23].

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some administrative tasks to be performed.408 The Preamble was the preamble to an Act

creating machinery for commissioners to investigate abuses of charitable trusts.409 A

dimension of the reasons for the problems with the Preamble, is that a preamble to a

machinery Act has, contrary to tenets of statutory interpretation, come to be read almost as a

codification of substantive law.

The process by which the Preamble becomes a definition is as follows: In 1605, a Mr

Romilly (later Sir Samuel Romilly) for the purposes of arguing a case that depended upon a

narrow definition of charitable purpose,410 categorised the list in the Preamble into four

broad groupings.411 These suggested categories were not taken up in the judgment but were

subsequently adopted in a leading text on the law of charities.412 Lord Macnaghten

substantially adopted these four categories in his reasons for judgment in Pemsel’s case.413

From that categorisation into these four heads, the law of charities has developed to a point

where the orthodox understanding of the doctrine is that for a purpose to be charitable, it

must fall within one of the four heads of charitable purpose listed by Lord Macnaghten in

Pemsel’s case and be for public benefit.414

The use of the categories in both Morice v Bishop of Durham and Pemsel’s case contexts is

eminently reasonable. The categories alone were not, though, the reasons for judgment in

either case. In Morice v Bishop of Durham, they were not adopted into the reasons for

408 See Charities Act 2006 (NZ) s 8.

409 Pemsel’s case [1891] AC 531, 581 (Lord Macnaghten). See also Gareth Jones, History of the Law of Charity 1532-1827 (1969)

27, 107; and H Picarda, The Law and Practice Relating to Charities (3rd ed, 1999) 8-11.

410 Morice v Bishop of Durham [1805] 10 Ves 522.

411 J Warburton, D Morris and N F Riddle, Tudor on Charities (2003) 13; H Picarda, The Law and Practice Relating to Charities (3rd

ed, 1999) 12.

412 L S Bristowe and W I Cook, The Law of Charities and Mortmain (Tudor's Charitable Trusts) (3rd ed, 1889) 2.

413 J Warburton, D Morris and N F Riddle, Tudor on Charities (2003) 13.

414 Peter Luxton, The Law of Charities (2001) 112; Gino Dal Pont, Charity Law in Australia and New Zealand (2000) 111-112, 123,

127; 132-146; 147-169; 172-197. Denis Ong, Trusts Law in Australia (3rd ed, 2007) 330; Philip H Pettit, Equity and the Law of

Trusts (10th ed, 2006) 251; H Picarda, The Law and Practice Relating to Charities (3rd ed, 1999) 12-13; Kerry O'Halloran, Myles

McGregor-Lowndes and Karla Simon, Charity Law & Social Policy: National and International Perspectives on the Functions of

the Law Relating to Charities (2008) 29-31.

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judgment.415 In Pemsel’s case, Lord Macnaghten described his musing over the

classification into ‘four principal divisions’ as ‘academical.’416

With the classification having now taken on the significance that it has, the divisions are

more than ‘academical’. The list itself, which, according to Fishman, recited the ‘proper

objects of charitable interest’ solely unintentionally,417 has become the rationale. This is the

first underlying methodological problem.

2. Principle 2: The Overlooked but Underlying Jurisprudence of Pemsel’s Case

Just as the problems with the Preamble flow from its unintentional application,418 so the

problems with Pemsel’s case are not with the case; the problems arise from what has become

the orthodox reading of it. At the latest, by 1947, the orthodox reading of Pemsel’s case had

become that ‘all claims to embrace an object under the head of a charity must assert that it

comes within one of the four classes’.419

This is an unexpected outcome because the judicial officer in Pemsel’s case, Lord

Macnaghten, himself, described the classification as a ‘rather academical discussion’ that

would probably ‘amuse’ a layman.420 Equally as important, Lord Macnaghten stated that ‘no

one who takes the trouble to investigate’ can doubt that the concept of charitable purpose,

415 Morice v Bishop of Durham [1805] 10 Ves 522.

416 Pemsel’s case [1891] AC 531, 584 (Lord Macnaghten).

417 James Fishman, 'The Political Use of Private Benevolence: The Statute of Charitable Uses' (2008) Pace Law Faculty Publications

<http://digitalcommons.pace.edu/lawfaculty/487/> at 26 September 2008.

418 James Fishman, 'The Political Use of Private Benevolence: The Statute of Charitable Uses' (2008) Pace Law Faculty Publications

<http://digitalcommons.pace.edu/lawfaculty/487/> at 26 September 2008.

419 National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31, 52 (Lord Porter). For this development see

particularly Chichester Diocesan Board of Finance v Simpson [1944] UKHL 2 (21 June 1944) and before that Chesterman v

Federal Commissioner of Taxation (1923) 32 CLR 362 and its overruling in the Privy Council variously reported at [1925] 37

CLR 317, [1926] AC 128, (1925) 32 ALR 9, (1925) 95 LJPC 39, (1925) 134 LT 360, (1925) 42 TLR 121 and [1926] 1 WWR 309.

420 Pemsel’s case [1891] AC 531, 582, 583 (Lord Macnaghten).

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and the jurisdiction of the courts that treat those purposes with ‘particular favour’, was

established well before the Statute of Elizabeth and was not dependent upon it.421

The overlooking of the underlying jurisprudence is even more unusual when considered

from first principles. Typically in the reading of a case, there is a presumption that there is a

jurisprudence giving effect to a public policy in the ratio decidendi of the case.422 Sound

jurisprudential reasoning may dissent from that reasoning and it may be overruled but it does

not overlook it. Had the underlying jurisprudence not been overlooked, the current problems

with the doctrine of charitable purpose might not have arisen.

If Lord Macnaghten is so clear that his classification is ‘academical’ and that the

jurisprudence of charitable purpose rests on foundations independent of the Statute of

Elizabeth, how can his opinion have been read as one of classification and without reference

to the underlying jurisprudence? The answer may lie in the problem of defining charitable

purpose. Lord Macnaghten set out these observations as part of his reasons as to why the

popular notion of charity could not be utilised in legal theory. He held that it led to the

‘hopeless task’ of each individual case being decided on its own facts.423 Subsequent cases

have substantially followed his example of classifying charitable purpose into classes but

whereas Lord Macnaghton developed the classes with reference to the underlying

jurisprudence the subsequent decision do not. The is now at apoint where the classification

has become the jurisprudence.

421 Pemsel’s case [1891] AC 531, 580, 581 (Lord Macnaghten).

422 Julius Stone, 'The Ratio of the Ratio Decidendi' (1959) 22(6) Modern Law Review 597; Kenneth Vandevelde, Thinking Like a

Lawyer (1996) 3, 20-21.

423 Pemsel’s case [1891] AC 531, 587 (Lord Macnaghten).

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At a critical juncture, a case that held that the popular concept of charitable was capable of

legal theory development, was overruled.424 Justice Issacs, in Chesterman’s case, attempted

to give jurisprudential form to the popular notion of charitable purpose. He pointed out that:

But in the application of these rules minds easily differ. For instance, in Pemsel's Case Lord

Halsbury and Lord Bramwell dissented. And one of the three eminent jurists who composed the

majority, Lord Herschell, in the very next year indeed – within eight months afterwards – was led

to a non-technical interpretation of the words "charitable purpose" in another Act.425

The other Judges in the majority of the High Court of Australia agreed but the High Court

was overruled by the Privy Council.426 The consequence has been that the ‘hopeless task’ of

each individual case being decided on its own facts, because of the apparent inability to give

meaning to the popular concept of charity, has been avoided and replaced by the ‘hopeless

task’ of each individual case being decided on its own facts because the courts are without an

underlying jurisprudence to frame decision making.

What then was that overlooked jurisprudence? The opinions in Pemsel’s case point to an

underlying jurisprudence informed by (supply side) motives of piety and (demand side)

requirements for public goods. Lord Macnaghten, along with the other Law Lords in the

majority, identified charitable purposes not with reference to the categories per se, but with

‘those trusts of a public nature which, according to the doctrine of the Court derived from the

piety of earlier times.’427

The centrality of trusts of a public nature to the doctrine of charitable purpose is well

accepted. The equally important, but more readily overlooked, dimension of the

424 Chesterman v Federal Commissioner of Taxation [1923] HCA 24 (6 June 1923); (1923) 32 CLR 362.

425 Chesterman v Federal Commissioner of Taxation [1923] HCA 24 (6 June 1923); (1923) 32 CLR 362, 381-382 (Isaacs J) referring

to Commissioners of Inland Revenue v Scott 15 (1892) 2 QB, 152.

426 Chesterman v Federal Commissioner of Taxation [1923] HCA 24 (6 June 1923); (1923) 32 CLR 362.

427 Pemsel’s case [1891] AC 531, 580 (Lord Macnaghten).

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jurisprudence is that informed by the ‘piety of earlier times’. There is a concept of pious

uses428 that lies beneath the concept of charitable purpose traceable to well before the Statute

of Elizabeth.429 The centrality of this concept to early forms of voluntary association cannot

be overstated. Richardson summarised several scholars declaring not only that ‘[a]ll craft

guilds pursued pious goals’ but also ‘that craft guilds began as religious and fraternal

associations’ which ‘all’ retained a religious orientation until the Reformation.430 Evidently,

it was the combination of ‘piety and profit’ that ‘helped overcome the free-rider problems

and achieve common goals’.431

The legislation of the English Parliament of 1601, and its antecedent in 1557,432 did not set

out a definition of charitable purpose drawn from the concept of pious use or reference the

broad concept of public trust within a definition as might be done today.433 The reasons why

can only be speculation. It is interesting, though, that the drafters of the Statute of Elizabeth,

and its 1597 predecessor,434 appear to have drawn, instead, upon the poem The Vision

Concerning Piers Plowman435 to formulate the list of charitable purposes set out in the

Preamble.436 Had the legislation been declaratory then it may have been necessary to

428 Gareth Jones, History of the Law of Charity 1532-1827 (1969) 3, 4. The word pious has at law (or at least had at the time of

Pemsel’s case) a broader meaning than in common parlance. Lord Watson reviewed the law in relation to pious uses in Pemsel’s

case and found ‘[s]o far as I am able to discover, godly and pious as applied to trusts or uses, had, in early times much the same

significance in Scotland as in England. Their meaning was not limited to objects of a religious or eleemosynary character, but

embraced all objects which a well-disposed person might promote from motives of philanthropy.’ See Pemsel’s case [1891] AC

531, 558 (Lord Watson).

429 Gareth Jones, History of the Law of Charity 1532-1827 (1969) 3.

430 Gary Richardson, 'Craft Guilds and Christianity in Late-Medieval England' (2005) 17(2) Rationality and Society 139, 140.

431 Gary Richardson, 'Craft Guilds and Christianity in Late-Medieval England' (2005) 17(2) Rationality and Society 139, 141, 167,

169, 175-178.

432 An Act to Reform Deceits and Breaches of Trust Touching Lands Given to Charitable Uses 1597, 39 Eliz c 6.

433 R H Helmholz, Roman Canon Law in Reformation England (1990).

434 An Act to Reform Deceits and Breaches of Trust Touching Lands Given to Charitable Uses 1597, 39 Eliz c 6 discussed in James

Fishman, 'The Political Use of Private Benevolence: The Statute of Charitable Uses' (2008) Pace Law Faculty Publications

<http://digitalcommons.pace.edu/lawfaculty/487/> at 26 September 2008, 31-33.

435 William Langland, The Vision of Piers Plowman: a Critical Edition of the B-Text (A Schmidt trans, 1995 ed); H Picarda, The Law

and Practice Relating to Charities (3rd ed, 1999) 9.

436 Gareth Jones credits Willard (1869) with recognising the link between the poem and the Preamble. Gareth Jones, History of the

Law of Charity 1532-1827 (1969) 24. Note Blake Bromley argued to the contrary that the ‘true sources of the Preamble are to be

found in the titles and texts of the public statutes of Tudor monarchs’ (and not the poem). Blake Bromley, '1601 Preamble: The

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address the issue of what the extant law was, squarely, but being a machinery Act, the issue

could be avoided. It seems it was.

The context was post-Reformation England where the law by which the charities had

formerly been administered was Roman Catholic Canon law and the poem adopted railed

against Roman Catholic abuses. In selecting wording from The Vision of Piers Plowman for

the Preamble,437 the Protestant reformers may have been offering political comment on their

willingness to address the abuses which Langland, the poet, had criticised. The adoption of

the words of such a poem, to make the point that the full force of state power, at a national

level, will now be applied to remedy the abuses of which the people have complained, is

very understandable and methodologically sound for a preamble. If that is so, then the use of

the poem in the Preamble was a method for the legislators to carry a message that was

politically poignant. Furthermore, in post-Reformation England, the unwillingness of a

Tudor Parliament to affirm, or in any way to give expression to, Roman Catholic Canon law

is understandable.

The factors informing the drafting of the Preamble by a Tudor Parliament are not relevant in

twenty-first century common law countries but the consequences are. For citizens in the

twenty-first century in common law countries, the most profound consequence of the

primacy of the Preamble may not be what it says, but what it ignores. By entombing the

extant common law behind the Preamble, and instead requiring the Preamble to be used to

decide charitable purpose, the underlying jurisprudential rationale (the essence) that may

have given some sense to the formation of the (incomplete) list, which is the Preamble, was

lost. That may not have mattered at the time because the underlying rationale that organised

State's Agenda for Charity' (2002) 8 Third Sector Review: Charity Law in the Pacific Rim 67, 71. Both views may be correct if

the earlier statutes had adopted the wording of the poem and the drafters of the Statute of Elizabeth followed this.

437 H Picarda, The Law and Practice Relating to Charities (3rd ed, 1999) 9.

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the list was, then, not important. The community in question knew the objects within the

purview of the legislation and that was all that was required at that time.

Exploration of the impact of this oversight must wait until Chapter VIII. At this point, it is

sufficient to note that the loss of the underlying jurisprudence does not flow from a reading

of Pemsel’s case as a whole, though, but only from a narrow focus on the categorising words

in the judgment of Lord Macnaghten.438 The underlying jurisprudence has been overlooked.

The common law is such that a jurisprudence that has been overlooked can be rediscovered.

The paradoxical nature of the common law is that it is not ‘a set of fixed rules but a process’

whereby courts return to earlier cases and decide what principles from ‘prior cases’ inform

the development of the law in the case before it. The underlying jurisprudence in Pemsel’s

case awaits rediscovery.

In the context of an overlooked jurisprudence, it is also worth noting in passing at this point,

that the form of the expression of both piety and public benefit – trust or corporation – was

not historically significant. The law in relation to these organisations for piety has a history

preceding the Norman Conquest of England. In those days, they were called eleeymosynary

corporations. They are traceable back to about the sixth century with charities, such as the

King’s School, Canterbury, having history traceable to 597.439 These organisations can now

be located in civil society but they were not conceived of as civil society organisations until

recently. Conceptually, there was not a distinction between these charitable corporations and

charitable trusts. The form was not important.

The concept of the trust has become central to the current formulation of the doctrine of

charitable purpose but this need not be so. Not only is there a basis for a corporate form of

expression in eleemosynary corporations but the antecedents to the charitable trust might

438 Pemsel’s case [1891] AC 531, 583-584 (Lord Macnaghten).

439 Kerry O'Halloran, Charity Law and Social Inclusion: An International Study (2007) 58.

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trace not only to church law, but the Islamic concept of the waqf brought back from the

Crusades.440 The formal recognition of trusts in general, and charitable trusts in particular,

evolved through feudal times and the present conception of trust as a legal concept emerged

following the passing of the Statute of Uses in 1535.441

The doctrine of charitable purpose may be presently locked within the concept of trusts but

historically its foundations lie equally, if not foundationally, in corporate and unincorporated

forms.

3. Principal 3: There is not a Definition.

There is not, now, a definition of charitable purpose. The popular meaning of charitable

purpose as concern for others was sacrificed for certainty. Charitable purpose, in lay terms,

has a subjective element that relates to motive.442 At law, by the adoption of the technical

definition, the reference to motive is removed and charities are institutions that satisfy certain

‘objective’ criteria.443 Lord Macnaghten held, in adopting the technical meaning, that:

The majority of the Court of Appeal tell [the Special Commissioners vested with the task of

deciding what is a charitable institution for tax exemption purposes under the English Income Tax

Act (1842)] they must be guided by the popular meaning of 'charity', and that ‘each individual case

must be decided on its own facts.’ There is certainly no indication in the Act that such a hopeless

task as that was laid on the Special Commissioners.444

The law has consistently returned to the Preamble to overcome this difficulty but as the

doctrine of charitable purpose has become focused on the institution (not the altruistic

characteristic) it bears little, if any, link to common parlance. If the legal class of charities

440 Monica Gaudiosi, 'The Influence of the Islamic Law of Waqf on the Development of the Trust in England: The Case of Merton

College' (1987-1988) 136 University of Pennsylvania Law Journal 1231.

441 Kerry O'Halloran, Charity Law and Social Inclusion: An International Study (2007) 59.

442 Gino Dal Pont, Charity Law in Australia and New Zealand (2000) 8-9.

443 Gino Dal Pont, Charity Law in Australia and New Zealand (2000) 8-13; Pemsel’s case [1891] AC 531, 583 (Lord Macnaghten).

444 Pemsel’s case [1891] AC 531, 587.

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does not represent social expectations of charitable purpose, what do citizens of common law

countries expect to reside at the heart of this body of law? This problem was foreseen by

none less than Lord Chancellor Halsbury who, in Pemsel’s case, argued in his dissenting

judgment to resist the separation of the common from the technical meaning.445 The problem

that arises from the schism is that the notions embedded in the words ‘charitable purpose’,

which might have stood as the unifying or relating concept that brings all of these heads of

charitable purpose into relationship (the essence) has been lost. The now dominant

jurisprudential theory is that referrable to the list in the Preamble; and if the inquiries have

shown anything, it is that this list is clearly inadequate.

A specific problem with identifying the genus in the Preamble is that it is a list.446 A

definition defines with reference to key characteristics – that is, the essence is not

elucidated.447 A list only lists. If there is a commonality of characteristics in a list, it is the

responsibility of the definer to state what that commonality is: that is, to provide this as the

essence of the definition. If it is helpful, the definer may state in the definition ‘this

definition includes....’ The only time when a list may be a definition is where the list is an

exhaustive list. With the Preamble formulating the foundation for the modern legal

understanding of charitable purpose, there is the worst of both.448 There is not an exhaustive

list and there is not a statement of the essential characteristics. Addressing this problem

requires an exhaustive list, a clear definition or a definition including a list.449

445 Pemsel’s case [1891] AC 531, 542.

446 Charitable Trusts Committee (UK), Report of the Committee on the Law and Practice Relating to Charitable Trusts, Cmd 8710

(1952-53) 29, 31-36.

447 R W M Dias, Jurisprudence (5th ed, 1985) 3.

448 That is not to say that it was the worst of both in 1601. The Preamble served its purpose then. It is the purpose to which it is

presently put that creates the problems.

449 United Kingdom Secretary of State for the Home Department, Charities: A Framework for the Future (1989).

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A second specific problem with the present approach when considering the missing essence,

is that spirit and intendment are ephemeral, opaque and uncertain concepts,450 unsuited to

legal analysis.451 A spirit may have character, but that character is not manifest nor subject

to legal obligation until incarnate in a legally recognised body. Then, the body is subject to

the law, not the spirit. In the context of charities, these bodies take organisational form.

Put at its simplest, there is a need for the law applying to these organisations to identify

clearly the essence of these organisations that are said to manifest charitable purposes. It is

not enough, though, to identify essence. That which differentiates these organisations from

others must also be delineated if the organisations are to be defined adequately.

Differentiation is possible. The sector to which charities belong is but one sector, in fact, but

one part of a sector of society. Categorised as a part of the third sector, charities and other

civil society organisations stand alongside, but different from, the response to social needs of

businesses (the first sector), the government (the second sector) and family (the fourth

sector).452 At this point it is enough to note that there is not a definition . In the next section

reasons why the present situation exists are considered.

D. How the Definitional Problems Arose

The Statute of Elizabeth was passed in conjunction with, the Statute of Poor Relief.453

Together they were part of the first national attempt to provide a regulatory framework for

voluntary attention to community needs, but most particularly, poverty.454 For reasons to be

discussed below, real wages at the dawn of the seventeen century were ‘only about half of

450 Inquiry into the Definition of Charities and Related Organisations Report of the Inquiry into the Definition of Charities and

Related Organisations (2001) 7.

451 Gilmour v Coats [1949] AC 426, 443 (Lord Simonds).

452 Submission by Australian and New Zealand Third Sector Research to the Inquiry into the Definition of Charities and Related

Organisations, Commonwealth Government, (2000). Gino Dal Pont, Charity Law in Australia and New Zealand (2000) 3. Martti

Muukkonen, The Familiar Unknown - Introduction to Third Sector Theories (Licentiate Thesis, University of Joensuu, 2000).

Mark Lyons, Third Sector - The Contribution of Nonprofit and Cooperative Enterprises in Australia (2001).

453 43 Eliz c 2 (Eng.&W). For a discussion of the inter-relation of the two Acts see Blake Bromley, '1601 Preamble: The State's

Agenda for Charity' (2002) 8 Third Sector Review: Charity Law in the Pacific Rim 67.

454 Peter Luxton, 'The Shaping of Charity Law' in Judith Hill (ed), The Law of Charities (2001) 3, 6.

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what they had been’ at the dawn of the sixteenth.455 The extent of the poverty was such as to

cause the sovereign concerns as to the maintenance of social order.456

In the sixteenth century, poverty relief, and indeed the voluntary supply of resources in

general, was a combined effort of family and business,457 often, if not usually, organised

through the church.458 The Statute of Elizabeth brought the state into poverty-relief

regulation and regulation of voluntary supply of resources.459 It entrenched the coercive role

of the state in administration of voluntary supply of goods and services. The Nathan Report

(1952) refers to this as the beginning of a partnership ‘in which the state fills gaps left by

charity rather than charity filling gaps left by the state.’460 The boundaries between the

voluntary giving and government-coerced contributions to poor relief were ‘fluid’,461 as had

been the boundary between commercial relations expressed through guilds in the lead up to

the Reformation.462

What had changed through the sixteenth century was the church and its role. At the

beginning of the sixteenth century, it was the Roman Catholic institution. By the end of that

century, that institution had become a pariah, its institutions sacked and its property base

sequestrated to the English crown.463 With that transition from Roman Catholicism came a

455 Marjorie K. McIntosh, 'Poverty, Charity, and Coercion in Elizabethan England' (2005) 35 Journal of Interdisciplinary History

457, 460. W Jordan, 'The English Background of Modern Philanthropy' (1961) 66 American Historical Review 401, 403.

456 Peter Luxton, 'The Shaping of Charity Law' in Judith Hill (ed), The Law of Charities (2001) 3, 6. Christopher W Brooks,

Lawyers, Litigation and English Society Since 1450 (1998) 204.

457 W Jordan, 'The English Background of Modern Philanthropy' (1961) 66 American Historical Review 401, 404. McIntosh provides

a detailed overview of the way in which the ‘disparate elements’ came together to ameliorate poverty ‘at the town Hadleigh’

during the Elizabethean period: Marjorie K. McIntosh, 'Poverty, Charity, and Coercion in Elizabethan England' (2005) 35 Journal

of Interdisciplinary History 457, 468-79. See also Gary Richardson, 'Craft Guilds and Christianity in Late-Medieval England'

(2005) 17(2) Rationality and Society 139, 140-141 on the role of guilds in mediating religious giving.

458 Peter Luxton, The Law of Charities (2001) 6.

459 Geoffrey Gibson, 'Fusion or Fission?' (2000) 20(1) Australian Bar Review 70,79.

460 Charitable Trusts Committee (UK), Report of the Committee on the Law and Practice Relating to Charitable Trusts, Cmd 8710

(1952-53) 8.

461 Ilana Krausman Ben-Amos, The Culture of Giving: Informal Support and Gift-Exchange in Early Modern England` (2008) 10.

462 Gary Richardson, 'Craft Guilds and Christianity in Late-Medieval England' (2005) 17(2) Rationality and Society 139, 145.

463 Blake Bromley, '1601 Preamble: The State's Agenda for Charity' (2002) 8 Third Sector Review: Charity Law in the Pacific Rim

67, 78.

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removal of many of the forms of assistance that had previously been available to address

poverty.464 The Roman Catholic Church had required of its adherents that they, in their

wills, leave a portion to pious uses.465 Its law also administered the transfer of estates on

death so some of these gifts made their way to relief of poverty and other charitable ends

through the application of that law, the terms of the will and the nature of the gift.466 With

the sacking of the monasteries and the disenfranchising of the Roman Catholic religion,

poverty relief particularly, but the supply of charitable good in general, came to be organised

voluntarily and principally at a local level, without the institutional support of the law or the

Roman Catholic Church. As might be expected, this community response met with mixed

levels of effectiveness and success according to the capacity of the relevant community.467

By the time of the famines of the 1590s, it seemed evident that a national response was

required. The Statute of Poor Relief was the regulatory framework by which the state

responded to aspects of that need and the Statute of Charitable Uses was the way by which

the voluntary dimensions expressed through charitable uses (trusts) would be enforced.468

It was the English merchant classes, keen to shape the emerging nation according to their

aspirations, who applied to their public purposes the concepts of the charitable trust. Free of

the shackles of the Roman Catholic religion’s laws and involvement, they were able to

appoint trustees who might accomplish their social purposes in perpetuity, rather than the

local bishop or cleric, so they poured enormous sums into non-religious charitable

purposes469 with the knowledge that it would be state, not church courts that would oversee

464 Peter Luxton, The Law of Charities (2001) 6.

465 The phrase was ad pios causa that is for a ‘pious cause’ or as described through this thesis a ‘pious use’.

466 Gareth Jones, History of the Law of Charity 1532-1827 (1969).

467 Marjorie K. McIntosh, 'Poverty, Charity, and Coercion in Elizabethan England' (2005) 35 Journal of Interdisciplinary History

457, 468.

468 Charitable Trusts Committee (UK), Report of the Committee on the Law and Practice Relating to Charitable Trusts, Cmd 8710

(1952-53) 8. See also James Fishman, 'The Political Use of Private Benevolence: The Statute of Charitable Uses' (2008) Pace

Law Faculty Publications <http://digitalcommons.pace.edu/lawfaculty/487/> at 26 September 2008.

469 W Jordan, 'The English Background of Modern Philanthropy' (1961) 66 American Historical Review 401.

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their performance. The private supply of charitable good flourished in that environment and

through that, a charitable sector developed outside of the context of organised religion.

Not all generations take the same view of charitable purpose – some ages are more generous

than others and the period 1680 to 1760 is sometimes described as ‘the dark age of English

philanthropy.’470 In such a context, it may reasonably be expected that there would be a

backlash against the growth of charities and that this would find judicial expression in

limiting the definition of ‘charitable purposes’. It might be expected, then, that this would

result in the narrowing of the classes of charitable purposes. But that was not to be. The

scope of charities was curtailed, but not by narrowing the definition of charitable purpose.

The Preamble was evidently too deeply entrenched.471 The response was legislative – the

English Mortmain Act 1736.472 That Act had the effect of hampering devises of land for

charitable purposes473 by declaring void dispositions by will to charities that were made

within the 12-month period prior to the death of the devisor.474 In this context, litigation

over whether or not a purpose was charitable was to ascertain if the Mortmain Act declared

the gift of no effect and, as a consequence, the gift passed to the next of kin or otherwise in

accordance with the will. So, perversely perhaps, the effect of the Mortmain Act was that it

‘preserved from serious questioning the inherited, generous conception of legal charity.’475

From the generous, secular spirit of sixteenth century to the eighteenth century’s Mortmain

legislation, the scope of charitable purpose, as defined by the Preamble, expanded but for

antithetical reasons.476

470 Gareth Jones, History of the Law of Charity 1532-1827 (1969) 105.

471 Gareth Jones, History of the Law of Charity 1532-1827 (1969) 107.

472 Geo II c 36.

473 J D Heydon and M J Leeming, Jacobs' Law of Trusts in Australia (7th ed, 2006), 139.

474 Geo II c 36. Peter Luxton, The Law of Charities (2001) 7; Gareth Jones, History of the Law of Charity 1532-1827 (1969).

475 Gareth Jones, History of the Law of Charity 1532-1827 (1969) 107.

476 Peter Luxton, The Law of Charities (2001) 6-9.

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From these beginnings, traceable to the Preamble, the law of charities as a body of law has

been, and must be viewed, as a part of society’s response to its members’ needs for

charitable good.477 Civil society organisations, like the church, may press to expand both

their scope of operation and their entitlement to favour. Business and government might

encourage this against family interests, which may push back with legislative curtailment as

occurred with the Mortmain Act.478 In such a context, civil society organisations must be

seen not as passive intermediaries, but as ‘players’ in their own right contesting for both

space and favour. Charities are, then, part of a social space and charity’s boundary with

other aspects of society sectors, and its entitlement to favours, may expand or contract.

Common law countries in the twenty-first century often do not have either Mortmain

legislation or its equivalent. The same contests over boundaries are, though, evident. They

find expression in a variety of ways of which the following are examples:

1. The disquiet over tax benefits to ‘businesses’ run by religious organisations not

being available to commercial operators479 and, more generally, over the

government’s utilisation of the voluntary sector to deliver welfare services;

2. The exclusion of all political activity from the benefits available to charities at

common law and the extent to which political parties ought to be favoured and

accountable;480

3. The emergence of the welfare state481 and the acceptance by government of

primary responsibility for care of the poor, education and health care provision;

that is three of the four ‘heads of charity’;482

477 Gareth Jones, History of the Law of Charity 1532-1827 (1969) 105.

478 Geo II c 36.

479 Adele Ferguson, 'Not-for-Profit Organisations are a Big Part of the Economy, Yet they are Virtually Unaccountable' (2005)

(March 24-30) Business Review Weekly 45, 45-46.

480 Gary Johns, 'Political Parties: From Private to Public' (1999) 37 Commonwealth and Comparative Politics 89; Gary Johns,

'Desirability of Regulating Political Parties' (2001) 8 Agenda 291.

481 Peter Luxton, The Law of Charities (2001) 10-11; J W Nevile (1998) provides the following definition of a welfare state:

A welfare state can be defined as one in which the economy is basically a capitalist economy, but the government intervenes

extensively in order to ensure that the economic welfare of all citizens is at least at a minimum standard, and, if possible, to

increase the economic welfare of all.

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4. Family provision claims where gifts to charities are, or are not, as the case may

be, set aside in favour of family members.483

In summary, then, the problems arose because there were social challenges that needed

addressing and the law evolved in the way it did in response to those needs. 484 To step out of

the corner into which the law has painted itself, it is necessary to rediscover the essence of

the doctrine of charitable purpose and clarify what distinguishes charitable organisations

from other organisations. These are issues of boundary definition. As the Charities

Definition Inquiry reported: ‘It is clear from submissions to the Inquiry that much of the

confusion in the sector is related to …what the boundaries are between different types of

entities.’485 By remaining with the simple alternatives of only charitable or not charitable,

the possibility of a more sophisticated analysis is excluded. This points to wider

taxonomical problems.

E. Wider Taxonomy Problems: Distinguishing Charitable Purpose from Related Purposes

Going beyond charities required rebuilding the links between charitable purposes and other

civil society purposes. The fourth head of Pemsel’s case, ‘other purposes beneficial to the

community’, in many ways sets the outer limits of charitable purpose. What, though, lies

beyond those limits? Discussing the ‘current reforms’ in the United Kingdom, Garton

concluded that

a modernised charitable sector is primed to dominate two social functions – the provision of

public goods and intangible private services – but that there are still significant areas that fall

In the Australian version the cornerstone of the welfare state was that in every family income unit at least one person had the right

to full time employment at a wage which was at least big enough to enable the breadwinner and his family to live in frugal

comfort. J W Nevile, 'Human Rights Issues in the Welfare State' (1998) 4(2) Australian Journal of Human Rights 95, 96.

482 Inquiry into the Definition of Charities and Related Organisations Report of the Inquiry into the Definition of Charities and

Related Organisations (2001) 55.

483 Eg. Succession Act 1981 (Qld) Part V and Auckland City Mission v Brown [2002] 2 NZLR 650.

484 J M Kelly, A Short History of Western Legal Theory (1992) xv.

485 Inquiry into the Definition of Charities and Related Organisations Report of the Inquiry into the Definition of Charities and

Related Organisations (2001) 34.

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outside of the charitable sector, and hence, in some cases, outside the ambit of regulation, despite

the fact that they are functionally similar to those activities which fall within the charitable sector.

These are: (i) the advancement of non-traditional religion; (ii) the facilitation of political self-

determination and the political pursuit of charitable purposes; (iii) the facilitation of professional

association; (iv) social enterprise and the pursuit of otherwise charitable purposes for private

benefit; (v) the advancement of non-welfare based recreation; (vi) the provision of social housing

by means of purposes which had not been considered charitable by virtue of lack of public benefit;

and (viii) the facilitation of mutual support.486

This is an unsatisfactory situation from a regulatory perspective and it points to a clue to

solving the puzzle. It is immediately apparent that charities form part of a vast sector of

organisations:487 a sector that touches the lives of almost every citizen488 and is a ‘significant

contributor to the economy and society’.489 Expanding the class, and then subsectionalising

within that class more effectively, is a more useful conceptual development. In the twenty-

first century, charitable purpose could be the rallying point around which so much legal

analysis is organised if the relationship between charitable purpose and these ostensibly

similar and yet different ‘other’ purposes could be revealed.

Mapping this class becomes even more important as the common law doctrine of charitable

purpose is extended by legislation into more and more diverse areas of law. The fiscal

favours attaching to charitable purposes are well known. What is less widely appreciated is

that statutes have extended the concept of charitable purpose into such diverse areas as

company law, with charitable purpose being a criterion for omitting ‘Limited’ from the name

486 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 194.

487 See Inquiry into the Definition of Charities and Related Organisations Report of the Inquiry into the Definition of Charities and

Related Organisations (2001).

488 Mark Lyons, Third Sector - The Contribution of Nonprofit and Cooperative Enterprises in Australia (2001) xi suggests that at

least 65% of Australians belong to at least one third sector organisation.

489 Inquiry into the Definition of Charities and Related Organisations Report of the Inquiry into the Definition of Charities and

Related Organisations (2001) 31; see also Lester Salamon and Wojciech Sokolowski, 'Volunteering in Cross-National

Perspective: Evidence From 24 Countries' (Working Paper No 40, The Johns Hopkins Center for Civil Society Studies, 2001).

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of a company,490 to volunteer protection,491 and into copyright law.492 The challenge for

jurists, which this thesis explores, is to identify the underlying commonality that gives

meaning to the class so that the common law can continue to develop.

F. Problems with Measuring Charitable Purpose and some Alternative Approaches

It will be recalled that the reason why the common law has remained constrained within the

spirit and intendment of the Preamble when defining charities and consequently the scope of

operation of the law, is because the courts have been reluctant to expose the law to the

vagaries of subjective concepts. This presents a problem, identified by Garton, of how to

define civil society organisations. This is because it is ‘difficult to draw a bright line around

the [civil society organisations] falling within the scope of the regime.’493 Garton proposed

three possible ways of defining the scope. They were ‘(i) controlling entry to the sector; (ii)

drawing up a complete list of regulated organisations; and (iii) defining the sector by

reference to conceptually clear criteria.’494 Concluding that the first two proposals were

unsatisfactory in some regard or another, he preferred ‘conceptually clear criteria’.495 The

problem with conceptually clear criteria is that the structural and functional definitions that

he proposed (drawing upon the work of Salamon and Anheier, mentioned in the next

chapter, which preceded the civil society diamond introduced in Chapter VI) were ‘not able

to reflect the sector, as defined ...with complete accuracy.’496 The problem with this

approach is that it is likely to be over inclusive or under inclusive. Garton’s solution was

pragmatic. He suggested that these problems ‘could be mitigated in practice if we provide

490 Corporations Act 2001 (Cth) s 150.

491 Civil Liabilities Act 2003 (Qld) Ch 2 pt 3 div 2.

492 Copyright Act 1968 (Cth) s 106(b).

493 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 217.

494 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 217.

495 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 217.

496 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 217-218.

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for the periodic review and, where necessary, revision of the boundaries of our regulatory

regime.’ 497

Thus he proposed ‘the development, through trial and error, of a robust working boundary

that brings the inevitable problems of over – or under – inclusion to an acceptable level,

whilst in the long-term topographical changes to the boundaries could also be taken into

account.’ 498

This pragmatic suggestion has merit, but in my view, it is possible to theorise further. If, as I

will suggest in the next three chapters, the factors that inform conceptions of charitable

purpose can be quantified, then jurisprudence can move beyond this ‘periodic review’ and

‘revision’ process, and also the simple nominal form of measurement of charitable purpose,

or not. Legal doctrines like the doctrine of charitable purpose, are ‘usually not based on a

single policy but represent compromises among a set of opposing policies’.499 Some of those

policies will prevail at one time and others at another time.500 If the policy contest is to find

expression in legal theory, it is necessary to establish subjects over which those disputes are

held and, if possible, the variables that are weighed in making decisions for or against. Put

simply, there may be dynamic boundaries which accommodate movement along a

continuum of contested a priori policy assumptions. If the policy contests that underpin the

doctrine of charitable purpose can be elucidated and set out on a continuum, then it may be

possible to rank and even measure the variables that inform these policy choices. That

possibility is fulfilled in Chapter IX.

It will also be recalled from the last chapter, that not only must the purposes of an

organisation be charitable, they must be only charitable for an organisation to belong to the

497 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 219.

498 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 219.

499 Kenneth Vandevelde, Thinking Like a Lawyer (1996) 3.

500 Kenneth Vandevelde, Thinking Like a Lawyer (1996) 3.

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legal category of charities. Thus one purpose not being charitable, even if among others,

could destroy the charitable nature of an organisation even where the intention to be

charitable seems clear.501 To highlight this limitation it is necessary to introduce

measurement theory at a rudimentary level.

Measurement is not a simple concept.502 Its application to concepts like charitable purpose

(and three other concepts I will introduce over the next three chapters – altruism, public

benefit and coercion) is problematic.503 One group debated the concept of measurement for

six years504 and at the conclusion of that debate it was said that ‘the 19 members of the

committee came out by the routes they entered.’505 Following this debate, S S Stevens of

Harvard University published a paper clarifying measurement into four classes.506 These

four categories, now labelled Representational Theory, stand alongside and differ from

Operational Theory and Classical Theory approaches to measurement.507 The language of

Stevens’s Representational Theory is deeply embedded in the discourses of Occidental

thought and the categories are adequate for the purposes of discussion in this thesis so they

are adopted even though they are not without difficulties.508 The four classes or scales of

measurement Stevens postulated were: nominal, ordinal, interval and ratio.

501 Morice v The Bishop of Durham [1805] 9 Ves 399 but compare Congregational Union of NSW v Thistlethwaite (1952) 87 CLR

375.

502 Warren Sarle, Measurement Theory: Frequently Asked Questions (1997) SAS Institute Inc.

<ftp://ftp.sas.com/pub/neural/measurement.html> at 31 January 2007; Paul Velleman and Leland Wilkinson, Nominal, Ordinal,

Interval, and Ratio Typologies are Misleading (1993) The American Statistician

<http://www.spss.com/research/wilkinson/Publications/Stevens.pdf> at 31 January 2007; Joel Michell, 'Measurement Scales and

Statistics: A Clash of Paradigms' (1986) 100 Psychological Bulletin 398.

503 Stanley Smith Stevens, 'On the Theory of Scales of Measurement' (1946) 103 Science 677; Joel Michell, 'Measurement Scales and

Statistics: A Clash of Paradigms' (1986) 100 Psychological Bulletin 398; Paul Velleman and Leland Wilkinson, Nominal,

Ordinal, Interval, and Ratio Typologies are Misleading (1993) The American Statistician

<http://www.spss.com/research/wilkinson/Publications/Stevens.pdf> at 31 January 2007.

504 Stanley Smith Stevens, 'On the Theory of Scales of Measurement' (1946) 103 Science 677, 677.

505 Stanley Smith Stevens, 'On the Theory of Scales of Measurement' (1946) 103 Science 677, 677.

506 Stanley Smith Stevens, 'On the Theory of Scales of Measurement' (1946) 103 Science 677, 678.

507 Joel Michell, 'Measurement Scales and Statistics: A Clash of Paradigms' (1986) 100 Psychological Bulletin 398, 398.

508 Hiroshi Watanabe, 'Coarse-Grained Information in Formal Theory of Measurement' (2005) 38 Measurement 295; Paul Velleman

and Leland Wilkinson, Nominal, Ordinal, Interval, and Ratio Typologies are Misleading (1993) The American Statistician

<http://www.spss.com/research/wilkinson/Publications/Stevens.pdf> at 31 January 2007; Joel Michell, 'Measurement Scales and

Statistics: A Clash of Paradigms' (1986) 100 Psychological Bulletin 398.

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The Nominal Scale is a labelling device.509 In the context of this discussion it is the

question: charitable purpose or not a charitable purpose, upon which Lord Macnaghten cast

an opinion in Pemsel’s case.510 It is generally considered uninformative.511 It remains,

though, the only method used by jurists when discussing the doctrine of charitable purpose.

The Ordinal Scale of measurement is a method of measurement where ranking or ordering

takes place. ‘This scale has the structure of what may be called the isotonic or order-

preserving-group.’512 It is most suited where rank ordering can be discerned but not precise

values. If, as I will suggest later, some purposes are more charitable than others, it would be

possible to rank these. This is not to say that there will not be debate over rankings on the

ordinal scale. The importance for this thesis, in introducing ordinal measurement, is that if

charitable purposes can be ranked then it is possible to move beyond simply labelling

purposes as charitable or not. The step to an ordinal approach is not a large one. It is

evident in other disciplines when discussing public benefit and altruism.513

The Interval Scale is the third form of measurement. It is the first clearly quantitative

approach; there is not a true zero point but rather, where zero is is a matter of convention.514

There are objectively verifiable quantitative differences between values such as one interval

being double another. Stevens notes that ‘[m]ost psychological measurement aspires to

create interval scales, and it sometimes succeeds.’515

509 Stanley Smith Stevens, 'On the Theory of Scales of Measurement' (1946) 103 Science 677, 678.

510 Pemsel’s case [1891] AC 531, 587 (Lord Macnaghten).

511 Hiroshi Watanabe, 'Coarse-Grained Information in Formal Theory of Measurement' (2005) 38 Measurement 295, 301.

512 Stanley Smith Stevens, 'On the Theory of Scales of Measurement' (1946) 103 Science 677, 679.

513 C S Lewis segmented charity into four classes and Atkinson segmented civil society organisations into ten categories. There are

two examples. See C S Lewis, The Four Loves (1960) and Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston

College Law Review 501, 519-65.

514 Stanley Smith Stevens, 'On the Theory of Scales of Measurement' (1946) 103 Science 677, 679.

515 Stanley Smith Stevens, 'On the Theory of Scales of Measurement' (1946) 103 Science 677, 679.

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The Ratio Scale is the fourth form of measurement. It can be applied when ‘all four

relations: equality, rank order, equality of intervals, and equality of ratios’ are present.516

The amount of money received by a charitable organisation by way of donations is an

example of application of the ratio scale to a measure of charitable giving. Calculating the

amount of money received by way of donations, as a percentage of the total income for an

organisation, is an example of the application of the ratio scale where the measurement is

reduced to a scale of between zero and 100 hundred inclusive.517

Disciplines other than law apply much more sophisticated methods of measurement to

concepts such as charitable purpose and civil society theory has developed models for

addressing these difficulties. Garton has identified the problem and proposed three possible

solutions.

This suggests that legal theory could be enhanced by taking cognisance of these

developments in other disciplines. This does not seem possible as the doctrine of charitable

purpose is presently understood, but if a more dynamic concept of charitable purpose

emerged, it might be possible for these alternative methods of measurement to inform

jurisprudence. At this stage, though, it is enough for me to point out that the doctrine of

charitable purpose cannot, at present, progress beyond nominal measurement, and that is a

fundamental methodological problem inhibiting legal theory development. In so doing, I

point to a way that the doctrine of charitable purpose might develop beyond charities to a

jurisprudence for civil society.

G. Going beyond Charities: the Foundation of the Problems in Philosophic Contests

Resolving the challenges embedded in defining charities, deciding whether regulation should

be based on form or purpose and deciding the way that charitable purpose should be

516 Stanley Smith Stevens, 'On the Theory of Scales of Measurement' (1946) 103 Science 677, 679.

517 John Colombo and Mark Hall, The Charitable Tax Exemption (1995) 217.

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measured, cannot be determined without reference to broader, non-legal a priori

assumptions. That is because the definition of charitable purpose is ultimately to decide the

scope of regulation and access to favourable treatment. Those questions are socio-political,

not legal. There is not a better illustration of this than the background to Pemsel’s case

itself.

The background to Pemsel’s case begins in England in 1863 with Gladstone, who was then

Chancellor of the Exchequer, advancing the argument that if government funds charities it

has a right to control charities. He expressed this view in the following way:

… if we have the right to give public money, we have no right to give it in the dark. We are

bound to give it with discrimination; bound to give it with supervision; bound as a constitutional

Parliament, if the Hospitals are to receive a grant, to bring them within our control.518

The Bill that he put before the British Parliament to give effect to this position significantly

curtailed the scope of the exemption from income tax for charities, reducing it to ‘the

buildings occupied by hospitals, colleges and almshouses.’ Evidently, Gladstone was aware

of ‘a number of charities that were very wealthy, enjoyed taxation exemption and yet catered

only for the very wealthy.’519 The contrary argument was put by Disraeli. His contention

was that the exemption of charities ‘is not a privilege – it is a right’; Disraeli’s position

succeeded. The Bill was withdrawn. Gladstone lost the next election. That was not,

however, the end of Gladstone’s attempts to limit the scope of exemption for charities. It

was under Gladstone’s subsequent leadership of the Inland Revenue Office that the

reassessment of the Moravian’s trust, of which Pemsel was the Treasurer, was issued. It was

the final appeal from that decision that we now know as Pemsel’s case. Discussion of the

518 Myles McGregor-Lowndes, 'Public/Private Accountability and the Tax Exempt Status of a Charitable Organisation' (Seminar

Paper, Social Policy Research Centre, University of New South Wales, 2003) citing W E Gladstone in 3 Hansard 170, 200

reported in The Financial Statements of 1853 (1860-63) 458.

519 Myles McGregor-Lowndes, 'Public/Private Accountability and the Tax Exempt Status of a Charitable Organisation' (Seminar

Paper, Social Policy Research Centre, University of New South Wales, 2003).

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decision must wait until Chapter VII, but it is important in peeling back the layers to

underlying assumptions, to recognise that the decision in Pemsel’s case arose out of a

concern that charities were being unjustly favoured. Litigation does not arise unless at least

one of the parties is dissatisfied with the state of things.

Socio-political questions, such as whether or not charities or other civil society organisations

are unjustly favoured, do not change their nature by moving from the parliament to the

courts. The questions that underpin those debates are ultimately decided according to

philosophic a priori assumptions. Gladstone had a view that government should control the

sector more and limit entitlement to favours. Disraeli had a different view. Judges are

mindful of the policy outcome of decisions. Nowhere is this more significant than in

Pemsel’s case itself where Lord Bramwell, who was in the minority, expressed his concern

at what he saw as taxpayer funded evangelism.520 The majority did not share this view.

Lord Macnaghten reached his conclusion by the application of principle and precedent but

concluded his opinion ‘glad to find that the claim of the crown is based on what seems…to

be a very superficial view…[and consequently]…that the appeal should be dismissed with

costs.’521 The issues have not changed with the passing of centuries. In 2008 Justice Kirby

held that as the functions performed by religious organisations can be offensive to ‘the

beliefs, values and consciences of other taxpayers’ the favours extended to these

organisations must be limited.522 In similar vein Justice Rothstein held that such issues are

‘best left to Parliament’. 523

My point is that these socio-political questions cannot be separated in the context of a

discussion of the law of charities from the broader question of the role of these organisations

in common law countries. In Pemsel’s case, the question focused on a trust for religious

520 Pemsel’s case [1891] AC 531, 568 (Lord Bramwell).

521 Pemsel’s case [1891] AC 531, 592 (Lord Macnaghten).

522 Central Bayside General Practice Association Limited v Commissioner of State Revenue (2006) 229 ALR 1, 47 (Kirby J).

523 AYSA Amateur Youth Soccer Association v Canada (Revenue Agency) 2007 SCC 42 [44] (Per Rothstein J).

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purposes. The issue remains though fundamentally the same today but it is sometimes

framed in terms of social capital. If, as Steinberg has pointed out, ‘[r]eligious and other

nonprofits complement ... relational contributors to social capital by nurturing moral codes

and behaviours’,524 does that justify favour? If a society wishes to encourage the

development of social capital, should religious and other civil society organisations be

favoured? That is ultimately a debate, not only about freedom, but also about the funding of

religion in common law countries. The freedom and funding of religion are socio-political

questions, as commentators on the law of charities have observed.525 Garton is illustrative.

He pointed out:

English charity law can be viewed as utilitarian in nature. The list of purposes in the Preamble,

which demonstrates the kind of charity the State wish to encourage, reflects legal charity’s origin

in the activities of the protestant Church of England, which played a “fundamental” role in

maintaining the structure and social fabric of British society in the 17th century.

526

At a broader philosophic level, Michel Foucault observed that the really ‘demonic’ nature of

the ‘modern state’ is derived from the combination of the ancient Greek ‘city-citizen game

and the shepherd-flock game’; that is, the political and the religious agendas.527 The doctrine

of charitable purpose purports to proceed by analogy (only) from the ‘spirit and intendment’

of the Preamble. The socio-political factors do not find explicit voice. If, as Foucault

suggests, religion and the state are in fact integrated in Occidental society, then it is

disingenuous to continue the charade that it is ‘spirit and intendment’, not other socio-

524 Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The

Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117, 123.

525 Blake Bromley, '1601 Preamble: The State's Agenda for Charity' (2002) 8 Third Sector Review: Charity Law in the Pacific Rim

67, 84; Neville Estates Ltd v Madden [1962] 1 Ch 832, 853; Ontario Law Reform Commission, Report on the Law of Charities

(1996) 16. Inquiry into the Definition of Charities and Related Organisations Report of the Inquiry into the Definition of Charities

and Related Organisations (2001) 214.

526 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 86b citing

Gareth Jones, History of the Law of Charity 1532-1827 (1969) 27.

527 For a detailed discussion of the way Foucault deals with these issues across a number of his lectures see Nancy Holland, 'Truth as

Force: Michel Foucault on Religion, State Power, and the Law' (2002-2003) 18 Journal of Law and Religion 79.

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political factors, that shape the doctrine of charitable purpose. The mere fact that Pemsel’s

case was brought and defended, and that there were majority and minority opinions,

evidence that there are worldviews in contest, and victory for one is usually a loss for

another. Pemsel’s case is ultimately proof that Gladstone lost and Disraeli won not only in

parliament but before the courts. There is, I contend, a need to be explicit about this. It is an

early step to progressing towards development of the doctrine of charitable purpose to

include all civil society organisations, although this may seem counter-intuitive. It may

seem counter intuitive because acknowledging that the current formulation of the doctine of

charitable purpose is fundamentally the result of contests between worldviews, seems to only

complicate an already complicated area of law. So a jurist’s journey into these deeper

contests is likely to be a little like the trip Merry and Pippin made into Fangorn Forest.528

Having entered it may seem there is not a way out. That is not necessarily so, though, for

my object is not to resolve these disputes but to set them out in a jurisprudential framework

where they can compete, and common ground can be found. It is not that the diverse

worldviews agree on what the outcome should be. They can however agree on what is in

dispute. At this level is common ground. Again, to quote Foucault, who asks generally –

and this thesis asks with particularity in relation to doctrine of charitable purpose ‘what

historical a priori provided the starting-point from which it was possible to define the great

checkerboard of distinct identities established against the confused, undefined, faceless, and,

as it were, indifferent background of differences?’529

In the context of the doctrine of charitable purpose there are three contested a priori

assumptions:

1. The first contested a priori assumption is over the division between the

individual in family and kin on the one hand and the wider community on the

other. It is the fundamental question underpinning the determination of when

528 J R R Tolkien, The Lord of The Rings, The Two Towers (1965) 74-109.

529 Michel Foucault, The Order of Things (1994) xxiv.

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benefit is public and when it is private which is so central to the doctrine of

charitable purpose at common law. It is central in the quest to define civil

society organisations, in particular those with charitable purposes, as distinct

from other organisations which exist for private benefit. At its base, so far as is

relevant to this thesis, is the question of when community begins to exist distinct

from individuals in family groupings. These issues of public and private benefit,

and the way in which the ideas have been theorised with reference to the

development of this jurisprudence, are explored in Chapter IV titled Benefit. The

answers to these questions are shaped by, and shape the answers to, the

contested a priori assumptions mentioned below.

2. The second contested a priori assumption is the nature of humans. The doctrine

of charitable purpose springs from ‘the piety of earlier times’.530 The existence

of this piety is taken as given. That assumption is not without controversy. At

its simplest, this controversy is a dispute over the existence and nature of

altruism.531 If there is no altruism, just rational self-interested actors operating in

nonprofit markets, then charities in particular, and civil society organisations in

general, will be regulated and favoured on different bases than if altruism is the

continental divide which segments the sector from all others – in particular

business.532 At its base, so far as is relevant to this thesis, is a fundamental

tension between anthropologies which affirm that all human action is capable of

explanation according to some framework which is founded in pursuit of self-

interest (alone) on the one hand, and on the other, anthropologies affirming a

capacity for self abnegation, charity and altruism in humanity. Whilst the

foundations of the anthropologies are complex, diverse and incapable of

reconciliation, in their practical application they are reducible to the extent to

530 Pemsel’s case [1891] AC 531, 580 (Lord Macnaghten).

531 See Chapter V.

532 See Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501.

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which the activity in question is motivated by, or has the effect of, helping

others. The issues in relation to those contests over the value and extent of

altruism, so far as they are relevant to the development of this jurisprudence, are

explored in Chapter V.

3. The third contested a priori assumption relates to the nature of human society.

At its simplest, this is a dispute over the extent and nature of freedom in society

and expressed, alternatively, as the nature and role of government and the

limitations on government by those governed. This issue underpins the division

of civil society organisations, particularly those with charitable purposes, from

government organisations and the broader question of what are the proper limits

of government regulation of civil society organisations such as religious

organisations. At the base of this contest, so far as is relevant to this thesis, is

the fundamental tension (built from outcomes of the contest over the nature of

humans) between voluntary submissions to one another for the sake of

community on the one hand, and on the other the compulsory submission to one

another under pain of force. The issues of relevance to the development of this

jurisprudence in relation to the distinction between government and civil society

organisations are explored in Chapter VI. The discussion of these issues

provides a platform for the discussion of Associations law in Chapter VII.

H. Conclusion

Across this and the two preceeding chapters, the need to go beyond charities has been

explored. In Chapter I, the state of the literature was sketched in outline and the gaps,

puzzles and problems were elucidated. In Chapter II, some of the challenges facing common

law countries, that are driving the need for reform of the common law, were considered from

the social and also the legal perspective. In this chapter, the foundations of these problems

were identified with a view to establishing how to go beyond charities to a jurisprudence for

civil society. The next three chapters build on this foundation work.

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Rudyard Kipling pointed out, ‘they know not England who only England know.’533

Similarly, jurists who try to resolve the challenges in the doctrine of charitable purpose

solely with reference to the doctrine of charitable purpose cannot expect to find the answer,

for the answers must lie outside of the law. Research into and theorising about altruism,

public benefit and voluntary associations have, in non-legal disciplines, advanced

considerably over the last 30 years. Drawing upon that research, it will be argued over the

next three chapters, first that the concept of public benefit is capable of being more

completely understood, second that a concept of altruism suitable for jurisprudential

application can be drawn from that research and theorising and finally, that the theory of

association can be mapped separate from government. The fundamental issues in contest are

not resolved. All that is attempted is to set out the issues in each case in relationships that

enable jurists to work with the concepts to develop the law as they might see fit.

I. Postscript

Just as the Woodman and the Farmer in A Tale of Two Cities ‘work unceasingly, work

silently and no one heard them as they went about with muffled tread’534 bringing into

position the apparatus to be used in the revolution, so I suggest the resources needed for

development of the common law have likewise been steadily moved into position for

development of a framework suited for jurisprudential development. So, across the next

three chapters, the resources will be marshalled under the headings of benefit, altruism and

coercion respectively.

533 Rudyard Kipling, Barrack-Room Ballads and Other Verses (45th ed, 1891). For the application of this idea to civil society

analysis see the introductory comments of Helmut Anheier in Helmut Anheier, Civil Society Measurement, Evaluation, Policy

(2004) ix.

534 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 6.

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PART TWO – CIVIL SOCIETY

Civil society is the subject of this Part. It will be recalled from Chapter I that ‘Civil society is

the sphere of institutions, organisations and individuals located between family, the state and

the market in which people associate voluntarily to advance common interests.’535 Civil

society is differentiated from the family, the state and the market by means of the three

contested a priori assumptions elucidated through Chapters II and III - public benefit,

altruism and coercion. Chapter IV is devoted to exploring, conceptually, the distinction

between public and private benefit. Altruism is explored in Chapter V with a view to

development of a concept capable of application in legal theory. Insights from various

disciplines inform theory development but economic insights dominate. At the end of

Chapter V both the altruism (that is integral to supply of civil society organisations and the

provision of charitable goods), and the public benefit (that characterises demand for those

organisations and goods) are integrated into one framework. The nature of freedom in

society is discussed in Chapter VI. This discussion is critical, first to distinguish civil society

organisations from government, and second to inform the broader question of what are the

proper limits of government regulation of civil society organisations. Chapter VI closes with

a model for theory development that is applied in Part Three to bring civil society theory to

jurisprudence and jurisprudence to civil society theory.

535 Helmut Anheier, Civil Society Measurement, Evaluation, Policy (2004) 22.

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IV BENEFIT

A. Preamble

Mr Lorry was a banker and steward who protested that all that concerned him was the

technical discharging of his duty but who, at every point, went beyond that which was

technically required and yet always remained within the strictures of his brief. He was

Dickens’s main link between the two cities.536 He is a wonderful Dickensian typology of the

neo-classical economist who, from within the strictures of that discipline’s rational, self-

interested, opportunity-maximiser, seeks to facilitate understanding of the journey between

self-interest and common good. It is principally to the assistance of that discipline –

economics – that this chapter now turns.

B. Introduction

1. Overview

By the close of the last chapter the problems with development of the doctrine of charitable

purpose had been peeled back to three contested a priori assumptions. The first contested a

priori assumption identified was over the division between the individual in family and kin

on the one hand, and the wider community on the other. This distinction is central to the

quest to define civil society organisations, in particular those with charitable purposes, as

distinct from other organisations that exist for private benefit.537 If the purposes of an

organisation are for public benefit, those purposes satisfy one of the two criteria of charitable

purpose at common law. This chapter explores the distinction betweeen public and private

benefit. I argue that if a large number of people, who would otherwise be strangers,

voluntarily associate in a civil society context the association is public. If a small number of

536 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 21, 23, 36-40, 244, 356.

537 Peter Luxton, The Law of Charities (2001) 112; Gino Dal Pont, Charity Law in Australia and New Zealand (2000) 111-112, 123,

127, 132-146, 147-169, 172-197; Denis Ong, Trusts Law in Australia (3rd ed, 2007) 330; David Hayton, Paul Matthews and

Charles Mitchell, Law Relating to Trusts and Trustees (7th ed, 2007) 977; Philip H Pettit, Equity and the Law of Trusts (10th ed,

2006) 251; Gino Dal Pont, Equity and Trusts in Australia and New Zealand (2nd ed, 2004); H Picarda, The Law and Practice

Relating to Charities (3rd ed, 1999) 20.

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people associate for private purposes (such as a family gathering to celebrate Christmas) the

association is private. Charities, and more broadly civil society organisations, are, I theorise

public organisations. Put differently, I suggest that both the remoteness of the people

involved and the number of people involved inform whether or not an organisation is

pursuing public purposes.

It will also be recalled from Chapter II, that measuring the amount of public benefit,

necessary to satisfy charitable purpose at common law, was difficult. Different measures

applied to different heads of charitable purpose.538 If the purpose is the relief of poverty,

under the first head, then the ostensibly private purpose of benefiting one’s relatives can still

be a charitable purpose. If the purpose is to qualify under the fourth, general head of

charitable purpose, public benefit must be considerably more evident. In this chapter, I also

argue that the way public benefit has been theorised in economics as on a continuum,

provides a guide to how public benefit might also be theorised in the context of the doctrine

of charitable purpose.539 The ultimate goal, of which this chapter is a first step, is a way of

measuring or at least ranking benefit so that a clearer distinction can be drawn between

public and private benefit for theory development. That is the first step to a more

sophisticated concept of charitable purpose.

In this chapter, the major demand side economic theories of relevance to the development of

this jurisprudence are introduced. The theories are considered in historic and social context

before three substantive sections explore the way that economists have analysed charities and

more broadly civil soicety organisations.540 A central challenge for jurisprudence is to define

538 Peter Smith, 'Religious Charities and the Charities Act 2006' (2007) 9(3) The Charity Law & Practice Review 57, 70.

539 Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The

Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117, 117.

540 Basic texts define the scope of economics differently and there is no universal agreement as Miller and Shade note. See R J Miller

and E D Shade, Foundations of Economics (2nd ed, 1988) 2. For the purposes of this thesis the following will suffice; ‘Economics

is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.’ J

Jackson et al, Economics (5th ed, 1998) 2-5. Steinberg simplifes this to ‘Economics is the study of choices under scarcity’.

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the organisations. Differentiating these organisations from their ‘other’ is integral to

resolving the defintion problem. Accordingly, theories predominantly concerned with the

distinction between civil society organisations and government begin the substantive

discussion. This is followed by a discussion of theories predominantly concerned with the

distinction between civil society organisation and business A final, more general, discussion

regarding the disctinction between civil society organisations and family concludes the

chapter. In this third section, the discussion is predominantly concerned with the essential

nature of civil society organisations and the challenges of distinguishing them from private

gatherings of which the nuclear family is the exemplar. The supply side of the economic

equation is not considered until Chapter V.

2. Introduction to Economic Theories in their Historic and Social Context

Charities have existed and have enjoyed favourable treatment since time immemorial.

Luxton pointed to Julius Caesar’s gift of the gardens beyond the river to the people of Rome

as evidence of charitable giving existing in ancient Rome.541 Elaine Abery has observed that

the favouring of charities is at least as old as Ezra’s return of the exiled Jews.542 Colombo

and Hall pointed to evidence of tax favour for charities in ancient Greece, ancient Rome and

in ancient Egypt.543 They began their work with the words: ‘Exempting charities from

various forms of taxation is a practice that appears as old as western civilization itself’.544

The exemption has applied in the United Kingdom since William Pitt introduced income

taxation.545 The challenge arising with this is that when legislatures such as the United

States Congress, pass into law this favoured status, they are ‘generally silent about the

Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The

Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117, 117.

541 Peter Luxton, The Law of Charities (2001) 4.

542 Elaine Abery, 'Charities: A Target for Ralph' (2000) 29 Australian Tax Review 224, 224 referencing The Holy Bible New

International Version (1984) Ezra 7:24 .

543 John Colombo and Mark Hall, The Charitable Tax Exemption (1995) 1, 14.

544 John Colombo and Mark Hall, The Charitable Tax Exemption (1995) 3.

545 J Warburton, D Morris and N F Riddle, Tudor on Charities (2003) 305.

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dispositive reasons.’546 The beginning challenge for the formation of a common law

jurisprudence, then, is that charities exist and are favoured but we do not know why. There

are various contested views.547 At a more foundational level underpinning charities, is a

body of law which enables these gifts to take place.548 Why do charities and other civil

society organisations exist and why are they granted favours?

Since the late 1970s, a rich and diverse debate has raged within economics in an endeavour

to explain what, why and how public goods are provided by civil society organisations.549

As public goods are goods supplied to the public at large, as distinct from private buyers, the

concept of markets, and the rules of supply and demand applying to them, are deeply

problematised.550 Legislative agendas, not common law development, precipitated this

development. The ‘emergence of non-profit studies was bound to the expansion of the non-

profit sector in the United States and attempts to regulate it.’551 Integral to this inquiry in

that country were two factors: first, changes to the funding of health care by government,

making it more attractive to businesses; and second, changes to the taxation regime that were

not necessarily advantageous to charities.552 Peter Dobkin-Hall has observed:

Although a few scholars studied philanthropy, voluntarism, and non-profit organisations simply

because they found them interesting, most members of the research community were attracted to

546 Penina Kessler Lieber, 'United States Tax Treatment of Nonprofit Organisations' in Paul Bater, Frits Hondius and Penina Kessler

Lieber (eds), The Tax Treatment of NGOs: Legal, Ethical and Fiscal Frameworks for Promoting NGOs and their Activities (2004)

173, 180.

547 Penina Kessler Lieber, 'United States Tax Treatment of Nonprofit Organisations' in Paul Bater, Frits Hondius and Penina Kessler

Lieber (eds), The Tax Treatment of NGOs: Legal, Ethical and Fiscal Frameworks for Promoting NGOs and their Activities (2004)

173, 180-181.

548 Kerry O'Halloran, Charity Law and Social Inclusion: An International Study (2007) 1.

549 Charles T Coltfelter, The Economics of Giving (1997); Robert Scott Gassler, 'Nonprofit and Voluntary Sector Economics: A

Critical Survey' (1990) 19 Nonprofit and Voluntary Sector Quarterly 137.

550 Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The

Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117; Avner Ben-Ner and Theresa Van Hoomissen, 'Nonprofit

Organisations in the Mixed Economy' in Benedetto Gui (ed), Annals of Public and Cooperative Economics (1991) 519.

551 Martti Muukkonen, The Familiar Unknown - Introduction to Third Sector Theories (Licentiate Thesis, University of Joensuu,

2000) 96.

552 Martti Muukkonen, The Familiar Unknown - Introduction to Third Sector Theories (Licentiate Thesis, University of Joensuu,

2000) 96-97.

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the field by the incentives provided by non-profit leaders as they sought to defend the charitable

tax-exempt universe against legislative attack.553

These factors, which shaped the emergence of the study of the sector in the United States, are

significant in the debate in the United Kingdom,554 Australia,555 Canada,556 South Africa,557

the Caribbean558 and New Zealand559 today.560

In contrast with the economic agendas, which were driven by social agendas and the need for

appropriate regulatory responses, common law development throughout the same period

continued to be considered within the strictures of the Preamble ostensibly without reference

to these debates that shaped the legislative agenda.561 The Preamble upon which the doctrine

of charitable purpose is founded is, essentially, a list of public goods. The exemplars of

553 Peter Dobkin Hall, 'Theories and Institutions' (1995) 24 Nonprofit and Voluntary Sector Quarterly 5, 9.

554 Christine R. Barker, 'The Reform of Charity Law in Scotland' in Paul Bater, Frits Hondius and Penina Kessler Lieber (eds), The

Tax Treatment of NGOs: Legal, Ethical and Fiscal Frameworks for Promoting NGOs and their Activities (2004) 33; Great Britain

Parliamentary Panel on Charity Law, Charity Supervision in the 1990s: A Response to the White Paper (HMSO, 1990); Great

Britain National Audit Office, 'Monitoring and Control of Charities in England and Wales' (HMSO, 1987).

555 Prime Minister John Howard (Speech delivered at the Prime Minister's Awards for Excellence in Community Business

Partnerships, Melbourne Museum, 20 October 2005); Senator Andrew Murray and Mary O'Donovan, Parliament of Australia, One

Regulator One System One Law: The Case for Introducing a New Regulatory System for the Not for Profit Sector (2006).

556 David G Duff, 'Charitable Contributions and the Personal Income Tax: Evaluating the Canadian Credit' in Jim Phillips, Bruce

Chapman and David Stevens (eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 407; Wolfe

Goodman, 'Reflections on Tax-Assisted Giving in Canada' (2005) 53(3) Canadian Tax Journal 747.

557 Karen Nelson, 'Tax and the Non-profit Sector - The South African Experience' in Paul Bater, Frits Hondius and Penina Kessler

Lieber (eds), The Tax Treatment of NGOs: Legal, Ethical and Fiscal Frameworks for Promoting NGOs and Their Activities

(2004) 193.

558 Trevor A Carmichael Q.C., 'Charity Law Development in the Commonwealth Caribbean' in Paul Bater, Frits Hondius and Penina

Kessler Lieber (eds), The Tax Treatment of NGOs: Legal, Ethical and Fiscal Frameworks for Promoting NGOs and their

Activities (2004) 59.

559 Michael Gousmett, 'The Charitable Sector in New Zealand' (2002) The New Zealand Law Journal 278.

560 Professor Karla Simon and Professor Lee Irish, 'Tax Preferences for Non-governmental Organisations' in Paul Bater, Frits

Hondius and Penina Kessler Lieber (eds), The Tax Treatment of NGOs: Legal, Ethical and Fiscal Frameworks for Promoting

NGOs and their Activities (2004) 303; Rob Atkinson, 'Theories of the Federal Income Tax Exemption for Charities: Thesis,

Antithesis and Synthesis' in Paul Bater, Frits Hondius and Penina Kessler Lieber (eds), The Tax Treatment of NGOs: Legal,

Ethical and Fiscal Frameworks for Promoting NGOs and their Activities (2004) 253.

561 Guild v Inland Revenue Commissioners [1992] 2 AC 310; Central Bayside General Practice Association Limited v Commissioner

of State Revenue (2006) 229 ALR 1, 15-37 (Kirby J); and AYSA Amateur Youth Soccer Association v Canada (Revenue Agency)

2007 SCC 42 and Commissioner of Taxation v Word Investments Limited (2008) 236 CLR 204, 240 where Kirby J (dissenting)

held: ‘My own attempt to drag this body of law into the twenty-first century, in conformity with modernity and applicable general

principles, came to nothing’. See also Senator Andrew Murray and Mary O'Donovan, Parliament of Australia, One Regulator One

System One Law: The Case for Introducing a New Regulatory System for the Not for Profit Sector (2006).

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these public goods in the Preamble are the ‘Repaire of Bridges Portes Havens Causwaies …

Seabanks and Highewaies’.562 The Preamble also lists such things as the relief of poverty,

which, in economic terms, usually involves the supply of private goods, such as food, to

particular individuals.563 There is, then, in the cases on charitable purpose, a division.

Atkinson, in his usual colourful way, puts it thus: ‘[I]n summary, charities provide primary

public benefits in two ways: especially good goods to ordinary people, and ordinary goods to

the especially deserving.’564 With this brief background, this chapter is directed to

endeavouring to provide a framework for the divide between public and private to be

contested within the common law.

C. When the Government is the Other

1. Burton Weisbrod

Burton Weisbrod is credited with initiating the current stream of economic discourse

regarding the unique characteristics of charities, and other civil society organisations, and

their role in society.565 The publication in 1975 of various chapters by him, initially in

Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy566

and then

562 Preamble.

563 It might be asked where the advancement of religion fits. The repair of churches was listed in the Preamble but that has been

expanded to advancement of religion as the law is presently understood. I will argue that advancement of religion, broadly

understood and recast, will be theorised as fundamentally a public good.

564 Rob Atkinson, 'Nonprofit Symposium: Theories of the Federal Income Tax Exemption for Charities: Thesis, Antithesis, and

Syntheses' (1997) 27 Stetson Law Review 395, 402.

565 There were others who preceded Weisbrod, notably Ginzberg, Heinstad Arrow and Rebens, but because they did not offer a

theoretical framework their contributions are not considered foundation. Robert Scott Gassler, 'Nonprofit and Voluntary Sector

Economics: A Critical Survey' (1990) 19 Nonprofit and Voluntary Sector Quarterly 137, 139. Weisbrod’s work is, as Kingma

points out a ‘natural extension of the theory of club goods, Coase Theorem and the theory of collective action. In each theory the

classic public goods or externality problem is resolved by the collective action of the individuals affected.’ Bruce Kingma, 'Public

Good Theories of the Nonprofit Sector' in Helmut Anheier and Avner Ben-Ner (eds), The Study of the Nonprofit Enterprise -

Theories and Approaches (2003) 53, 54.

566 Burton A Weisbrod, 'Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy' in Burton A Weisbrod (ed),

The Voluntary Nonprofit Sector (1977) 51.

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his 1977 work, The Voluntary Nonprofit Sector,567 laid the foundation for subsequent

economic theory, to which he again contributed in 1988 with The Nonprofit Economy.568

Perhaps the most easily overlooked contribution of Weisbrod’s work is the simple, but

profound, observation that analysis of an economy as only made up of two sectors: business

and government, is ‘seriously’ incomplete.569

In Weisbrod’s analysis of the sector, he identifies ‘three general categories of non-profits –

one private and two public’,570 called, in order, ‘proprietary, collective, and trust non-

profits.’571 The private (proprietary) are typically clubs, trade unions and trade associations,

which, whilst they adopt the non-profit form, ‘do little but seek the betterment of their own

members.’572 The two public forms are collective non-profits and trust non-profits. The first

of these public forms, whose activities are virtually indistinguishable from government

agencies,573 do such things as finance research on causes and cures for diseases and aid the

poor and the handicapped.574 The second provides ‘trust goods’ such as ‘nursing homes, day

care centres and blood banks’.575 These organisations provide a combination of ‘private

goods and consumer protection.’576 From the theoretical outset of the discourse, regarding

the organisations that make up civil society, then, can be discerned the public versus private

567 Burton A Weisbrod, 'Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy' in Burton A Weisbrod (ed),

The Voluntary Nonprofit Sector (1977) 51.

568 Burton A Weisbrod, The Nonprofit Economy (Paperback ed, 1991).

569 Burton A Weisbrod, 'Not-for-Profit Organisation as Providers of Collective Goods' in Burton A Weisbrod (ed), The Voluntary

Nonprofit Sector (1977) 1, 1.

570 Burton A Weisbrod, The Nonprofit Economy (Paperback ed, 1991) 59.

571 Burton A Weisbrod, 'Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy' in Burton A Weisbrod (ed),

The Voluntary Nonprofit Sector (1977) 51, 60.

572 Burton A Weisbrod, The Nonprofit Economy (Paperback ed, 1991) 59.

573 Burton A Weisbrod, 'Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy' in Burton A Weisbrod (ed),

The Voluntary Nonprofit Sector (1977) 51, 60.

574 Burton A Weisbrod, 'Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy' in Burton A Weisbrod (ed),

The Voluntary Nonprofit Sector (1977) 51, 60.

575 Burton A Weisbrod, 'Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy' in Burton A Weisbrod (ed),

The Voluntary Nonprofit Sector (1977) 51, 60.

576 Burton A Weisbrod, 'Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy' in Burton A Weisbrod (ed),

The Voluntary Nonprofit Sector (1977) 51, 60.

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distinction. This is a blurred but evident boundary between government agency and private

action. There is also a concern that non-profits may sometimes do little more than ‘seek the

benefit of their own.’ These concerns are located in the context of a wider attempt by

Weisbrod to prise from the jurisdiction of business and government, a space that he calls the

voluntary, non-profit sector. It is my threshold contention that the time has come for

jurisprudence to follow economics and acknowledge this space. I contend that this should be

done irrespective of any entitlement to favours associated with charities.

Weisbrod also considered the issue of favours (so central to the doctrine of charitable

purpose) and offered a justification for favoured treatment based on contribution to public

good.577 He did not follow the vague, nominal approach of the doctrine of charitable purpose

to identify public benefit. He postulated an ordinal scale for ranking civil society

organisations according to the extent of their contribution to public good. Public good was

to be measured by a concept Weisbrod called the ‘collectiveness index’. This collectiveness

index weighed the extent to which a civil society organisation was public as against the

extent to which it was private. He wrote:

The collectiveness index reflects the causal relationship between the way an organisation obtains

revenues and the nature of its outputs. A private for-profit firm sells outputs that benefit only the

buyer; in return it receives revenues from sales. It is typically a provider of ‘purely private’ goods

or services and an accurate measure of ‘collectiveness’ would be an extreme score – say, zero.

Similarly, an organisation that, even if it is called a ‘nonprofit,’ provides only private goods or

services for its members or constituents and not for others should also be characterized by a zero.

Such a nonprofit would generally obtain all its revenue either from sales of goods and services or

from membership dues.

577 Burton A Weisbrod, 'Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy' in Burton A Weisbrod (ed),

The Voluntary Nonprofit Sector (1977) 51, 75.

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By contrast, and at the opposite extreme, any private organisation that provided purely collective

goods – virtually all of the benefits from which accrued to persons who did not pay for them –

should receive the highest measure of collectiveness, say 100.578

How, then, is the collectiveness rating to be calculated? Weisbrod suggested that the way to

measure collectiveness is by ‘the percentage of the organisation’s revenue that is in the form

of contributions, gifts or grants.’579 Weisbrod acknowledged that the index as postulated by

him would be flawed, or at least not flawless,580 but an accurate collectiveness index would

‘reflect the degree to which an organisation provides external benefits’.581 Weisbrod argued

that the higher the collectiveness index the more public subsidy can be justified.582 In short,

he postulated a means of ranking non-profits according to the extent of their contribution to

public good.583

Weisbrod considered the issue of legal form. For Weisbrod, the voluntary non-profit

category is not necessarily limited to those organisations with the non-distribution constraint.

Weisbrod leaves open the possibility that ‘self-help groups’ and organisations that ‘have no

legal structure’ and possibly ‘mutual’ organisations and ‘cooperatives’ would be within the

class called civil society organisations within this thesis.584 For Weisbrod, the sector may

comprise all of the organisations of whatever form that do not fit government or business.

He thus approached definition, not by reference to a list like the Preamble, but by

578 Burton A Weisbrod, 'Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy' in Burton A Weisbrod (ed),

The Voluntary Nonprofit Sector (1977) 51, 73.

579 Burton A Weisbrod, 'Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy' in Burton A Weisbrod (ed),

The Voluntary Nonprofit Sector (1977) 51, 75.

580 Burton A Weisbrod, 'Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy' in Burton A Weisbrod (ed),

The Voluntary Nonprofit Sector (1977) 51, 77.

581 Burton A Weisbrod, 'Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy' in Burton A Weisbrod (ed),

The Voluntary Nonprofit Sector (1977) 51, 75.

582 Burton A Weisbrod, 'Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy' in Burton A Weisbrod (ed),

The Voluntary Nonprofit Sector (1977) 51, 75.

583 Public good in this context does not have the exact economic meaning linked to public goods but rather the broader meaning

attributable to policy debate and political economy. In that context, it is more like common good in the philosophic sense or

public benefit in the legal sense.

584 Burton A Weisbrod, The Nonprofit Economy (Paperback ed, 1991) 62.

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differentiating these organisations from their other. The other, for Weisbrod, was business

or government.

Weisbrod offered an explanation for why these organisations emerge. He theorised that civil

society organisations, such as charities, emerge in a society because the state has failed to

provide a collective good. Working through the form of the voluntary organisation, is a

society’s ‘second best’ solution.585 For Weisbrod, socio-economic ends should principally

be achieved through business in the first instance, and then, if possible, through the state, and

if by neither, then through civil society organisations. Muukkonen conveniently summarises

Weisbrod’s ‘state failure’ theory as follows:

Weisbrod argued that the government is willing to provide public goods only to meet the needs of

the majority. When the need is homogenous the median voter prefers government supply because

the state can eliminate the free-rider problem with taxation. There are, however, special needs that

governmental services do not fulfil as in the case of ethnic and linguistic minorities. This creates

the need for many specialised services because the government does not supply them. Sometimes

this is because the government is not able to supply enough public goods and sometimes it is seen

that it is not the duty of government to provide certain public goods.586

In summary, for Weisbrod there is a third sector of society where organisations that pursue

purposes different from business and government, provide a good or service when businesses

and government cannot be enticed to do so. A society, and for jurisprudential purposes

lawmakers, may subsectionalize the participants in this sector according to whether they are

public (trust and collective) or private. They may also justifiably favour those contributing

to public benefit where public benefit is evidenced by scoring highly on Weisbrod’s

585 ‘Second best’ in this context does not have the precise economic meaning developed in economic theory flowing from the work of

E H Mishan. See E H Mishan, 'Second Thoughts on Second Best' (1962) 14 Oxford Economic Papers 205.

586 Martti Muukkonen, The Familiar Unknown - Introduction to Third Sector Theories (Licentiate Thesis, University of Joensuu,

2000) 102-103. For historical significance and the former role played by guilds see also Gary Richardson, 'Craft Guilds and

Christianity in Late-Medieval England' (2005) 17(2) Rationality and Society 139 and for more on free-rider problems generally

see John Colombo and Mark Hall, The Charitable Tax Exemption (1995) 100.

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collectiveness index. This approach subsegments and ranks such organisations according to

an ordinal, not a nominal form, where the measuring indicium is the income source. Legal

form, and in particular the existence in constituent documents of a non-distribution profit

constraint, is not critical.

2. Estelle James and the Public/Private Continuum

Estelle James built upon the government failure theory of Weisbrod.587 She argued that there

were two demand side factors propelling the private supply of public and quasi-public good

by non-profits (as she called civil society organisations). They are excess demand and

differentiated demand.588

Where there is excess demand, both government provided schooling and civil society

supplied schooling may both grow until sufficient education is supplied to meet the need.

This phenomenon is particularly evident in (poorer) third world countries where the

government does not, or is not able to, supply adequate educational services for all student

needs.589

In addition to, or in lieu of, the excess demand, as a theory of civil society organisation

growth, is the existence of differentiated demand. According to James, people will choose

civil society organisations for education in lieu of government supplied education because

their worldview is different from the dominant hegemony expressed through government-

provided services.590 Whereas Burton Weisbrod’s theory of civil society organisations was

587 Estelle James, The Nonprofit Sector in International Perspective (1989); Estelle James, 'The Nonprofit Sector in Comparative

Perspective' in Walter W Powell (ed), The Nonprofit Sector: A Research Handbook (1987) 397.

588 Estelle James, 'The Nonprofit Sector in Comparative Perspective' in Walter W Powell (ed), The Nonprofit Sector: A Research

Handbook (1987) 397. She acknowledges these were first ‘mentioned’ in Burton A Weisbrod, 'Not-for-Profit Organisation as

Providers of Collective Goods' in Burton A Weisbrod (ed), The Voluntary Nonprofit Sector (1977) 1, 5.

589 Estelle James, 'The Public/Private Division of Responsibility for Education: An International Comparison' (1987) 6 Economics of

Education Review I, 1-4.

590 Estelle James, 'The Public/Private Division of Responsibility for Education: An International Comparison' (1987) 6 Economics of

Education Review I, 5.

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that they emerged because government’s obligation to satisfy the needs of (only) the median

voter left minorities without a product they needed, Estelle James pointed out that even if the

government provided adequate product, consumers may still choose to have the good or

service supplied in a differentiated form by a civil society organisation. Noting that some

elite schools may be chosen because of a superior quality product, she observes that this does

not explain all, or even most, choices of civil society organisation provided schooling.

James pointed to the difference of the educational service provided as the reason.591 The

difference is due to the demand for education taught in accordance with a particular

worldview. The importance of civil society organisations as vehicles for the propagation and

maintenance of worldviews – particularly religion – is foundational to Estelle James’s

heterogeneity theory.592

James segmented the sector into two types of organisations. Type (i) are those organisations

such as schools, where the good is a quasi-public good often supplied in the pursuit of a

charitable purpose, but which, also, is capable of being supplied on a user-pays basis. Type

(ii) are those where the beneficiaries do not pay or pay little for the services they receive.593

Seeking payment for services is a characteristic of business, and seeking and obtaining

donations is an indicia of commitment to supply of public or quasi-public goods. When

considering the supply of civil society organisations, James noted that in some countries,

notably Japan and Columbia, these organisations are perceived as ‘disguised’ vehicles for

private benefits, particulary in the supply of education. She noted, ‘the founder may become

the headmaster and be paid a salary beyond market wage, [and receive benefits] in

591 Estelle James, 'The Public/Private Division of Responsibility for Education: An International Comparison' (1987) 6 Economics of

Education Review I, 4-5.

592 Estelle James, 'The Public/Private Division of Responsibility for Education: An International Comparison' (1987) 6 Economics of

Education Review I, 6.

593 Estelle James, 'The Nonprofit Sector in Developing Countries: The Case of Sri Lanka' in Estelle James (ed), The Nonprofit Sector

in International Perspective - Studies in Comparative Culture and Policy (1989) 289, 292.

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nontaxable form – expense accounts, free houses and cars.’594 Discerning the underlying

purpose – in particular whether it is for public or private benefit, may be a significant

differentiator and advance theory in discerning a business from a civil society organisation

pursuing the purpose of advancement of education.

Distinguishing civil society organisations from government, can also be a challenge. Civil

society organisations stand alongside, and in contest with, government. Government is,

within James’s analysis, a significant influencer of the expression of the sector in a society.

She pointed to the example of the Bihar government in India, ‘nationalising’ most of the

private schools, as an extreme example of influence.595 Less extreme examples include use

of funding to coerce the way purposes are pursued. James observes that initially government

may offer subsidies; then, once the civil society organisation is dependent upon the

subsidies, James observed it is easier for government to influence it.596 This interplay of

government with civil society organisations in the pursuit of purposes such as education, can

make distinguishing one from the other difficult. She notes, for example, that in Ireland the

government funds Catholic schooling and the schools are managed by the Catholic Church.

She suggests that in Italy, the Catholic Church’s influence is sufficiently great for the

demand for worldview-compatible education to be provided by public schooling.597 She

points out that what this means is:

594 Estelle James, 'The Public/Private Division of Responsibility for Education: An International Comparison' (1987) 6 Economics of

Education Review I, 6.

595 Estelle James, 'The Public/Private Division of Responsibility for Education: An International Comparison' (1987) 6 Economics of

Education Review I, 10.

596 Martti Muukkonen, The Familiar Unknown - Introduction to Third Sector Theories (Licentiate Thesis, University of Joensuu,

2000) referring to Estelle James, 'The Nonprofit Sector in Comparative Perspective' in Walter W Powell (ed), The Nonprofit

Sector: A Research Handbook (1987) 397, 409.

597 Estelle James, 'The Public/Private Division of Responsibility for Education: An International Comparison' (1987) 6 Economics of

Education Review I, 7.

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the definition of “public” versus “private” is by no means an unambigious concept. We really

have a continuum of public versus private funding and control, with different countries

representing different points on a continuum.598

James also comments on the supply of civil society organisations. ‘The availability of

religious (nonprofit) entrepreneurship, plays an important supply side role…’.599 Religious

organisations have important motivations which are not profit-related and have advantages

over both businesses and government. These advantages spring from the availability of

volunteers, and usually religious, parent organisations being willing to sponsor or

subsidise.600

One final observation to be noted from this discussion of Weisbrod and James’s works, is

that civil society organisations are not government but can provide goods similar to

government in that the goods are often public goods and for public benefit. They are also

like government in that these organisations can comprise significant minorities and thus can

have quite large memberships.601

3. Lester Salamon’s Voluntary Sector Failure Theory

Lester Salamon’s voluntary sector failure theory is not neoclassical economic theory per se,

but in this multi-disciplinary discourse, it stands juxtaposed against the government failure

theory of Weisbrod and the soon to be discussed, market failure theory of Henry Hansmann.

It is most conveniently considered in this context. His work also provides an introduction to

supply side factors which will be discussed in the next chapter.

598 Estelle James, 'The Public/Private Division of Responsibility for Education: An International Comparison' (1987) 6 Economics of

Education Review I, 7. For statutory application of this principle see Charities and Trustees Investment Act 2005 (Scotland) s 8.

599 Estelle James, 'The Public/Private Division of Responsibility for Education: An International Comparison' (1987) 6 Economics of

Education Review I, 1.

600 Estelle James, 'The Public/Private Division of Responsibility for Education: An International Comparison' (1987) 6 Economics of

Education Review I.

601 Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The

Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117, 123.

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Salamon argued that the transaction costs of mobilising a government, as against mobilising

a ‘handful of volunteers’, means that ‘the private, nonprofit sector will typically provide the

first line of response to perceived “market failures”, and the government will be called upon

only as the voluntary response proves insufficient.’602 Salamon integrated this idea with his

criticism of theories of the welfare state, noting that when the sector is viewed in this way, ‘it

becomes clear that government involvement is less a substitute for, than a supplement to

private non-profit action.’603 There are, according to Salamon, four failures of the voluntary

sector that lead to government involvement. They are:

1. ‘Philanthropic insufficiency’, by which Salamon means the sector’s inability to

generate resources ‘on a scale that is both adequate enough and reliable enough

to cope with the human-service problems of an advanced industrial society.’604

2. ‘Philanthropic particularism’, by which he means the predisposition of (some)

charities to be selective and also favour those of their own class, race, religion or

other basis for social segmentation.605

3. ‘Philanthropic paternalism’, is the phrase used by Salamon to declare that it is

those who have control of the most resources who control resource allocation.

The consequence is not only that there may be a flow of funds to charities

‘enjoyed also by the rich such as fine arts and opera but also a sense of

dependence can be cultivated among the poor.’606

602 Lester Salamon, 'Voluntary Failure Theory Correctly Viewed' in Helmut Anheier and Avner Ben-Ner (eds), The Study of the

Nonprofit Enterprise - Theories and Approaches (2003) 183, 185 quoting Lester Salamon, 'Of Market Failure, Voluntary Failure,

and Third Party Government: Toward a Theory of Government-Nonprofit Relations in the Modern Welfare State' (1987) 16

Journal of Voluntary Action Research 35, 39.

603 Lester Salamon, 'Of Market Failure, Voluntary Failure, and Third Party Government: Toward a Theory of Government-Nonprofit

Relations in the Modern Welfare State' (1987) 16 Journal of Voluntary Action Research 35, 39.

604 Lester Salamon, 'Of Market Failure, Voluntary Failure, and Third Party Government: Toward a Theory of Government-Nonprofit

Relations in the Modern Welfare State' (1987) 16 Journal of Voluntary Action Research 35, 39.

605 Lester Salamon, 'Of Market Failure, Voluntary Failure, and Third Party Government: Toward a Theory of Government-Nonprofit

Relations in the Modern Welfare State' (1987) 16 Journal of Voluntary Action Research 35, 40.

606 Lester Salamon, 'Of Market Failure, Voluntary Failure, and Third Party Government: Toward a Theory of Government-Nonprofit

Relations in the Modern Welfare State' (1987) 16 Journal of Voluntary Action Research 35, 41.

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4. ‘Philanthropic amateurism’, flows frequently from voluntary participation in the

sector. Salamon points out that many of the social problems addressed by the

sector require a professional response.607 This may call for government

involvement.

As, in Salamon’s view, these four weaknesses of the voluntary sector, ‘correspond well with

government’s strengths’, and vice versa, a framework at both a theoretical and practical level

exists for ‘government-non-profit cooperation’608 and should be preserved and strengthened.

This model harks back to the concept of the charities working in partnership with the

government, mentioned in chapter III. It identifies specific areas of weakness, though, of

which a jurist may take cognisance when developing a regulatory regime. Importantly,

though, he anchors these civil society organisations in a worldview where civil society itself

responds to communal needs. Only when the voluntary response ‘fails’, is government to

step in. The inherent freedom therefore in civil society organisations to respond to social

agendas, as theorised by Salamon, cannot be overemphasised. Arguably, if Salamon’s

model is to be given legal expression, it is the function of law to facilitate voluntary response

to social concerns. This agenda will be taken up in Chapter VII.

D. When Business is the Other

1. Henry Hansmann, Market Failure and Trustworthiness Theory

Burton Weisbrod’s public goods theory, as developed by Estelle James, took as its focus

civil society organisations as an alternative to government supply. Following Weisbrod in

time, though not in significance, came a theory of supply of public goods by organisations

adopting the civil society form rather than businesses. That is, it was a market failure theory.

Henry Hansmann is universally recognised as the ‘chief architect’ of the market failure

607 Lester Salamon, 'Of Market Failure, Voluntary Failure, and Third Party Government: Toward a Theory of Government-Nonprofit

Relations in the Modern Welfare State' (1987) 16 Journal of Voluntary Action Research 35, 42.

608 Lester Salamon, 'Of Market Failure, Voluntary Failure, and Third Party Government: Toward a Theory of Government-Nonprofit

Relations in the Modern Welfare State' (1987) 16 Journal of Voluntary Action Research 35, 43.

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theory. 609 Writing in a context where, in the United States, California and New York had

just passed legislation and the law regulating ‘nonprofit’ corporations was under theoretical

review by the American Bar Association,610 Hansmann proposed an economic theory for the

existence of civil society organisations and then drew upon that theory to assess the policy

framework in which ‘nonprofit’ legislation was located. In his 1981 work, Reforming

Nonprofit Corporation Law,611 Hansmann considered directly the legal framework regulating

civil society organisations, and his insights profoundly informed the development of

regulations for the sector in the United States. In this section, first, the way Hansmann

defined the sector is considered, then why civil society organisations emerge, and finally,

attention is turned to Hansmann’s discussion of which organisations should be entitled to

favours and why.

Hansmann defined civil society organisations with reference to the non-distribution

constraint. ‘The defining characteristic of a non-profit organisation is that it is barred from

distributing profits, or net earnings, to individuals who exercise control over it, such as

directors, officers, or members.’612 The fact that Hansmann begins with such a legal

constraint, presupposes some sort of formal organisational structure rather than an informal

network, association or social movement. Hansmann acknowledged the existence of other

forms, including trusts, but focused on the incorporated form for two stated reasons: first,

because the incorporated form is the most economically significant, and second, the law

regulating these bodies is most in need of reform.613 It is important for jurisprudential

development to note that Hansmann recognised other forms of civil society organisation

such as unincorporated associations and trusts. This is because a jurisprudence for civil

society must not to become shackled to the non-distribution constraint as the indicia of a

609 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 512;

610 Henry Hansmann, 'Reforming Nonprofit Corporation Law' (1981) 129 University of Pennsylvania Law Review 500.

611 Henry Hansmann, 'Reforming Nonprofit Corporation Law' (1981) 129 University of Pennsylvania Law Review 500.

612 Henry Hansmann, 'Reforming Nonprofit Corporation Law' (1981) 129 University of Pennsylvania Law Review 500, 501.

Emphasis added.

613 Henry Hansmann, 'Reforming Nonprofit Corporation Law' (1981) 129 University of Pennsylvania Law Review 500, 502.

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civil society organisation. The non-distribution constraint is an indica of altruistic intent and

an indicia of pursuing a public not a private purpose. It is indicative not determinative.

Having defined the organisations’ defining characteristic – the non-distribution constraint –

Hansmann subcategorised the organisations with this characteristic according to their

sources of income and the way they were controlled.614 According to Hansmann, there were

only two sources of income: donations or sales. As for control, again there were two

subcategories – either the patrons control the entity or they do not. From this matrix of

characteristics (only) four categories of organisations with non-distribution constraints

emerged from Hansmann’s analysis:

1. donative mutuals, where the givers to the organisation control the organisation;

2. donative entrepreneurials, where persons other than the givers control the

organisation;

3. commercial mutuals, where the consumers of goods or services supplied by the

organisation control it; and

4. commercial entrepreneurials, where the consumers of the goods or services

supplied by the organisation do not control it.615

Hansmann readily acknowledged that no type is pure and, whilst ‘the distinction ... between

commercial and donative non-profits is simply one of degree, rather than a difference of

kind’, that ‘difference in degree is substantial.’616 These four classes of nonprofit serve in

three typical situations where the non-distribution constraint typically arises. They are:

1. third party payment of which charitable intermediaries (Hansmann uses

Oxfam as an example) are the classic case where the recipient for whom the

good is ‘purchased’ is often a long way away and, unknown to the contributor

614 Henry Hansmann, 'Reforming Nonprofit Corporation Law' (1981) 129 University of Pennsylvania Law Review 500, 502.

615 Henry Hansmann, 'Reforming Nonprofit Corporation Law' (1981) 129 University of Pennsylvania Law Review 500, 503.

616 Henry Hansmann, 'The Role of Trust in Nonprofit Enterprise' in Helmut Anheier and Avner Ben-Ner (eds), The Study of the

Nonprofit Enterprise - Theories and Approaches (2003) 115, 117.

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and as a consequence, the purchaser/contributor has little or no way of knowing

whether the intended recipient receives the goods purchased. In this ‘radical

case of asymmetric information’,617 how can a contributor to ‘CARE’

(Hansmann’s example) ‘discover whether as a result of her contribution, 100

children in Africa actually received a bowl of nourishing porridge for a

week?’618

2. purchases of public goods of which subscriber public radio is a typical example.

In such cases, the relatively small cost of subscription and the large and usually

dispersed patronage, make an organisation with a non-distribution constraint,

more attractive than private ownership – at least in some cases.619 It is

noteworthy that Hansmann explicitly avoided the underlying motive. He wrote

‘for whatever reason, many individuals are willing to ignore the incentive to free

ride, choosing, instead, to make a contribution toward the purchase of a good

that will serve a large public.’620 Donations to performing arts are exemplars of

this category as their contributors, in effect, subsidise the attendance of those

who only pay the ticket price.621

3. purchases of complex private services of which the most topical examples are

hospitals and other health services.622 In these ‘commercial’ operations, where

the asymmetric information challenges, observed earlier, also arise, the non-

distribution constraint operates as ‘a very crude consumer protection device.’623

Hansmann emphasised that the purpose of his categorisation was for ease of description and

reference and not because legal significance should attach to the categories. He wrote,

617 Henry Hansmann, The Ownership of Enterprise (1996) 230.

618 Henry Hansmann, The Ownership of Enterprise (1996) 230.

619 Henry Hansmann, The Ownership of Enterprise (1996) 230-231.

620 Henry Hansmann, The Ownership of Enterprise (1996) 230.

621 Henry Hansmann, The Ownership of Enterprise (1996) 231-232.

622 Henry Hansmann, The Ownership of Enterprise (1996) 233-235.

623 Henry Hansmann, The Ownership of Enterprise (1996) 235.

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‘nonprofit corporation law should be unitary, applying essentially the same rules and

standards to all non-profit corporations regardless of classification.’624 His reasoning for

taking this stand was stated to be because the legal form of organisation – nonprofit or for-

profit – is determined by weighing, on the one hand, the cost of private ownership and on the

other, the cost of contracting in the market. If this is so, the choice of an organisation subject

to a non-distribution constraint rather than a for-profit entity, is directly shaped by regulatory

choices affecting costs. In The Ownership of Enterprise,625 Hansmann pointed out that all of

the different legal forms of association, from propriety limited companies to nonprofit

associations, are merely vehicles of association for purposes. It followed that ‘[t]here is no

fundamental reason to have business corporation statutes at all; they are just specialized

versions of the theoretically more general cooperative corporation statutes.’626 The purpose

of incorporation is ‘to permit the creation of a juridical person – a single legal entity – that

can serve as a signatory to contracts.’627 The parties most motivated to enter into the

‘ownership’ contracts, will be those for whom the cost of market imperfections are such that

to achieve their purpose, other than by taking ownership, will be more costly.

Logically then, according to this theory, the emergence of the ‘nonprofit’ and mutual

enterprise arises where contracting costs and ownership costs are high. In such a case:

the solution is to create a firm without owners – or, more accurately, to create a firm whose

managers hold it in trust for its customers. In essence, the ‘nonprofit’ form abandons any benefits

of full ownership in favour of stricter fiduciary constraints on management.628

624 Henry Hansmann, 'Reforming Nonprofit Corporation Law' (1981) 129 University of Pennsylvania Law Review 500, 504.

625 Henry Hansmann, The Ownership of Enterprise (1996).

626 Henry Hansmann, The Ownership of Enterprise (1996) 17.

627 Henry Hansmann, The Ownership of Enterprise (1996) 19.

628 Henry Hansmann, The Ownership of Enterprise (1996) 228.

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As a consequence, there is not a satisfactory justification for complex varied forms of civil

society organisation, according to Hansmann, but only the existence of the non-distribution

constraint.

Hansmann also pointed out that ‘many of today’s commercial nonprofits had their origins as

donative nonprofits that depended crucially on philanthropic support.’629 He also observed

that, as the industries in which these commercial activities were conducted through civil

society organisations with a non-distribution constraint matured, there were changes that led

to for-profit firms being able to compete more readily. The standardisation of services, the

development of reputations and the promulgation of more effective regulatory regimes, all

reduced the need for the stricter fiduciary constraints which attend civil society organisations

with non-distribution constraints. For, as the cost of contracting declines, so does the need

for the non-distribution constraint.630 There is, though, a clear distinction between the

business corporation and the civil society organisation. The business exists to serve its

shareholders. The civil society organisation exists for its patrons.631

Hansmann concluded that a society needs only three forms of corporation:

1. the business corporation which is used where the patrons can police through

individual contracts, the producer’s price and performance;

2. the cooperative corporation which is necessary for situations where it is not

possible to police the producer’s price and performance through individual

contracts (such as arises in the case of monopolies); and

629 Henry Hansmann, 'The Role of Trust in Nonprofit Enterprise' in Helmut Anheier and Avner Ben-Ner (eds), The Study of the

Nonprofit Enterprise - Theories and Approaches (2003) 115, 118.

630 Henry Hansmann, The Ownership of Enterprise (1996) 237.

631 Henry Hansmann, 'Reforming Nonprofit Corporation Law' (1981) 129 University of Pennsylvania Law Review 500, 507.

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3. the nonprofit corporation (here called the civil society organisation with a non-

distribution constraint) which is needed where there is contract failure such that

contracts and direct patron control are inadequate.632

With the distinction between ‘non-profit corporations’ and other corporations clearly in

mind, Hansmann analysed reasons why there should be excessive regulation of civil society

organisations with non-distribution constraints. He concluded that there is no basis for

restricting the purposes for which a civil society organisation may incorporate which could

not be ‘better served by other means.’633 By this he meant that once the non-distribution

constraint is in place, the civil society organisation should be subject to the general law.634

This is an important point, which will be taken up in Chapter VII, for any jurisprudence must

come to terms with why it would be more restrictive to the vehicle for the voluntary

provision of public goods than that applying more generally. If there is not a sound basis,

then it seems appropriate for the general law to apply.

It will be recalled from chapter II, that there is a plethora of forms of incorporation and that

civil society organisations tend to be regulated according to the form they take. If

Hansmann’s insights are accepted, there is simply no basis for this. One simple form of

corporation for all civil society organisations will do.

If one form of corporation will do, and the general law should apply to it, is there, then, any

basis for tax favour for any organisation under Hansmann’s theory of market failure?

Clearly, if the role of nonprofits is to satisfy a market failure, that, in and of itself, does not

warrant ‘peculiar favours’ such as preferential tax treatment. Hansmann approached the

matter from the other direction. Accepting the situation, that many charities and other civil

632 Henry Hansmann, 'Reforming Nonprofit Corporation Law' (1981) 129 University of Pennsylvania Law Review 500, 597.

633 Henry Hansmann, 'Reforming Nonprofit Corporation Law' (1981) 129 University of Pennsylvania Law Review 500, 526.

634 Hansmann used the phrase ‘criminal law’ but in context it seems to be broader than this. See Henry Hansmann, 'Reforming

Nonprofit Corporation Law' (1981) 129 University of Pennsylvania Law Review 500, 526.

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society organisations already have tax favour, he justified the exemption they receive on the

basis that – as they are subject to the non-distribution constraint – they are denied equity

fundraising opportunities available to for-profits.635 It is just, then, to allow a tax exemption

as a crude equaliser enabling capitalisation so that a means of efficient distribution of

resources in these particular markets occur.636 This is, though, linked to the need for civil

society organisations with non-distribution constraints to be available to meet the needs

arising from asymmetric information. If, as is the case in the hospital sector where the

government is a major supplier of funding, and the level of regulation is onerous, there is not

a substantive problem with asymmetric information, then the favour may not be warranted.

As Hansmann pointed out in 2003, when responding to criticism by Ortmann and

Schlesinger,637 he ‘expressed serious doubt [as long ago as 1981] that the problem by

asymmetric information in product markets could explain the market share of most

commercial non-profits.’638 Consequently, at least with respect to the hospital industry in the

US at that time, ‘there was a strong case for eliminating federal and state tax exemption for

non-profit hospitals’.639

Hansmann has also expressed the view that the case for exempting unrelated business

income is weak and that ‘[s]ubsidies for non-profits should be structured to encourage them

to expand their related, not their unrelated, activities.’640

635 Henry Hansmann, 'Reforming Nonprofit Corporation Law' (1981) 129 University of Pennsylvania Law Review 500, 507-8.

636 For a discussion of the weaknesses of this approach see Rob Atkinson, 'Nonprofit Symposium: Theories of the Federal Income

Tax Exemption for Charities: Thesis, Antithesis, and Syntheses' (1997) 27 Stetson Law Review 395, 418. Richard Steinberg,

'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The Nonprofit Sector: A

Research Handbook (2nd ed, 2006) 117.

637 Henry Hansmann, 'The Role of Trust in Nonprofit Enterprise' in Helmut Anheier and Avner Ben-Ner (eds), The Study of the

Nonprofit Enterprise - Theories and Approaches (2003) 115, 116-17 responding to criticisims in Andreas Ortmann and Mark

Schlesinger, 'Trust, Repute, and the Role of Nonprofit Enterprise' in Helmut Anheier and Avner Ben-Ner (eds), The Study of The

Nonprofit Enterprise - Theories and Approaches (2003) 77.

638 Henry Hansmann, 'The Role of Trust in Nonprofit Enterprise' in Helmut Anheier and Avner Ben-Ner (eds), The Study of the

Nonprofit Enterprise - Theories and Approaches (2003) 115, 117.

639 Henry Hansmann, 'The Role of Trust in Nonprofit Enterprise' in Helmut Anheier and Avner Ben-Ner (eds), The Study of the

Nonprofit Enterprise - Theories and Approaches (2003) 115, 121 Note 2.

640 Henry Hansmann, 'Unfair Competition and the Unrelated Business Income Tax' (1989) 75(3) Virginia Law Review 605, 621.

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Hansmann did not take up the existence and extent of donations as a source of justification

for favour put forward by Weisbrod. Nor did Hansmann consider charity, altruism, public

benefit, or any of the other traditional notions considered central to legal discourse. True to

the liberal, individualist philosophy and neo-classical economics in which the analysis was

rooted, the adoption of the form – of a civil society organisation – is to facilitate the supply

of goods; to address ‘contract failure’. Favour was justified on the basis of economic

efficiency. Without the tax exemption as a rough leveller of the playing field, a market need

would not be satisfied.

2. John Colombo and Mark Hall’s Donative Theory

Like Hansmann, John Colombo and Mark Hall developed their theory from entirely within

an economic paradigm – avoiding the notion of charitable purpose central to law. Their

project was the development of a theory of tax exemption of charities.641 The problem of

defining ‘charities’, was relevant to them only for the purpose of identifying entitlement to

tax favour.642 Consequently, they had little to contribute to the definition of charities or more

broadly civil society organisations beyond what should be in, or out, of tax exemption. Put

differently, their concern was only with the class of organisations entitled to tax favours.

The significant contribution to the discourse made by Colombo and Hall, relevant here, was

the development of a more rigorous theory of entitlement to exemption based only on

donations. They observed that if civil society organisations provide public goods, there will

always be ‘free riders’ taking advantage of that provision. It follows that there will always

be a shortfall between the level of the supply and the level of demand of charitable good.

This gap is the strong normative case for a shadow subsidy by the rest of the community

through the tax system.643 At a threshold level, they argued that the mere formation or

641 John Colombo and Mark Hall, The Charitable Tax Exemption (1995) Preface xi.

642 John Colombo and Mark Hall, The Charitable Tax Exemption (1995) Preface xi.

643 John Colombo and Mark Hall, The Charitable Tax Exemption (1995) 100.

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existence of a civil society organisation with a non-distribution constraint, is not an altruistic

act deserving tax exemption. It is the donations to the civil society organisation that raise it

to a status where exemptions may be justified. They theorised that justification for

exemption rested on the level of donative support from the public.644 Acknowledging this

idea is not new;645 they argued that donations constitute a signal by the donors that some

good or service is undersupplied by both the private market and direct government funding.

Moreover, because of the free-rider incentive, donors alone will never provide the level of

production actually required to meet demand. Thus, donative organisations need additional

financial support, and this support is provided by the indirect subsidy of tax exemption (as

well as through the donation of charitable deduction).646 This taxation support is justified

because it is the function of government to provide public goods – it being the sector

equipped to deal with the free-rider problem through its coercive powers.647

Colombo and Hall also considered the complex problem of sorting out what is a donation.

They too, like Hansmann, avoided any reference to motive. They relied upon the literature

to the date of their work to conclude that ‘in most instances, selfish and adulterated motives

for giving do not undermine the basis for the donative theory, with the exception of

donations that are not true gifts but instead constitute implicit purchases.’648 With this

concession to mixed motive,649 they concluded that these challenges are sorted out (they use

the word ‘rehabilitated’) in the market for the supply of charitable goods.650 This

‘rehabilitation’ operates by directing the gifts to those objects that society perceives more

644 John Colombo and Mark Hall, The Charitable Tax Exemption (1995) 113.

645 See, for example Burton A Weisbrod, 'Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy' in Burton

A Weisbrod (ed), The Voluntary Nonprofit Sector (1977) 51, 73.

646 John Colombo and Mark Hall, The Charitable Tax Exemption (1995) 112.

647 John Colombo and Mark Hall, The Charitable Tax Exemption (1995) 101.

648 John Colombo and Mark Hall, The Charitable Tax Exemption (1995) 119.

649 John Colombo and Mark Hall, The Charitable Tax Exemption (1995) 138.

650 John Colombo and Mark Hall, The Charitable Tax Exemption (1995) 139.

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deserving.651 They suggest civil society organisations receive, by way of gift income, not less

than one tenth and up to one third of total revenues to be entitled to the tax exemption.652

3. Myles McGregor-Lowndes

Building on the work of Hansmann, Atkinson and Colombo and Hall, a gratuitous, transfer

intermediary is introduced by Myles McGregor-Lowndes as an organising idea to articulate

the role played by civil society organisations which act as an intermediary between donor

and donee.653 This entity facilitates the fundamental purpose of the sector which, according

to McGregor-Lowndes, is the gratuitous transfer of property.654 This is a much broader

concept than ‘charities’. Charities ostensibly perform this function but are defined with

reference to the purposes listed in Pemsel’s case only. A logical step for common law

development would be to expand the way charities are defined to include all such

organisations that are vehicles for the gratituous transfer of property. That does not mean

that all such organisations should be entitled to the favours attaching to charitable purpose.

That is a separate issue and needs to be separately addressed.

Reviewing the law in Australia in relation to the facilitation of gratuitous transfers through

the use of gratuitous transfer intermediaries, McGregor-Lowndes concluded that whilst these

intermediaries are likely to be more efficient than government and their for-profit

counterparts, the law fails to adequately provide the regulatory infrastructure to facilitate

such gratuitous transfers efficiently. He stops short, however, of offering a proposal for

reform.655 When cognisance is taken of both Colombo and Hall’s and McGregor-Lowndes’s

contribution in the context of a wider discussion of market failure set by Hansmann, the

centrality of gratuitous transfers to the sector and the need for legal infrastructure to enable

651 John Colombo and Mark Hall, The Charitable Tax Exemption (1995) 139.

652 John Colombo and Mark Hall, The Charitable Tax Exemption (1995) 217.

653 Myles McGregor-Lowndes, The Regulation of Charitable Organisations (PhD Thesis, Griffith University, 1994) 123.

654 Myles McGregor-Lowndes, The Regulation of Charitable Organisations (PhD Thesis, Griffith University, 1994) 161.

655 Myles McGregor-Lowndes, The Regulation of Charitable Organisations (PhD Thesis, Griffith University, 1994) 377.

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such transfer, the need for a more comprehensive framework – as distinct from a conception

of charitable pupose – emerges as critical for development of the common law.

4. Interim Summary

In reforming the common law, as distinct from simply adding heads by statute to the four

heads enumerated in Pemsel’s case, jurists could take cognisance of the need for an

overarching framework that facilitates ‘gratuitous transfers’. They could take cognisance of

the irrelevance of form provided there is a non-distribution constraint. They could take

cognisance of the percentage of income received as donations. All of these factors seem

more relevant than the four heads of Pemsel’s case because they are explicit indicia of actual

pursuit of a charitable purpose. They manifest direct evidence of altruistic intent and public

benefit.

The focus so far in this chapter has been on the way theorists from within the discipline of

economics have analysed charities and other civil society organisations that are vehicles for

contributions of public benefit. The review has therefore focused on what is sometimes

called the demand side analysis of civil society organisations. In the second half of the next

chapter, the supply side will be considered and the works of Atkinson, Rose-Ackerman, Ben-

Ner, and Steinberg will be considered. Both the supply and demand sides will be brought

together at the end of that chapter.

E. When Family is the Other

1. Introduction

The focus of this chapter is the division between public and private benefit within economic

theories regarding civil society organisations. This focus on organisations, presupposes a

private sphere. That private sphere has not been explored. Completing the chapter requires

some attention to the more general foundations of that public-private divide, having regard to

the private as distinct from the public dimension.

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In this section, I briefly canvass conceptions of family as the ultimate typology of private.

This is undertaken with a view to distinguishing these gatherings from civil society

organisations.656 This distinction is important because at law, it will be recalled, a charitable

purpose is distinguished by being for public benefit not for private benefit. Identifying the

boundary between family and its other is increasingly problematic. Family has been a

dynamic concept historically and philosophically. A consequence of that is that what is

private is not easily segmented from what is public in twenty-first century theory. Returning

to first principles there are, though, indicia that assist in differentiating civil society from

family, and with that, public from private, which can be elucidated. These are distilled from

the ideas canvassed in this and earlier sections of this chapter.

2. Conceptions of Family and Problems of Definition

(a) The Nuclear Family is not Necessarily the Norm

Through the later part of the twentieth century, a concept of a family as nuclear – comprising

a monogamous, married, father and mother, one or more children, without grandparents,

grandchildren or other extended family – dominated thinking when defining family in

common law countries. This concept of family has continued into the twenty-first century.

At the most basic level, the private sphere was that which was contained within the family.

With such a definition of family, the boundary between family on the one hand and civil

society organisations, including those engaged in charitable purposes on the other, is easy to

define. This is because even if civil society organisations are difficult to define, the

boundary line of family is clear.

The concept of family is not necessarily nuclear, however, nor is the boundary line

necessarily clear in common law countries at the beginning of the twenty-first century. The

social changes mentioned in Chapter II, affecting the form and composition of families, is

656 Note the broad definition of family set out in the definitions section commencing at page 50.

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affecting the way that people gather to support one another. The nuclear family still may be

the exemplar of private social community but, as Tillman pointed out, the way people form

families is changing.657 Households often now have only one parent who may not be

married to another adult in the home. The nature of the relationships may be characterised as

not permenant. The ‘associations’ may be more explicitly for mutual (contractual) benefit.

Where, and when, in such a concept does the private sphere end?

(b) Extended Family and Kin Support can Extend beyond Nation States

Compounding this division between public and private is the scope and extent of giving and

support in common law countries. For example in New Zealand, six percent of the

population is a diaspora of Pacific Islanders and one of the ‘features of this Pacific diaspora

is the transfer of money, goods, and human resources from expatriate kin to their islands of

origin’.658 Should those transfers be treated as in pursuit of private purposes or are they in

the pursuit of public charitable purposes? Does it make a difference if the giving is through

religious or other charitable organisations? Does it make a difference if the resources, so

transferred, are applied to persons who are impecunious – whether or not they are relatives?

If so, why, or why not?

There is a demarcation between private social units, of which the nuclear family is the

exemplar; and arrangements which, at their most basic, are public institutions. This may not

be an easy boundary to draw, but there is a difference, and consequently, there must be a

division between the private purposes of family at one extreme and the most public

charitable purposes of civil society organisations, such as a large membership international

aid organisation, at the other.

657 K H Tillman and C Nam, 'Family Structure Outcomes of Alternative Family Definitions' (2008) 27 Population Research and

Policy Review 367, 378.

658 E T Cowley, J Paterson, et al., ‘Traditional Gift Giving Among Pacific Families in New Zealand’ (2004) 25(3) Journal of Family

and Economic Issues 431, 432.

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(c) Distinguishing between Family and Religion can be Problematic

The changing face of religion illustrates that there is a contest that finds contemporary

expression in the boundary between what is a family and what is a religious charitable

purpose. The letter from Senator Grassley to Kenneth and Gloria Copeland discussed in

Chapter II,659 illustrated that there is a contested boundary in the context of definition of

family between what is public and what is private. The traditional understanding of a

religious calling, as the whole of one’s life being set aside for the service of God and others,

creates theory challenges in a tax context where the lifestyle enjoyed by the religion’s

practitioner is not the traditional, frugal one commonly expected.

There is a boundary between public and private at the deepest levels but how is it to be

theorised in the doctrine of charitable purpose?

3. Theoretical and Philosophical Ambiguity and Problems of Definition

The way families are considered theoretically is changing. The increasing analysis of family

in terms of contracts in a neoclassical sense, traceable to the Nobel Prize winning work of

Gary S Becker, may theorise the developments mentioned at the beginning of this section but

it also compounds the conundrum for legal theory. This is because it leads to a definition of

families that is close to the definition of (other) associations. Associations are understood

legally as essentially a contract between members.660 If families are similarly seen, then both

are fundamentally the same: both are associations of individuals for mutually beneficial

transfers.661 How then is family different from a civil society organisation? If families are

no longer defined by reference to nuclear family concepts, but are fluid communites formed

and dissolved to facilitate the supply and demand of needs, then how are these families more

or less than self-help groups?

659 Letter from Charles Grassley to Kenneth and Gloria Copeland, 5 November 2007, available at

http://finance.senate.gov/sitepages/grassley2007.htm.

660 See any association law text.

661 Maria Sophia Aguirre (2006) 'Marriage and the Family in Economic Theory and Policy' (2006) 4 Ave Maria Law Review 435.

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For some periods of history, the idea of family has extended to include all within the

household. This expansive sense of family to include even employees (to use a

contemporary descriptor) was mentioned in relation to the law when discussing charitable

purpose trusts and their extension to include trusts for poor employees as well as poor

relations. The inclusion of employees as within the household flows from the idea of

business integrally linked to the idea of family. The word economics comes from the Greek

word oikonomea, which literally means management of a household of family life.

Household was a broad and expansive term. Within it may be included not just the narrow

concept of mother, father and their infant children, but extended family and even servants

and slaves.662 Elsewhere, I have argued that the idea of household is a rich one with dynamic

boundaries useful for understanding obligations with respect to resource distribution.663 For

the purposes of this discussion, it is sufficient to note that at a practical level, the idea of

family was historically understood very broadly to extend well beyond the nuclear family

and the idea of the family as an economic cooperative is not novel.

The idea of family associations being formed and dissolved for social convenience is not a

novel proposition either. Plato gave philosophic expression to the idea. In the Republic,664

Plato set out Socrates’s discussion with Glucon regarding the sharing of wives and children

as an idea for achieving unity in community. Aristotle rejected this notion,665 but it was to

re-emerge in the writings of Marx in the nineteenth century.666

662 For an extensive discussion of the concept see J H P Reumann, The Use of OIKONOMIA and Related Terms in Greek Sources to

about 100 A.D., As a Background for Patristic Applications (PhD Thesis, University of Pennsylvania, 1957) and D McDairmid,

Stewardship and Tithing in the Episcopal Church (PhD Thesis, The University of Queensland, 1994).

663 Matthew Turnour, 'The Stewardship Paradigm' (School of Humanities, Queensland University of Technology, 1999).

664 Plato, 'The Republic Book 1 (360 BC)' in W H D Rouse (ed), Great Dialogues of Plato (1956) .

665 Aristotle, Nicomachean Ethics Book 1 (1991) Chapter 12, 414 [15].

666 Karl Marx and Friedrich Engels, The Communist Manifesto (1888) see Chapter II.

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The point is not to argue for or against spouse-sharing. It is to highlight that not only are

there practical, social challenges with which theorists must contend, but also philosophically

the concept of family has a long, and contested history that problematises the theoretical

divide between public and private.

Jurists may assume that the idea of a boundary between family and civil society

organisations is not fixed but, for regulatory purposes, lines will need to be drawn. This

problem of identifying the boundary between public and private extends beyond issues of

family. Whenever a gathering of people arises, be it a bikie gang, a gentlemen’s club or an

ethnic association, the question of whether it is a public or private association may inform

the extent to which it is enabled, regulated and favoured by law. The practical challenges

associated with drawing those lines are rooted in philosophic disputes and those disputes are

deeply embedded in Occidental thought. The disputes do not need to be resolved in this

thesis. It is enough, for the purposes of this thesis, to identify the contests and the factors

that inform those contests. What is important to establish is that there are gatherings that are

private. They can extend beyond the nuclear family but they ultimately involve intimate

relationships of people who know each other well. These relationships may involve groups

larger than nuclear families but they are generally smaller rather than larger.

F. Conclusion

From the discussion in this chapter a number of conclusions can be drawn.

First, drawing from the easily overlooked but profound observation of Weisbrod that was

underscored by Hansmann and Salamon – there is a third sector. The common law has a

doctrine centred on only one relatively small subsector of that sector – charities – not the

sector as a whole. The common law will remain ‘seriously incomplete’ to quote Weisbrod,667

until it expands the scope of operation of the doctrine to include all of civil society.

667 Burton A Weisbrod, The Nonprofit Economy (Paperback ed, 1991).

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Second, the form an organisation takes may be treated as irrelevant. Weisbrod’s analysis

was not dependent upon the form taken. Hansmann assumed a non-distribution constraint

characterised the organisations he analysed. Beyond that indicia, he considered only one

form of organisation to be necessary. There is nothing in the analysis of James, Salomon,

Colombo and Hall or McGregor-Lowndes which pressed for a particular form for civil

society organisations with the exception, perhaps, of the non-distribution constraint. The

analysis of the concept of family by Gary Becker in mutual benefiting (contractual) terms

parallels legal analysis of associations and further presses for a framework which is not

dependent upon form for analysis of civil society organisations. According to Hansmann, the

form is chosen only because it is the most suitable vehicle to carry out a particular purpose.

Third, it is the purpose pursued, and in particular whether that purpose is for the public

benefit, that is the critical feature of civil society organisations. James segmented civil

society organisations into two types: those for which consumers pay and those where part of

the whole or the good is given. Weisbrod focused on the purpose pursued. He

subsectionalised civil society organisations into public and private and subsectionalised

public organisations into trust and collective. He also ranked them on a 'collectiveness’

index. For Salamon, it was the voluntary provision of public goods that distinguished the

sector. Hansmann similarly pointed to the constituency served as ‘other’ as the distinctive

characteristic of civil society organisations. James pointed out that the purpose was

distinctively to provide a good from within a worldview different from the dominant

hegemony expressed through government. For McGregor-Lowndes, similarly, it is the

‘gratuitous’ transfer (to others) that is distinctive; as was the case with Colombo and Hall.

Fourth, persons are not family unless they are related by blood, marriage or closely

associated through some other extended form of intimate association such as belonging to

the same household. Strangers are not family. If strangers are not family then I theorise that

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where persons are associating in what may be a civil society context, a variable is the degree

of remoteness. In the context of an association, remoteness is evident by the people involved

being strangers, but for their mutual pursuit of a common purpose through a civil society

association. In the context of gratuitous transfers, it is the remoteness of the transferee

beneficiaries from the transferor donors. For convenience I label this variable ‘X’

(‘xenos’).668

Fifth, remoteness is not, however, the only variable informing whether a benefit is public.

From the discussion in the earlier chapters, and from the review of all of the authors

mentioned above, the number of people involved in the association, or as beneficiaries of

transfers, is an express or implied factor in distinguishing public from private. Civil society

organisations are often the expression of significant minorities and can be quite large. For

convenience I label this variable ‘Z’.

Sixth, it should be noted that some authors, notably Hansmann and Colombo and Hall,

sought to expressly exclude why persons associated or gave. Motive was expressly excluded

from the analysis. The concept of motive is, however, present conceptually in the idea of the

non-distribution constraint and in the concept of ‘gratuitous transfers’. I suggest that it is

analytically confusing to impregnate the concept of public benefit with motive. In my view,

public benefit should be treated as a demand side concept. Motive should be analysed

separately as a supply side concept. As I will come to altruistic motives in the next chapter,

and as it is the variable attached to ‘why’; for convenience I now label this variable of

motive ‘Y’ (‘why’).

I conclude, Seventh, that whether a benefit is public or private can be assessed as a function

of X and Z. If a large number of people, who would otherwise be strangers, voluntarily

668 The classical Greek word for stranger.

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associate then the purpose is a public purpose. If a small number of people associate for

private purposes (such as a family or work colleagues gathering to celebrate a birthday) the

association is private.

Eighth, both remoteness and the numbers involved are variables that could be ranked or

measured. If these variables could be ranked or measured, then I theorise that the variables

above could be used to inform a dynamic concept of public benefit. What is public and what

is private can be arranged on a continuum. Weisbrod suggested a collectiveness index.

Colombo and Hall proposed a scale based on donated income for entitlement to shadow tax-

subsidy.

The fundamental contest over a priori assumptions, regarding what is public and what is

private has not been resolved. Factors that inform the division between what is public and

what is private have been elucidated. I theorise that a civil society organisation is public.

When a civil society organisation undertakes transfers the transfers are for public benefit.

Demand is but one side of an economic analysis. Supply is the other. It took some time for

this distinction to be elucidated in economics. It is a helpful theoretical division. Given the

struggle with the Preamble, the separation of the demand factors from the supply in

economic theory is a distinction that can usefully inform jurisprudential developments.

Altruism has been theorised as distinctly linked to the supply of civil society organisations in

economic theory and exploration of the supply side factors occupies the next chapter.

G. Postscript

In an interesting exchange between the lawyer, Sydney Carton, and his client, Charles

Darnay, in the presence of Lorry the banker, Carton says to Darnay: "If you knew what a

conflict goes on in the business mind, when the business mind is divided between good-

natured impulse and business appearances, you would be amused, Mr. Darnay." Lorry

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acknowledged the comment was directed at him and affirmed that in the discharge of

ostensibly private business he must have regard to others. “We men of business, … are not

our own master” he replied. Mr Lorry was averring to his more public duties as a citizen

charged with looking after other citizens’ private business. It is easy at the beginning of the

twenty-first century, when neo-classical economic theory has been so dominant for so long,

to forget that not all people of business do pursue only their own good.669 Mr Lorry’s

professionalism is an example of the complex weave where public and private distinctions

are difficult and are interwoven with the complexities of altruism and self interest. Having

considered the interface of public and private benefit in this chapter, in the next, altruism and

self interest are considered.

669 D Maister, True Professionalism: The Courage to Care about Your People, Your Clients, and Your Career (1997).

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V ALTRUISM

A. Preamble

When, at the close of A Tale of Two Cities, Dickens narrated the thoughts of a man who had

just sacrificed his life that another might live,670 he juxtaposed altruistic and self-interested

motivations. The initial thoughts are of the wellbeing of others: ‘the lives for which I lay

down my life, peaceful, useful, prosperous and happy.’671 The thoughts immediately turn,

though, to self-centred visions. He sees a woman with ‘a child upon her bosom, who bears

[his] name’,672 people who hold ‘a sanctuary in their hearts, and in the hearts of their

descendants, generations hence…weeping for [him] on the anniversary of this day.’673

When all will die, and perhaps imminently, is it self-interested prudence to choose the time,

day and a manner most likely to ensure ‘that my name is made illustrious’,674 or is such self-

sacrifice, which results in the saving of the life of another, always altruistic?

B. Introduction

Chapter III closed noting that development of the doctrine of charitable purpose required

addressing three contested a priori assumptions. The second of those contested a priori

assumptions, it will be recalled, was over the nature of humans. At its simplest, it was stated

that this is a dispute over the existence and nature of altruism. Those contests over the

nature of altruism are the subject of this chapter.

One of the great challenges facing reform of the doctrine of charitable purpose is how it is

possible to move beyond the ‘spirit and intendment’ of the Preamble. In this chapter, I argue

that it is possible to move beyond the ‘spirit and intendment’ of the Preamble by replacing it

670 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 389.

671 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 389.

672 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 389.

673 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 390.

674 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 390.

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with altruism. I argue that altruism stands alongside public benefit as the second essential

characteristic of charitable purpose.675 This is not a novel proposition. The Australian

Charities Definition Inquiry reported that the Preamble ‘has now outlived its usefulness’676

and recommended that: ‘to be regarded as charitable, an entity must have a dominant

purpose which is altruistic and for the public benefit’.677

There is a long line of cases from diverse jurisdictions setting out the principle that altruism

is central to charitable purpose. 678 I argue that it is a ‘mark or test of what is truly

675 See Toronto Volgograd Committee v Minister of National Revenue [1988] 3 FC 251, 258-259 where Marceau J held:

There is one difficulty however with Lord Macnaghten's judgment, a difficulty which, in my opinion, is too often overlooked: it

was a judgment strictly concerned with charitable trusts and was elaborated with a view to reaching all possible objects capable of

giving validity to institutions set up in an altruistic spirit for the furtherance of some beneficial objective.

676 Inquiry into the Definition of Charities and Related Organisations Report of the Inquiry into the Definition of Charities and

Related Organisations (2001) 6.

677 Inquiry into the Definition of Charities and Related Organisations Report of the Inquiry into the Definition of Charities and

Related Organisations (2001) 111.

678 Whilst altruism as a word was only introduced into the English language in 1853 (see discussion in next section) the concept was

established before T V Grant MR famously held in 1805 that the word charity ‘in its widest sense denotes all the good affections,

men ought to bear towards each other; in its most restricted and common sense, relief of the poor’ but that in ‘neither of these

senses is it employed in this Court. Here its signification is derived chiefly from the Statute of Elizabeth’: Morice v Bishop of

Durham [1804] 9 VES 399; 32 ER 656. Wickens, VC in Cocks v Manners (1871) LR 12 Eq 574, 585 held that benefiting others

was central to charity ‘whether the word “charitable” is used in its popular sense or in its legal sense’. Other-regarding motive was

held to be an element of charitable purpose in Pemsel’s case itself by the majority comprising Lords Watson, Herschell and

Macnaghten with Lord Morris; see discussion in Chapter VIII. In Re Delany, Conoley v Quick [1902] 2 Ch 642, 648-9 Farwell J

held that ‘Charity is necessarily altruistic and involves the idea of aid or benefit to others; but, given the latter, the motive

impelling it is immaterial.’ By the early twentieth century the importance of altruism to charitable purpose was often stated. For

examples in Australia see William Taylor and Another v Mathew Taylor and Others [1910] CLR 218, 225, 227 (Griffith, Barton

and Isaccs JJ); Barby and Others v Perpetual Trustee Company (Limited) and Another (1937) 58 CLR 316, 324 where it was held

that to be charitable the ‘gift must proceed from altruistic motives or from benevolent or philanthropic motives’ (Dixon J). In

Canada see Re Morton, Yorkshire & Canadian Trust Ltd v Atherton et al [1941] 4 DLR 763, [779] (Fisher J) citing Re Delany,

Conoley v Quick [1902] 2 Ch 642, 648-9 (Farwell J); Toronto Volgograd Committee v Minister of National Revenue [1988] 3 FC

251 particularly 259 (Marceau J), and 275 (Stone J); Vancouver Society of Immigrant and Visible Minority Women v MNR [1999]

1 SCR 10, 40 [14] and AYSA Amateur Youth Soccer Association v Canada (Revenue Agency) 2007 SCC 42 (Rostein J for the

Court). In England see Re Coats’ Trusts; Coats and Another v Gilmour and Others [1948] Ch 340 (Evershed LJ). Lord

MacDermot summarised the law in 1958 stating ‘there can be no doubt that unselfishness and benevolence are still of the essence

of legal charity. That is not to say, … that the unselfish element must be absolute in the sense that what would otherwise be

charitable will fail to be so if its founders or promoters incidentally take some degree of benefit. The principle, as I understand it,

is that a valid charity must be substantially altruistic and benevolent in its purposes’: see Trustees of the National Deposit Friendly

Society v Skegness Urban District Council [1959] AC 29. This quote was promptly cited with approval in Independent Order of

Odd Fellows Manchester Unity Friendly Society v Manchester Corporation [1958] 3 All ER 378 (Lord Evershed M R). See also

for contra statement Skegness Urban District Council v Derbyshire Miners’ Welfare Committee [1959] AC 807, 824 (Viscount

Simmonds). In Dingle v Turner and Others [1972] AC 601, 614 it was held that a trust must be ‘sufficiently altruistic in nature’ to

qualify as being for a charitable purpose (Lord Macdermott); and Waterson and Others v Hendon Borough Council [1959] 2 All

ER 760 (Salmon J); London Library v Cane and Westminster City Council [1958] 4 RPC 239, 51 R&IT 571, 29 DRA 484, 248-

249; 3 All ER 378 (Sir William Fitzgerald P); In Ireland see Baptist Union of Ireland (Northern) Corporation Ltd v

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charitable’.679 The difficulty is not with the idea. The puzzle is how to theorise it. Altruism

has not been theorised as an alternative to the Preamble in a way that is suitable for

jurisprudential development of the common law. This chapter develops a foundation for that

theory. I argue that when strangers associate to pursue purposes which transcend private

benefit, altruism is present. There are, then, two factors that inform altruism: remoteness

and motive. The more disparate the origins of the persons (remoteness) and the more the

reasons are to benefit others (why) then the greater the altruism. A civil society organisation

is altruistic. When goods are transferred in or through a civil society organisation, some

altruism is evident.

The recommendations of the Australian Charities Definition Inquiry regarding altruism did

not find their way into legislation.680 The cases underscore the importance of altruism but

they do not develop it conceptually. 681 It is necessary, then, to look beyond the cases to

theorise altruism. It is to the scholarship of disciplines other than law, therefore, that this

chapter turns. By exploring altruism in other non-legal disciplines, a concept of altruism

suitable for jurisprudential application is developed through the chapter. Theories explaining

altruism span economics, sociology, political science, administrative science, management

theory,682 theology and linguistics.683 One author has suggested that it has become a

‘[r]orschach blot onto which different people project their expectations, hopes or fears.’684 I

Commissioners of Inland Revenue 26 Tax Cas 335 [1945] NI 99, 357 (MacDermott J); Expert Witness Institute v Commissioners

of Customs and Excise [2002] 1WLR 1674 (CA) [2001] 1 WLR 1658 (Lloyd J); In New Zealand see Educational Fees

Protection Society Inc v Commissioner of Inland Revenue [1992] 2 NZLR 115 [33], [35]-[36], Presbyterian Church of New

Zealand Beneficiary Fund v Commissioner of Inland Revenue [1994] 3 NZLR 363 [28], [30], [32], [38], [40].

679 Baptist Union of Ireland (Northern) Corporation Ltd v Commissioners of Inland Revenue 26 Tax Cas 335 [1945] NI 99, 357

(MacDermott J).

680 Charities Bill (2003) (Cth).

681 Cited at footnote 678.

682 Ludwig Theuvsen, 'Doing Better While Doing Good: Motivational Aspects of Pay-for-Performance Effectiveness in Nonprofit

Organisations' (2004) 15 Voluntas: International Journal of Voluntary and Nonprofit Organisations 117, 118.

683 See C S Lewis, The Four Loves (first published 1960, 2002 ed).

684 Lester Salamon and Wojciech Sokolowski, 'Volunteering in Cross-National Perspective: Evidence From 24 Countries' (Working

Paper No 40, The Johns Hopkins Center for Civil Society Studies, 2001) 1.

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must confess at the outset to this possibility. In the forest of research, I think I see a path

down which a jurist could journey and I set out to describe it.

The Chapter is divided into four substantive sections. The first section explores the

definition of altruism and research into it. The a priori assumptions of jurists will determine

how the research is theorised and so, in the second substantive section, a framework is

offered for managing contested a priori assumptions. Third, and building on the discussion

of the previous chapter, the idea of altruism as integral to the supply side of civil society

organisations is canvassed under the title of Altruistic Organisations. This leads to the final

discussion in the chapter, which proposes how a concept of altruism could be theorised in

such a way as to replace the Preamble in legal theory. In closing this introduction it is

important to also note that altruism joins ultimately with voluntarism to replace the

Preamble. It does not stand alone. This chapter and the next together inform the theory

developed across Chapters VIII and IX.

C. Altruism as a Concept

It will be recalled from Chapter I, that the ‘peculiar favours’ enjoyed by charities at common

law are enjoyed, not only because of their contributions of a ‘public nature’, but also because

those contributions are based in the ‘piety of earlier times’.685 Piety is a word that, whilst

popular in ‘earlier times’, has yielded popularity to the word ‘altruism’. I adopt the word

altruism as it is more commonly used and it carries meanings more precisely in the twenty-

first century. My object in changing from piety to altruism is not to break rank from the

historical development of the law, but rather to find new ways of expressing an aspect of an

old doctrine.

685 Pemsel’s case [1891] AC 531, 583 (Lord Macnaghten):

The Court of Chancery [and its counterparts throughout the common law world] has always regarded with peculiar favour those

trusts of a public nature which, according to the doctrine of the Court derived from the piety of early times, are considered to be

charitable.

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This section has five subsections. First, altruism is defined. Second, an overview of reseach

into altruism is offered to establish that it is now widely accepted that there is such a thing as

altruism.686 Third, consideration is given to the puzzle of motive – what drives altruistic

behaviour? Fourth, this problem that there is not a universal measure or ranking of altruism

is discussed. Fifth, an interim summary closes the section with the point that altruism is not

a vague notion but there are challenges to be addressed if the ‘hopeless task’, of each

individual case being decided on its own facts, is to be avoided.687

1. A Definition of Altruism

George Lewes introduced the word ‘altruism’ into the English language in 1853 with his

translation of Comte's Philosophy of the Sciences.688 Comte evidently invented the word

possibly drawing upon a French legal phrase Alteri huic.689 The Oxford English Dictionary

defines altruism as: ‘[D]evotion to the welfare of others, regard for others, as a principle of

action; opposed to egoism or selfishness.’690

When using the term, Comte intended ‘to establish the opposite reference point to the self-

gratifying, utility-maximizing “economic man” of economic theory.’691 In theoretical

analysis, it is part of a broader class called ‘prosocial behaviour.’692

The three aspects of the definition are all important to this jurisprudential theorising. First,

the concept is the foundation of action. It is not (just) a feeling or sentiment but the pursuit

686 Later in this chapter I will come to the philosophic and theological arguments that affirm, deny and explain the phenomenon

labelled ‘altruism’.

687 Pemsel’s case [1891] AC 531, 587 (Lord Macnaghten).

688 George Lewes, Comte's Philosophy of the Sciences (George Lewes trans, 1890 ed); see also J A Simpson and E S C Weiner, The

Oxford English Dictionary (2nd ed, 1989).

689 Helmut Anheier and Regina List, A Dictionary of Civil Society, Philanthropy and the Non-Profit Sector (2005) 6; see also J A

Simpson and E S C Weiner, The Oxford English Dictionary (2nd ed, 1989). Note also the similarity with italian word ‘altrui’

meaning ‘others.’

690 J A Simpson and E S C Weiner, The Oxford English Dictionary (2nd ed, 1989).

691 Helmut Anheier and Regina List, A Dictionary of Civil Society, Philanthropy and the Non-Profit Sector (2005) 6.

692 Graham Vaughan and Michael Hogg, Introduction to Social Psychology (1998) 324; David Shaffer, Social and Personality

Development (2000) 306.

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of altruistic purpose can be assessed by reference to objects pursued. Second, it spans a

range. It spans from the weaker form of ‘regard for others’ to the stronger ‘[d]evotion to the

welfare of others.’ Third, it is defined with reference to, and as the opposite of, egoism or

selfishness.

If altruism exists, as the next subsection seeks to establish; and if the strength of altruistic

purpose can be theorised as on a continuum between two extremes – complete selfishness at

one extreme and complete devotion to the welfare of others at the other – then altruism, as

the ‘mark or test of what is truly charitable’693 is capable of quite sophisticated theoretical

analysis. A definition is but the first step.

2. Altruism is: An Overview of Research

Altruism is now accepted as an international phenomenon of significant proportions.

Research by the Johns Hopkins Comparative Nonprofit Sector Project published in 2001,

spanning 24 countries, found significant diversity in contributions made voluntarily but that

in all of the nations investigated, people give of time and money in a way that is irrational

when considered from a purely economic basis.694 In further research published in 2003, the

results of investigation across 35 countries established that 190 million people volunteer

their services.695 That amounted to about 221 volunteers per 1,000 adult population.696 It is

difficult to estimate the total amount of voluntary contributions but there is evidence to

suggest that volunteer work contributed through civil society organisations is ‘equivalent to

another 11 million full time employee equivalent jobs’.697 To these contributions must be

693 Baptist Union of Ireland (Northern) Corporation Ltd v Commissioners of Inland Revenue 26 Tax Cas 335 [1945] NI 99, 357

(MacDermott J);

694 Lester Salamon and Wojciech Sokolowski, 'Volunteering in Cross-National Perspective: Evidence From 24 Countries' (Working

Paper No 40, The Johns Hopkins Center for Civil Society Studies, 2001) 4.

695 Lester Salamon, S Sokolowski and Regina List, Global Civil Society: An Overview (2003) 14.

696 Lester Salamon, S Sokolowski and Regina List, Global Civil Society: An Overview (2003) 14.

697 Lester Salamon and Wojciech Sokolowski, 'Volunteering in Cross-National Perspective: Evidence From 24 Countries' (Working

Paper No 40, The Johns Hopkins Center for Civil Society Studies, 2001) 3.

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added the gifts of money and other things which fund and enable the work of the employees

in those organisations.

Altruism may be evident throughout the world but the form of contribution varies greatly

from community to community. The international research is supplemented by other

country-specific research on giving and volunteering. For example, research has found that

‘the best’ country for blood donation, France, is the ‘worst’ in willingness to give money for

the support of the Third World.698 The highest-ranked country for volunteering, Norway, is

near the bottom in giving blood.699 This leads Ting and Piliavin to the observation that ‘we

cannot make any strong statements regarding comparative altruism.’700 The form altruistic

contributions take also varies from nation to nation. For example, a comparison of attitudes

to giving between the United States and the United Kingdom found that in the United

Kingdom conceptions of private, undisclosed generosity dominate whereas in the United

States of America, more public conceptions of altruism dominate thinking.701

The conclusions to be drawn are that there is now a body of research showing that people do

contribute in ways that may be described as altruistic, and the phenomenon is international.

If each nation expresses altruism differently, different factors might inform its presence or

absence from jurisdiction to jurisdiction. Does this not simply plunge analysis back into the

subjectivity concerns raised by Lord Macnaghten in Pemsel’s case? 702 The answer is no.

The next section explains why.

698 Jen-Chieh Ting and Jane Allyn Piliavin, 'Altruism in Comparative International Perspective' in Jim Phillips, Bruce Chapman and

David Stevens (eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 51, 52.

699 Jen-Chieh Ting and Jane Allyn Piliavin, 'Altruism in Comparative International Perspective' in Jim Phillips, Bruce Chapman and

David Stevens (eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 51, 52.

700 Jen-Chieh Ting and Jane Allyn Piliavin, 'Altruism in Comparative International Perspective' in Jim Phillips, Bruce Chapman and

David Stevens (eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 51, 52.

701 Karen Wright, 'Generosity Versus Altruism: Philanthropy and Charity in the US and UK' (Civil Society Working Paper No 17,

London School of Economics and Political Science, 2002) 23-25.

702 Pemsel’s case [1891] AC 531, 587 (Lord Macnaghten).

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3. What Drives Altruistic Behaviour?

If motive itself can be measured, analysis may be able to progress beyond simply valuing

time. It may be possible to actually measure altruism. Altruism is a complex phenomenon.

There is a great variety of factors at play and methods of measuring those factors. At the

most basic level, altruism can be measured by volunteering. The United Nations Handbook

of National Accounting: Handbook on Non-Profit Institutions in the Systems of National

Accounts sets out a method for valuing volunteer labour input, having regard to the two

presently dominant methods of opportunity cost and market or replacement cost.703 It may

be possible though to progress further. The factors informing altruism range from reasons

that appear to be entirely self-sacrificing through to those that seem to be entirely self-

interested.704 Motives are ‘rarely if ever pure’ and ‘people have multiple motives in play for

doing anything’.705 They include the response of others706 and whether those others act

altruistically or at least pro-socially,707 empathy,708 being helpful, ‘to avoid feeling

helpless,’709 a calculation of the cost,710 sanctions,711 and the competence to deal with the

situation.712 There appears to be a complex interaction of intrinsic and extrinsic

motivations713 and some research suggests altruistic behaviour is genetic.714 As research into

703 United Nations Department of Economic and Social Affairs Statistics Division, Handbook on Non-Profit Institutions in the System

of National Accounts (2003) 69. See also Matthias Benz, 'Not for the Profit, but for the Satisfaction? - Evidence on Worker Well-

Being in Non-Profit Firms' (2005) 58 Kyklos 155.

704 See Roger Bennett and Anna Barkensjo, 'Internal Marketing, Negative Experiences, and Volunteers' Commitment to Providing

High-Quality Services in a UK Helping and Caring Charitable Organisation' (2005) 16 Voluntas: International Journal of

Voluntary and Nonprofit Organisations 251; Matthias Benz, 'Not for the Profit, but for the Satisfaction? - Evidence on Worker

Well-Being in Non-Profit Firms' (2005) 58 Kyklos 155.

705 Mathew Liao-Troth, 'Are they here for the Long Haul? The Effects of Functional Motives and Personality Factors on the

Psychological Contracts of Volunteers' (2005) 34 Nonprofit and Voluntary Sector Quarterly 510, 513-514.

706 Including the mass media and parent modelling. See Wayne Weiten, Themes & Variations (1998) 446.

707 Graham Vaughan and Michael Hogg, Introduction to Social Psychology (1998) 332.

708 Graham Vaughan and Michael Hogg, Introduction to Social Psychology (1998) 329-30.

709 Richard Sharf, Theories of Psychotherapy & Counselling (2000) 36.

710 Graham Vaughan and Michael Hogg, Introduction to Social Psychology (1998) 335-36.

711 See Ernst Fehr and Bettina Rockenbach, 'Detrimental Effects of Sanctions on Human Altruism' (2003) 422 Nature 137.

712 Graham Vaughan and Michael Hogg, Introduction to Social Psychology (1998) 340.

713 See Roland Benabou and Jean Tirole, 'Intrinsic and Extrinsic Motivation' (2003) 70 Review of Economic Studies 489; Carlo

Borgaza and Ermanno Tortia, 'Worker Motivations, Job Satisfaction, and Loyalty in Public and Nonprofit Social Services' (2006)

35 Nonprofit and Voluntary Sector Quarterly 225 .

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altruism progresses the appropriateness and the limitations of research tools become clearer

and with that there emerges a clearer picture of what altruism is and what are its

manifestations.715 With this clarification, it seems that there are myriad drivers but indicia of

what is ‘altruistic’ are distilling certain characteristics.716 These characteristics, once

identified, can possibly be measured. If they can be measured, then there is the beginning of

a basis for assessing altruism itself, not just indicia of it such as volunteering. Further, that

measurement could be at least on an ordinal if not on an integral or ratio set scale.717 At this

point, all that can be stated, though, is that research into measurement of motives for altruism

is progressing but there are not universally agreed indicia or measures.

4. No Universal Measure or Ranking of Altruism but a Continuum

The lack of uniformity in indicia or measurement has not prevented ranking of motives. The

authors of Giving Australia, consistent with an approach becoming more common,718

acknowledge the vastness of the literature and adopt a simple concept of a continuum of

altruism reporting: ‘Giving can also be viewed as occurring along a continuum from altruism

714 Wayne Weiten, Themes & Variations (1998) 446; James Kalat, Biological Psychology (2001) 16; David Shaffer, Social and

Personality Development (2000) 308-309; Graham Vaughan and Michael Hogg, Introduction to Social Psychology (1998) 325.

Interestingly, altruism has now been found in an indirect form in fish: see Lee Dugatkin, 'Trust in Fish' (2006) 441 Nature 937 .

715 For a good example of use of presently accepted methods see Tom Smith, Altruism and Empathy in America: Trends and

Correlates (2006).

716 See E Gil Clary, Mark Snyder and Arthur Stukas, 'Volunteer's Motivations: Findings from a National Survey' (1996) 25 Nonprofit

and Voluntary Sector Quarterly 485; Roland Benabou and Jean Tirole, 'Intrinsic and Extrinsic Motivation' (2003) 70 Review of

Economic Studies 489; Edward Deci and Ryan Richard, 'The "What" and "Why" of Goal Pursuit: Human Needs and the Self

Determination of Behaviour' (2000) 11 Psychological Inquiry 227; Monica Hwang, Edward Grabb and James Curtis, 'Why Get

Involved? Reasons for Voluntary-Association Activity Among Americans and Canadians' (2005) 34 Nonprofit and Voluntary

Sector Quarterly 387; Ludwig Theuvsen, 'Doing Better While Doing Good: Motivational Aspects of Pay-for-Performance

Effectiveness in Nonprofit Organisations' (2004) 15 Voluntas: International Journal of Voluntary and Nonprofit Organisations

117.

717 One model that explores motives divided them into six ‘dimensions’ and is called the Volunteer Function Inventory. See E Gil

Clary, Mark Snyder and Arthur Stukas, 'Volunteer's Motivations: Findings from a National Survey' (1996) 25 Nonprofit and

Voluntary Sector Quarterly 485 and also Mathew Liao-Troth, 'Are they here for the Long Haul? The Effects of Functional

Motives and Personality Factors on the Psychological Contracts of Volunteers' (2005) 34 Nonprofit and Voluntary Sector

Quarterly 510, 513 where the volunteer function inventory has been married with other theories to develop more complex

methodologies for anticipating volunteer behaviour.

718 See the entry on ‘altruism’ in Helmut Anheier and Regina List, A Dictionary of Civil Society, Philanthropy and the Non-Profit

Sector (2005).

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– with no expectation of return – through to giving that entails reciprocity of either implicit,

explicit, more or less tangible returns to the giver’.719

This approach, of ranking on a continuum, has the advantage of simplicity and enables the

empirical data, as it emerges, to inform where on the continuum the level of altruism may be

set without having to embrace a particular method or framework. The concept seems equally

applicable to civil society organisations. In principle, there is not a reason why civil society

organisations could not similarly be ranked on a continuum of altruism. Indeed, it may be

simpler. The manifestations of motive may be more objective. In the context of civil society

organisations, for example, purposes are almost invariably set out in the constituent

documents. The ways those purposes are pursued in activities, can be taken as indicia if

there is ambiguity.720 At this point in this argument, though, all that is necessary is to note

that there is nothing in the research inconsistent with a concept of a continuum of altruism

There is judicial support for the idea, and the Australian research is an example of the

concept of a continuum becoming an acceptable conceptualisation.

5. Interim Summary

It will be recalled from the definition discussion that began this section that altruism finds

expression in the pursuit of purposes that benefit others. The form of those other benefiting

pursuits may be quite differently expressed in different nations, age groups and religious

expressions. There is considerable research into indicia of altruism that has not reached a

consensus on measurement. One way of managing the contests may be to take the diverse

factors into account and simply create a continuum of altruism from strongest to weakest.

Altruism is not a vague notion. It is the subject of detailed investigation across the world

719 Centre for Australian Community Organisations and Management, Giving Australia: Research on Philanthropy in Australia:

Australians Giving and Volunteering 2004 (2005) ix.

720 Congregational Union of NSW v Thistlethwaite (1952) 87 CLR 375; Vancouver Society of Immigrant and Visible Minority Women

v MNR [1999] Can Sup Ct Lexis 12.

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and its identification, classification and measurement is progressing at a rapid rate. How

then is it to be theorised for jurisprudential application?

D. Theorising Altruism for Jurisprudential Development

1. Introduction

Given that altruism ‘is’, and that the common law has already accepted the concept into its

understanding of the doctrine of charitable purpose (albeit not adequately theorised to

provide part of an alternative conception) the next challenge is to theorise it in a way that is

useful to jurists who wish to replace the Preamble. That is the challenge of this section. It is

complicated by conflicting worldviews which must be acknowledged and accommodated.

The conclusion to which I will come, is that theories in relation to altruism are not capable of

reconciliation at any level. At each level there is, however, a continuum between two

extremes. In this section, I argue that there is a basis for a theoretical bridge between the two

extremes upon which disputants may contest the form of altruism accepted into law. I do not

conclude that there is a middle ground – for I do not consider that to be the present state of

theorising.

2. Theorising Altruism: Two Alternatives

The law, at least in this area of civil society organisations such as charities, has, for a long

time, been premised both on the assumption that humanity is characterised by limited

altruism721 and is essentially associative.722 Beneath those assumptions, though, lie deep

divides. This is because theorising altruism reduces to contests over human nature. The

threshold challenge to be addressed in this section is, then, how to reduce the contests into a

framework that jurists can manage. I adopt a classification proposed by the Scottish,

Enlightenment philosopher, David Hume. David Hume summarised the alternatives in the

following way:

721 H L A Hart, The Concept of Law (1961) 191-192.

722 Keith L Fletcher, The Law Relating to Non-Profit Associations in Australia and New Zealand (1986) 7.

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There are certain sects, which secretly form themselves in the learned world, as well as factions in

the political; and though sometimes they come not to an open rupture, they give a different turn to

the ways of thinking of those who have taken part on either side. The most remarkable of this kind

are the sects, founded on the different sentiments with regard to the dignity of human nature;

which is a point that seems to have divided philosophers and poets, as well as divines, from the

beginning of the world to this day. Some exalt our species to the skies, and represent man as a

kind of human demigod, who derives his origin from heaven, and retains evident marks of his

lineage and descent. Others insist upon the blind sides of human nature, and can discover nothing,

except vanity, in which man surpasses the other animals, whom he affects so much to despise. If

an author possess the talent of rhetoric and declamation, he commonly takes part with the former:

If his turn lie towards irony and ridicule, he naturally throws himself into the other extreme.723

Contestable, antiquated and perhaps overly simplistic as this division into these two

typologies is, these divergent assumptions are foundational to at least some legal theory.724

On the one hand, religious belief systems of all kinds have for millennia exhorted altruistic

behaviour725 and it has been taken as axiomatic by many that altruism is possible. Adopting

Hume’s phrase, I label this the ‘demigod’ school. There are those who belong to what Hume

called the ‘vanity school’. For these people, altruism is not only an unacceptable concept but

it is ‘intellectually unacceptable to raise the question of whether “true” altruism could

exist.’726 So, I adopt the division between the two typologies as it provides a platform for

much more sophisticated development between these extremes. In this section I summarise

the basis upon which concessions are being made by the ‘vanity’ schools and note that the

‘demigod’ schools, too, acknowledge the complex interplay of self-interested prudence and

723 David Hume, 'Of the Dignity of Meanness of Human Nature' in Eugene F. Miller (ed), Essays, Moral, Political and Literary (first

published 1742, 1985 ed) 80, 80. Italics added.

724 John Farrar, Introduction to Legal Method (1977) 3.

725 See Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David

Stevens (eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87.

726 J A Piliavin and Hong-Wen Charng, 'Altruism: A Review of Recent Theory and Research' (1990) 16 Annual Review of Sociology

27, 28.

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other-centred benevolence. The level of divergence between the two schools cannot be

overstated and these divergences are considered in the next two subsections.

3. Nothing, Except Vanity

The view that people only act out of self-interest is traceable to at least Hobbes,727 some

might say Machiavelli,728 but arguably back to Augustine’s conception of the City of Man729

and probably beyond. It builds from the premise that all action is for the pursuit of self-

interest. If an action seems to be for the benefit of others, there are psychic benefits such as

a ‘warm inner glow’730 for the ‘altruist’ which makes the action rational and in the pursuit of

self-interest.731 Once a view of human nature is taken that all ostensibly altruistic action is

explicable as derived from self-interest alone, it cannot be disturbed for it is an a priori

assumption. This view became so dominant that, until the mid to late 1970s, it did not

matter ‘…whether one spoke to a biologist, a psychologist, a psychiatrist, a sociologist, an

economist, or a political scientist the answer was the same: anything that appears to be

motivated by a concern for someone else’s needs will, under closer scrutiny, prove to have

ulterior selfish motives.’732

This extreme view is not now the only, nor even the dominant, view. The theoretical

landscape of altruism has changed. By 1990, the research and theory on altruism could be

summarised as ‘the data from sociology, economics, political science, and social psychology

727 Thomas Hobbes, Leviathan, Great Books of the Western World (first published 1651, 1992 ed).

728 Nicolo Machiavelli, The Prince, Great Books of the Western World (W K Marriott trans, first published 1515, 1992 ed).

729 Saint Augustine, On Christian Doctrine, Great Books of the Western World (J F Shaw trans, first published 427, 1992 ed).

730 J Andreoni, 'Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence' (1989) 97 The Journal of Political

Economy 1447 ; Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg

(eds), The Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117, 130.

731 Anne M McGuire, ''It was Nothing' - Extending Evolutionary Models of Altruism by Two Social Cognitive Biases in Judgments

of the Costs and Benefits of Helping' (2003) 21 Social Cognition 363.

732 J A Piliavin and Hong-Wen Charng, 'Altruism: A Review of Recent Theory and Research' (1990) 16 Annual Review of Sociology

27, 28.

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are all at least compatible with the position that altruism is part of human nature.’733 The

paradigm shift is argued to have occurred in the mid 1970s.734 Hamilton’s early work735

which led to the work by Robert Trivers in 1976, entitled The Evolution of Reciprocal

Altruism,736 provided the genesis in evolutionary biology theory although it has since been

suggested that altruism is compatible with, and possibly foreshadowed by, Charles

Darwin.737 The foundations of the shift in economic theory are traceable to at least Kenneth

Arrow in 1963.738 In 1988 Robert Frank, building on this early work, put forward a cogent

argument as to why altruism is consistent with rational self-interest.739 By the beginning of

the twenty-first century, Ben-Ner and Putterman could argue that the discourse had reached a

point where it could be said that ‘kin altruism across human cultures is an illustration of the

fact that organic evolution can produce organisms that are not strictly self-interested.’740

This view of the progress in evolutionary biology theory led them to argue that ‘a scientific

view of human nature’741 transcends the narrowness of neoclassical economic theory which,

they say, will move to a point where pure self-interest is a special case.742 So, theorising

from this ‘vanity school,’ a priori assumptions are at a point where the limited altruism and

associative nature of humanity, which is presumed in the doctrine of charitable purpose, is

explicable from a scientific view of human nature. It is important to note, though, that whilst

733 J A Piliavin and Hong-Wen Charng, 'Altruism: A Review of Recent Theory and Research' (1990) 16 Annual Review of Sociology

27, 28.

734 J A Piliavin and Hong-Wen Charng, 'Altruism: A Review of Recent Theory and Research' (1990) 16 Annual Review of Sociology

27, 28.

735 W D Hamilton, 'The Genetical Evolution of Social Behaviour I' (1964) 7 Journal of Theoretical Biology 1; W D Hamilton, 'The

Genetical Evolution of Social Behaviour II' (1964) 7 Journal of Theoretical Biology 17; W D Hamilton, 'Innate Social Aptitudes

of Man: an Approach from Evolutionary Genetics' in R Fox (ed), Biosocial Anthropology (1975) 133.

736 Robert Trivers, 'The Evolution of Reciprocal Altruism' (1976) 46(1) Quarterly Review of Biology 35 .

737 Avner Ben-Ner and Louis Putterman, 'On some Implications of Evolutionary Psychology for the Study of Preferences and

Institutions' (2000) 43 Journal of Economic Behavior and Organisation 91, 92.

738 See K Arrow, 'Uncertainty and the Welfare Economics of Medical Care' (1963) 53 American Economic Review 941. See also

discussion in J A Piliavin and Hong-Wen Charng, 'Altruism: A Review of Recent Theory and Research' (1990) 16 Annual Review

of Sociology 27, footnote 3.

739 See Robert H Frank, Passions with Reason - The Strategic Role of the Emotions (1988).

740 Avner Ben-Ner and Louis Putterman, 'On some Implications of Evolutionary Psychology for the Study of Preferences and

Institutions' (2000) 43 Journal of Economic Behavior and Organisation 91, 97.

741 Avner Ben-Ner and Louis Putterman, 'On some Implications of Evolutionary Psychology for the Study of Preferences and

Institutions' (2000) 43 Journal of Economic Behavior and Organisation 91, 97.

742 Avner Ben-Ner and Louis Putterman, 'On some Implications of Evolutionary Psychology for the Study of Preferences and

Institutions' (2000) 43 Journal of Economic Behavior and Organisation 91, 97.

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there has been a shift toward embracing the concept of altruism, that shift has been based on

extensions of evolutionary, biological theory and rational self-interest. It has not been based

on acceptance of a priori assumptions of a demigod worldview. The a priori assumptions

remain intact. There is a base, though, the span of a bridge reaching out toward the other

side of an ideological chasm. There is not an acceptance of the alternative perspectives

foundation.

4. A Kind of Human Demigod

In contrast with the ‘nothing except vanity’ schools of human nature, there are those who

‘exalt our species to the sky’. They are people who embrace altruism as inherent in human

nature. Frequently, they draw upon a religious worldview but that is not necessarily so.

They may simply be persons who, to use Hume’s phrase: ‘possess the talent of rhetoric and

declamation.’ As the secular and sacred foundations of both perspectives share a similar

anthropology (people are capable of altruism) and possibly even a similar teleology (self-

perfection)743 in outworking, they may produce very similar behavioural outcomes.

Religious foundations provide both the command to behave altruistically and the theological

justification for that behaviour. One of the ‘four virtues of Buddha’ is a pure self, which is

distinguished from self in the pursuit of selfish desire. 744 The purpose of Zakaat is ‘to make

(non-Muslims) aware of how Islam teaches people to treat one another with love and

altruism.’ Muslims are extolled to ‘establish regular prayer and to practice regular “Zakaat”

(charity)’.745 The Jewish tradition, likewise, has similar exhortations to charitable giving,

and a division of charity into eight degrees.746 Theologically, if there is a benevolent, divine

743 See Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David

Stevens (eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87.

744 Soka Gakkai International USA, Living Buddhism, Buddhist Concepts for Today's Living (1): The Four Virtues of the Buddha:

Breaking Out of their Lesser Self (2002) <www.sgi-usa.org/buddhismtoday> at 6 October 2006.

745 Categorised as one of the group of ‘concise injunctions’ in Hussain Islamic Jurisprudence. Islamic Academy, Islam the Glorious

Religion <www.islamicacademy.org> at 6 October 2006.

746 Moses Ben Maimon known as Rabbi Maimonides, The Laws of the Hebrews, Relating to the Poor and the Stranger (1840) 67.

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Being, and people are created by that Being, then human nature being derived from that

being, is also capable of benevolence toward others. On this basis, altruistic behaviour is a

manifestation of the divine nature.747

The expectation of altruism does not need a supra-human foundation. Such a perspective

can derive principally from a feeling or moral sentiment.749 A sentiment that identifies with

people and sees all as connected. This perspective was succinctly summarised in the

twentieth century by Germaine Greer in The Female Eunuch in the following way:

Half the point in reading novels and seeing plays and films is to exercise the faculty of sympathy

with our own kind, so often obliterated in the multifarious controls and compulsions of actual

social existence. For once we are not contemptuous of Camille or jealous of Juliet we might even

understand the regicide or the motherfucker. That is love.750

There has been a renewed interest in rediscovering this secular foundation for the demigod

school. Will Kymlicka illustrates a current articulation in wording consistent with the quote

from Hume that opened this section:

If we are chronically distrustful and pessimistic, we are unlikely to find the will to form the sorts

of relationships and projects that make life worth living. We can call this general outlook one of

“charity”, since it involves taking a charitable view of other people and of their potential. I believe

that charity in this broad sense – thinking charitably about others – is indeed necessary for self-

perfection, even on a purely secular level.751

747 An example of the New Testament teaching to this effect is:

Through these he has given us his very great and precious promises, so that through them you may participate in the divine

nature and escape the corruption in the world caused by evil desires.

The Holy Bible New International Version (1984) 2 Peter 1:4.

748 Alan Ware, Between Profit and State (1989) 119.

749 Adam Smith, The Theory of Moral Sentiments (first published 1789, 1971 ed).

750 Germaine Greer, The Female Eunuch (1993) 163.

751 Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David Stevens

(eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87, 111-12.

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In an approach reminiscent of Plato752 and some virtue ethicists,753 he argued that by being

charitable we pursue the good and in so doing, act in a way that is most to our own personal

advantage.

His point is that ‘outside a theological context, supply side arguments are by definition

prudential arguments: they tell us how to improve the quality of our lives.’754 These points

by Kymlicka, evidence the compatibility of secular approaches to altruism with religious

concern for others.

5. Interim Summary

In both the religious and the secular articulations discussed, are two dimensions. First, there

is other benefiting action and second there is benefit for the altruist. Augustine labelled the

two as benevolence and prudence.755 The exhortation and aspiration to pure altruism may be

present in both the religious and secular articulations of this approach but the reality is of a

murky mixing of prudence and benevolence. In all cases there is observable benefit for

others. In the context of motive, however, it is interpreted through the worldview of the

theorist. The challenge for this thesis is to bring these two extremes of self-interested

prudence and other centred benevolence into some sort of relationship suitable for

jurisprudential analysis. The theoretical developments discussed provide a platform and

economists have taken these insights and applied them in the context of civil society

organisations. The next section considers developments from within that discipline.

752 Plato, The Dialogues of Plato, Great Books of the Western World (Benjamin Jowett trans, 1992 ed).

753 See Peter Geach, The Virtues (1977); Phillippa Foot, Virtues and Vices (1978); Thomas Hurka, Virtue, Vice and Value (2001).

754 Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David Stevens

(eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87, 112.

755 Saint Augustine, The Confessions, Great Books of the Western World (R S Pine-Coffin trans, first published 400, 1992 ed); Saint

Augustine, On Christian Doctrine, Great Books of the Western World (J F Shaw trans, first published 427, 1992 ed) 745.

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E. Altruistic Associations

1. Introduction

In the last chapter, various theories, focused on the demand side, were discussed and the

centrality of the theme of providing benefit to others was explored. In this section of this

chapter, the supply side of the equation is explored in a limited way. Rob Atkinson is a

lawyer trained in economics who, as long ago as 1990, theorised altruism ‘to be the

continental divide in the nonprofit sphere’.756 He also subsegmented civil society

organisations, into ten classes. 757 His insights open the section. That discussion is followed

by a later review by Susan Rose-Ackermann758 whose more general observations on altruism

in civil society organisations locate these organisations in a unique space in society.

Together these two authors provide a way of envisaging altruism for subsegmenting civil

society organisations, and also of distinguishing civil society organisations from other

organisations. The groundbreaking work of Ben-Ner and Van Hoomissen,759 bringing

together the supply and demand sides of these organisations characterised by altruism,

follow. Richard Steinberg’s most recent, and most comprehensive attempt at an overarching

theory, closes the section. As with the preceding chapter on Benefit, the object is not to

review every work on economics dealing with altruism, but rather to show ways in which

altruism has beeen theorised in organisations such as charities, and draw from that clues as to

how law might similarly theorise the concept.

For a market to exist, including a market for civil society organisations and the goods and

services they supply, there must not only be a demand for such, but also supply to meet that

demand. For charities and other civil society organisations to exist, someone has to be

willing to make the altruistic contributions necessary to establish the organisations and keep

756 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 509.

757 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 565-66.

758 Susan Rose-Ackerman, 'Altruism, Nonprofits, and Economic Theory' (1996) 34 Journal of Economic Literature 701.

759 Avner Ben-Ner and Theresa Van Hoomissen, 'Nonprofit Organisations in the Mixed Economy: A Demand and Supply Analysis'

(1991) 62 Annals of Public and Cooperative Economics 519.

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them running. ‘Without founding entrepreneurs and those managers and board members

willing to play a continuing role in the evolution of the organisation, the nonprofit share

would obviously fall to zero.’760

‘Economists assume that each individual pursues his or her self-interest as they see it.’761

When the typology of the self-interested, utility-maximising individual is applied to civil

society organisations, the outcome to be expected is less efficiency, less drive for excellence

and less conscientious behaviour. This is because the material benefits of ownership that

drive efficiency, are removed.762 At the foundation of supply side analysis is, then, an

ambiguity inherent in adopting a for-profit model of profit maximisation as the driver of

supply into a voluntary or nonprofit environment.763 How this tension has been theorised

from an ‘often simplified’764 typology of human nature, whilst remaining within the

framework of neoclassical economics, provides insights useful for jurists. Robert Atkinson

provides an essential beginning.

2. Robert Atkinson and a Weak Form of Altruism

In Atkinson’s view, whilst market failure on the one hand (Hansmann) and government

failure on the other (Weisbrod) ‘give plausible and coherent account of the Third Sector’,

that account is ‘incomplete’.765 The account is incomplete as a description of these

760 Richard Steinberg, 'Economic Theories of Nonprofit Organisations - An Evaluation' in Helmut Anheier and Avner Ben-Ner (eds),

The Study of the Nonprofit Enterprise - Theories and Approaches (2003) 277, 282; See also Avner Ben-Ner and Theresa Van

Hoomissen, 'Nonprofit Organisations in the Mixed Economy: A Demand and Supply Analysis' (1991) 62 Annals of Public and

Cooperative Economics 519, 532.

761 Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The

Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117, 117.

762 Dennis Young, 'Entrepreneurs, Managers, and the Nonprofit Enterprise' in Helmut Anheier and Avner Ben-Ner (eds), The Study of

the Nonprofit Enterprise - Theories and Approaches (2003) 161, 164.

763 Dennis Young, 'Entrepreneurs, Managers, and the Nonprofit Enterprise' in Helmut Anheier and Avner Ben-Ner (eds), The Study of

the Nonprofit Enterprise - Theories and Approaches (2003) 161, 162.

764 Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The

Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117, 117.

765 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 505, 509.

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organisations, because of its ‘reliance on the perspective of neo-classical economics [which]

leads it to overlook altruism’. He observed:

The benefits provided by organisations on one side of the divide flow to their members in the

form of ordinary consumer goods and services purchased at fair market value; the organisations

on this side of the nonprofit range are mutual benefit nonprofits. I maintain that all other

organisations that are truly nonprofit exhibit altruism in one form or another.766

Atkinson at the outset, therefore, postulated that civil society organisations may be divided

into two mutually exclusive and collectively exhaustive groups:

1. mutual benefit nonprofits; and

2. altruistic nonprofits.767

Atkinson’s definition of altruism is critical. He avoided the ‘subjective selflessness that is

hard to identify in particular cases and thus of limited utility as a criterion for government

policies toward nonprofits’.768 He opted instead for a weak altruism which ‘is not at odds

with contemporary economic analysis of altruism itself as a self regarding preference’.769

Atkinson’s altruists ‘may be motivated wholly or in part by a desire for fame, a good name,

divine favour (now or hereafter) or some other ‘selfish’ concern’.770 ‘What is distinct about

[them] is not that they give without gain, but that any satisfaction they derive from giving is

not in the form of a material quid pro quo for their donation.’771 He thus accommodated

both the demigod school and the vanity school.

766 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 509-10.

767 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 510 particularly footnote 23. It

should be noted that this perspective was not unique to Atkinson. Hansmann mentioned it and quoted an author of California’s

twofold classification for religious nonprofits as dividing between charitable or public benefit corporations on the one hand and

mutual benefits on the other. Hansmann appeared to be of the view that these two categories do not adequately encompass

commercial entrepreneurial nonprofits. See Henry Hansmann, 'Reforming Nonprofit Corporation Law' (1981) 129 University of

Pennsylvania Law Review 500, 584-85.

768 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 520 footnote 64, 526.

769 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 526.

770 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 526.

771 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 526.

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On the basis of analysis rooted in this weak altruism, Atkinson considered ‘the locus of

benefits in each of Hansmann’s four categories of nonprofits: donative entrepreneurials,

donative mutuals, commercial entrepreneurials, and commercial mutuals.772 This approach

leads to ‘ten different species of nonprofits, which fall into two broad general categories.’773

Those categories are altruistic organisations and mutual benefit organisations. Of these ten

categories of ‘nonprofits’, clearly it is the civil society organisations that have as their

defining characteristic the sale of private goods to members (Atkinson’s Type 10) that are

only a mutual benefit organisation and ‘as they arise and operate essentially for the benefit of

their members… they lack an essential element of altruism in any of its various

manifestations.’774 The other nine types all manifest the weak altruism of Atkinson in some

way or another.775 Whilst a little long, Atkinson’s own summary cannot be surpassed. He

stated:

The role of altruism is clearest in donative organisations that benefit a class other than their

members, whether control is in the hands of donors themselves (Type 4), beneficiaries (Type 3),

or third parties (Type 1). Altruism can also be found in both entrepreneurial (Type 2) and mutual

(Type 5) donatives that benefit the donors themselves, but only under special circumstances.

Either the benefits must be in the form of public goods, as with listener-sponsored radio, or

individual donors’ receipt of benefits must be independent of their gifts, as in the case of needy

congregants who receive their churches’ relief without regard to their own contributions. Even

though, in the latter case, the benefits provided are private goods, the provision is ‘socialized.’

Altruism is not limited to donative nonprofits. Entrepreneurial commercials – commercials not

controlled by those who purchase their products – can confer uncompensated benefits either on

their own customers, in the form of lower prices or higher quality (Type 7), or on their parties, in

the form of cross-subsidization (Type 6). Genuinely non-profit hospitals are examples of the

772 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 520.

773 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 520.

774 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 562.

775 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 566.

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former; NYU’s operation of the Mueller Macaroni Company illustrates the latter. As we saw in

the case of Type 8 organisations, an entrepreneurial commercial can also use the proceeds of its

sales for the benefit of its controllers. But for such an organisation to be altruistic, the benefits

would have to be either public goods or socialized private goods. Finally, mutual commercial

organisations exhibit altruism if they use the proceeds from their sales to member-controllers to

benefit others, as arguably occurs on a small scale in church bazaars and a large scale in the

American Bar Endowment’s insurance program (Type 9).776

From Atkinson’s perspective, what is critical about the organisations is that supply of civil

society organisations arises from altruistic motivations in all but the mutual benefit

organisations. Furthermore, the extent and type of altruism are capable of delineation or

subsectionalisation so that, if the law is to grant favour based on altruism, there are ten

categories identified by Atkinson into which civil society organisations may be

subsectionalised for the purposes of assessing the nature, and possibly extent, of altruism as

a basis for entitlement to favour. This is a much more sophisticated division of organisations

than that presently applied at common law which involves classifying into ‘four principal

divisions’ of charitable purpose. Further, it explicitly accommodates divergent worldviews

by adopting a weak form of altruism to divide the classes.

Atkinson’s 1990 work, discussed above, then proceeded into normative territory arguing for

tax exemptions for nonprofit civil society organisations in light of his ‘altruism analysis’.777

He revisited the topic of tax exemptions in 1997 and there reviewed the significant

theoretical developments that occurred between 1990 and 1997. He concluded that the mere

existence of altruism in any form of nonprofit civil society organisation is enough to justify

tax exemption.778

776 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 565-66.

777 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 616.

778 Rob Atkinson, 'Nonprofit Symposium: Theories of the Federal Income Tax Exemption for Charities: Thesis, Antithesis, and

Syntheses' (1997) 27 Stetson Law Review 395, 423.

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To find altruism in commercial, ‘nonprofit’ civil society organisations he pointed to the

supply side noting that, at the very least, the founders sacrificed the set-up capital. Provided

that capital, at the least, remains in the organisation, their initial altruism remains in the

organisation, and so it remains an altruistic organisation.779

Atkinson also made the point that merely manifesting altruism is not enough to justify tax

exemption. An altruistic organisation may be engaging in socially destructive activities that

would warrant denial of the exemption. He gives as an example, consistent with the doctrine

of charitable purpose weighing of public benefit,780 the racist practices of Bob Jones

University, being enough to extinguish an entitlement to exemption that it might otherwise

have enjoyed as a charitable organisation.781 It is noteworthy that this approach has found

acceptance now in England and Wales since the passing of the Charities Act 2006782 and

‘disbenefit’ is listed expressly as a factor to consider in Scotland; and ‘detriment’is listed as a

factor in Northern Ireland.783

3. Rose-Ackerman

Rose-Ackerman undertook an extensive study in 1996784 and found: ‘Altruism and nonprofit

entrepreneurship cannot be understood within the standard economic frameworks.’785 In

concluding that altruism is the central distinguishing feature of ‘nonprofit’ civil society

organisations, she does not mention the work of Atkinson. She discussed various authors on

altruism, but the aim of her work was to understand the role of ‘nonprofit’ firms.786 The

779 Rob Atkinson, 'Nonprofit Symposium: Theories of the Federal Income Tax Exemption for Charities: Thesis, Antithesis, and

Syntheses' (1997) 27 Stetson Law Review 395, 523.

780 J Warburton, D Morris and N F Riddle, Tudor on Charities (2003) 7.

781 Bob Jones University v United States, 461 US 574, 591 (1983) discussed in Rob Atkinson, 'Nonprofit Symposium: Theories of the

Federal Income Tax Exemption for Charities: Thesis, Antithesis, and Syntheses' (1997) 27 Stetson Law Review 395, 426.

782 See for instance the The Charity Commission for England and Wales, Commentary on the Descriptions of Charitable Purpose in

the Charities Act 2006 (2007).

783 Charities and Trustees Investment Act 2005 (Scotland) s 8(2)(a)(ii).

784 Susan Rose-Ackerman, 'Altruism, Nonprofits, and Economic Theory' (1996) 34 Journal of Economic Literature 701.

785 Susan Rose-Ackerman, 'Altruism, Nonprofits, and Economic Theory' (1996) 34 Journal of Economic Literature 701, 701.

786 Susan Rose-Ackerman, 'Altruism, Nonprofits, and Economic Theory' (1996) 34 Journal of Economic Literature 701, 702.

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conclusion to which she came was that, whilst the distinction between business, government

and nonprofit was ‘problematic’,787 nevertheless ‘differences persist’788 and nonprofit civil

society organisations can perform ‘three inter-related roles’.789 Those three inter-related

roles are not defined with respect to the Pemselian purposes of poverty relief, advancement

of religion or other purposes beneficial to the community. She distils the purposes into three

classes. They are:

1. to provide an organisational form that ‘may be trusted more’790 and thus have a

‘competitive advantage’ in a market where ‘customers have imperfect

information about service quality’;

2. to serve as ‘outlets for the generous impulses of individuals’,791 and have an

advantage over government bodies because they can ‘better reflect the desire of

donors’ and; linked to the above,

3. to provide ‘a shell within which people can reify their ideological beliefs without

having to be accountable to profit-seeking investors.’792

The first class, based on trust, is often typified by hospitals, child care and aged care

providers, which sometimes are charitable purposes under the first head of Pemsel’s case.

The second, broad class of social contributions would have included advancement of

education (the second head of Pemsel’s case) in former centuries and now embodies many

other forms of public-benefiting purposes. The third class includes advancement of religion,

(the third head of Pemsel’s case) but goes beyond that to include pursuit of political and

other ideological purposes. There are, then, three very different classifications offered by

Rose-Ackerman that include, but go beyond, the Pemselian purposes.

787 Susan Rose-Ackerman, 'Altruism, Nonprofits, and Economic Theory' (1996) 34 Journal of Economic Literature 701, 702.

788 Susan Rose-Ackerman, 'Altruism, Nonprofits, and Economic Theory' (1996) 34 Journal of Economic Literature 701, 702.

789 Susan Rose-Ackerman, 'Altruism, Nonprofits, and Economic Theory' (1996) 34 Journal of Economic Literature 701, 723.

790 Susan Rose-Ackerman, 'Altruism, Nonprofits, and Economic Theory' (1996) 34 Journal of Economic Literature 701, 723.

791 Susan Rose-Ackerman, 'Altruism, Nonprofits, and Economic Theory' (1996) 34 Journal of Economic Literature 701, 723.

792 Susan Rose-Ackerman, 'Altruism, Nonprofits, and Economic Theory' (1996) 34 Journal of Economic Literature 701, 723.

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These three classes are something of a synthesis of the various views which preceded her

work mentioned in this, and the former, chapter. She also noted, consistent with former

authors, that the boundaries between these civil society organisations and other organisations

are contested and dynamic:

1. Government regulation and professional training can reduce the advantage of the

‘nonprofit form’;793 and

2. If government funding and regulation are both evident the form (‘nonprofit’ or

for-profit) may become ‘irrelevant’;794 and

3. Consequently ‘nonprofits’ may, in such a context, have little claim to

preferential tax treatment.

Recognising the risk of favours granted to civil society organisations attracting for-profits in

disguise, Rose-Ackerman recommended that the ‘treatment of nonprofits should not be so

favourable as to open a large wedge between the sectors’.795 She also pointed to the

importance of the ‘signal sent by the nonprofit form’ and encouraged civil society

organisations ‘run on genuinely charitable principles’ to oppose subsidy programs that may

dilute that signal.796 She noted a risk to the revenue base, stating: ‘Only if the tax and

regulatory benefits of the nonprofit form become too large, will charlatans select it as a way

to get rich’.797

Her concluding comments related to the ‘proper mix’ of organisations in society; and the

likely battlefields:

793 Susan Rose-Ackerman, 'Altruism, Nonprofits, and Economic Theory' (1996) 34 Journal of Economic Literature 701, 724.

794 Susan Rose-Ackerman, 'Altruism, Nonprofits, and Economic Theory' (1996) 34 Journal of Economic Literature 701, 725.

795 Susan Rose-Ackerman, 'Altruism, Nonprofits, and Economic Theory' (1996) 34 Journal of Economic Literature 701, 725.

796 Susan Rose-Ackerman, 'Altruism, Nonprofits, and Economic Theory' (1996) 34 Journal of Economic Literature 701, 725.

797 Susan Rose-Ackerman, 'Altruism, Nonprofits, and Economic Theory' (1996) 34 Journal of Economic Literature 701, 723.

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Future debate over the proper mix of nonprofits, for-profits and government provision is likely to

be most heated in social services, child care, and education. The debate concerns both the role for

the state in direct provision versus financing, and the relative status of for-profits verses nonprofits

as suppliers of services.’798

In the context of religion, Rose-Ackerman concluded there is ‘little doubt that nonprofits will

continue their dominance’799 but in the provision of health care, where government funding

and regulation are powerful influencers, a special role for civil society is open to serious

challenge.800

In summary then, for Rose-Ackerman, altruism is the central distinguishing feature of a

collection of organisations that fulfil three overarching purposes. Those purposes include,

but are much broader than, the ‘four principal divisions’ of Pemsel’s case. Some purposes,

such as the reification of ideological beliefs through, for example the advancement of

religion, are likely to always be expressed through civil society organisations. Other

purposes, such as the provision of health care, could be discharged by other organisational

forms such as business or government. Law and, more broadly, regulation policy can

powerfully influence the types of organisations that discharge a particular type of purpose.

Jurists seeking to unshackle the doctrine of charitable purpose informed by Rose-

Ackerman’s insights may take cognisance of four key points: first, the centrality of altruism;

second, the classifying of civil society purposes into three broad classes, that include but go

beyond the four Pemselian purposes; third, the fact that some purposes such as reifying

ideology are always likely to adopt the civil society organisational form; and fourth, the way

that contests over organisation form is shaped by government policy.

798 Susan Rose-Ackerman, 'Altruism, Nonprofits, and Economic Theory' (1996) 34 Journal of Economic Literature 701, 725.

799 Susan Rose-Ackerman, 'Altruism, Nonprofits, and Economic Theory' (1996) 34 Journal of Economic Literature 701, 725.

800 Susan Rose-Ackerman, 'Altruism, Nonprofits, and Economic Theory' (1996) 34 Journal of Economic Literature 701, 725.

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4. Avner Ben-Ner

In the development of economic theory regarding civil society organisations, the recognition

of supply factors, and their interplay with the demand for charitable good, was not

immediately apparent. In 1991, the year after Rob Atkinson published his work, Avner Ben–

Ner and Theresa Van Hoomissen explicated a theory of both supply and demand that

explained the formation of charities and other civil society organisations in mixed

economies, such as is typical of common law countries.801 They pointed out that it is not

enough simply to focus on the demand for charitable good.802 It is necessary to also consider

the factors that lead to the supply of charitable good through civil society organisations.803

They theorised that the most important supply factor is the ability of demand side

stakeholders (broadly defined to include consumers, sponsors, or donors) to ensure that the

civil society organisations ‘of interest to them perform according to their wishes within

economic feasibility constraints’.804 These stakeholders, who are not necessarily or even

primarily altruistic, will form civil society organisations if they ‘value the expected flow of

net benefits from a self-run organisation more than the benefits they can derive from

alternative sources’.805 This means that civil society organisations are ‘an instance of vertical

integration.’806 Ben-Ner and Van Hoomissen went so far as to state that:

Although the process of nonprofit formation can be facilitated by individuals other than

stakeholders, demand side stakeholders must play an active role informing and operating

801 Avner Ben-Ner and Theresa Van Hoomissen, 'Nonprofit Organisations in the Mixed Economy: A Demand and Supply Analysis'

(1991) 62 Annals of Public and Cooperative Economics 519.

802 Avner Ben-Ner and Theresa Van Hoomissen, 'Nonprofit Organisations in the Mixed Economy: A Demand and Supply Analysis'

(1991) 62 Annals of Public and Cooperative Economics 519, 521.

803 Avner Ben-Ner and Theresa Van Hoomissen, 'Nonprofit Organisations in the Mixed Economy: A Demand and Supply Analysis'

(1991) 62 Annals of Public and Cooperative Economics 519, 520.

804 Avner Ben-Ner and Theresa Van Hoomissen, 'Nonprofit Organisations in the Mixed Economy: A Demand and Supply Analysis'

(1991) 62 Annals of Public and Cooperative Economics 519, 520.

805 Avner Ben-Ner and Theresa Van Hoomissen, 'Nonprofit Organisations in the Mixed Economy: A Demand and Supply Analysis'

(1991) 62 Annals of Public and Cooperative Economics 519, 521, 532.

806 Avner Ben-Ner and Theresa Van Hoomissen, 'Nonprofit Organisations in the Mixed Economy: A Demand and Supply Analysis'

(1991) 62 Annals of Public and Cooperative Economics 519, 540.

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nonprofit organisations, because demand will not materialize unless the organisation is

stakeholder controlled.807

Ben-Ner, in conjunction with others, continued to explore the supply side characteristics808

but it is not critical to explore those factors in this thesis beyond noting two things. First,

that there is a place for civil society organisations in mixed economies such as those existing

in common law countries. Second, whilst charities might evidence quite high levels of

altruism, the non-distribution constraint, as a signal of the sector, can operate at very low

levels of altruism and the existence of the non-distribution constraint can be compelled by

economic need, rather than self-sacrifice.

In later work, Ben-Ner discussed altruism. Noting that study of altruism is an evolving

science, and the accommodation of altruism in economic theories is a work in progress, he

concluded that altruism, within economic theory, is not inconsistent with a more

sophisticated understanding of human nature.809

The common law doctrine of charitable purpose remains, like early economic analysis,

fixated on the demand side of provision of public benefits. As has occurred in economic

807 Burton A Weisbrod, 'Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy' in Burton A Weisbrod (ed),

The Voluntary Nonprofit Sector (1977) 51, Avner Ben-Ner and Theresa Van Hoomissen, 'Nonprofit Organisations in the Mixed

Economy: A Demand and Supply Analysis' (1991) 62 Annals of Public and Cooperative Economics 519, 540.

808 Avner Ben-Ner, 'For-profit, State, and Nonprofit: How to Cut the Pie?' (Working Paper, Industrial Relations Center, University of

Minnesota, 2004); Avner Ben-Ner, 'Religous Institutions and the Economics of Religion' (1997) 153 Journal of Institutional and

Theoretical Economics 150; Avner Ben-Ner, 'The Shifting Boundaries of the Mixed Economy and the Future of the Nonprofit

Sector' (2002) 73(1) Annals of Public and Cooperative Economics 5; Avner Ben-Ner, 'Who Benefits from the Nonprofit Sector?

Reforming Law and Public Policy Towards Nonprofit Organisations' (1994) 104(3) Yale Law Journal 731; Avner Ben-Ner and

Helmut Anheier, 'Shifting Boundaries: Long-term Changes in the Size of the For-profit, Nonprofit, Cooperative and Government

Sectors.' (1997) 68(3) Annals of Public and Cooperative Economics 335; Avner Ben-Ner and Benedetto Gui, 'Introduction' in

Avner Ben-ner and Benedetto Gui (eds), Annals of Public and Cooperative Economics (1991) 515; Avner Ben-Ner and Benedetto

Gui, 'The Theory of Nonprofit Organisations Revisited' in Helmut Anheier and Avner Ben-Ner (eds), The Study of the Nonprofit

Enterprise - Theories and Approaches (2003) 3; Avner Ben-Ner and Louis Putterman, 'On some Implications of Evolutionary

Psychology for the Study of Preferences and Institutions' (2000) 43 Journal of Economic Behavior and Organisation 91; Avner

Ben-Ner and Louis Putterman, 'Trusting and Trustworthiness' (2001) 81 Boston University Law Review 523.

809 Avner Ben-Ner and Louis Putterman, 'On some Implications of Evolutionary Psychology for the Study of Preferences and

Institutions' (2000) 43 Journal of Economic Behavior and Organisation 91 particularly 97. See also Avner Ben-Ner and Louis

Putterman, 'Trusting and Trustworthiness' (2001) 81 Boston University Law Review 523.

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analysis, jurisprudential development must move to a more holistic approach that takes

cognisance of altruism as integral to the supply of those public benefits. Such a step does

not require theorists to embrace the demigod worldview. Ben-Ner’s approach from within

the discipline of economics provides a model.

5. Richard Steinberg

Ben-Ner integrated the supply and demand factors but the influence of government,

mentioned variously throughout this and the last chapter, remained excluded until Richard

Steinberg attempted a comprehensive theory in 2005. His work is by far the most complete

attempt yet to bring all of the factors into one framework.810 Steinberg began with the

premise of the three failure theories discussed in Chapter IV but noted that they ‘do not

explain why nonprofits are there for [consumers] to use’.811 He theorised an arrangement in

the form set out in the figure below. The top, left-hand box identifies the factors that each

potential ‘nonprofit’ entrepreneur considers when deciding issues in relation to whether to

utilise a civil society organisation or not. The lower, left-hand box sets out the factors that

determine whether the entrepreneur’s objectives can be accomplished through a civil society

organisation and the right-hand box sets out the possible outcomes that may flow from the

civil society entrepreneur’s decision-making.812

Figure 3 Schematic of Steinberg’s Complete Theory

810 Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The

Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117.

811 Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The

Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117, 128.

812 Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The

Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117, 130.

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Steinberg acknowledged at the outset that there are ‘many ways to fit these various pieces

together’.813 His way of putting the pieces together is informed by his purpose which is to

provide, from within the discipline of economics, ‘a more comprehensive and integrated

theory’814 of why ‘nonprofits are there for [consumers] to use’.815

The purpose of this thesis is different. So, taking cognisance of the factors but fitting them

together in a different way, it is noted that the factors listed in the first box can be divided

into two classes, when considered in the light of this and the last chapter. There are goods

that are demanded – Collective Goods and Private Benefits. There are motives for supply –

Changing Preferences, Being Trustworthy, Distribution and Access to Income and Perks.816

The goods that are demanded – Collective Goods and Private Benefits can be considered

according to who benefits. This is an important issue, not only for economic theory, but also

for legal theory regarding the doctrine of charitable purpose. There is a need to identify

public as distinct from private benefit.

The motives for supply – Changing Preferences, Being Trustworthy, Distribution and Access

to Income and Perks – can be considered according to the extent of altruism evident.

Considering the factors listed in the second box, which identified factors those entrepreneurs

consider, the jurist notices that all of the factors in the second box are influenced, if not

determined, by law. The role of government has been evident throughout the discussion so

813 Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The

Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117, 132.

814 Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The

Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117, 117-118.

815 Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The

Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117, 128.

816 Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The

Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117, 130.

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far but it is Steinberg’s model that brings together not just Regulation and Enforcement but

five other factors, all of which are shaped by laws. Even Resource Availability is shaped, if

not determined, by law.817

The first, and most obvious point for jurists to note, is that if completing an economic theory

requires bringing the coercive role of government into the equation, a jurisprudence is also

likely to require the coercive role of government to be explicitly addressed. In the next

chapter, the theory behind the coercive role of government will be discussed. At this point, it

is enough to note it as a significant factor. Second, and equally important, is the role that

both the supply side factors and the demand side factors play. Third, and capping these

broader remarks, is the fact that it seems that these three factors are sufficient to complete a

theory.

6. Interim Summary regarding Altruistic Associations

In summary, at this point the following conclusions may be drawn regarding civil society

organisations from the literature canvassed.

First, there are ‘many ways to fit these various pieces together’ but it seems fair to say that

the analysis of economists, of which the figure by Steinberg above is a recent example,

offers an example of the pieces and how they might be put together. Taking into account

Steinberg’s observations and the work of authors discussed over this and the preceding

chapter, it is clear that public benefit, altruism and the coercive role of government are all

essential factors shaping civil society. From Chapters II and III, it is clear that putting

together the relevant common law into an alternative architecture of issues like this, is as

needful to law as it is to economics. This project is yet to be undertaken by jurists, though,

817 The Australian exemptions to the copyright laws for charities being an apt example: Copyright Act 1968 (Cth) s 106(b).

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beyond the doctrine of charitable purpose, at least at anything like the same level as that

undertaken by economists.

Second, certain factors have been identified as central to the discourse in other disciplines

that are factors also important to law. Altruism is one of the factors. It ought to be an

integral part of the definition of charities, as the Australian Charities Definition Inquiry818

concluded, and, I now suggest, of the definition of the broader class of civil society

organisations. Altruism is a factor that leads to the supply of civil society organisations in

common law countries. The supply of goods that are non-rivalrous and non-exclusive (often

called in other disciplines common goods or collective goods and in this thesis called

Charitable goods) is a central theme of the discourse and these goods are the object of the

supply of charities that so interests jurists.

Third, the non-distribution constraint is a clear signal which is widely accepted as evidencing

a civil society organisation. This signal is not only evidence of altruism which is an essential

characteristic, it is also a signal that the organisation does not exist for private benefit which

is an equally important differentiator marking out civil society organisations. There are

many laws enabling and regulating organisations with non-distribution constraints and the

law looks to the indicia as integral to charity. The relationship of the non-distribution

constraint to altruism, and altruism to charities and charities to the wider body of

organisations with non-distribution constraints, is capable of more complete theorising.

F. Conclusion

From the discussion in this chapter a number of conclusions can be drawn. First, theoretical

agreement that altruism ‘is’ provides a foundation for legal theory development. The second

contested a priori assumption in relation to the nature of humans has not been completely

818 Inquiry into the Definition of Charities and Related Organisations Report of the Inquiry into the Definition of Charities and

Related Organisations (2001) 14, Recommendation 7.

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resolved, but the dispute over the existence and nature of altruism has been resolved

sufficiently in favour of there being something that can be labelled altruism. This concept of

altruism is not a feeling or sentiment but a formulation for action that benefits others. It

spans a range from weak to strong. Measurement of altruism is developing and there are

indicia capable of ranking or being measured even if there is not a universal measure of

altruism.

Second, divergences over how altruism is theorised are deep and the contests seemingly

irreconcilable. These differences need not prevent the divergent insights informing

development of the doctrine of charitable purpose, provided broad agreement over what is in

contest can be reached. If the variables that inform those contests can be brought into a

theoretical framework, then this altruism exists where a person acts from a motive which is

other-centred.

Third, however it be theorised, ‘altruism’ is the ‘continental divide’ by which civil society

organisations are distinguished from other organisations. Civil society organisations may

take many forms. They may be categorised in many ways. Atkinson proposed ten

categories. Rose-Ackerman pointed to these organisations existing for the pusuit of three

classes of purposes. These are examples of the way in which economists have distilled key

indicia for more useful and conclusive purposes: and these are examples of categories that

jurists could use that are arguably superior to the four heads set out in Pemsel’s case.

Fourth, theory has developed in economics to a place where altruism has been theorised as

distinctly linked to the supply of civil society organisations. Supply is but one side of an

economic analysis. Demand is the other. It took some time for this distinction to be

elucidated in economics. It is a helpful theoretical division. Given the continual reference to

altruism in the case law, and the struggle with the Preamble, the separation of the supply

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factors from the demand for public benefit suggests that the insights from economics could

usefully inform jurisprudential developments.

Fifth, the first and arguably most significant variable in the supply of civil society

organisations is motive: a motive of benefiting others. As the essential feature of this

variable is that it offers a reason ‘why’ a purpose is pursued, I have, for convenience,

labelled it ‘Y’.

Sixth, motive is not, though, the only factor. People do things for others such as their family

or immediate acquaintances and there the motive may be personal benefit. It is essential to

altruism that others benefit – that is members of the wider public who are more remote from

the donor. I theorise, therefore, that remoteness is then also a factor. It will be recalled from

the last chapter that remoteness was labelled ‘X’.

I theorise that altruism as defined earlier819 is manifested as a function of two variables, X

and Y. When strangers associate to pursue purposes which benefit persons other than

themselves, altruism is present. The more disparate the origins of the persons, and the more

the purposes are for public benefit, the greater the altruism. A civil society organisation is

altruistic.

It is possible, though, to go one step further. Once it is conceded that there may be gradients

or ranks or a continuum of altruism between the two theoretically diverse a priori typologies,

there is a basis for legal theory development. That theory development can be informed by

measurement theory to the extent considered necessary or appropriate by judges, legislators

and regulators. All that is needed is the framework within which the contestants may debate

the indicia of altruism and to what extent it is established and might be necessary.

819 See Section C subsection 1 of this Chapter, page 688

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I have, then, by drawing on this economic analysis, begun marking out a basis different from

the Pemsel’s case categorisations for recognising charities and civil society organisations.

Economists have advanced analysis of charities and altruism sustantially. They have done so

by building on a concept of rational self-interest drawn from neoclassical economic theory.

The concept of the rational self-interested person is a modernist concept. It is contested and

deeply problematic when viewed in a pre- and post-modern context. Indeed, there are many

modernist perspectives, particularly in the social sciences, that also find it deeply

problematic and progressively more contested. Importantly, in part this is because,

embedded in it, are notions of the individual in relation to the community which are founded

in contest not cooperation.820 In the next chapter, civil society organisations are considered

as organisations separate from the government.

G. Postscript

When Dickens had written of the altruistic act of the middle-aged lawyer (the giving of his

life for his client) he lifted his sights with sympathy and understanding to the locus of that

moment in the vast sweep of history. He wrote immediately, and prophetically of his vision

that out of this period of tyrannical state oppression, would emerge ‘a beautiful city and a

brilliant people rising from the abyss, and, their struggles to be truly free, in their triumphs

and defeats through long, long, years to come’.821 This chapter has focused on altruism but,

following Dickens’s example, the argument in the next chapter lifts to understandings of the

role of the state in the vast sweep of history. The nature of human society, freedom, and

visions of how a ‘beautiful city’ is achieved, are explored. There is not just one conception

of civil society or its component parts. The same a priori assumptions that founded the

820 For similar comments on the limits of economic analysis in explaining the essentials in family law see Brian H Bix, 'How to Plot

Love on an Indifference Curve' (2001) 99 Michigan Law Review 1439, 1454.

821 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 389.

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problems canvassed so far, find their roots in an history that problematises development of

conceptions of civil society and the state. The next chapter explores that diversity as a basis

for development of a jurisprudence for civil society in chapters VII, VIII and IX.

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VI COERCION

A. Preamble

At the beginning of A Tale of Two Cities, Dickens paints an image of two ostensibly similar

countries. He wrote:

There were a king with a large jaw and a queen with a plain face, on the throne of England; there

were a king with a large jaw and a queen with a fair face, on the throne of France. In both

countries it was clearer than crystal to the lords of the State preserves of loaves and fishes, that

things in general were settled forever.822

With the benefit of hindsight, readers know that the commonality and the settledness were

only surface-deep. A revolution was coming and the power to coerce would soon change

hands from a king with a large jaw and a queen with a fair face in France but not in England.

Dickens wanted us to draw lessons from the comparison. The reader is to ask why one

incarnation of sovereignty survived and the other did not. This chapter helps to frame that

discussion in the context of views of sovereignty relevant to the development of a

jurisprudence for civil society.

B. Introduction

The third contested a priori assumption elucidated in Chapter III, related to the nature of

human society. At its simplest, this is a dispute over the extent and nature of freedom in

society. The nature of freedom in society is discussed in this thesis for two reasons. First,

there is the role of distinguishing civil society organisations from government. In this

regard, coercion is considered in a way similar to altruism and benefit in the prior two

chapters. A second, and equally important, reason is unique to the discussion of law. The

second issue informs the broader question of what are the proper limits of government

regulation of civil society organisations. In relation to the first issue, I suggest that if a group

822 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 5.

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of people carry out a purpose together but the reasons for association to carry out the purpose

are coerced, then the fundamental character of voluntariness is missing and the association is

an expression of government. As families and private groups can be coercive, it is not

enough, though, to focus only on the reason for associating. A siginificant theoretical feature

of government is that it is the will of ‘the people’ of a ‘polis’. The number of people

involved is, then, also a relevant distinguishing feature. Government involves larger groups.

A civil society organisation is a large enough voluntary association. As with the last two

chapters, I theorise that coercion is a dynamic concept that can be understood as on a

continuum.

The second aspect of coercion explored in this chapter relates to attitudes to government

coercion. In the last chapter, the motifs of ‘vanity’ and ‘demigod’ were adopted to elucidate

two typologies of a priori assumptions regarding motive for pursuing purposes. In this

chapter, a similar approach is adopted to categorise two divergent positions in relation to

perceptions of the coercive role of government. The two positions are labelled for

convenience as ‘communal’ and ‘contractual’. To explain the differences, I link the two

worldviews to eras in history. The contractual is linked, as might be expected, with

modernity. The communal concept is linked with the thinking of the period that preceded

modernity. I acknowledge at the outset that there is overlap and inadequacy with both the

descriptors and the linking of these descriptors to these periods in history. My object,

though, is a very limited one. It is to mark out a continuum between extreme positions in

relation to the level of coercion and voluntary involvement in society.

At one extreme, is the a priori assumption that people only engage in society because they

need to do so and society is nothing more than a social contract. Performance of a contract

can be voluntary but ultimately, a contract is dependent upon coercion to compel

performance. People will breach such a contract if it is in their best interests unless there is a

coercive force ready to restrain this breach. At one extreme, then, is a concept of society

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which is fundamentally reliant upon coercion. The coercive powers of the state sustain

society by enforcing the social contract. This worldview is rooted in modernist philosophy

and is explored second in this chapter. First, I explore the alternative concept of society that

rests on a priori assumptions that people are social and have a propensity to care for one

another. Within such a worldview, society is an extension of family ties because everyone is

related. There is a place for coercion in such a society, but it is an adjunct or ancillary

dimension – not the foundation. The foundation is voluntary association. Fundamentally,

from this persective, people voluntarily meet the needs of one another. The third and final

section, conceptualised these two approaches to coercion in a framework suitable for

jurisprudential theory development. That theory development will occur across Chapters

VIII and IX in conjunction with notions of altruism and public benefit.

C. Coercion and Community

1. Saint Augustine

Amazing as it may seem, the roots of our present tensions over the nature and place of

coercion in society must be traced at least as far back as Augustine for an adequate

appreciation of the depth of the dilemma. In his City of God,823 Augustine postulated two

contrasting, though commingled,824 conceptions of society which he typed as cities (polis).825

The two cities are distinguishable at a foundational level by two different types of love.826

The first city is the earthly. It is constructed on the self love of its citizens. The second city

is the heavenly. It is constructed on citizens’ love of ‘God, and … neighbour’.827 For

Augustine, then, the society which consists of people who love and serve one another, will

only be found in the heavenly city. Society may, and indeed will, continue to exist in the

823 Saint Augustine, On Christian Doctrine, Great Books of the Western World (J F Shaw trans, first published 427, 1992 ed).

824 Saint Augustine, The City of God (Marcus Dodds trans, 1992 ed) 375, 598.

825 Saint Augustine, On Christian Doctrine, Great Books of the Western World (J F Shaw trans, first published 427, 1992 ed) Book

14 Chapter 1.

826 Saint Augustine, On Christian Doctrine, Great Books of the Western World (J F Shaw trans, first published 427, 1992 ed) Book

14 Chapter II8.

827 Saint Augustine, On Christian Doctrine, Great Books of the Western World (J F Shaw trans, first published 427, 1992 ed) 589 and

more generally Book 14 Chapter 1.

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earthly manifestation of the city of God but at its foundations will be the pursuit of self-

interest. This society, for the pursuit of self-interest, will be at peace but it is a peace

achieved by force not by love. This is because those who would overthrow a government,

seek to create a society of peace in a form acceptable to them.828 Michael Banner

summarised the position as follows:

Peace is achieved through the imposition of one’s own will by the exercise of force, and is at once

costly in its creation, unjust in its character, and unstable in its existence. This is not to say that

there is no difference between the Roman Empire and a band of brigands, to refer to Augustine’s

infamous jibe, but it is to say that the peace of all other societies is different in kind from the just

and certain peace of the true society found in the city of God, represented here on earth in the

church, which is the city of God ‘on pilgrimage.829

Augustine applauded the just peace achieved in the earthly city as ‘good’ and ‘without doubt

the gift of God’, but he exhorted his reader to pursue ‘the better things of the heavenly city’

for it is when people pursue the heavenly city, that ‘misery’ is avoided.830 Augustine

exhorted his reader to voluntarily give up the pursuit of their own will and be ‘converted

from [their] own evil and selfish desires’ that they might experience ‘peace everlasting’.831

This fundamental tension between a civil society founded on love and voluntary surrender of

one’s will to the will of God so that peace everlasting may be known, on the one hand and a

civil society founded on a just peace achived by force on the other, continues as the root

dilemma for our civil society analysis today. It has been variously expressed, interpreted and

restated over the 17 centuries since Augustine to the present day, but in seeking to theorise a

common law doctrine, both perspectives must be borne in mind.

828 Saint Augustine, The City of God (Marcus Dodds trans, 1992 ed), 458.

829 Michael Banner, 'Christianity and Civil Society' in Simone Chambers and Will Kymlicka (eds), Alternative Conceptions of Civil

Society (2002) 113, 116.

830 Saint Augustine, The City of God (Marcus Dodds trans, 1992 ed), 458.

831 Saint Augustine, The City of God (Marcus Dodds trans, 1992 ed), 460.

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A second equally important contested a priori assumption, relates to the legitimacy of

government action. To Augustine is also often traced the path back to the philosophical

foundation for the view that the legitimacy of the state rests upon government behaving in

accordance with overarching principles of justice. Law is the expression of a higher law in

such a context. The positive law depends for legitimacy upon its alignment with these

overarching principles of justice. Augustine argued that where the state is unjust, it loses

legitimacy. In the City of God he wrote:

Justice being taken away, then, what are kingdoms but great robberies? For what are robberies

themselves, but little kingdoms? The band itself is made up of men; it is ruled by the authority of

a prince, it is knit together by the pact of the confederacy; the booty is divided by the law agreed

on. If, by the admittance of abandoned men, this evil increases to such a degree that it holds

places, fixes abodes, takes possession of cities, and subdues peoples, it assumes the more plainly

the name of a kingdom, because the reality is now manifestly conferred on it, not by the removal

of covetousness, but by the addition of impunity. Indeed, that was an apt and true reply which

was given to Alexander the Great by a pirate who had been seized. For when that king had asked

the man what he meant by keeping hostile possession of the sea, he answered with bold pride,

“What thou meanest by seizing the whole earth; but because I do it with a petty ship, I am called a

robber, whilst thou who dost it with a great fleet art styled emperor.”832

Those who hold to this communal worldview, consequently, readily defy the government if

it does not give expression to their common values. The readiness of those engaged in the

civil rights movement in the United States in the 1960s to be imprisoned for disobedience to

racist laws, is one of the more popular examples of this resistance. The power of this

worldview is perhaps no more powerfully illustrated than by King Henry of Germany in

1077 standing in penance in the snow outside the Pope’s residence at Canossa, accepting that

832 Saint Augustine, On Christian Doctrine, Great Books of the Western World (J F Shaw trans, first published 427, 1992 ed) Book 4

Chapter 4.

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to disobey the Pope was to disobey God.833 Coercive power in a community dominated by

such a worldview is of limited effect for the citizens only submit to it in so far as the power

enforces the accepted community values. The shared values, though, underpin conceptions

of community which bind society together. These shared, usually religious, values are the

society’s ligaments. The worldview is not, though, dependent upon, nor is it the exclusive

domain of, religion. John Rawls set out a sophisticated secular argument developed from

Kantian premises to similar effect.834

2. Thomas Aquinas

Augustine’s two cities were mutually exclusive and no basis existed for a bridge or step

between them. Thomas Aquinas developed, and varied, the idea of Augustine’s City of God

based on love, by extending it to include those who shared a common will for common

good.835 He thus laid the base for taking a concept of civil society beyond and outside of the

church but maintained its relational base of service to others or common good. Participation

came to have a significant and central role in the formation of society for it is through the

quest for a common will that participation became important and that led to the development

of representative democracy. Importantly, then, this view of the social nature of humans

was not a uniquely Christian concept; critical to this thesis, though, is that whether solely

within the church (as in Augustine) or outside it as well (as in Aquinas) the good or value of

society was in its ‘sociality’.836 People willingly chose to come together into society. In

society they might voluntarily submit to one another, they may pursue a common good or

they may pursue self interest.

833 He had formerly written to Pope Gregory, ‘King Henry not by usurpation, but by the pious ordination of God, to Hildebrand, not

now Pope, but false monk.’ John Ehrenberg, Civil Society - The Critical History of an Idea (1999) 44.

834 John Rawls, A Theory of Justice (1972).

835 Michael Banner, 'Christianity and Civil Society' in Simone Chambers and Will Kymlicka (eds), Alternative Conceptions of Civil

Society (2002) 113, 117-119.

836 Michael Banner, 'Christianity and Civil Society' in Simone Chambers and Will Kymlicka (eds), Alternative Conceptions of Civil

Society (2002) 113, 119. This is not to suggest that Aquinas was offering a proposal for those outside of the Church but that the

argument in its twenty-first century application is capable of that application.

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This idea of society is not uniquely Christian. Aristotle was of the same view. For Aristotle,

humanity, at least in its ideal expression, is fundamentally social.837 Thus the pillars of pre-

modern civil society were founded on the fundamental sociality of humanity whether those

foundations traced to Jerusalem or Athens.

Augustine’s teaching may have suggested ready and violent contest between government and

those who hold to a view that justice is sourced in God (or some higher principle) but that

conflict did not follow. It did not follow because the external reference point (God or the

Bible’s teaching) encouraged submission to governments. Voluntary associations may, then,

choose to submit to quite oppressive unjust regimes. The Apostle Paul’s teaching recorded

in Romans chapter 13, and evidently written from prison in Rome, is an oft cited justification

for acceptance of oppressive regimes whilst affirming freedom of association generally.838

The Roman Catholic catechism is instructive in setting out the obligation to submit and the

freedom to resist.839 The catechism does not teach an entirely compliant reading of Romans

13. It refuses to allow the untrammeled exercise of power and authorises Roman Catholic

citizens, in certain situations, to do what is necessary to reform society according to their

vision of the common good. Importantly, this is a conception of society where people

associate together to achieve common good – if necessary against their government.

Principally, though, the common good is to be pursued in submission to government and

working within its structures.

3. From Thomas More to Shawn Kimmel

The conception of the pre-modern, ideal society reached its most theoretical zenith in

Thomas More’s Utopia. Written during the reign of Henry VIII, Utopia maps out the ideal

837 Aristotle, Nicomachean Ethics Book 1 (1991) particularly the early chapters.

838 The Holy Bible New International Version (1984) Romans 13:1-6.

839 Catholic Church, Catechism of the Catholic Church (2003) Vatican City http://www.vatican.va/archive/ENG0015/_INDEX.HTM

at 21 February 2007.

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state. It is a state where everyone looks after one another. The utopia that More sought was

perhaps too ideal. Far from seeing the emergence of such a state, he was beheaded for

refusing to submit to that state when it changed religious allegiances. His hopes of such a

society were, however, to find political expression in two quite different forms. In the

protestant expression typified by the United States of America, the foundations were in

personal piety. Each person’s conscience and their freedom to hear God as their personal

God, is a foundational premise of the protestant conception of civil society. A consequence

of this was a foundational commitment to freedom of religion and freedom of conscience

expressed in a separation of church and state. The Roman Catholic conception of civil

society more evident in European countries rested, not on an atomised or individual

expression of society as such, but rather on a society being expressed through shared

community. The Protestants sought to create space within the secular sphere for private

individuals to live the values of the heavenly city in personal piety. The Roman Catholics

sought to make this an instituted social norm within the church. In both contexts the function

of state power-police was to foster civic goodness not maintain control. This paradigm is

being rediscovered in contemporary civil society. A recent example is the work of Shawn

Kimmel.

Shawn Kimmel returned to eighteenth century United States history to point out that police

are now viewed as ‘a disciplined corps of policemen [sic] or a nation doing a good job of

controlling crime’,840 but that formerly ‘police referred to a mode of governance in which a

community or polity assumed responsibility for regulating the basic conduct of its social and

economic life in order to promote not only public security but also public well-being.’841 In

titling his work Freedom’s Police, Kimmel’s first objective was to

840 Shawn D Kimmel, Freedom's Police: The Constitution of the Liberal Police State in the Early Republic's Theater of Civil Society

(PhD Thesis, University of Michigan, 2007) xii.

841 Shawn D Kimmel, Freedom's Police: The Constitution of the Liberal Police State in the Early Republic's Theater of Civil Society

(PhD Thesis, University of Michigan, 2007) xii.

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underline the degree to which the structure and conditions of freedom are only understood through

a careful study of the institutional and policy forms and frameworks (of police) created by

different groups to determine the ways people constitute themselves and their rule over others –

especially through the means of organized association in civil society.842

Deeply imbedding restraint on freedom in consensual civil society, he observed that in that

context police went beyond public security ‘to public well-being’. Police were, he wrote,

quoting Donna Andrews, ‘the partial, consensual expression of a society’s social

arrangements, mores, and beliefs’.843

Seen through this ‘new lens’,844 Kimmel invited his reader to consider whether restraint on

freedom in both an historical and contemporary context ‘was constituted as an unequally

applied discipline that created power for some on the basis of restraining the exercise of

power, both visual and political, by others’.845 It is not my project to comment on the

normative dimensions of these assertions. What I flag is that premodern conceptions of civil

society continue today and conceptions of freedom rest upon them. They were more than

that, though. They were to ‘promote not only public security but also public well-being’846

and to reify ‘social arrangements, mores and beliefs.’847 Seen in this light, freedom is

foundational to the expression of charity. Civil society organisations, including charities, are

842 Shawn D Kimmel, Freedom's Police: The Constitution of the Liberal Police State in the Early Republic's Theater of Civil Society

(PhD Thesis, University of Michigan, 2007) xv, xvi..

843 Shawn D Kimmel, Freedom's Police: The Constitution of the Liberal Police State in the Early Republic's Theater of Civil Society

(PhD Thesis, University of Michigan, 2007) xiii.

844 Shawn D Kimmel, Freedom's Police: The Constitution of the Liberal Police State in the Early Republic's Theater of Civil Society

(PhD Thesis, University of Michigan, 2007) xv.

845 Shawn D Kimmel, Freedom's Police: The Constitution of the Liberal Police State in the Early Republic's Theater of Civil Society

(PhD Thesis, University of Michigan, 2007) xv.

846 Shawn D Kimmel, Freedom's Police: The Constitution of the Liberal Police State in the Early Republic's Theater of Civil Society

(PhD Thesis, University of Michigan, 2007) xii.

847 Shawn D Kimmel, Freedom's Police: The Constitution of the Liberal Police State in the Early Republic's Theater of Civil Society

(PhD Thesis, University of Michigan, 2007) xiii.

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not to be seen as ‘separate spheres’ but as ‘part of a strategic theatre of state power’ included

or alienated according to the application of theories of freedom. 848

4. Interim Summary

For theory development, it is critical to note that the pursuit of comon good as the the

foundation of civil society was an accepted central tenet of civil society from both Protestant

and Roman Catholic perspectives as modernity dawned. There is a clear common will, in

such a context, to care for one another as all belong to the one large family. That provision

could, and perhaps ideally should, find expression through government. Government is a

tool to assist in the order of society to carry out the common will. Restrictions on freedom

are appropriate if they are just and advance the common good but if government is unjust

and not for the common good it may be resisted. There were differences over how this ideal

society was to be achieved – through Protestant individual piety or Roman Catholic

community – but the centrality of caring for one another in community was taken as given.

Association for charitable purposes, and the provision of charitable goods, is not to be seen

as an entirely separate sphere from government under this framework but rather as its cradle.

D. Coercion and Contract

1. Nicolo Machiavelli

Nicolo Machiavelli’s The Prince849 marks the dawn of modernity. It provided philosophic

justification for the entirely self-interested approach to social life and in so doing, the City of

Man received clear articulation in occidental philosophy.

Machiavelli conceptualised civil society and the government, as we now understand these

ideas, in terms not of community but rather coercive power. ‘a prince, so long as he keeps

848 Shawn D Kimmel, Freedom's Police: The Constitution of the Liberal Police State in the Early Republic's Theater of Civil Society

(PhD Thesis, University of Michigan, 2007) xv.

849 Nicolo Machiavelli, The Prince, Great Books of the Western World (W K Marriott trans, first published 1515, 1992 ed).

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his subjects united and loyal, ought not to remind the reproach of cruelty.’850 If power is

diffuse then compromise is needed but ‘it has to be noted that men ought either be well

treated or crushed’851. The government can sometimes buy-off either the relevant contesting

civil society organisations or a sufficiently large portion of them to maintain control. If

people only pursue self interest, then the role of government is quite different. It is an

approach that has, though, underpinned the development in modernity. Thomas Hobbes has

been integral to this.

2. Thomas Hobbes

Thomas Hobbes built upon Machiavelli’s seminal work a conception of government where

persons chose to submit to the sovereign because the life of man is not social but ‘solitary,

poor, nasty, brutish, and short’.852 People come into society not because they are social but

to avoid the ravages of life without government. The state of nature is, for Hobbes, not a

loving community but a place of fear. Civil Society in the political sense (not as here

defined) is achieved by each person being provided by the state with the peace and order

necessary for pursuing their own self-interest. The role of government is (merely) to provide

the superstructure to enable this to occur. Law is the coercive tool of the sovereign to

separate the civil from the uncivilised. It is a positive law without reference to a higher law

or morality. Citizens will voluntarily choose submission to the law that issues from the

sovereign because it is better than living in the state of nature. Recognising the pursuit of

self-interest as fundamental and ignoring any altruism, Hobbes devised a political structure

whereby persons in this free association known as ‘civil society’, gave up freedom for the

better life that flowed from being under the leviathan of government. In such a context ‘civil

society’ was expressed through government. There was not a separate space for civil society

as is conceptualised here.

850 Nicolo Machiavelli, The Prince, Great Books of the Western World (W K Marriott trans, first published 1515, 1992 ed) 23.

851 Nicolo Machiavelli, The Prince, Great Books of the Western World (W K Marriott trans, first published 1515, 1992 ed) 4.

852 Thomas Hobbes, Leviathan, Great Books of the Western World (first published 1651, 1992 ed) 65.

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3. Adam Smith, Adam Ferguson and David Hume

Adam Smith’s Wealth of Nations published in 1776, explained how self-interested

individuals, pursuing their own self-interested ends, built a nation’s wealth. Smith theorised

that the market operates like an invisible hand allocating resources. It is thus contracts in a

market by which resources are allocated, not concern for others. The market, not sociability,

founds social engagement.853

Civil society in this typology of a modernist worldview is constructed not upon mutual

relations but upon the capacity to contract. Augustine’s City of Man had received formal,

philosophic articulation in modernity. This does not mean that there was not a place for

concern for others within Smith’s worldview. There was; it was based on moral sentiment.

Charitable acts were legitimate expressions of private piety and a society based on contract

was tempered by public civility. As Adam Smith explained in A Theory of Moral Sentiment,

people cared for one another out of a moral concern or sentiment.854 That infrastructure was

based on self-love. It was believed, then, that reason dictated moral behaviour. In such a

context, the market was seen as but one sphere of societal interaction and religious

sensitivities tempered commerce. In general, eloquence and law came to be seen [in the

sixteen century] as the means whereby men moved from a natural brutish life to one of

civility’ opines Brooks and in this context the emergence, protection and enforcement of the

charitable trust can be seen as a tool for social progress and cohesion.855

The humanising influence of morality and religion on market capitalism was not long to

stand. Smith’s fellow Scot, David Hume, was soon to publish A Treatise of Human Nature.

The effect of that work was to establish beyond doubt that reason cannot justify morality.

There is an unbridgeable chasm between what “is” and what “ought” to be. Henceforth there

853

Adam Smith, The Wealth of Nations (first published 1776, 1977 ed) 119.

854 Adam Smith, The Theory of Moral Sentiments (first published 1789, 1971 ed).

855 Christopher W Brooks, Lawyers, Litigation and English Society Since 1450 (1998) 206.

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was no theoretical basis for moral restraint of the market. There was, though, a formal

contractual base for society. Although John Locke and Jean Jacques Rouseau are both

central figures in the articulation of this alternative conception of society, for the purposes of

this thesis, it is the concept of a social contract, that found its articulation in the work of Jean

Jacques Rousseau, that is most helpful.

4. Jean Jacques Rousseau

In his book, The Social Contract, Rousseau constructed the argument for a social contract by

commencing with the concept of freedom and developing from this an idea of equality. To

this he added notions of fraternity. Rousseau began with a premise that individuals in the

state of nature are free. These free individuals agreed together to give up their freedom and

form a society by entering into a social contract. Rousseau wrote that the social contract,

stripped down to its essence, reduces itself to the following terms: ‘[E]ach of us puts his

person and all his power in common under the supreme direction of the general will, and, in

our corporate capacity, we receive each member as an indivisible part of the whole.’856 So,

like Augustine, Rousseau invited his readers to surrender their will. The difference was that

Augustine invited surrender to God, whereas Rousseau invited surrender to one’s fellow

citizens.

Rousseau also drew upon the concept of the ‘polis’ to describe this space where people

voluntarily submitted their will to others.857 Sovereignty became in this context the

expression of the common or general will. Since it was for freedom that citizens came to

partake of the social contract, it is the function of the sovereign to facilitate that freedom –

and to do so with as little intrusion as is absolutely necessary. This is because ‘each man

alienates, ... by the social compact, only such part of his powers, goods and liberty as it is

856 Jean Jacques Rousseau, The Social Contract, Great Books of the Western World (G D H Cole trans, first published 1762, 1992 ed)

392 (Italics in original).

857 Jean Jacques Rousseau, The Social Contract, Great Books of the Western World (G D H Cole trans, first published 1762, 1992 ed)

536 (Italics in original).

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important for the community to control; but it must also be granted that the sovereign is sole

judge of what is important’.858 This means that it is general will, and consequently the

function of the sovereign, to promote both liberty and equality.

If we ask in what precisely consists the greatest good of all, which should be the end of this

system of legislation, we shall find that it reduces itself to two main objects: liberty and

equality – liberty, because all particular dependence means so much force is taken from the

body of the State; and equality, because liberty cannot exist without it.859

Having stated this, Rousseau immediately observed that equality is difficult to maintain and

it ‘is precisely because the force of circumstances tends continually to destroy equality that

the force of legislation should always tend to its maintenance’.860 That does not mean,

though, that the legislative response will always be the same. On the contrary, there is a

need to tailor the legislative response ‘in every country in accordance with the local situation

and the temper of the inhabitants’.861

It might seem, from what has been written so far, that what holds a society together is the

laws issuing as an expression of the general will. It is not. What holds a society together,

according to Rousseau, is not the particular regulations, but the ‘manners and morals’ of the

particular society. The regulations are but the ‘arc of the arch, while manners and morals,

slower to arise, formed in the end its immovable keystone’.862

858 Jean Jacques Rousseau, The Social Contract, Great Books of the Western World (G D H Cole trans, first published 1762, 1992 ed)

397.

859 Jean Jacques Rousseau, The Social Contract, Great Books of the Western World (G D H Cole trans, first published 1762, 1992 ed)

405.

860 Jean Jacques Rousseau, The Social Contract, Great Books of the Western World (G D H Cole trans, first published 1762, 1992 ed)

405

861 Jean Jacques Rousseau, The Social Contract, Great Books of the Western World (G D H Cole trans, first published 1762, 1992 ed)

405.

862 Jean Jacques Rousseau, The Social Contract, Great Books of the Western World (G D H Cole trans, first published 1762, 1992 ed)

406.

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Rousseau does not flinch from integrating religion into the state, for ‘no state has ever been

founded without a religious basis’.863 The place of religion is, though, according to

Rousseau, completely subservient to the state. The function of this civic religion is,

according to Rousseau, to strengthen the polis. As the Christian Gospel, Rousseau

explained, in its true form encouraged other-worldliness, he knew of ‘nothing more contrary

to the social spirit’ than this Christian Gospel. This was because, ‘so far from binding the

hearts of citizens to the state, it has the effect of taking them away from all earthly things’.864

This inherent tension between the Christian Gospel, which encourages other-worldliness,

and the need for unity under one sovereign, requires the imposition of a ‘purely civil

confession of faith of which the Sovereign should fix the articles’ with power to put to death

or ‘banish from the State whoever does not believe them’.865

The basis for this banishment or even death, was lack of fraternity or, as Rousseau put it, for

being ‘anti-social’ which was ‘the worst of all crimes’.866 Central to this fraternity is

tolerance and this ‘tolerance should be given to all religions that tolerate others, so long as

their dogmas contain nothing contrary to the duties of citizenship. But whoever dares to say:

Outside the Church is no salvation, ought to be driven from the State, unless the State is the

Church and the Prince and Pontiff.’867

These values of liberty, equality, and fraternity have been taken up, over and again, as will

be seen in the next chapter, as values foundational to democracy. They are values that are

acceptable in an entirely secular modern state context and yet, as Rousseau observed, are

863 Jean Jacques Rousseau, The Social Contract, Great Books of the Western World (G D H Cole trans, first published 1762, 1992 ed)

436-437.

864 Jean Jacques Rousseau, The Social Contract, Great Books of the Western World (G D H Cole trans, first published 1762, 1992 ed)

437.

865 Jean Jacques Rousseau, The Social Contract, Great Books of the Western World (G D H Cole trans, first published 1762, 1992 ed)

439 (footnotes removed).

866 Jean Jacques Rousseau, The Social Contract, Great Books of the Western World (G D H Cole trans, first published 1762, 1992 ed)

439 (footnotes removed).

867 Jean Jacques Rousseau, The Social Contract, Great Books of the Western World (G D H Cole trans, first published 1762, 1992 ed)

439.

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likely to be lived by true Christians voluntarily as they ‘recognize one another as brothers.’868

The values can be a tool for evil as well as good when grounded in the social contract alone.

This is because the social contract provided a philosophic platform for tyranny in a way that

their voluntary pursuit has not. That this was so, did not take long to prove. Robespierre

took up the phrase ‘liberty, equality, fraternity or death’ opportunistically and what followed

in France was the Reign of Terror.869 There is not, within Rousseau’s social contract, a

theoretical justification for the innocent, young seamstress or the visiting, middle-aged

lawyer to resist the general will.870

Religion then, and the morality that it sustains, was then foundational to society; whether it

be the compulsory morality, rooted in the secular religion of Rousseau, or the moral

sentiment perhaps rooted in a voluntarily chosen religious expression as was contemplated

by Adam Smith and Adam Ferguson.

5. Fredric Bastiat

The French Revolution brought into stark relief the contest between voluntary philanthropic

attention to poverty within the social order and the overthrow of that order.871 The catch cry

of the revolution – liberty, equality, fraternity or death – refined, in an extraordinary way, the

distinction between coerced participation in the shaping of society and voluntary

contribution to the common good. Pointing out that the fathers of the revolution were

committed to shaping society by force of law into their own image of what common good

was, Fredric Bastiat argued that this was to press the function of law too far.872 For Bastiat,

law must be limited to ‘the collective organisation of the individual right to lawful defence’

868 Jean Jacques Rousseau, The Social Contract, Great Books of the Western World (G D H Cole trans, first published 1762, 1992 ed)

437.

869 T Honderich, The Oxford Companion to Philosophy (1995) 780.

870 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 388-389.

871 Kerry O'Halloran, Charity Law and Social Inclusion: An International Study (2007) 101.

872 Frederic Bastiat, The Law - The Classic Blueprint for a Just Society (1998) 52-53.

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which is the expression of liberty.873 This liberty stands antithetically against fraternity.

Enforced fraternity, according to Bastiat, destroys liberty.874

In fact, it is impossible for me to separate the word fraternity from the word voluntary. I cannot

possibly understand how fraternity can be legally enforced without liberty being legally destroyed,

and thus justice being legally trampled underfoot.875

For Bastiat, liberty provides the foundation of the social order. People, once they have a

foundation of liberty may, and possibly will, care for one another, but any taking of property

from one person to provide for another under coercion, such as occurs with taxation, is

unjust plunder and ‘false philanthropy’.876 Bastiat was at pains to point out that he was not

opposed to many of the activities that socialists wanted performed by the state. He discussed

charities, education and religion but argued that these must be provided or pursued

voluntarily. 877

Bastiat’s conclusion obliges a separation by law between law which enables voluntary

association, which Bastiat would affirm as an expression of liberty, and law by which favour

is granted. The former are fundamental, the latter are unjust.

873 Frederic Bastiat, The Law - The Classic Blueprint for a Just Society (1998) 2.

874 Bastiat’s definition of Liberty is instructive. He wrote:

And what is this liberty, whose very name makes the heart beat faster and shakes the world? Is it not the union of all liberties

– liberty of conscience, of education, of association, of the press, of travel, of labor, of trade? In short, is not liberty the

freedom of every person to make full use of his faculties, so long as he does not harm other persons while doing so? Is not

liberty the destruction of all despotism – including, of course, legal despotism? Finally, is not liberty the restricting of the

law only to its rational sphere of organizing the right of the individual to lawful self-defense; of punishing injustice?

See Frederic Bastiat, The Law - The Classic Blueprint for a Just Society (1998) 51-52.

875 Frederic Bastiat, The Law - The Classic Blueprint for a Just Society (1998) 21-22.

876 Frederic Bastiat, The Law - The Classic Blueprint for a Just Society (1998) 4-5.

877 Frederic Bastiat, The Law - The Classic Blueprint for a Just Society (1998) 26-29.

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6. Karl Marx

In contrast with Bastiat’s view of individual liberty, and Adam Smith’s view of the centrality

of markets, in 1848 Karl Marx published the first version of The Communist Manifesto.878 In

that work he postulated, as an alternative to both freedom and the ‘invisible hand’ of market

economics, a view of history which led to a situation where goods were transferred ‘from

each according to his ability to each according to his need’.879 In proposing this, Marx did

not develop More’s ideas expressed in Utopia.880 He did not revert to the anthropology of

Augustine for beneficence toward one another as a basis for this approach. For Marx, the

key to his utopia was for the general will of civil society to be expressed through the uprising

of the proletariat against the owners of capital (the bourgeois) and the breaking of the

market. It would be the general will of civil society to be discovered and articulated initially

through a revolutionary uprising of the proletariat. It would be followed by the collapse of

capitalism through to a communist (civil) society. Government would carry into effect the

community’s desires. These desires would be for the good of all, Marx taught, in the

communist state. This political form would be achieved once the impact of the market was

completely overthrown.

Thus for Marx, and for communism generally, ‘civil society’ was expressed in and through

the government. Public benefit was expressed through the government. The anthropology

of Marx’s society, at least until the communist state was achieved, was a place where self-

interested individuals pursued self-interested objectives. His hope however (and his belief)

was that, freed of market forces, people would voluntarily contribute to the public benefit

through government.

878 Karl Marx and Friedrich Engels, The Communist Manifesto (1888).

879 Karl Marx, Critique of the Gotha Program (1875) EServer <http://marx.eserver.org/1875-gotha.critique.txt> at 2 April 2008.

880 Thomas Moore, Utopia (1515) Project Gutenberg (Transcribed from the 1901 Cassell & Company edition by David Price)

<http://www.gutenberg.org/files/2130/2130-h/2130-h.htm> at 21 February 2007.

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So, rooted in Hegel, and developed in Marx, communism also was founded upon self-

interested economic actors. The fundamental selfishness of human beings was harnessed

through the market in liberal capitalism; but in a socialist context, it found expression

through the wishes of the people expressed through their government. A quite different

perspective on the role of government was to be published nine years later in England.

7. John Stuart Mill

In 1859, John Stuart Mill published On Liberty in which, having regard to developments on

the continent,881 he asserted one very simple principle, namely

…that the sole end for which mankind are warranted, individually or collectively, in interfering

with the liberty of action of any of their number, is self protection. That the only purpose for

which power can be rightfully exercised over any member of a civilised community, against his

will, is to prevent harm to others. His own good, either physical or moral, is not a sufficient

warrant.882

Importantly, for arguments canvassed in this thesis, ‘…from this liberty of each individual

follows the liberty, within the same limits, of combination among individuals; freedom to

unite, for any purpose not involving harm to others: the persons combining being supposed

to be of full age, and not forced or deceived.’883

One of the great challenges of developing a general theory of liberty, which Mills identified,

was that even though there is general acceptance of liberty as a concept ‘the practical

question, where to place the limit – how to make the fitting adjustment between individual

independence and social control – is a subject on which nearly everything remains to be

881 John Stuart Mill, On Liberty (1892) 268

882 John Stuart Mill, On Liberty (1892) 271.

883 John Stuart Mill, On Liberty (1892) 273.

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done’.884 But ‘no two ages, and scarcely any two countries, have decided [the limits of

liberty] alike; and the decision of one age or country no more suspect any difficulty in it,

than if it were a subject on which mankind had always been agreed’.885 This challenge, Mill

explained, is overcome in two ways:

The aim, therefore, of patriots was to set limits to the power which the ruler should be suffered to

exercise over the community; and this limitation was what they meant by liberty. It was

attempted in two ways. First, by obtaining a recognition of certain immunities, called political

liberties or rights, which it was to be regarded as a breach of duty in the ruler to infringe, and

which if he did infringe, specific resistance, or general rebellion, was held to be justifiable. A

second, and generally a later expedient, was the establishment of constitutional checks, by which

the consent of the community, or of a body of some sort, supposed to represent its interests, was

made a necessary condition to some of the more important acts of the governing power.886

In setting out a role for ‘a body of some sort’ separate from government Mill arguably

recognises a role for civil society organisations to participate in, and oppose the state. He

follows Montesquieu ‘who first placed intermediate organisations at the centre of civil

society as a check and balance to the states coercive power’.887

8. Interim Summary

Civil society in modernity developed, and came to rest upon, a contractual view of society.

The foundation for that view was a view of human nature that was solitary as distinct from

‘social’; a society that was exchange based rather than communally based; and a conception

of government based on liberty surrendered to sovereignty for security. There was always a

basis for tension over the extent to which liberty could be constrained by the sovereign.

Equality and fraternity emerged as central themes but they, too, were contested. The

884 John Stuart Mill, On Liberty (1892) 269.

885 John Stuart Mill, On Liberty (1892) 269.

886 John Stuart Mill, On Liberty (1892) 268.

887 John Ehrenberg, Civil Society - The Critical History of an Idea (1999) 148 referring to Baron Charles de Montesquieu, The Spirit

of the Laws, Great Books of the Western World (Thomas Nugent trans, first published 1748, 1992 ed) 71.

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contests were over the extent to which liberty could properly be constrained and the extent to

which equality and fraternity could properly be compelled.

So dominant were these views of civil society as subsumed in the state and freedom to

contract that by the late twentieth century that social commentary failed to foresee the

collapse of the Berlin Wall.888 All analysis tended, under both of these dominant paradigms,

to focus on freedom to contract or government, as people were expected to accept injustice in

such a context because it was better than not being subject to government.

It is easy to see from this perspective how civil society as a third space would be lost

philosophically in the milieu of liberal and socialist philosophy, for in both cases, civil

society is perceived as expressed through the government or the freedom to contract.

E. Conceptualizing Coercion, Communities and the Social Contract

In this section, the two contrasting worldviews discussed to this point in this chapter are

brought into relationship by a review of ideas from Ferdinand Tönnies, Will Kymlicka,

Helmut Anheier, Evelyn Brody and Arthur Jacobsen. Ferdinand Tönnies is considered one

of the three founders of sociology and his work grounds this thesis development in a long

theoretical tradition. Will Kymlicka’s bridging of a secular and sacred divide is important in

a way similar to the way theory, discussed in the last chapter, is bridging the gap between the

‘demigod’ and ‘vanity’ schools. Helmut Anheier’s civil society diamond is a tool designed

to bring into relationship the disparate variables discussed here, and is adopted for reasons

set out in Chapter I. Evelyn Brody and Arthur Jacobsen’s ideas on sovereignty flesh out the

need for dynamic boundaries.

888 Helmut K Anheier, Eckhard Priller and Annette Zimmer 'Civil Society in Transition: The East German Third Sector Ten Years

after Unification' (Working Paper No 15, Centre for Civil Society, 2000).

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1. Ferdinand Tönnies

Toward the end of the nineteenth century, sociology began to emerge as a distinct discipline.

One of the early pioneers in the field was Ferdinand Tönnies. In his analysis of society, he

juxtaposed two different conceptions of community: one where people live with altruistic

concern for one another ‘Gemeinschaft’ and a second of a fundamentally self-interested view

of society which he labelled, ‘Gesellschaft’. Intellectually, Tönnies was profoundly

influenced by both Thomas Hobbes and Karl Marx. Whereas Marx was principally

concerned with that which led to the breakdown of the (then) society, and Hobbes’s

Leviathan889 was based on the violence from which people escaped by coming into civil

society; Tönnies’s interest was that which bonded people together.890 Integral to explaining

his thesis of why people associate, was identifying the two theoretical bases for society. The

foundations were embedded in the difference between two German words which he

acknowledged ‘are conventionally used as synonyms.’891 It is important to note at the outset

that for Tönnies, there is not a sharp distinction between the two but rather that there is a

continuum between them. For Tönnies, ‘the crucial question in any ‘empirical’ setting was

not whether a particular individual, institution, idea or action belonged to Gemeinschaft or

Gesellschaft, but where they were positioned on the continuum between the two.’892

Whilst Tönnies deals with Gemeinschaft first in his work, laying out its richly-textured,

relational base before contrasting it with the more formal association labelled Gesellschaft, it

is convenient in this thesis to deal first with Gesellschaft.

Tönnies’s concept of Gesellschaft, if not identical with, closely resembles the idea of civil

society attributed to the liberal, individualist tradition traceable at least to Hobbes and set out

earlier in this chapter. Tönnies wrote:

889 Thomas Hobbes, Leviathan, Great Books of the Western World (first published 1651, 1992 ed).

890 Ferdinand Tönnies, Community and Civil Society (Jose Harris trans, 2001 ed) x.

891 Ferdinand Tönnies, Community and Civil Society (Jose Harris trans, 2001 ed) 17.

892 Ferdinand Tönnies, Community and Civil Society (Jose Harris trans, 2001 ed) xxviii.

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Gesellschaft thus forms a single aggregate, and must be understood as a mass or multitude of

natural and artificial individuals. Their wills and spheres of interest interact with each other in

manifold different ways, yet they remain independent of one another and lacking in deep

intimacy. A general picture now emerges of what may be called “Civil Society” or Society based

on general commercial exchange.893

It is pursuit of self-interest, and that alone, which holds Gesellschaft together. For in this

form of civil society.

Nobody wants to do anything for anyone else, nobody wants to yield or give anything unless he

gets something in return that he regards as at least an equal trade-off.

The theory of Gesellschaft takes as its starting point a group of people who, as in Gemeinschaft,

live peacefully alongside one another, but in this case without being essentially united – indeed,

on the contrary, they are here essentially detached. In Gemeinschaft they stay together in spite of

everything that separates them; in Gesellschaft they remain separate in spite of everything that

unites them. As a result, there are no activities taking place which are derived from an a priori

and pre-determined unity and which therefore express the will and spirit of this unity through any

individual who performs them. Nothing happens in Gesellschaft that is more important for the

individual’s wider group than it is for himself. On the contrary, everyone is out for himself alone

and living in a state of tension against everyone else. The various spheres of power and activity

are sharply demarcated, so that everyone resists contact with others and excludes them from his

own spheres, regarding any such overtures as hostile. Such a negative attitude is the normal and

basic way in which these power-conscious people relate to one another, and it is characteristic of

Gesellschaft at any given moment in time.894

Whilst Tönnies allocates considerable space to the discussion of formation and maintenance

of this common space and the formation of the values placed upon goods transacted in this

893 Ferdinand Tönnies, Community and Civil Society (Jose Harris trans, 2001 ed) 63-64.

894 Ferdinand Tönnies, Community and Civil Society (Jose Harris trans, 2001 ed) 52.

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‘common ground’,895 what is important in his argument, for the purposes of this discussion,

is that the dependence that arises between persons is a ‘dependence’ on market society,896

that is on the capacity to trade with others – nothing more.897

Gemeinschaft provides a very different, but important alternative, foundation for civil

society, one which is rooted in altruistic concern for others. The distinction between

Gesellschaft and Gemeinschaft is the difference between a society of persons held together

by the mutual pursuit of self-interest (Gesellschaft) and a society founded on the relational

base most evident in family and kin (Gemeinschaft). The foundation premise of Tönnies’s

Gemeinschaft is the interrelatedness of all persons due to common descent. This ‘direct

mutual affirmation’,898 is typified by the close personal bonds of family. Tönnies lists the

mother/child, the man/woman as couple and the brother/sister relationship as examples.899

Far from the rational pursuit of self-interest by individuals bound together only by their

mutual dependence typified by Gesellschaft, in Gemeinschaft, people are bound together by

‘mutual understanding’ and ‘[c]ommonly life means…in common.’900 Integral to this

binding together, is a common will or sentiment which Tönnies explains: ‘Reciprocal

binding sentiment as the peculiar will of a community is what we shall call mutual

understanding or consensus. This is the special social force and fellow feeling that holds

people together as members of a whole.’901 It is the central, shared understanding from

which its law is drawn: ‘We can say that anything which is in agreement with the inner

895 Ferdinand Tönnies, Community and Civil Society (Jose Harris trans, 2001 ed) 53.

896 Ferdinand Tönnies, Community and Civil Society (Jose Harris trans, 2001 ed) 57. Jean Jacques Rousseau, The Social Contract,

Great Books of the Western World (G D H Cole trans, first published 1762, 1992 ed).

897 Ferdinand Tönnies, Community and Civil Society (Jose Harris trans, 2001 ed) 60.

898 Ferdinand Tönnies, Community and Civil Society (Jose Harris trans, 2001 ed) 22.

899 Ferdinand Tönnies, Community and Civil Society (Jose Harris trans, 2001 ed) 22.

900 Ferdinand Tönnies, Community and Civil Society (Jose Harris trans, 2001 ed) 34.

901 Ferdinand Tönnies, Community and Civil Society (Jose Harris trans, 2001 ed) 33.

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character of a community relationship constitutes its law, and will be respected as the true,

essential ‘will’ of all those bound together in it.’902

If altruism is accepted, and a Gemeinschaft view of society adopted, this takes conceptions

of civil society back into the richly textured but, for liberal individualism, deeply

problematic territory of religion and morality. Tönnies draws his chapter on Gemeinschaft to

a close with this powerful observation: ‘Accordingly, the entire economic existence of a fully

developed city – whether as part of the Hellenic or the Germanic world – cannot be

understood unless art and religion are taken to be the most important matters in the whole of

civic life, for its government, its citizenry and its guilds’.903

In Tönnies’s theory, then, we have the theoretical formulation of two conceptions of civil

society which are extensions of the demigod and vanity schools discussed earlier. But in this

discussion of society, the concept of civil society is to be understood as located on a

continuum between these two extremes. One school of civil society theorists could conceive

of it entirely as a Gemeinschaft, another as entirely Gesellschaft, but, according to Tönnies,

most civil societies will be conceived as located in between the two extremes.904

The nineteenth century closed and with it, significant discussion of civil society. Tönnies

continued to be issued and reissued, and discussed in a sociological context. The

rediscovery of community, and civil society in this context, however, appears recent. From

the perspective of the jurist, though, what is important is that it is not necessary to accept

either a Gemeinschaft or a Gesellschaft conception of civil society in the development of a

jurisprudence. The differences can be accepted and located on a theoretical continuum.

Before coming to the way these ideas have been mapped in the twenty-first century by Will

902 Ferdinand Tönnies, Community and Civil Society (Jose Harris trans, 2001 ed) 33.

903 Ferdinand Tönnies, Community and Civil Society (Jose Harris trans, 2001 ed) 50.

904 Ferdinand Tönnies, Community and Civil Society (Jose Harris trans, 2001 ed) xxviii.

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Kymlicka, it is helpful to touch briefly upon ideas of sovereignty and porous boundaries, as

these ideas become important in a legal context in Chapter VII.

2. Evelyn Brody, Arthur Jacobson and Sovereignty Theory

The dynamic nature of the boundaries between civil society and government and the

acknowledgment that this creates a platform for serious conflict, was revised in a theoretical

context by both Evelyn Brody and Arthur Jacobson in the late twentieth century. At the

foundation of Evelyn Brody’s theorising, is an appreciation that there are three sectors of

society: government, business and nonprofit,905 and that the boundaries between these sectors

are ‘porous’.906 By porous, she means that the same activity can be conducted in more than

one sector.907

Turning to entitlement to favour in the form of tax exemption, Brody argued that the

theoretical foundation for exemption lay in a notion of sovereignty.908 By sovereignty she

did not mean that civil society organisations are outside of the coercive powers of

government nor that civil society organisations have their own coercive abilities.909 Rather,

by sovereignty she meant that each keeps out of the other’s space and in effect each operates

in its own domain.910 Acknowledging the religious foundation of many charities,

905 Evelyn Brody, 'Of Sovereignty and Subsidy: Conceptualizing the Charity Tax Exemption' (1998) (Summer) The Journal of

Corporation Law 585, 588.

906 Evelyn Brody, 'Of Sovereignty and Subsidy: Conceptualizing the Charity Tax Exemption' (1998) (Summer) The Journal of

Corporation Law 585, 588.

907 Evelyn Brody, 'Of Sovereignty and Subsidy: Conceptualizing the Charity Tax Exemption' (1998) (Summer) The Journal of

Corporation Law 585, 588; Evelyn Brody, 'Institutional Dissonance in the Nonprofit Sector' (1996) 41 Villanova Law Review 433,

440. It seems this boundary has been ‘porous’ for at least 500 years. See Ilana Krausman Ben-Amos, The Culture of Giving:

Informal Support and Gift-Exchange in Early Modern England (2008) 12.

908 Evelyn Brody, 'Of Sovereignty and Subsidy: Conceptualizing the Charity Tax Exemption' (1998) (Summer) The Journal of

Corporation Law 585, 586.

909 Evelyn Brody, 'Of Sovereignty and Subsidy: Conceptualizing the Charity Tax Exemption' (1998) (Summer) The Journal of

Corporation Law 585, 588.

910 The foundations of this debate in economics are usually traced to Bittker and Rahdert. See Boris Bittker and George Rahdert, 'The

Exemption of Nonprofit Organisations from Federal Income Taxation' (1976) 85(3) The Yale Law Journal 301, 307. For a review

of this position and a summary of the criticisms of this argument see Rob Atkinson, 'Nonprofit Symposium: Theories of the

Federal Income Tax Exemption for Charities: Thesis, Antithesis, and Syntheses' (1997) 27 Stetson Law Review 395, 408.

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particularly in the United States context, she put her argument at its plainest as ‘charities go

untaxed because Caesar should not tax God (or the modern secular equivalent)’.911

Ultimately, she did not accept this theory concluding that, whilst there is clear evidence of

power struggles between the churches, as the most powerful of charities on the one hand, and

government on the other,912 that is not an appropriate basis for favour or denial of favour.

Her conclusion was that ‘policy makers should resist the lures of this approach in order to

reform the tax treatment of charity’.913

Whether a jurist believes the churches stand outside the scope of government regulation or

whether they should be taxed like other organisations is not a legal question but a theological

or philosophical one. It finds expression, though, in the form laws take. Locating the

contest in contests over the scope of legal coercion, is the work of Arthur Jacobson.

Jacobson laid a platform for a fresh perspective on the place not just of charities but of all

associations in political economy, with his thesis that, by allowing any form of association,

the state divests itself of sovereignty. Pointing to the ‘discomfort of legal and political

thought with private associations of persons’914 and noting that both friends and enemies of

sovereignty must make concessions, he theorised that there is a middle ground.

When these ideas, of the sovereignty of civil society organisations, are married with the

developing interest in the idea that corporations generally are in effect a form of independent

911 Evelyn Brody, 'Of Sovereignty and Subsidy: Conceptualizing the Charity Tax Exemp tion' (1998) (Summer) The Journal of

Corporation Law 585, 586.

912 Evelyn Brody, 'Of Sovereignty and Subsidy: Conceptualizing the Charity Tax Exemption' (1998) (Summer) The Journal of

Corporation Law 585, 629.

913 Evelyn Brody, 'Of Sovereignty and Subsidy: Conceptualizing the Charity Tax Exemption' (1998) (Summer) The Journal of

Corporation Law 585, 587.

914 Arthur Jacobson, 'The Private Use of Public Authority: Sovereignty and Associations in the Common Law' (1980) 29 Buffalo Law

Review 600, 601.

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sovereign,915 there is considerable scope for development of a jurisprudence that is informed

by political theory. If Jacobson’s understanding is accepted, allowing the formation of any

form of association is a threat to the sovereignty of the state. The larger the association and

the stronger its claim to allegiance, the more it is a potential threat to the coercive power of

government. The overt resistance of government by civil disobedience, such as was seen in

the US civil rights movement or the demolition of the Berlin Wall, is an illustration of

Jacobsen’s point. One final observation integral to this conception of contested sovereignty,

and consistent with the concept of Gemeinschaft, is the notion that fiduciary relations

provide the fundamental substratum upon which all civil society organisations are built.916

These late twentieth century themes of contested sovereignty resonate with the premodern

conceptions of civil society and the willingness of persons to stand against the government.

The concept of different spheres of influence and boundaries between the spaces that are

porous and contested, enliven issues of which cognisance must be taken in jurisprudential

development. Civil society organisations can be seen as a real threat to the government.

Government is an active participant in defining the contested boundaries and can act to

encourage or limit the organisations that make up civil society. The contest over the

boundary’s location and any entitlement to favour, is shaped by political a priori

assumptions. It is not simply they result of principle by precedent without reference to

philosophy. A twenty-first century author, Will Kymlicka, has contributed significantly to

elucidating these political a priori assumptions and his insights are considered next.

915 Stephen Bottomley, The Constitutional Corporation: Rethinking Corporate Governance (2007) 36-38.

916 Joel Fleishman, 'Public Trust in Not-for-Profit Organisations and the Need for Regulatory Reform' in Philanthropy and the

Nonprofit Sector in a Changing America (1999) 172, 173.

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3. Will Kymlicka

Like Tönnies, but writing over a century later, Kymlicka917 distilled the alternative

paradigms to two. He based the differences on two different conceptions of what is just. He

summarises the options into two choices:

Faced with this ‘instability’ in our everyday views of justice, we have two choices: To put it

crudely, we can move to the left, or we can move to the right. The left-wing option is to adopt a

stronger form of egalitarianism, which seeks to eliminate all forms of involuntary disadvantage,

including those that result from differences in natural talents. This is often called the left-liberal

or ‘liberal egalitarian’ view of justice. The right-wing option is to reject the initial premise that

involuntary disadvantages as such are unfair, even if they are the result of social class, race or

gender. This is the right-liberal or ‘libertarian’ view of justice.918

If the law is the expression of the community’s values then political choices between left and

right will shape the form law takes. Those choices express on the one hand, a Gemeinschaft

conception of civil society or on the other, Gesellschaft. As Kymlicka observes, ‘which of

the two options we will take will profoundly influence our view of charity’.919 The point is

that, if a society has a strong preference for a communal concept of civil society, then

government intervention through law to redistribute is more likely. If society has a market-

based conception of civil society, then freedom will be respected above redistributive

conceptions of justice. Kymlicka explains the implications of this for the role of government

in creating or reducing the space for, and favour of, charities. ‘[I]f we accept the left-liberal

conception of justice, there seems to be little room for a distinctive virtue of charity.’920

917 Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David Stevens

(eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87.

918 Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David Stevens

(eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87, 91.

919 Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David Stevens

(eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87, 91.

920 Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David Stevens

(eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87, 100.

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By contrast, if the worldview of Gesellschaft and the conception of freedom and its attendant

materials triumphs, then there is arguably, according to Kymlicka (with echos of Bastiat) a

greater basis for freedom.921

Like Rousseau and Tönnies, Kymlicka also pointed to the important role of religion in

deciding between perspectives, noting that:

There are a few libertarians who trumpet the virtues of selfishness while disputing the value of

compassion…[h]owever,… [most] insist that is one of the strengths of their theory that it can

make room for genuine compassion for others, unlike the compelled contributions required by the

welfare state.922

Charity plays a very different and more prominent role in the three major monotheistic religions –

Christianity, Islam and Judaism – than in modern secular theories of justice.923

Within all three religious traditions we can find two distinct sorts of contributions – [(a)] an

obligatory (and sometimes legally enforced) system of mutual aid and support for the church and

(b) more voluntary forms of charity, particularly for the poor.924

In spelling out this role, Kymlicka highlights the difference between the libertarian and

liberal perspectives in supply and demand terms:

But this left-liberal attitude is ‘demand sided’ – it is focused on the needs or merits of the recipient

of the charity – whereas the religious attitude is supply sided, focused on the giver, and his or her

921 Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David Stevens

(eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87, 101.

922 Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David Stevens

(eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87, 102.

923 Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David Stevens

(eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87, 105.

924 Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David Stevens

(eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87, 105.

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need to develop his or her character and his or her relationship with God. And from a supply side

perspective, the need to give charity is just as strong for the poor as the rich.925

It is only by radically curtailing obligations of justice that earlier religious traditions were able to

make significant space for charity.926

In this respect, religious conceptions of charity share a major feature with libertarianism: they

both make space for charity by radically curtailing obligations of justice.927

Turning to the economic framework of transactions by which supply and demand are met,

Kymlicka explained that:

This focus on recipients means that in left-liberal theories the requirements of justice leave little

room for charity. But by concentrating on the importance of charity for the giver, perhaps we can

give charity a more prominent and positive role. The religious arguments described above do not

depend on any particular conception of justice and could in principle be accepted by those on both

the left and the right.928

Up to this point, it may seem reasonably clear that according to this analysis, left-leaning

lawmakers will develop law in such a way that the state takes greater responsibility for the

meeting of community need and right-leaning lawmakers will focus on the freedom of

individuals. Right-leaning lawmakers might be expected to encourage voluntary

contributions but would not compel these. Kymlicka, though, did not accept the simplicity

of that conclusion. In relation to the role of government, Kymlicka observed that:

925 Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David Stevens

(eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87, 109.

926 Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David Stevens

(eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87, 115.

927 Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David Stevens

(eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87, 114.

928 Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David Stevens

(eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87, 110.

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There is good reason to think that states are inherently imperfect and that even the best-designed

public policies cannot remedy all of the forms of involuntary disadvantages that inevitably arise

out of modern societies929

…coercive laws and impersonal bureaucratic regulations are often simply unable to identify and

rectify the real sources of disadvantage facing specific people in specific contexts.930

In such a context, ‘charity would no longer be a regrettable second-best approach but might

instead be the best and only way of dealing with certain important forms of disadvantage.’931

The extent to which space should be made for voluntary contributions and the extent to

which it ought to be encouraged is not, then, a simple choice between ‘left’ and ‘right’.

Philosophy informs both the space for civil society organisations and entitlement to favours

but in the outworkings of the theory, there is room for compromising to achieve the optimum

outcome.

4. Helmut Anheier and the Civil Society Diamond

The acknowledged philosophical diversity problematising research into civil society, led to a

quest for broad models for theoretical discussion. The civil society discourse has developed

to a point where there are now internationally accepted models for this theoretical discussion.

One of those frameworks is the civil society diamond which Helmut Anheier developed to

provide a framework where a priori assumptions could be contested.932 For reasons set out

earlier, I adopt it for jurisprudential development. To use his words, he sought to set out a

929 Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David Stevens

(eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87, 100.

930 Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David Stevens

(eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87, 100.

931 Will Kymlicka, 'Altruism in Philosophical and Ethical Traditions: Two Views' in Jim Phillips, Bruce Chapman and David Stevens

(eds), Between State and Market: Essays on Charity Law and Policy in Canada (2001) 87, 100-101.

932 It is never entirely possible as all analysis has implicit philosophic assumptions. The South African users of the civil society

diamond have criticised the definition of civil society at its foundation as the ‘free market assumptions’ were not accepted by

many South Africans; see Helmut Anheier, Civil Society Measurement, Evaluation, Policy (2004) 128.

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‘common map’, ‘compass’, ‘a set of instruments that could frame and guide the

conversation’.933 The civil society diamond is explained in this subsection so that

jurisprudential development can draw from, and be located within, this wider international

inquiry in the next chapter. Four points of importance emerge for discussion.

First, and building on Weisbrod934 and others, at the foundation of Anheier’s framework is a

conception that civil society is a space or sphere of society different from business,

government and family. The definition which Anheier supplied, and which was mentioned

in Chapter I, bears restatement here. Anheier’s definition is ‘civil society is the sphere of

institutions, organisations and individuals located between family, the state and the market in

which people associate voluntary to advance common interests.’935

Second, Civil society is a multi-faceted concept.936 He theorised that there are four major

areas of discourse in relation to civil society:

1. Structural; which he stated incorporates ‘…size, composition and sources of

support of the civil society unit under consideration’;

2. Legal and Political Space; which he defined as ‘…the regulatory environment

in which civil society operates’;

3. Impact-Related; which he defined as ‘…the contributions of civil society,

generally, or in a particular field’; and

4. Value-Related; which he defined as ‘…norms and cultural elements’.937

Anheier brings these four quite different dimensions into one theoretical framework by

projecting them into a common ‘property space’. He achieved this using common or almost

933 Helmut Anheier, Civil Society Measurement, Evaluation, Policy (2004) 6.

934 Burton A Weisbrod, 'Not-for-Profit Organisation as Providers of Collective Goods' in Burton A Weisbrod (ed), The Voluntary

Nonprofit Sector (1977) 1, 1.

935 Helmut Anheier, Civil Society Measurement, Evaluation, Policy (2004) 22.

936 Helmut Anheier, Civil Society Measurement, Evaluation, Policy (2004) Forward, Ch 1.

937 Helmut Anheier, Civil Society Measurement, Evaluation, Policy (2004) 32.

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common units of measure, namely, numeric assessments of key components of civil society.

The stand-out common measure is percentage, or rating, on a scale of zero to 100. The result

is a diamond set out in the figure below where each dimension is allotted one quadrant.938

Figure 4 Illustration of the Civil Society Diamond

Importantly, in assessing ‘space’, the preferred focus is law.

Third, Anheier asserts that civil society must be viewed at three levels – institution,

organisation and individual. Clarifying the level is integral to clarity in legal analysis, as

charitable purposes attach to organisations. Charities are expressions of organisational

purpose.939

938 Reproduced from Helmut Anheier, Civil Society Measurement, Evaluation, Policy (2004) 45.

939 Helmut Anheier, Civil Society Measurement, Evaluation, Policy (2004) 23-26; Peter Luxton, The Law of Charities (2001) 5.

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Fourth, Anheier suggests that the preferred indicators of space, measured through law, are

indicators designed to measure the degree of enablement. The indicia Anheier points to are

three: fiscal and other incentives, freedom of association and civil liberties. 940 As freedom

of association is a subset of civil liberties, these two arguably can be addressed as one group

under the more general head of association. Tax expenditures and other fiscal favours

amount to favour over other organisations that do not enjoy the tax incentive.

Favour is quite different and distinct from regulating. It is possible to regulate but not to

favour. It is not possible to favour, though, without having first enabled by some form of

regulation. Anheier’s division informs the division between the next two chapters, where the

concept of law regulating and enabling participation through civil society organisations is

theorised under the title, ‘Association law’, and laws by which civil society organisations are

favoured on the basis of their contribution to public benefit are discussed under the title of

‘Benefit law’. This division, between regulating association and favouring voluntary

contributions of public benefit, is logical when approached in this way but it is not a division

presently evident from within the doctrine of charitable purpose.941 It is, though, a division

that follows logically from the philosophical discussion in this chapter. Theorists in the

tradition exemplified by Bastiat, may wish to enable voluntary association but not favour it.

This division between regulating and favouring is a threshold which must be crossed to go

beyond charities to a jurisprudence for civil society.942 The legal reasoning for Association

law is set out in the next chapter but the justification for the division and a discussion of

Benefit law must await Chapter VIII.

940 Helmut Anheier, Civil Society Measurement, Evaluation, Policy (2004) 41.

941 This distinction is implicit in Luxton who notes: ‘The result is that all charitable institutions are subject to two sets of laws: those

that relate to status and those that relate to structure’: Peter Luxton, The Law of Charities (2001) 16.

942 That the law centres on the charitable trust is pointed to by Luxton as a reason for difficulty in development of the law: Peter

Luxton, The Law of Charities (2001) 16.

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F. Conclusion

From the discussion in this chapter, a number of conclusions can be drawn.

First, the conceptions of society, and civil society, are diverse. The space for civil society

organisations can be seen as separate from, and sometimes subsumed in, government but

progressively the space is being seen as separate. There are different conceptual foundations

for civil society. Civil society can be seen as an extension of notions of family and

relatedness or it can be conceptualised as simply a forum for transactions.

Second, the duty of citizens in relation to government, which frames the response of citizens

through civil society organisations, can range from complete submission to legitimate

opposition. Civil society organisations as vehicles for association can be seen as subject

entirely to the will of the sovereign in a Hobbesian sense or as a right and legitimate threat in

a Jacobsonian sense.

Third, responding to these alternative worldviews, theorists such as Tönnies, since the late

ninteteenth century, have conceptualised different societies as located between these

alternative extreme worldviews. These boundaries can be conceived of as porous and

dynamic. Particular political philosophies might, in a purist sense, oblige particular views of

the space and the encouraging or discouraging of charitable purposes, but practical reality

confounds tidy, theoretical outworkings and presses toward a need for blended responses.

The perceived role of government in shaping the sector and the acknowledgement that

government is a player in shaping the sector further complicates theory development.

Fourth, theory has progressed to a point where the factors informing conceptions of civil

society have been brought within the framework of a diamond. Within that framework,

space is assessed according to laws.

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Fifth, laws can be considered as divided between regulating and favouring. It follows that

legal theory can be informed by this division and can also inform broader civil society

discourse by analysis within this framework. In this development of legal theory, the

decisions of lawmakers regarding the form of law regulating both entitlement to associate

(Association law) and entitlement (if any) to favoured treatment (Benefit law) both of which

are to be discussed over the next two chapters, are identified as the expressions of choices

between philosophic alternatives informed by practical reality. Those choices can be

simplistically reduced to a left verses right analysis, but they need not be. They can be

located in a broader body of more sophisticated theory anchored in the concepts upon which

these societies are built. These often irreconcilable perspectives – diverse as they are – distil

to contests over the freedom of people to associate in civil society beyond the coercive

power of government in groups larger than families. The extent of civil society’s freedom

from government is in contest. What is not in contest is the fact that it is ‘freedom’ that is in

dispute.

Sixth, there are clear differences in the extent to which societies enable communities to form,

self-regulate and dissolve civil society organisations without government interference. The

protection may extend beyond this as will be discussed in the next chapter. There is a

continuum between the extremes of maximum freedom from government influence on the

one hand and complete control so as to make an organisation in effect only an arm of

government on the other.

Seventh, there are two factors that inform the extent of coercion. The first is the reason why

people associate. It will be recalled that this variable was labelled ‘Y’ in the last chapter.

People may be coerced to associate in the context of family and so motive alone is not the

only variable. The size of the organisation is the second factor relevant in this context. The

polis, as the expression of the people in a jurisdiction is an exemplar. The most significant

distinguishing feature, though, is the existence of coercion.

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It will be recalled from the end of Chapter III that the third fundamental contest over a priori

assumptions related to the nature of humans in society. That issue has now been addressed.

The tensions between worldviews have not been resolved but both the influence of the

alternative perspectives, and the variables that inform the extent of coercion, have been

elucidated. A civil society organisation is a voluntary organisation. When goods are

transferred to, or through, these organisations, the transfers are not taxes but freely made.

G. Postscript

There were awful injustices committed, accepted or ignored by the sovereigns of both

England and France in the eighteenth century. The responses of citizens to this were quite

different. Different views of sovereignty may well have informed these different responses.

In France, environed by the awful injustices, ‘the Woodman and the Farmer worked

unheeded’943 toward a revolution whilst in England, their counterparts did not. It is beyond

the scope of this work to explain why. It was my project, though, to consider how views of

sovereignty can inform the development of the doctrine of charitable purpose. Like the

Woodman and the Farmer, I have worked and the apparatus to frame that discourse is now in

place. Across the next three chapters, a jurisprudence for civil society is developed. In

chapter VII, a metaphor of confusion is introduced drawn from Dickens’s character Solomon

Pross presenting one persona in England and another in France. In Chapter VIII, the reverse

metaphor of two different characters seeming to be the same is introduced through Dickens’s

characters, Darnay and Carton, being mistaken for one another. This frames the confusion

between the doctrine of charitable purpose defining the organisations to be subject to

regulation and the role of the doctrine in determining entitlement to favour. They may look

the same but they are not. This lays the platform for resurrecting the central character of

Dickens’s work who was ‘recalled to life’, Dr Manette. His being ‘recalled to life’, provides

943 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 7.

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the typology for releasing charitable purpose into a new life of service of the law in Chapter

IX.

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PART THREE – JURISPRUDENCE

Jurisprudence is the subject of this Part. In this Part the components developed in Part Two

are assembled into a jurisprudence for civil society organisations. The foundational

dimension of this jurisprudence is Association law. Association law is the theoretical

framework for enabling and regulating charities, and more generally civil society

organisations, in the pursuit of their purposes. Association law is discussed in Chapter VII.

In Chapter VIII the role of charitable purpose in determining the scope of operation of the

common law and entitlement to favour is discussed. This second aspect, called in this thesis

Benefit law, explores the basis for the laws granting favour to some civil society

organisations. It is argued that the reason favour is extended to some civil society

organisations is based on the extent or nature of public benefit provided. The focus of

Chapter VIII is on Pemsel’s case and it is argued that the case can be read in a way that

resolves, or at least ameliorates, the puzzles and problems identified in Part One.

In Chapter IX a way in which the doctrine of charitable purpose could be developed into a

jurisprudence of civil society is outlined. Why this alternative jurisprudence is superior to

the present orthodox approach is set out using examples drawn from problems identified in

Part One. This alternative architecture for the common law, developed from the doctrine of

charitable purpose but inclusive of all civil society purposes, is argued to cover the field of

the law applying to civil society organisations and warrants its own space as a body of law

between public law and private law in jurisprudence.

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VII ASSOCIATION LAW

A. Preamble

John Barsad was a thoroughly republican Parisian. He was described as, ‘about five feet

nine of height; black hair; complexion dark; generally, rather handsome visage; eyes dark,

face thin, long, and sallow; nose aquiline, but not straight, having a peculiar inclination

towards the left cheek’.944 Solomon Pross was an upright Londoner who was deeply loved

by his sister whose appearance could be similarly described. As John Barsad rose from table

at the ‘Good Republican Brutus of Antiquity Wineshop’ in Paris, his eyes met those of

Solomon Pross’s sister. She screamed and clapped her hands with joy at the sight of the

brother she had not seen for so long. Solomon Pross was John Barsad. That the two men

were in fact the same person (one being a spy’s persona) would have remained unknown but

that someone came from London to Paris who knew him so well, and could not but declare

so publicly. This is Miss Pross’s chapter. Associations hidden are declared. It is the chapter

where relations are recognised.

B. Introduction

In this chapter, it is argued that the common law protects a freedom to associate and give.

Those freedoms underpin charitable association and charitable giving but apply whether or

not the association and the giving enjoy the ‘peculiar favour’ afforded charities.945 The

freedoms extend beyond charities to protect association through all civil society

organisations. As the space for association has been protected by the common law, it is

appropriate to call this body of law ‘Association law’. Association law derives its legitimacy

not only from the common law but also from constitutionally protected and internationally

accepted freedoms. It follows that the regulation of these organisations must respect not

only common law recognised freedoms, but also basic human rights. The entities that are to

944 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 184.

945 Pemsel’s case [1891] AC 531, 583. (Lord Macnaghten).

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be regulated having regard to these freedoms are those that are pursuing civil society

purposes. Further, it is the purposes pursued and not the form that these organisations take

that is the basis for regulation. Association law is, then, the body of law that enables and

regulates association through civil society organisations generally – not just charitable

associations. For the purposes of defining the organisations that fall within the scope of

operation of Association law it is contended that civil society organisations are identified by

reference to charitable purposes that are not technically defined. These charitable purposes

are in essence purposes which are:

a. Altruistic; and

b. For public Benefit; and

c. Pursued without Coercion.

These charitable purposes differentiate civil society organisations from the three other

organisational purposes: namely

a. Business, which is manifest in the pursuit of self-interest; that is, lack of

altruism;

b. Government, which is characterised by coercion, that is, lack of voluntariness or

freedom; and

c. Family, which is characterised by being private not public.

Association law is the foundation of a jurisprudence for civil society. It is a body of law that

is founded on two reciprocal principles. First, that voluntary association is to be enabled,

regulated and perhaps encouraged. Second, that regulation of civil society organisations

must be the minimum necessary to meet the just requirements of morality, public order and

the general welfare in a democratic society. This is, in summary, the argument advanced in

this chapter.

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The argument is foundational to the next chapter because on this foundation is constructed

an infrastructure justifying favour to civil society organisations including charities. The

body of law, which is the outworking of entitlement to favour is called Benefit law.

This chapter focuses only on the enabling dimension integral to regulation called here

Association law. First, the relationship between civil society theory and legal theory is

discussed. It is suggested that legal theory can draw from civil society theory and civil

society theory can accommodate jurisprudential insights. This initial investigation is

necessary to locate civil society jurisprudence in a broader body of civil society inquiry.

Second, the extent to which space to associate freely is protected by common law is

discussed. This leads into a discussion of the protection of freedom of association under

international conventions. Third, the scope of application of Association law is considered.

Fourth, it is suggested that purpose, not form, should be the basis for regulating all civil

society organisations not just the organisations presently known as charities. The chapter

closes by suggesting twinned principles that could act as a bridge between foundational but

abstract human rights, such as freedom of association on the one hand; and the emerging

civil society regulation theory on the other.

C. Locating Jurisprudence in Civil Society Theory and Civil Society in Jurisprudence

It will be recalled from the beginning of Chapter I that the widest frame was adopted to

begin the discussion, and that widest frame was society.946 It was stated that because society

is complex, for analytical purposes, the literature often divides society into four sectors:

business (the first sector), government (the second sector), civil society (the third sector) and

family (the fourth sector).947 Following that observation, it was also noted that law is

946 See page 18.

947 See Helmut Anheier, 'Dimensions of the Third Sector: Comparative Perspectives on Structure and Change' (Paper presented at

Centre for Civil Society, London School of Economics, August 2000) 16; Kristin A Gronbjerg and L Paarlberg, 'Extent and

Nature of Overlap between Lisitngs of IRS Tax-Exempt Registration and Nonprofit Incorporation: The Case of Indiana' (2002) 31

Nonprofit and Voluntary Sector Quarterly 565 ; Michael Hall, Larry McKeown and Karen Roberts, 'Caring Canadians, Involved

Canadians ' (2005) 2000 National Survey of Giving, Volunteering and Participating, Statistics Canada; Mark Lyons, Third Sector

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complex and so, for analytical purposes, it, too, is often divided according to sectors, and

that in legal analysis, it is possible to identify segmentation into: public law for government,

private law for citizens, as citizens, with further subdivision into commercial law for

business, and estate and family law for families. It was immediately apparent that a

jurisprudence for the third sector,948 and more broadly civil society, had not developed.949 It

followed that whilst it could be said that jurisprudential divisions follow divisions of the

first, second and fourth sectors, and distinct heads of law for those sectors were readily

identifiable, the same could not be said for the laws applying to the civil society.950 Analysis

of the law applying to civil society organisations seems to have lagged in development,

similar to the way analysis of the third sector has lagged.951 This chapter takes up the

challenge of going beyond the narrow class of charities to include the plethora of other forms

of civil society organisation by which people associate for purposes that are not family,

business or government.

Across Chapter II, it was noted that the law’s preoccupation with Pemselian partitioning of

charitable purposes had fettered its capacity to respond to the needs of common law

countries. 952 In Chapter III, the way that the esoteric methodology of the common law had

alienated legal research from the wider community of scholarship was explored. The

consequence of this has been that scholarship in disciplines other than law, and even

developments within law, have not, to date, significantly informed the jurisprudence centred

on charitable purposes. The time has come for that to change. It is important to locate this

theory development not only in legal theory but also in cross-disciplinary scholarship. As

- The Contribution of Nonprofit and Cooperative Enterprises in Australia (2001); Kathleen Day and Rose Anne Devlin,

'Backgrounder: The Canadian Nonprofit Sector' (Canadian Policy Research Networks, 1997); Marion R Fremont-Smith,

Governing Nonprofit Organisations – Federal and State Law and Regulation (2004).

948 See footnote 91 at page 23.

949 See footnote 92 at page 23.

950 See page 24.

951 See Rob Atkinson, 'Problems with Presbyterians: Prolegomena to a Theory of Voluntary Associations and the Liberal State' in

Charles Mitchell and Susan Moody (eds), Foundations of Charity (2000) 125.

952 See particularly pages 98 to 111.

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the civil society diamond is a, if not the leading, international tool for cross-disciplinary

analysis of civil society, the jurisprudence developed in this thesis is located within this civil

society diamond.953 It will be recalled from Chapter VI that Anheier divided civil society

into three levels for analytical purposes, and it was noted that charities belong to the level of

organisations, not individuals or institutions.954 The definitional problems with charitable

purpose lead to a dissonance between, on the one hand, the definition of charities at law –

which takes a technical meaning with reference to the purpose of an organisation – and on

the other hand, the concept of charity and acts of charity at the institution and individual

levels respectively - which takes a common meaning. The challenge for jurists is to bring

these conceptions back into harmony. Logically, this is best achieved by abandoning the

technical meaning applied at the organisational level and replacing it with a concept of

charitable purpose consonant with the idea of charity at an individual and institutional level.

To date there has not been an alternative to the technical legal meaning of charitable purpose

because of concerns regarding subjectivity.955 If, though, the development of a jurisprudence

for civil society does not rely upon subjective concepts of altruism, benefit or coercion to

define civil society organisations, it is arguably possible to move beyond the technical

definition. If it is possible to move beyond the technical definition, then the dissonance

experienced in relation to the meaning of charity at the organisational level can be addressed.

It is beyond the scope of this work to explore charity at the institutional and individual level,

and I leave open the question of whether the theory proposed here can be extended into these

other dimensions. The point is that the underlying objective criteria can be applied to reunite

‘charity’ at the organisational level with its source jurisprudence in public benefit and the

piety of earlier times.956

953 See page 254 and discussion of significance at footnote 73.

954 For discussion of the importance and use of the civil society diamond see particularly page 20, footnote 73 and also pages 253 to

255.

955 Pemsel’s case [1891] AC 531, 587 (Lord Macnaghten).

956 Pemsel’s case [1891] AC 531, 583 (Lord Macnaghten).

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The next insight of Anheier useful in the development of jurisprudence is that which enables

the methodology of civil society analysis to be applied in jurisprudence. It will be recalled

from the last chapter that civil society was multi-faceted in nature. The civil society

diamond was postulated as a tool for bringing different facets into the one plane for analysis

by reducing the variables into numbers between zero and 100. Whilst Anheier stated that it

is for the researchers to select the indicators957 for each dimension that they consider most

useful to their particular project, 958 it will be recalled that he suggested that for assessing

‘space’ the preferred focus is law.959 Over the last three chapters, it has been argued that the

space is defined with reference to altruism, benefit and coercion. Altruism, benefit and

coercion are all capable of some level of objective measurement. It is also suggested that

these factors are informed by, remoteness ‘X’, motive ‘Y’ and number of person involved

‘Z’. These variables are also capable of objective measurement. All inform the space for

civil society and all can be measured on a scale of zero to 100. It follows that if

jurisprudential development of the doctrine of ‘charitable’ purpose draws upon these same

measurable indicia of charitable purposes, this body of law can be located in a wider body of

civil society discourse.

Conversely stated this means that the wider body of civil society discourse may inform legal

theory development. This has further implications. First, because in civil society discourse

the space is distinguished from, but on par with, business (the first sector) government (the

second sector) and family (the fourth sector) it invites recognition of the law applying to civil

society as a separate jurisprudential division of third sector law on par with public

(government) law and private (business and family) law. Second, as civil society theory

draws a distinction between enabling and regulating participation in the space and granting

favour, it invites a division between law that regulates (Association law) and law that favours

957 Helmut Anheier, Civil Society Measurement, Evaluation, Policy (2004) 137.

958 Helmut Anheier, Civil Society Measurement, Evaluation, Policy (2004) 35.

959 See page 254.

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(Benefit law).960 In the remainder of the Chapter, I focus only on that part of law that relates

to associations in civil society, beginning with the fundamental freedom to associate at

common law.

D. Space to Associate is Protected by the Common Law

The extent to which freedom to associate and contribute is dependent upon the goodwill of

the government is contested. There are significant differences among, and within, common

law countries. In this section, the belief that ‘western legal thought …assumes the

universality of certain principles contained in the “four freedoms” … freedom of association,

of assembly, of speech, and of religion’961 is discussed. The purpose of the discussion is to

set out a platform for the pursuit of charitable purposes anchored in a fundamental freedom

to associate. The section should be read as twinned with the next section, which takes up the

same issue but from the perspective of international law.

The foundation of the freedom to associate at common law is most clearly recognisable in

freedom of religious association. Freedom to associate, particularly for religious purposes,

separate from sovereign control, is founded in the common law that precedes the signing by

King John of the Magna Carta Libertatum962 at Runnymede in 1215. In the tenth century,

King Edgar had declared that ‘the church must have its law’.963 This freedom of the church

to self regulate was adopted as part of the law of England by William the Conqueror

following his accession to the throne of England in 1066. These fundamental freedoms were

codified, initially in the The Charter of Liberties of Henry I.964 Similar statements of

960 See page 255.

961 S E Klingelhofer and David Robinson, 'The Rule of Law, Custom and Civil Society in the South Pacific: An Overview' (2002)

8(1) Third Sector Review: Charity Law in the Pacific Rim 211, 211.

962 Magna Carta Libertatum, it should be remembered translates as ‘great charter of freedoms’ hereafter referred to only as Magna

Carta.

963 Christopher W Brooks, Lawyers, Litigation and English Society Since 1450 (1998) 219.

964 1100, Hen; H L Cannon, 'The Character and Antecedents of the Charter of Liberties of Henry I' (1909) 15(1) The American

Historical Review 37 .

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freedom of religious association were made by succeeding English monarchs.965 Most of the

provisions of Magna Carta have been repealed,966 but the first chapter, which guarantees the

freedom of the English Church, remains in force – at least in England.967 The conclusion to

be drawn is that there is a fundamental freedom inherent in the common law to associate to

pursue, at the least, religious charitable purposes. If a church is a self-regulating civil society

organisation then at least one form of civil society organisation has the freedom to associate

and self regulate independent of the state.

Freedom to associate is of limited value if the common law does not recognise associations

other than those incorporated in a manner acceptable to the government. This is because the

government may control association through regulation of incorporation. The position at

common law on this point is anomalous. The common law does not, now, recognise

unincorporated associations as separate judicial personae. Formerly it did. The common law

did not have difficulty recognising associations that did not take an incorporated form until

the late fourteenth or early fifteenth century.968 Throughout the period in which custom was

being rationalised into common law, ‘the judges did not distinguish between individuals and

group interests’.969 Fletcher pointed to kindred groups, village communities, trade guilds and

monastic orders970 as all enjoying recognition at common law until an awareness developed

of the threat of associations to the feudal powers, and later, the state.971 Garton has pointed

out that ‘in England an unincorporated association, which has no legal personality, may

965 Magna Carta 1215 signed by King John; Magna Carta 1216, 1217, 1225 signed by King Henry III; Magna Carta 1297 signed by

King Edward I; signed by each succeeding monarch until Henry V in 1416.

966 9 Geo IV c 31 s 1; Statute Law Revision Act 1873 (Eng.&W).

967 See Statute Law Revision Act 1872 (Eng.&W). Its enforceability in other jurisdictions will be dependent upon the rules governing

the reception of English laws into those jurisdictions and subsequent enactments within those jurisdictions. See B H McPherson,

The Reception of English Law Abroad (2007) 8, 205.

968 Keith L Fletcher, The Law Relating to Non-Profit Associations in Australia and New Zealand (1986) 7.

969 Keith L Fletcher, The Law Relating to Non-Profit Associations in Australia and New Zealand (1986) 10.

970 Keith L Fletcher, The Law Relating to Non-Profit Associations in Australia and New Zealand (1986) 7-9.

971 Keith L Fletcher, The Law Relating to Non-Profit Associations in Australia and New Zealand (1986) 3; Arthur Jacobson, 'The

Private Use of Public Authority: Sovereignty and Associations in the Common Law' (1980) 29 Buffalo Law Review 600.

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[today] be registered as a charity’.972 We have then today the anomalous situation in

England where unincorporated associations can be registered as charities but not be

recognised as legal entites. The foundations for the anomaly are in the Tudor period.

The Tudor period was one in which the ‘state frequently presented itself as an absolute

monarchy’.973 Under Henry VIII, the law was a coercive arm of the sovereign to declare the

religious beliefs of citizens, confiscate property and decide what form of religious

association was permissible. The reading of the liberties granted by Magna Carta became

subject to the sovereign’s discretion and this translated into prohibition of what we now call

civil society organisations that were not created with royal consent. There had formerly been

some limitations on association but by the Chantries Act of 1531, Henry VIII extended the

prohibition on associations without royal consent to a broad array of associations ‘made by

common assent without any corporation.’974 To migrate these civil society organisations that

had not been incorporated in a manner issuing from the sovereign, common law judges

adopted ‘the fiction of a lost grant’ to enable their recognition by courts of law.975

Freedom for religious association, and with it, to a limited extent, freedom of association for

other charitable purposes did survive, however, beyond the Tudor period, within the

common law. It was to receive clearer articulation and protection at common law under the

Stuart kings.

Three years after the Preamble was passed into law by Queen Elizabeth I, she was succeeded

by King James VI of Scotland, who became King James I of England. Under this new

monarch, English lawyers were keen to reassert that the common law was a fetter on the

972 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 62b.

973 Christopher W Brooks, Lawyers, Litigation and English Society Since 1450 (1998) 201.

974 Chantries Act 1531 23 Hen VIII c 10; cited in Keith L Fletcher, The Law Relating to Non-Profit Associations in Australia and

New Zealand (1986) 11; Fletcher notes that it was not repealed until 1960.

975 Keith L Fletcher, The Law Relating to Non-Profit Associations in Australia and New Zealand (1986) 12.

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sovereign’s power. A body of writing emerged reaffirming the freedom protected by law.976

Edward Coke, who was speaker of the English House of Commons in 1592 and 1593, and

Lord Chief Justice from 1613 to 1616, articulated the legal reasoning that shaped this

jurisprudence; not only in England but subsequently in the United States of America.977

Coke’s articulation of his theoretical foundation for these rights can be stated as three theses:

first, the king, in an English political sense, never dies; second, that the political power of the

king is derived from this law; so, third, it is ‘most dangerous’, particularly for a sovereign, to

change the laws, for the law makes the king.978

The consequence of acceptance of these thesis is that the sovereign, far from being an

absolute monarch is, like every other citizen, subject to laws and dependant upon them for

sovereignty. Furthermore, the sovereign should not change the law readily and should only

do so with the consent of the people for it is the people’s common law, customs and statutes

from which the sovereign derives ‘wit, power and dominion.’979 If the sovereign is

dependent upon the laws for sovereignty, then the foundations for the rule of law and

limitations on government power have been laid. If among those common laws are basic

liberties such as the freedom that found expression in Chapter 1 of Magna Carta,980 citizens

have some basis for protection of those rights from sovereign control.981

It was not long after Coke wrote of this foundation that the freedoms began to find

expression again in Charters. The first example, after the Tudors, of the practice of

preserving the common law freedoms by codification, is the Virginia Charter of 1606. From

976 Christopher W Brooks, Lawyers, Litigation and English Society Since 1450 (1998) 225.

977 Christopher W Brooks, Lawyers, Litigation and English Society Since 1450 (1998) 229.

978 Sir Edward Coke, The Selected Writings and Speeches of Sir Edward Coke, Steve Sheppard (ed) (Indianapolis: Liberty Fund,

2003) Vol 1<http://oll.libertyfund.org/title/911/106317> at 3 September 2007.

979 Christopher W Brooks, Lawyers, Litigation and English Society Since 1450 (1998) 200. The comparison with the writing of

Thomas Hobbes’s political thought should not go unnoticed. See Thomas Hobbes, Leviathan, Great Books of the Western World

(first published 1651, 1992 ed).

980 Christopher W Brooks, Lawyers, Litigation and English Society Since 1450 (1998) 202.

981 The parallels of this common law foundation with the philosophic foundations of that secular democracy articulated by Rousseau

and discussed in the preceding chapter are unavoidable but, notably, precede it. See pages 232-236.

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that time, a practice began of stating in charters and other constituent documents of colonies

that the liberties enjoyed by English citizens were also enjoyed by the citizens of the

particular jurisdiction.982 The language varied from jurisdiction to jurisdiction but there was

significant similarity in content. McPherson observed:

The similarity of the language used in colonial charters and the liberties declared by Magna Carta

and celebrated by Coke and others inevitably attracted attention in the colonies. Colonial lawyers

and political leaders viewed the liberties clauses in colonial charters as confirming their pre-

existing fundamental right as English subjects and binding the crown to acknowledge those

rights.983

So seemingly out of abundant caution, and upon secession from the English Crown, most

American states incorporated Magna Carta-style safeguards in their constitutions or organic

laws.984 This practice was followed in many other common law jurisdictions as they gained

independence from British rule.985

In England, the freedoms remained uncodified. By the time William Blackstone published

his Commentaries on the Laws of England986 in the 1760s, this view of an interplay between

sovereign power and citizens’ liberties was so well established that Blackstone was able to

set out a complete geneology back to the Magna Carta and beyond. He concluded:

But when such an hereditary right, as our laws have created and vested in the royal stock, is

closely interwoven with those liberties, which ... are equally the inheritance of the subject; this

982 B H McPherson, The Reception of English Law Abroad (2007) 208-209.

983 B H McPherson, The Reception of English Law Abroad (2007) 211-212.

984 B H McPherson, The Reception of English Law Abroad (2007) 215.

985 B H McPherson, The Reception of English Law Abroad (2007) 216.

986 Blackstone, Blackstone's Commentaries on the Laws of England, (The Avalon Project, Yale Law School, 2007)

<http://www.yale.edu/lawweb/avalon/blackstone/blacksto.htm> at 28 September 2007.

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union will form a constitution, in theory the most beautiful of any, in practice the most approved,

and, I trust, in duration the most permanent.987

Blackstone had also become ‘the leading legal authority’988 in the United States. These

fundamental freedoms, that had been in Charters dating back to the early 1700s, and which

Blackstone eulogised as ‘liberties .. most beautiful’, found expression in the first written,

common law country constitution.989 It began with the famous phrase ‘We the people of the

United States…’990 The setting out of basic freedoms common in the colonies became

common practice in common law nations. By 1996, the simple words ‘[e]veryone has the

right to freedom of association’ were enough on this point for the people of South Africa.991

If most common law countries codified protection of the freedoms, what, then, is the current

position at common law? The position is not clear. Ahdar and Leigh, writing in 2005 and

referring to freedom of religion, summarised the position as: ‘[i]n the past two decades,

courts across the common law world have purported to find that certain fundamental rights

existed – either as limitations on legislative capacity (Australia) or in the form of a strong

presumption against legislative encroachment (New Zealand and the United Kingdom)’.992

987 Blackstone, Blackstone's Commentaries on the Laws of England; Book the First - Chapter the Third: Of the King, and His Title,

(The Avalon Project, Yale Law School, 2007) <http://www.yale.edu/lawweb/avalon/blackstone/bk1ch3.htm> at 28 September

2007.

988 US Department of Justice, 'Report on Enforcement of Laws Protecting Religious Freedom: Fiscal Years 2001-2006' (US

Department of Justice, 2007) 15.

989 I acknowledge the claim by San Marino to have both the oldest republic (established in 301) and the oldest written constitution,

hence I limit this assertion to ‘common law’ countries. Statvta Decreta Ac Ordinamenta Illvstris Reipvblicae Ac Perpetuae

Libertatus Terrae Sancti Marine 1601.

<http://www2.omniway.sm/sanmarinoguide/aboutsanmarino/sanmarinoguide_get_par.php3?PARAM=29> at 31 August 2007 (in

Italian).

990 United States Constitution, Preamble.

991 Constitution of the Republic of South Africa 1996 As adopted on 8 May 1996 and amended on 11 October 1996 by the

Constitutional Assembly One Law for One Nation Act 108 of 1996 s 18.

992 Rex Ahdar and Ian Leigh, Religious Freedom in the Liberal State (2005) 102 (citing Australian Capital Television Pty Ltd v

Commonwealth (No 2) (1992) 177 CLR 106 as authority for the situation in Australia; R v Lord Chancellor, Ex parte Witham

[1998] QB 575; R v Secretary of State for the Home Department, ex parte Simms [2000] AC 115; and R (on the application of

Daly v Secretary of State for the Home Department [2001] 2 WLR 1622 as authority for the situation in the United Kingdom; and

Fraser v State Services Commission [1984] 1 NZLR 116, 121; and Taylor v New Zealand Poultry Board [1984] 1 NZLR 394,

398 as authority for the position in New Zealand).

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This may well be the situation more generally with respect to freedom of association. The

common law foundation continues in the United Kingdom and it would seem beneath the

constitutions in the United States and Canada. Ahdar and Leigh cite Watson v Jones993 as

United States authority for common law confirmation of protection of the space.994 In

Canada, the Supreme Court has recently affirmed the protection of religious freedom as

based on the ‘philosophical and political values underpinning Canadian democracy’, but that

protection was based on the Charter of Rights. 995

In Australia, where there is not a Bill of Rights or other equivalent charter, the dominant,

orthodox view of the common law is that put by Justice Millhouse in Grace Bible Church v

Reedman: ‘... in the absence of a Bill of Rights . . . the citizens … do not have rights which

may not be overridden by Act [of] Parliament.’996 Recently, in Haneef’s case, on appeal, the

Full Court of the Federal Court of Australia held, though, that ‘[f]reedom is not merely what

is left over when the law is exhausted’997 but that ‘the common law, ... has its own set of

constitutional rights, even if these are not formally entrenched against legislative repeal’.998

It seems that at the time of the Australian Constitutional debates, at least some thought it was

unnecessary to set out these freedoms, as they were believed to be preserved by the common

law.999 Following the reasoning of Justice Millhouse, if these freedoms are not incorporated

993 80 US (13 Wal) 679, 728-9 (1971). They also cite Bryce v Episcopal Church in Diocese of Colorado, 289 F 3d 648, 655 (10th Cir

2002).

994 Ahdar and Leigh point out that the case was decided without reference to the First Amendment of the United States Constitution

which protects religious liberty. They subsequently note that the US Supreme Court has ‘explicitly grounded the right of church

autonomy in the First Amendment.’ Rex Ahdar and Ian Leigh, Religious Freedom in the Liberal State (2005) 329-330.

995 Rex Ahdar and Ian Leigh, Religious Freedom in the Liberal State (2005) 1 quoting Congregation des temoins de Jehovah de St

Jerome-Lafontaine v Lafontaine (Village) (2004) 241 DLR (4th) 83, [64].

996 (1984) 54 ALR 571, 585. That this is the dominant position in Australia at the time of writing this thesis see: Gerhardy v Brown

(1985) 159 CLR 70, [20]. The minority view in Australia is that expressed by Justice Gaudron in Krugar and Bray 146 ALR 126.

997 Minister for Immigration and Citizenship v Haneef [2007] FCAFC 203 (Unreported, Black CJ, French and Weinberg JJ, 21

December 2007) [113].

998 Minister for Immigration and Citizenship v Haneef [2007] FCAFC 203 (Unreported, Black CJ, French and Weinberg JJ, 21

December 2007) [113] citing TRS Allan.

999 Tony Blackshield and George Williams, Australian Constitutional Law and Theory: Commentary and Materials (3rd ed, 2002)

Chs 2, 27.

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in Magna Carta-style safeguards, they may be abrogated at any time by legislation.1000 In

this context it is noteworthy, though, that in 1951, the Australian High Court struck down as

unconstitutional the Communist Party Dissolution Act 1950 (Cth).1001 That Act dissolved the

Australian Communist Party and forfeited its property1002 on the grounds that it was ‘a

revolutionary party using violence, fraud, sabotage, espionage and treasonable or subversive

means for the purpose of bringing about the overthrow or dislocation of the established

system of government of Australia’.1003 That case is usually read as an example of limitation

of the Australian Government’s interpretation and use of the constitutionally granted defence

power but this may become relevant as the law in this area develops.

In summary, then, there is a long history in the common law of recognising freedoms. They

exist. They may, though, be trumped by statute unless there is written constitutional

protection. Whether they will always be trumped by legislation may be a moot point for

reasons which will be discussed later. I turn now to the issue of association being dependent

upon government consent.

There is not a reason, in principle, why the common law courts could not recognise

associations even if unincorporated. That this possibility remains open is affirmed by

Fletcher, who identifies that ‘[n]o parliament has attempted to destroy the private autonomy

of associations’.1004 The European Court of Human Rights recognises associations

irrespective of incorporation for the purposes of affirming free assembly in civil society.1005

1000 Tony Blackshield and George Williams, Australian Constitutional Law and Theory: Commentary and Materials (3rd ed, 2002)

Chs 2, 27.

1001 Australian Communist Party v Commonwealth (1951) 83 CLR 1, [3].

1002 Communist Party Dissolution Act 1950 (Cth) s 4.

1003 Communist Party Dissolution Act 1950 (Cth) Preamble.

1004 Keith L Fletcher, The Law Relating to Non-Profit Associations in Australia and New Zealand (1986) 6, although Fletcher confined

his analysis to the applicable law in the United Kingdom, Australia and New Zealand.

1005 See eg, The United Communist Party of Turkey v Turkey [1998] Eur Court HR 1, where the formal structure of the association was

dissolved by the state even before it was able to commence activities.

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Some United States jurisdictions now recognise unincorporated associations by legislative

fiat. 1006

If it is accepted that at common law there is at least freedom of religious association, to

which a sovereign must assent, as inuring for the benefit of all citizens of that particular

common law country, then, I theorise that a common law judge may hold that advancement

of religion as a charitable purpose is a part of a broader class of freedom of religion accepted

from time immemorial by the common law. If that is so, it is logical to suggest that all

charitable purposes are part of a broader class of a general freedom of association accepted

from time immemorial by the common law which, in more recent centuries, has found

expression in constitutional restatements rather than common law development. If this

argument is accepted, there is a theoretical foundation for the pursuit of charitable purposes,

in particular, and civil society purposes in general, that is not dependent upon government

sanction. It is rooted in a freedom protected by the common law.

I turn now to consider the freedom that preserves this space from the perspective of

international covenants.

E. Space to Associate and International Conventions

For as long as recognition and protection of freedom of association involved only

interpretation of domestic constitutions, the common law principles could remain otiose. In

the late twentieth century and early twenty-first century, however, international treaty

obligations have obliged common law jurists to revisit the common law in the context of

those international covenants. In this next section, an argument is advanced that the

common law has a foundation for taking cognisance of international treaties and applying the

1006 The following states have adopted Revised Uuniform Unincorporated Nonprofit Association Act (2008) or variations on this

model legislation: Alabama, Kansas, Colorado, Delaware, The District of Colombia, Hawaii, Idaho, North Carolina,. Texas, West

Virginia, Wisconsin, Wyoming. See also Council to the Members of The American Law Institute, 'Principles of the Law of

Nonprofit Organisations: Discussion Draft' (American Law Institute, 2006) xxx.

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underlying principles of those treaties into the domestic common law. The conclusion to

which I come is that, at the weakest, international covenants buttress the argument based in

common law which was set out in the prior section. In some jurisdictions, they may provide

an alternative foundation. Again I return to Blackstone for a statement of the common law at

about the time that these common law freedoms were finding explicit expression in written

constitutional form.

Blackstone averted that the common law imported into the laws of England internationally

accepted principles - what he called ‘the law of nations’.1007 First, he set out in summary the

foundation principles of doing good, not harm and respecting sovereignty.1008 He then

summarised the way that ‘the law of nations’, which could now be described as

‘international conventions’, was imported into the law of England. He wrote, that it was

imported as a way of declaring ‘fundamental conditions’ necessary to be a part of the

‘civilized world’.1009

It follows, if Blackstone correctly stated the common law, that by the mid-to late 1800s, the

common law recognised and protected certain freedoms on the basis that they were a part of

the ‘law of nations’. If the freedoms that now find expression in international covenants

draw from those fundamental freedoms, there is a basis for the common law to recognise

international covenants that give expression to the law of nations. For the purposes of the

argument advanced here, at the forefront of that recognition and protection is freedom for

association, particularly religious association. If this is accepted, then it is immaterial

whether that freedom is rooted in the common law tradition or international covenants. They

1007 For a history of the law of nations see J M Kelly, A Short History of Western Legal Theory (1992) 241-243.

1008 Blackstone, Blackstone's Commentaries on the Laws of England; Book the Fourth - Chapter the Fifth: Of Offences Against the

Law of Nations, (The Avalon Project, Yale Law School, 2007) <http://www.yale.edu/lawweb/avalon/blackstone/bk4ch5.htm> at 3

September 2007.

1009 Blackstone, Blackstone's Commentaries on the Laws of England; Book the Fourth - Chapter the Fifth: Of Offences Against the

Law of Nations, (The Avalon Project, Yale Law School, 2007) <http://www.yale.edu/lawweb/avalon/blackstone/bk4ch5.htm> at 3

September 2007. For discussion of this notion as a foundation for colonisation see Antony Anghie, Imperialism, Sovereignty and

the Making of International Law (2004).

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are the same. All civilised countries accepted these principles. England, and those countries

that inherit her common law to the extent that they purport to be civilised and build on and

from Blackstone’s articulation, accept this ‘law of nations’.

What then of sovereignty? Throughout legal history, the idea that sovereign states have

absolute authority has waxed and waned.1010 The position waxed at common law under

Henry VIII and waned under the Stuarts. The idea that a state is sovereign, and as a

consequence, entitled to resist all internal dissidence and external interference, was reaching

its zenith in the nineteenth century1011 and dominated until the close of the Second World

War. The atrocities of the Second World War were so shocking that there was ‘a clear

international consensus among the victor powers that the perpetrators of aggression should

this time be treated differently by the international community’.1012 The result was the

Nuremberg Charter1013 and a war trial.1014 The outcome of the trial process was the

establishment of a foundation of new rules of international law and human rights.1015 The

trial was not the only, nor the most important, platform for the statement of these

fundamental rights in an international context. The Universal Declaration of Human

Rights1016

adopted on 10 December 1948, set out across 30 Articles a consensus of value

statements.1017

The consequence of the steady development of those value statements into international law

has, in Vesselin Popovski’s view, led to a ‘re-conceptualization of sovereignty, which no

1010 Antony Anghie, Imperialism, Sovereignty and the Making of International Law (2004) 101.

1011 Antony Anghie, Imperialism, Sovereignty and the Making of International Law (2004) 100-110.

1012 Richard Overy, 'The Nuremberg Trials: International Law in the Making' in Philippe Sands (ed), From Nuremberg to The Hague

(2003) 1, 28.

1013 Vesselin Popovski, 'Sovereignty as Duty to Protect Human Rights' (2004) UN Chronicle Online Edition 16

<http://www.un.org/Pubs/chronicle/2004/issue4/0404p16.html> at 28 September 2007.

1014 Joseph E Persico, Infamy on Trial (1994).

1015 Richard Overy, 'The Nuremberg Trials: International Law in the Making' in Philippe Sands (ed), From Nuremberg to The Hague

(2003) 1, 23.

1016 The Universal Declaration of Human Rights (UDHR), GA Res 217A (III) (entered into force 10 December 1948).

1017 Vesselin Popovski, 'Sovereignty as Duty to Protect Human Rights' (2004) UN Chronicle Online Edition 16

<http://www.un.org/Pubs/chronicle/2004/issue4/0404p16.html> at 28 September 2007.

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longer antagonizes but incorporates human rights. A state cannot pretend to absolute

sovereignty without demonstrating a duty to protect people’s rights.’1018 Further, the State

Department of the United States of America has affirmed that the United States will

intervene to protect civil society organisations threatened by governments that do not respect

the freedoms of their citizens.1019 Popovski’s argument, in an international human rights law

context, resonates with Coke’s defence of the common law basis for subjugation of the

sovereign to the law. He contended that once it is accepted that sovereignty ‘means the

sovereignty of the people, not of the leaders’, then if the leaders fail to protect the people (in

Hobbesian sense) or guard their rights (in a Lockean or Mill sense) or express their collective

will (in a Rousseauian sense) then there is justification for intervention to restrain that

sovereign to protect the freedoms of the people of that jurisdiction.1020

Many nations have agreed voluntarily to accept that their states cannot pretend to absolute

sovereignty without demonstrating a duty to protect people’s rights and have accepted that

the fundamental freedoms expressed in the Universal Declaration of Human Rights apply to

them. Provisions of the Universal Declaration of Human Rights have been adopted into

other international covenants which have been ratified by common law countries. Such

provisions include the International Covenant on Civil and Political Rights and the

European Convention on Human Rights and Fundamental Freedoms. Many nations,

including common law countries such as Great Britain, have ratified the European

Convention on Human Rights and Fundamental Freedoms1021 by which they agree to submit

1018 Vesselin Popovski, 'Sovereignty as Duty to Protect Human Rights' (2004) UN Chronicle Online Edition 16

<http://www.un.org/Pubs/chronicle/2004/issue4/0404p16.html> at 28 September 2007.

1019 Human Rights Bureau of Democracy, and Labor, Guiding Principles on Non-Governmental Organisations (2006) US Department

of State <http://www.state.gov/g/drl/rls/77771.htm> at 28 September 2007; clause 10 reads: ‘Whenever the aforementioned NGO

principles are violated, it is imperative that democratic nations act in their defense’.

1020 Vesselin Popovski, 'Sovereignty as Duty to Protect Human Rights' (2004) UN Chronicle Online Edition 16

<http://www.un.org/Pubs/chronicle/2004/issue4/0404p16.html> at 28 September 2007.

1021 For date of acceptance of the treaty see European Court of Human Rights, Dates of ratification of the European Convention on

Human Rights and Additional Protocols (2006)

<http://www.echr.coe.int/ECHR/EN/Header/Basic+Texts/Basic+Texts/Dates+of+ratification+of+the+European+Convention+on+

Human+Rights+and+Additional+Protocols/> at 28 September 2007.

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to the European Court of Human Rights. This will undoubtedly affect the development of

the doctrine of charitable purpose.1022 Other common law countries like Canada,1023 South

Africa1024 and New Zealand1025 have adopted concepts articulated in the Universal

Declaration of Human Rights into their constitutional rubric. Still others, like Australia,

have ratified treaties and established administrative bodies to effect compliance with the

treaty obligations.1026 At the end of the twentieth and beginning of the twenty-first centuries,

then, when the vast majority of common law countries have subscribed to the Declaration of

Human Rights and have accepted certain rights as ‘inalienable’,1027 they have, arguably or

expressly in so doing, circumscribed the scope of sovereignty to the extent necessary to

preserve these fundamental rights. In the twenty-first century, sovereignty appears to be on

the wane and freedoms, including freedom of association, are waxing. If common law

countries have circumscribed the scope of sovereignty to the extent necessary to preserve

these fundamental rights, I suggest that they have acted in a manner consistent with the

English common law. The common law arguably does not, or at least at various periods has

not, respected sovereignty as absolute.

It follows from the discussion so far, that common law jurists can take cognisance of

litigation in relation to these freedoms not only under the common law but also in an

international context. This freedom to take cognisance of international conventions becomes

an obligation if their country has agreed to bring its domestic law into conformity with

1022 Peter Luxton, The Law of Charities (2001) 36.

1023 Canadian Charter of Rights and Freedoms set out in The Constitution Act 1982, being Schedule B to the Canada Act 1982

(Eng.&W) 1982 c 11.

1024 Constitution of the Republic of South Africa 1996 as adopted on 8 May 1996 and amended on 11 October 1996 by the

Constitutional Assembly One Law for One Nation Act 108 of 1996 s 36(1).

1025 New Zealand Bill of Rights Act 1990 (NZ).

1026 In Australia the Human Rights and Equal Opportunity Commission, an independent statutory authority of the Commonwealth,

was established by the Human Rights and Equal Opportunity Commission Act 1986 (Cth) and is responsible for ensuring that

Australia discharges its responsibilities under (among other treaties): The International Covenant on Civil and Political Rights

(ICCPR), opened for signature 16 December 1966, GA Res 2200A (XXI) (entered into force 23 March 1976) and the Declaration

in the Elimination of All Forms of Intolerance and of Discrimination Based on Religion or Belief, GA Res 36/55, 36 UN GAOR

Supp (No 51) at 171, UN Doc A/36/684 (1981).

1027 Preamble to The Universal Declaration of Human Rights (UDHR), GA Res 217A (III) (entered into force 10 December 1948).

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international covenants affirming these rights, as is the case with the United Kingdom.1028

This issue is not merely theoretical. It affects the revenue base of common law countries that

belong to the European Union. This is because the European Court of Justice has accepted

the advice of Advocate General Mengozzi that the Court should allow the same tax

advantages for cross-border donations as for donations to domestic organisations.1029

Common law countries that belong to the European Union may, then, reasonably expect to

receive tax advantages determined with reference to European case law that transcends the

domestic, taxing statutes. These developments put even more pressure on development of

the doctrine of charitable purpose in the context of sovereignty over revenue – and

limitations on that sovereignty.

This argument, in relation to common law limitations of sovereignty, would be assisted if it

were established that the ‘law of nations’ was relied upon by the drafters of the Universal

Declaration of Human Rights,1030 as it is the foundation of later developments in

international law. I have not been able to establish this. Wood has opined, referring not only

to the Universal Declaration of Human Rights, but also the more explicit Declaration on the

Basis for the Elimination of All Forms of Intolerance and of Discrimination Based on Belief

adopted in 1981, that ‘there is no universal consensus as to their intellectual or philosophic

basis’.1031 It seems that the drafters of that declaration were ‘less concerned with attempting

to create a theory underlying human rights than they were with the urgent task of agreeing

together to protect those rights in practice’.1032

1028 J Warburton, D Morris and N F Riddle, Tudor on Charities (2003) 6; Kerry O'Halloran, Charity Law and Social Inclusion: An

International Study (2007) 170-171.

1029 Hein Persche v Finanzamt Lüdenscheid [2008] ECJ C318/07.

1030 The Universal Declaration of Human Rights (UDHR), GA Res 217A (III) (entered into force 10 December 1948).

1031 James E Wood, 'Religious Human Rights and a Democratic State' (2004) 46(4) Journal of Church and State 739, 740.

1032 Hasson has endeavoured to anchor the foundation in theological and anthropological argument. If, as he suggests, the link to the

common law can be established then these foundations can be traced back to the foundations of the common law mapped by

Brooks. Kevin J Hasson, 'Religious Liberty and Human Dignity: A Tale of Two Declarations' (2003) 27 Harvard Journal of Law

and Public Policy 81, 82. Marki Janis has traced the contribution of religion to international law and pointed out that ‘[a]s the

[twentieth] century has worn on, as a statist basis for international relations has appeared more and more threadbare, and as

encounters between state and society threaten the fabric of global order ... [r]eligion stands ready to help express both

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I suggest that this freedom could extend to underpin the freedom of civil society

organisations to recognition independently of government imprimatur. For present purposes,

the first step in the argument has been completed and that is to establish that the common

law, arguably if not absolutely, recognises and protects a space for civil society separate

from government.

What form, then, does this body of law that recognises the space for civil society separate

from government, take? It will not be the same in all jurisdictions. What can be stated of a

general nature is that there are two dimensions. The first, is that it will define civil society

organsations and thus the scope of operation of the particular laws. Second, I contend that

the body of law will focus on purpose, not form of incorporation, as the appropriate

foundation on which to base enabling and regulatory regimes. These two issues are the

subject areas of the next two sections.

F. The Scope of Application of Association Law

In this third substantive subsection of this chapter, the scope of Association law is sketched.

The discussion in Chapters IV, V and VI have set the foundations for these developments

and in this section, beginning with the common law, steps are taken from the Pemselian

partitioning to a broader concept. First, the regulating and favouring dimensions are

separated. The argument for progressing beyond the ‘spirit and intendment’ is advanced

before the step to regulation, not just of charities but of civil society organisations generally,

is made.

civilization’s discontents and the law’s contents.’ Advancement of religion is, then, potentially fertile terrain for investigation but

it is beyond the scope of this thesis. Mark Janis (ed), The Influence of Religion on the Development of International Law (1991)

145, 151. Add to this Ahdar and Leigh’s observation, referring to Locke that: ‘[s]ome theorists see a crucial link between religion

and the fostering of important civic virtues, such as law-abidingness, honesty, thrift and self-restraint’ and there seem to be links

between the role of religion in common law societies and the twenty-first century international law waiting for further exploration.

Rex Ahdar and Ian Leigh, Religious Freedom in the Liberal State (2005) 56. For my part I am not persuaded that the links have

yet been built.

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All organisations that are not businesses, government or family are within the scope of this

body of Association law. To identify whether an organisation is a civil society organisation

or another organisational form, it will be recalled from Chapters IV, V and VI, that regard

may be had to a combination of three factors: altruism; public benefit; and an absence of

coercion.

The elasticity of the concepts of altruism, public benefit and coercion meant that they could

be set out, it will be recalled, on a continuum, and that concept of a continuum permitted

subtle, and significant, differences from jurisdiction to jurisdiction. Civil society

organisations take many and varied forms throughout common law countries.1033 In a

common law context, the test could be that proposed by Justice Gonthier in his dissenting

judgment in Vancouver Society of Immigrant and Visible Minority Women where he held:

How then should the Court undertake the task of modernizing the existing categories of charitable

purposes? … [i]t would be a mistake to make a fetish of the purposes enumerated in the preamble.

Rather, the Court should adhere to the principles of altruism and public benefit, to which I

adverted above, in order to identify new charitable purposes and to ensure that existing ones

continue to serve the public good. The law should reflect the realization that although the

particular purposes seen as worthy of pursuit change over time, the principles of which they are

instantiations endure.1034

Under this more flexible alternative framework, the extent to which organisations

manifested altruism, public benefit and the absence of coercion could be assessed. If there

were insufficient altruism or public benefit, or if the organisation was effectively under the

coercive control of government, then that organisation would not be defined as a civil society

organisation. It would be subject to the laws applying to business, government or families.

1033 Keith L Fletcher, The Law Relating to Non-Profit Associations in Australia and New Zealand (1986) 356.

1034 Vancouver Society of Immigrant and Visible Minority Women v MNR [1999] 1 SCR 10 [50].

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If this broader approach is taken, all incorporated and unincorporated associations pursuing

civil society purposes, would be included in the class. Arguably the category includes all

organisations with a non-distribution constraint, in the reasoning of Hansmann1035 and all of

the organisations that satisfy Weisbrod’s public non-government criterion of ‘proprietary,

collective, and trust non-profits’.1036 They also include, of course, all the new forms of civil

society organisation emerging in the United Kingdom such as the ‘charitable incorporated

association’, the ‘community interest company’1037 and the Scottish charitable incorporated

organisations.1038 In the United States the category would include not just those

organisations falling within the scope of sections 501(c)(3) and 5014(c) of the United States

Internal Revenue Code but other civil society organisations as well. In Australia, within this

category would be not just charities as presently formulated, but all of the organisations

described as ‘related’ by the Australian Charities Definition Inquiry.1039 Why, then has the

class been kept small?

Beginning with charities, the current legal theory is focused on the technical definition of

charitable purpose, which gravitates towards definitions linked to Pemselian purposes. The

difficulty with defining the class with reference to charitable purposes is that the class of

Pemselian purposes has been kept so small by the courts that most civil society organisations

are defined as not having charitable purposes.

In a framework where entitlement to favour is linked historically to charitable purpose, it is

understandable that the common law judges would consider themselves bound to keep the

1035 Henry Hansmann, 'Reforming Nonprofit Corporation Law' (1981) 129 University of Pennsylvania Law Review 500, 501.

1036 Burton A Weisbrod, 'Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy' in Burton A Weisbrod (ed),

The Voluntary Nonprofit Sector (1977) 51, 60.

1037 Companies (Audit, Investigations and Community Enterprise) Act 2004 (Eng.&W) Part 2.

1038 Charities and Trustees Investment Act 2005 (Scotland) s 10 Schedule 1; Office of the Scottish Charity Regulator, 'Monitoring

Scottish Charities' (2005).

1039 Inquiry into the Definition of Charities and Related Organisations Report of the Inquiry into the Definition of Charities and

Related Organisations (2001) 43.

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class of entity recognised as having charitable purposes quite small.1040 That confinement, to

a small class of organisations is not a logical consequence of the definition of the class but a

need to avoid a ‘slippery slope’ of expanding the class enjoying favour to include

organisations that, in the opinion of the court, ought not to enjoy such favour.1041 If

regulating association is severed from favour, however, it follows that the class does not

need to be limited so as to exclude those associations that ought not to be enjoying favour. If

not so limited, then conceptually, the class could be expanded to include all of those

organisations that comprise civil society organisations. As the Supreme Court of Canada

observed in the AYSA Amateur Youth Soccer Association Case,1042 it is the access to favour

that obliges the court to keep the category limited. It is that same concern that motivated

Senator Grassley in his inquiry into the affairs of the Copelands.1043 This is particularly so in

Canada and the United States where gifts to charitable organisations are tax credited or tax

deductible.1044

The first step, then, toward a comprehensive definition of civil society organisation based on

a concept of charitable purpose is to recognise the different roles played by the concept of

charitable purpose: one to define the scope of application of the law and the other to act as a

gateway to favour. Freed of favour, it is a surprisingly easy step to move from the Pemselian

purposes. In deciding whether or not a purpose is charitable at common law, regard is had

to whether the purposes of the organisation are for public benefit and are within the spirit

and intendment of the Preamble. These purposes can be extrapolated by a series of steps to

include all civil society organisations. Public benefit is accepted as a concept central to

charitable purpose. It is generally understood that organisations controlled by government

1040 See: AYSA Amateur Youth Soccer Association v Canada (Revenue Agency) 2007 SCC 42, [44] (Rothstein).

1041 Internal Revenue Commissioners v Baddeley [1955] AC 572, 591 (Simmonds).

1042 2007 SCC 42.

1043 Letter from Charles Grassley to Kenneth and Gloria Copeland, 5 November 2007, available at

http://finance.senate.gov/sitepages/grassley2007.htm.

1044 Internal Revenue Code s 501(c)(3); Income Tax Act RSC 1985, c 1 (5th Supp) s 110 and s 118.

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are not charities so absence of coercion is an acceptable distinguishing concept also.1045 So,

to advance the thesis argued here a significant issue in contention is whether the ‘spirit and

intendment’ of the Preamble equates with altruism and voluntarism. Can altruism be

accepted as central to the concept of charitable purpose? A long list of cases has already

been provided supporting this proposition.1046 If altruism is accepted as integral to charitable

purpose, I theorise that altruism and voluntarism can replace reference to the spirit and

intendment of the Preamble. When read with public benefit together, they can replace the

Pemselian partitioning of charitable purpose for the purpose of defining space. I suggest

that a charitable purpose could be defined non-technically as a purpose pursued voluntarily

and altruistically for public benefit. It does not have to be defined as a purpose within the

spirit and intendment of the Preamble pursued for public benefit. These arguments will be

developed further in Chapter VIII and IX.

Turning now to civil society organisations, I have argued across the last three chapters that

the factors that distinguish civil society organisations from other organisations are altruism,

public benefit and the absence of coercion. The proximity of these factors to the definition

of charities is apparent. Charities cannot be defined as civil society organisations, though,

nor can civil society organisations be defined as charities at present because charities are

defined technically by reference to the Preamble. But, and here is the logical step, if, for the

purposes of defining space for free association, charitable purpose is defined with reference

to altruism, public benefit and voluntarism, rather than according to the four heads in

Pemsel’s case, most if not all of the problems set out in Chapters II and III would be

ameliorated if not removed.

The concept of charitable purpose yields the framework for the genus; just as it did the

genesis for the concepts of altruism, public benefit and voluntarism developed through

1045 Central Bayside Division of General Practice Ltd v Commissioner of State Revenue (2006) 228 CLR 168.

1046 See footnote 186.

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Chapters IV, V and VI. That genesis, it will be recalled, found expression in ‘public benefit’

and ‘the piety of earlier times’ (to use Lord Macnaghten’s words).1047 I theorise that the

essence of civil society organisations is charitable purposes, but not charitable purposes as

defined technically into Pemselian partitioning. It follows from this reasoning, that when

defining the jurisdiction, civil society organisations are identified by reference to charitable

purposes that are not technically defined. These charitable purposes are in essence purposes

which are:

a. Altruistic; and

b. For public Benefit; and

c. Pursued without Coercion.

These charitable puposes differentiate civil society organisations from the three other

organisational purposes: namely

a. Business, which is manifest in the pursuit of self-interest; that is lack of

altruism;

b. Government, which is characterised by coercion; that is a lack of

voluntariness or freedom; and

c. Family, which is characterised by being private not public.

Further, dynamic boundaries are both possible and appropriate once a definition of civil

society organisations is set out in this way because the limits on the right to freely associate

are contested in twenty-first century common law countries and will vary from one

jurisdiction to another.

Approaching the scope of application of the law in this way, brings a refining clarity to

analysis of the laws of association generally, not just the particular class called charities.

1047 Pemsel’s case [1891] AC 531, 583 (Lord Macnaghten).

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Legal development based on this theory would remain, in essence, focused on charitable

purposes but would extend the concept of charitable purpose to apply to all civil society

organisations. This is because, by definition, all civil society organisations, not just

charities, evidence in their essence some altruism and public benefit and are pursued without

coercion.

Consider now the outworkings of this alternative jurisprudence. Advancement of religion is

a head under the Pemselian partitioning of charitable purpose. It is, at its purest, a charitable

purpose in common parlance. In its more impure forms, it is possible to form the view that

some ‘religious organisations’ seem more like they are pursuing business, government or

family purposes. For example, an ostensibly religious organisation could in fact be a front

for advancement of personal interests and thus be really a family arrangement. Second, a

religious organisation could be predominantly pursuing business purposes such as making

profit in the most tax effective way. These first two issues are both dimensions of the

concerns raised in Senator Grassley’s letter.1048 An ostensibly religious association could be

pursuing government purposes. In the late twentieth and early twentieth centuries it has

become common for governments to deliver welfare to citizens by grants to, or contracts

with, religious civil society organisations. In such a context it is possible for a religious civil

society organisation, particularly a small parachurch organisation, to become simply a

conduit for the delivery of government services.1049 Taking each of these in turn, it is

possible to identify the factors that operate to differentiate the family, the business, and the

government organisation from the genuinely religious organisation.

It will be recalled from earlier chapters, that I contend that the genuinely religious

organisation is differentiated from business by the evidence of altruistic purposes. ‘A’, if not

1048 Letter from Charles Grassley to Kenneth and Gloria Copeland, 5 November 2007, available at

http://finance.senate.gov/sitepages/grassley2007.htm.

1049 Peter Luxton, The Law of Charities (2001) 10-11.

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‘the’, principal indicator of this altruism is, I suggest, the non-distribution constraint.1050 It is

differentiated from government organisations by evidence of sufficient voluntariness to

abrogate coercion and thus not be pursuing government purposes. It is differentiated from

family by the purpose pursued being sufficiently public to not be private. Thus, when

looking at Kenneth Copeland Ministries,1051 using the theoretical framework proposed here,

evidence of public benefiting purposes will be weighed against evidence of private

benefiting purposes when assessing whether the ministry was a private family purpose or a

public one. When looking at the ministry from the perspective of whether the ministry was a

business or not, then the question will be in relation to altruistic purposes.

Each jurisdiction could require different evidence of altruism, public benefit and voluntarism

and the factors informing those evidences could all be weighed differently. One jurisdiction

might take the view that, provided the religious organisation’s constituent documents

evidenced religious charitable purposes, very limited altruism, public benefit and freedom

from government coercion were necessary. A religious organisation in such a jurisdiction

might be able to be entirely funded by business pursuits;1052 the government could effectively

control the purposes it pursues, through contract;1053 and it might have only one family as

members and controllers of the board.1054 Another jurisdiction could take a different view on

one or more of these factors. That different view could lead to such an organisation being

considered a business, a government organisation or a family as the case may be. Put

theoretically – one or more of the dynamic boundaries would be more contracted in the

second jurisdiction with the consequence that the organisation was no longer defined as

falling within the scope of the definition of a civil society organisation.

1050 Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The

Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117, 118.

1051 Letter from Charles Grassley to Kenneth and Gloria Copeland, 5 November 2007, available at

http://finance.senate.gov/sitepages/grassley2007.htm.

1052 As is the position in Australia see: Commissioner of Taxation v Word Investments Limited (2008) 236 CLR 204.

1053 As is the position in Australia see: Central Bayside General Practice Association Limited v Commissioner of State Revenue (2006)

228 CLR 168, 175.

1054 As appears to be the case in Hong Kong. See: Cheung Man Yu v Lau Yuen Ching (2007) CACV 213/2006; 265/2006.

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This approach brings analytical clarity to defining the scope of the laws applying not just to

religious organisations, of which the above are examples, and not just charities, but all civil

society organisations. This brings me to my second point: purpose, not form, ideally governs

theory development for civil society organisations.

G. Regulate All Civil Society Organisations by Reference to Purposes

1. Introduction

Charities are identified and favoured on the basis of purpose.1055 If the principles discerned

from the common law are to be applied to other civil society organisations, the criterion for

such regulation must, in the light of the discussion of purpose in this chapter, be based, not

on the form of incorporation, but on the purpose pursued.1056 There is no compelling reason

not to follow the common law. Form is an accident of history. Further there is not even a

need to take an incorporated form. It is quite appropriate to regulate different civil society

organisations differently. A society might even choose to regulate different charities

differently based on the different charitable purposes pursued. Political parties, subversive

organisations and those pursuing terrorism purposes, may be treated differently. It is the

purposes they pursue, however, and not the form organisations take that justifies this

different response. At a theoretical level, it is not the form of the association that is

important, only that the association has a recognised form.1057 My next step, then, is not one

of dividing but of binding. In this section, I argue that the different forms of association –

unincorporated association, trust, company limited by guarantee, Royal Charter or

association incorporated under specific legislation – can be ignored for regulatory purposes.

It is purpose pursued that is relevant. As Stoljar pointed out, and as was mentioned in

1055 AYSA Amateur Youth Soccer Association v Canada (Revenue Agency) 2007 SCC 42 [24] per Rothstein J.

1056 J D Heydon and M J Leeming, Jacobs' Law of Trusts in Australia (7th ed, 2006) 141 -142.

1057 Peter Luxton, The Law of Charities (2001) 16. Henry Hansmann, 'Reforming Nonprofit Corporation Law' (1981) 129 University

of Pennsylvania Law Review 500, 526.

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Chapter III, it is purpose, not form, that animates an association and it is the existence of

property applied to that purpose that is critical for regulation.1058

2. Form is an Accident of History

The form civil society organisations take is an accident of history. As Luxton asserts, the

general proposition remains that charities have had to ‘make shift with forms intended for

other sectors’ and the fact that ‘the common law does not recognise incorporation in the

absence of a royal charter or statute’ highlights further restraint on the pursuit of charitable

purposes.1059 This is a direct consequence of the common law, not recognising

unincorporated associations.

Historically, as voluntary societies emerged following the Tudor period in England, and later

in other common law countries, they took three forms: the joint stock company, the chapel

and the public house.1060 The first form led to the membership associations of which the

company limited by guarantee is an exemplar. The second led to the utilisation of trusts

predominantly for religious congregations and the third led to more informal clubs; some of

which became recognised as institutions which were charitable, such as public libraries, and

some not charitable, such as trade associations.1061 These practices continued until the late

twentieth century, when some common law jurisdictions began to pass legislation expressly

intended to enable civil society participation through organisations. In the jurisdiction where

this thesis is submitted for examination, the Associations Incorporations Act 1981 (Qld) and

the Aboriginal Associations Act (Cth) are examples of enabling and regulating legislation.1062

In the United Kingdom, the ‘charitable incorporated association’, the ‘community interest

1058 S J Stoljar, Groups and Entities: An Inquiry into Corporate Theory (1973) Chapter 2 and 175.

1059 Peter Luxton, The Law of Charities (2001) 19.

1060 Peter Luxton, The Law of Charities (2001) 8.

1061 Peter Luxton, The Law of Charities (2001) 8.

1062 The genesis of this form of legislation is the Associations Incorporation Act 1858 (SA): Keith L Fletcher, The Law Relating to

Non-Profit Associations in Australia and New Zealand (1986) 346.

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company’1063 and the Scottish charitable incorporated organisations have been enabled.1064

In the United States, recent legislation passed by Vermont to enable for-profit charities called

L3Cs is a recent, more sophisticated example of specialist legislation.1065 Luxton has noted,

with some irony, that the association legislation in jurisdictions such as Queensland was

designed broadly for vehicles for civil society not specifically charitable purposes.1066 There

is a move on the continent toward a European nonprofit association.1067 Foundations in

Europe discharge a function similar to that of charitable trusts and so the guidelines for their

management are instructive. The model provides minimum requirements but expressly

declares: ‘the coming into existence of a European Foundation does not depend on any

acknowledgement or approval by a Court or other state supervisory body’ (Article 7).1068

This more recent approach to legal reform; of passing legislation for incorporating

associations, perpetuates dependence on government. The legislation has been justified by

Fletcher as necessary to ‘correct particular defects in the common law’1069 but, as the

discussion in the section above illustrated, the ‘defects’ associated with lack of incorporation

may be more imaginary than real. There was common law recognition before the Tudors of

unincorporated associations; the European Court of Human Rights has not been constrained

by lack of incorporated form in delivering justice;1070 and, if there is a problem, it can be

1063 Companies (Audit, Investigations and Community Enterprise) Act 2004 (Eng.&W) Part 2.

1064 Charities and Trustees Investment Act 2005 (Scotland) s 10 Schedule 1; Office of the Scottish Charity Regulator, 'Monitoring

Scottish Charities' (2005).

1065 Low-Profit Limited Liability Companies VT STAT ANN (2008).

1066 Peter Luxton, The Law of Charities (2001) 20.

1067 Peter Luxton, The Law of Charities (2001) 21; Klaus J Hopt et al (eds), The European Foundation: A New Legal Approach

(2006).

1068 Cited in Klaus J Hopt et al (eds), The European Foundation: A New Legal Approach (2006) 11.

1069 Robert Baxt, 'The Dillemma of the Unincorporated Association' (1973) 47 Australian Law Journal 305, 305; Keith L Fletcher,

The Law Relating to Non-Profit Associations in Australia and New Zealand (1986) 5.

1070 See, eg, The United Communist Party of Turkey v Turkey [1998] Eur Court HR 1 where the formal structure of the association was

dissolved by the state even before it was able to commence activities.

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resolved in the way that some United States jurisdictions have done, by passing legislation

obliging courts and others to recognise unincorporated associations.1071

The conclusion, to which I come, then, is that whatever the form of incorporation, and

indeed even if unincorporated, the common law can look to purpose not form and apply

regulation uniformly. The common law can recognise civil society organisations whether or

not they are incorporated and can protect them without reference to form.

3. Including the Excluded Others

If pursuit of a civil society purpose, not form, is the basis for regulation, the class of civil

society organisations expands, as it is necessary to include the formerly excluded. It will be

recalled from Chapter II that advancement of religion was a charitable purpose but

advancement of political purposes was not. If this reasoning is accepted, it overcomes the

problem identified in Chapter II of allowing religion into the class of charitable purposes

while excluding political purpose. In fact I contend that the political purpose cases should be

read as standing alongside the advancement of religion cases, providing the underpinnings of

civil society in common law countries. My reasoning is as follows. Advancement of

religion and advancement of political purposes are related conceptually as they are both

subcategories of a legal right to pursue freedoms – including freedom of association.1072

Lindblom summarised: ‘the right to free political expression was understood as inclusive of

the rights to freedom of thought, freedom of association and freedom of expression as

specified in the International Covenant on Civil and Political Rights.’1073 These are

freedoms upon which advancement of religion rests. The international covenants protect

both. It follows in civil society purpose discourse that both political and religious liberties

are intertwined. In drawing these parallels, I acknowledge that the spirituality that underpins

1071 For example Alabama, Kansas, Colorado, Delaware, The District of Colombia, Hawaii, Idaho, North Carolina, Texas, West

Virginia, Wisconsin and Wyoming which have Revised Uniform Unincorporated Nonprofit Association Act (2008) or variations

on this model legislation.

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religion, is fundamentally different from political purposes. My object is to bring political

purposes into the class of civil society organisations by identifying parallels, not to argue that

religion is political. It may or may not be, depending upon context.

What, though, of other purposes, particularly pursuit through civil society organisations of

purposes that are not good? The common law excludes from organisations pursuing

charitable purposes those organisations that are subversive of all morality. That has been the

position at common law since it was held in Cock v Manners1074 that ‘not all religious

purposes are charitable. Religious purposes are charitable only if they tend directly or

indirectly towards the instruction or the edification of the public’.1075

It follows from this discussion, though, that once favour is severed from association, those

associations which are subversive will remain within this broader class of civil society

organisations provided the other criteria for membership of the category are satisfied. If the

other criteria are not satisfied, these organisations must by definition be either businesses,

government organisations or families. Subversion of morality, criminal conduct and for that

matter even terrorism purposes, do not change the category which, by definition, will include

all purposes that do not fall within the other categories of purposes that are either business,

government or family. The consequences of pursuing purposes that are immoral, may well

affect entitlement to favours.1076 The pursuit of purposes that are criminal will invite

prosecution and may lead to trial under other laws. The pursuit of terrorism purposes could

1072 In this context see the history of law reform being included and excluded from the class of charitable purposes summarised for the

US in Perri 6 and Anita Randon, Liberty, Charity and Politics: Non-Profit Law and Freedom of Speech (1995) 95-98.

1073 Anna-Karin Lindblom, Non-Governmental Organisations in International Law (2005) 7-8.

1074 (1871) L.R. 12 Eq 574, 585.

1075 Chesterman v Federal Commissioner of Taxation [1925] 37 CLR 317.

1076 Peter Luxton, The Law of Charities (2001) 129.

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lead to incarceration without trial for those involved.1077 What the pursuit of those purposes

will not do is change the theoretical class to which these organisations belong.

I thus end with a very broad, ‘empty’1078 shell of a class of organisations stripped of moral

content for the purposes of classification, but ready for ordering in ways that may involve

taking into consideration any or all of these factors, particularly when it comes to

considering entitlement to favours. Thus, for example, if the German government bans

‘religious organisations whose objectives or activities conflict with the criminal laws or that

oppose the constitutional order or the concept of international understanding’,1079 as Ferrari

has noted, then this will be analysed as ordering of civil society organisations in a particular

way – those with objects that are criminal and those with objects that are not. The

organisations will not be excluded from the class of civil society organisations by pursuing

criminal purposes. This distinction between the genus to which an organisation belongs and

how organisations within a genus are classified is taken up in the context of entitlement to

favour, in the next chapter.

4. Focus on Purpose not Activities

Before closing this section, one last observation should be made in relation to the temptation

to be drawn to look at activities rather than purposes. As Justice Rothstein pointed out:

The common law focuses on “charitable purposes” rather than “charitable activities” [and] it is

really the purpose for which an activity is carried out, and not the character of the activity itself,

that determines whether or not it is “charitable”.1080

1077 Antony Anghie, Imperialism, Sovereignty and the Making of International Law (2004) 274-275; Silvio Ferrari, 'Individual

Religious Freedom and National Security in Europe After September 11' (2004) 2 Brigham Young University Law Review 357,

368.

1078 Anna-Karin Lindblom, Non-Governmental Organisations in International Law (2005) 525.

1079 Silvio Ferrari, 'Individual Religious Freedom and National Security in Europe After September 11' (2004) 2 Brigham Young

University Law Review 357, 368.

1080 AYSA Amateur Youth Soccer Association v Canada (Revenue Agency) 2007 SCC 42 [24] (Justice Rothstein).

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Justice Iacobucci set out the reason for this in his judgment for the majority in Vancouver

Society of Immigrant and Visible Minority Women v MNR:

The difficulty is that the character of an activity is at best ambiguous; for example, writing a letter to

solicit donations for a dance school might well be considered charitable, but the very same activity

might lose its charitable character if the donations were to go to a group disseminating hate literature.

In other words, it is really the purpose in furtherance of which an activity is carried out, and not the

character of the activity itself, that determines whether or not it is of a charitable nature. 1081

To this point in this chapter, I have argued that there is a theoretical space recognised at

common law for association through civil society organisations. I have identified the scope

and operation of that body of law as the law applying to all civil society organisations. I

have argued that the unifying feature of these organisations is their purposes. I have argued

that these purposes are essentially charitable in the non-technical sense, and that this enables

civil society organisations to be classified as differentiated from business, government and

family. The next step is to state, clearly and succinctly, the unique organising principles

underpinning the law applying to civil society organisations. What are its underlying

principles? How do these principles find expression in civil society regulation theory?

These questions are addressed in the final substantive section that follows.

H. Principles of Regulation of Associations

Given the discussion so far, it will be obvious that underpinning civil society is a

jurisprudential, organising framework that enables and even encourages freedom to associate

voluntarily for purposes other than business, government and family. It follows that all laws

that touch upon freedom of association through civil society organisations for purposes other

1081 [1999] 1 SCR 10 [152] and for similar views expressed in an Australian context see: Commissioner of Taxation v Word

Investments Limited [2006] FCA 1414 (Sundberg J); affirmed [2007] FCAFC 171 (Unreported, Stone, Allsop and Jessup JJ, 14

November 2007) [81] and reaffirmed on appeal to the High Court of Australia: Commissioner of Taxation v Word Investments

Limited (2008) 236 CLR 204.

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than business, government and family are within the scope of this jurisprudence. This is an

easy and logical first classification and I make it. I call this body of law Association law.

Freedom to associate is not untrammelled. So the next step in the theory development, when

focusing on Association law, is to set out a framework for enabling, and regulating, freedom

of association. Portions of the Universal Declaration of Human Rights, which has been

widely accepted in common law countries, articulate these broadly-held values, so I adopt

the wording of that Declaration as foundational articulations.

The Universal Declaration of Human Rights sets out across 30 Articles a consensus of value

statements, three of which are important for this discussion. They are:

Article 18, which provides:

Everyone has the right to freedom of thought, conscience and religion; this right includes freedom

to change his religion or belief, and freedom, either alone or in community with others and in

public or private, to manifest his religion or belief in teaching, practice, worship and observance.

Article 20(1), which provides:

Everyone has the right to freedom of peaceful assembly and association.

and Article 27(1), which provides:

Everyone has the right freely to participate in the cultural life of the community, to enjoy the arts

and to share in scientific advancement and its benefits.

These freedoms are stated to be exercised subject to certain limitations. The limitations are

set out in Article 29(2) as follows:

In the exercise of his rights and freedoms, everyone shall be subject only to such limitations as are

determined by law solely for the purpose of securing due recognition and respect for the rights and

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freedoms of others and of meeting the just requirements of morality, public order and the general

welfare in a democratic society.

Adopting these statements as summaries of the principles which countries such as Canada

have done,1082 a jurist wishing to determine the role of regulation to apply to a civil society

organisation would ask two key questions:

1. How can free and voluntary association best be enabled, and perhaps

encouraged? (the ‘maximum freedom principle’) and

2. What are the minimum restraints necessary? (the ‘minimum restraint principle’).

These are very broad questions. Simply stated as broad reciprocal premises of maximum

freedom and minimum restraint they are not particularly useful to judges, legislators or

regulators. They are though, arguably, a critical bridge to civil society regulation theory,

which is of immediate relevance to courts, legislators and regulators. The most recent work

in this context is that of Jonathan Garton. Garton has undertaken an extensive ‘bottom-up’

review of justifications for regulation of civil society. His principles of regulation can be

accommodated comfortably within this overarching jurisprudential framework. The two

premises, developed from the foundations, link to his general framework for regulation

which he expresses as his six principles. In summary, Garton built on earlier work such of

1082 ‘The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject only to such reasonable

limits prescribed by law as can be demonstrably justified in a free and democratic society.’ See The Constitution Act 1982, being

Schedule B to the Canada Act 1982 (Eng.&W) c 11, s 1. The Constitution of the Republic of South Africa 1996 As adopted on 8

May 1996 and amended on 11 October 1996 by the Constitutional Assembly One law for One Nation Act 108 of 1996 – s.36(1) is

in similar terms. It provides:

1) The rights in the Bill of Rights may be limited only in terms of law of general application to the extent that the

limitation is reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom, taking

into account all relevant factors, including:

a) the nature of the right;

b) the importance of the purpose of the limitation;

c) the nature and extent of the limitation;

d) the relation between the limitation and its purpose; and

e) less restrictive means to achieve the purpose.

It must be acknowledged, though, that there are other approaches open and those other approaches could be adopted in other

jurisdictions. For a detailed discussion of the diverse approaches to limitation of freedom discussed in the context of religion see:

Rex Ahdar and Ian Leigh, Religious Freedom in the Liberal State (2005) Chapter 6 (Limits to Religious Freedom).

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that of Karla Simon, who, as early as 1998 had stated that a central plank of regulation of

civil society organisations is that it should be ‘no heavier, not cut more deeply, than is

necessary.’1083 Garton concluded that all regulations of civil society should not be more in

number, nor more in complexity, than is necessary, stating that: ‘It is clearly in the interest of

proportionality and targeting that a particular regulatory goal is achieved through rules that

are no more complex or greater in number, than is necessary.’1084 He identified only six

overlapping grounds justifying regulation of civil society organisations. They were:

1. Preventing anti-competitive practices;

2. Controlling campaigning;

3. Ensuring trustworthiness;

4. Coordinating the sector;

5. Rectifying philanthropic favours; and

6. Preventing challenges to organisational quiddity. 1085

Adopting the two reciprocal premises and applying within this architecture Garton’s six

justifications for regulation the function, and legitimate scope, of Association law might be

stated in the following way:

Association law performs two functions. It is the body of law:

1. that enables voluntary association, and

2. that regulates voluntary association.

Limitations on voluntary association are justified if and only if the restraint is all that is

necessary to secure due recognition and respect for the rights and freedoms of others and of

meeting the just requirements of morality, public order and the general welfare in a

1083 Karla W Simon, 'Principles of Regulation for the Not-for-Profit Sector' (International Centre for Not-for-Profit Law, 1998) 246.

1084 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 150.

1085 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 37b, Chapter

4 generally and 151.

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democratic society. This restraint on regulation marks the legitimate scope of Association

law.

For the purposes of assessing whether a limitation on voluntary association is justified the

restraint will be justified if and only if it is all that is necessary

1. to prevent anti-competitive practices;

2. to control campaigning;

3. to ensure trustworthiness;

4. to coordinate the sector;

5. to rectify philanthropic favours; and

6. to prevent challenges to organisational quiddity.

The point in setting this out is not to manadate Garton’s normative ideals but to demonstrate

how his regulatory grounds could be located within this broader architecture. It is beyond

the scope of this work to progress to the content of regulation. My project is to propose

only a framework, not the regulatory content itself. This project is now completed. It is also

beyond the scope of this thesis to offer normative comment. It will be recalled from Chapter

I that there are many suggestions for regulatory reform. This framework seeks to provide a

broader jurisprudence for assessment and comparison of these proposals. It provides an

architecture for discussing, for example, the American Law Institute draft Principles of the

Law of Nonprofit Organisations or the Charities Commission’s Guidelines on Terrorism.1086

Finally, it should be noted that in building from the wording of the Universal Declaration of

Human Rights, there could be other formulations which might be preferred in a particular

jurisdiction. I take the Universal Declaration of Human Rights only as one example of a

1086 Council to the Members of The American Law Institute, 'Principles of the Law of Nonprofit Organisations: Discussion Draft'

(American Law Institute, 2006); The Charity Commission for England and Wales, Counter-terrorism strategy (2008).

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way in which common law freedoms can be stated in a shorthand way and distilled into

principles that link to regulatory theory for civil society.

I. Conclusion

I observed in Chapter I, that jurisprudential divisions follow divisions of the first sector

(business), the second sector (government) and the fourth sector (family) and that distinct

heads of law for those sectors are readily identifiable. I noted that at the beginning of the

third millennium, there was not a clearly identifiable jurisprudence for the third sector.

Legal theory regarding the law applicable to civil society, I observed, had lagged similarly to

the way analysis of the third sector lagged.

In this Chapter, I argued that space for civil society organisations is a matter for each

common law country to determine but that there is a history in the common law of protecting

space for association free of the coercive influence of government. That freedom is now

supported by constitutional law and international covenants. Development of a concept of

Association law as a foundation for a jurisprudence for civil society goes beyond freedom to

associate for religious purposes, although the religious underpinnings of the freedom are

central, and have been at the forefront of the common law’s protection. This addresses the

first problem of why associations in general, and more particularly those pursuing charitable

purposes, should exist at all outside (the control) of government. The reason is that common

law, constitutional law and international covenants affirm that the common law protects a

freedom to associate and sets the appropriate limits on the scope of government control of

that freedom.

As Association law, as here described, covers the field of all law applying to civil society,

not just charitable purposes, and, as it is distinguished from the laws applying to business,

government and family, it covers the field of relevant law. It describes the body of law

unique to all civil society organisations. It has been contended that, whilst associations are

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presently regulated by laws formulated with reference to the forms of association – thus

locking analysis of civil society association within the analysis of law applying to

associations for purposes other than civil society – it is the purposes, not the form, of the

association that is critical. The association dimension of a jurisprudence for civil society

emerges by defining and then regulating associations in civil society by reference to purpose.

Finally, I set out two principles drawn from the Universal Declaration of Human Rights –

the maximum freedom principle and the minimum limitations principle, and suggested that

these provide a bridge between the abstract foundational freedoms and regulatory theory

such as that developed by Garton. I thus suggested that these two principles might be

applied as underpinning a jurisprudence for Association law.

J. Postscript

The preamble to this chapter began with the excitement of rediscovered relations. The

relationship between charities and common law freedoms has been reasserted and these

freedoms have been related to civil society regulatory theory. In France the regulation of

fundamental freedoms led to a revolution. The catchcry of that revolution was ‘liberty,

equality, fraternity or death’. Dickens wrote that the words: ‘liberty, equality, fraternity’

were everywhere. Voluntarily emblazoned on homes and sometimes as graffiti, they were

‘the standard inscription’ on buildings.1087 Those three words were a values statement or

declaration for which people were willing to die and a hope of what society might be.

‘Liberty, equality, fraternity’ are three words that carry the great themes of Dickens’s tale

and inform categorisation for the purposes of favour in this thesis. They are a part of the

overall argument of the next chapter.

1087 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 285, 288 and 290.

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VIII BENEFIT LAW

A. Preamble

Darnay survived, it will be recalled from chapter I, because Sydney Carton gave his life in

Darnay’s place. That sacrifice was only possible because of a confusion. Dickens lays the

foundation for the confusion that is central to the climax of A Tale of Two Cities, in a

courtroom.1088 A case was decided in a particular way because it was plain to all present that

Sydney Carton looked very similar to Charles Darnay. The reader was prepared, then, for

subsequent confusion based on a similarity of appearance. Dickens’s reader later readily

accepts Carton passing himself off as Darnay and thus going to the guillotine in his place,

because a court of law had been satisfied the two looked alike.

B. Introduction

Looking alike, even being passed-off as another, is very different from being the same. That

is particularly the case with confusion surrounding the doctrine of charitable purpose. There

is a difference between the jurisdiction of the Courts of Chancery, which was defined by the

doctrine of charitable purpose and mapped the space of voluntary regulation for charity

commissioners on the one hand, and determining entitlement to favours, such as tax

exemption, on the other. These two functions of the doctrine of charitable purpose may look

alike in a court of law but that does not mean that they are the same. Calling them both the

same name – charitable purpose – has, as in Dickens’s Tale, led to understandable confusion.

This chapter seeks to highlight how that confusion arose and in the process enlighten a way

out of the confusion.

Whereas in the last chapter the discussion began with cross disciplinary theory and social

context, this chapter takes the opposite approach. This chapter involves a close reading of

Pemsel’s case and discussion of the Preamble. This occupies the first substantive section of

1088 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 79.

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the chapter. This approach is taken because it is necessary to build the jurisprudence

proposed in this thesis from within the existing case law. Pemsel’s case and the Preamble

are the foundation of that law.1089 I will argue that the division between Association law,

which is an expression of freedom, and Benefit law which justifies favour – a distinction

made at the beginning of the last chapter – is a division that can be justified on a reading of

Pemsel’s case.

I also argue that the most important words of the judgment of Lord Macnaghten are not those

setting out the famous ‘four principal divisions’, but those set out at the beginning of this

thesis that: ‘The Court of Chancery has always regarded with peculiar favour those trusts of

a public nature which, according to the doctrine of the Court derived from the piety of early

times, are considered to be charitable.’1090

In the first section I contend that the ratio decidendi of the case, contextualised in the reasons

and the obiter remarks of all of the Law Lords, provides a way out of the confusion

identified in Chapters II and III. For this way out of the confusion to be taken, all that is

required is for usual legal methodology discussed in Chapter III to be applied instead of

focusing on the ‘four principal divisions’ set out in Lord Macnaghten’s opinion. The case

provides both a basis for, and an example of, alternative ordering of the class of purposes

that scope the doctrine of charitable purpose.

Second, I argue that the meaning of ‘charitable purpose’ need not be rigidly partitioned into

four heads but takes its colour from context. ‘It is flexible to an immeasurable degree, as can

1089 H Picarda, The Law and Practice Relating to Charities (3rd ed, 1999); Peter Luxton, The Law of Charities (2001); J Warburton, D

Morris and N F Riddle, Tudor on Charities (2003); Gino Dal Pont, Charity Law in Australia and New Zealand (2000); Gino Dal

Pont, Equity and Trusts in Australia and New Zealand (2nd ed, 2000); Donald Bourgeois, The Law of Charitable and Non-Profit

Organisations (1990); John Mowbray, Lewin on Trusts (18th ed, 2008); National Anti-Vivisection Society v Inland Revenue

Commissioners [1948] AC 31, 52-53 (Lord Porter); Central Bayside Division of General Practice Ltd v Commissioner of State

Revenue (2006) 228 CLR 168; Commissioner of Taxation v Word Investments Limited (2008) 236 CLR 204; AYSA Amateur Youth

Soccer Association v Canada (Revenue Agency) 2007 SCC 42.

1090 Pemsel’s case [1891] AC 531, 583 (Lord Macnaghten).

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be seen by reference to the judgments of such eminent masters of law and language as the

judges who sat in Pemsel's Case’.1091 Charitable purpose when applied in an enabling or

regulatory context to define the organisations enabled or regulated is different in scope from

when it is applied as a basis for favour such as in an income taxing statute to decide which

enabled or regulated organisations are entitled to particular favours. As a consequence, there

could be two related but different scopes of application of the doctrine of charitable

purpose.1092

In the third and fourth sections altruism and the absence of coercion are considered on the

basis that they, together, can replace reference to the ‘spirit and intendment’ of the Preamble.

They are closely related concepts and, I suggest, are the contemporary articulation of the

‘piety of earlier times’,1093 I theorise that they can replace reference to the ‘spirit and

intendment’ of the Preamble to define both charities and more broadly civil society

organisations. Continual reference to the ‘extensive Elizabethan meaning’ must be

abandoned if common law countries are to have ‘a sensible meaning’ or rather meanings, of

charitable, and also to ‘prevent tautology.’1094

In the fifth section, I argue that the broad amorphous concept of public benefit rigidly

applied from within the Pemselian partitioning is in need of theoretical development and this

need for development is all the more pressing in a context where, following legislation in

some common law countries, public benefit may not any longer be presumed with respect to

the first three heads of Pemselian purposes. Other majority opinions in Pemsel’s case,

particularly the often neglected judgments of Lord Watson and Lord Herschell, provide

1091 Chesterman v Federal Commissioner of Taxation (1923) 32 CLR 362, 384 (Isaacs J) (overruled).

1092 Peter Luxton, The Law of Charities (2001) 30.

1093 This current, dominant articulation of the doctrine is from Pemsel’s case [1891] AC 531, 583. (Lord Macnaghten). For the status

of charitable purpose as a doctrine see also: National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31, 52

(Lord Porter).

1094 Chesterman v Federal Commissioner of Taxation (1923) 32 CLR 362, 384 (Isaacs J) (overruled).

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different approaches to public benefit and these fertile sources are utilised as a basis for

development of the concept of public benefit into three alternative categories.

In the sixth section I suggest that the concept of charitable purpose can be extended to

include a broader range of organisations than merely the orthodox class of charities. It

extends, I suggest, to all civil society organisations in the way that Justice Isaacs applied it to

Blackstone’s concept of the eleemosynary corporation.1095

In summary then, Chapter VII approached regulation of civil society organisations from

foundational freedoms and built towards regulatory theory which was conceptual and

abstract. This Chapter starts with the leading cases and proceeds inductively towards the

same outcome of a different but unified jurisprudence. The question of entitlement to favour

was not addressed in Chapter VII. It is taken up in this chapter. In summary, it is proposed

that favour is extended to civil society organisations based on contributions to public benefit.

At its simplest, I suggest the greater the contribution to public benefit the greater the

entitlement to favour. A more sophisticated division of public benefit is also offered, though,

by developing from the four heads of Pemsel’s case, three broader classes.

C. Pemsel’s Case

Pemsel’s case was a decision of the House of Lords in the United Kingdom on appeal from

Scotland, decided by majority in 1891. The question for the Court was whether or not

certain religious purposes were charitable, and thus entitled to income tax exemption.

1. The Facts

Pemsel was the treasurer of the Church of the United Brethren commonly called

Moravians.1096 Commissioners for Special Purposes were tax collectors.1097 Bates was a

1095 Refered to in Chesterman v Federal Commissioner of Taxation (1923) 32 CLR 362, 384 (Isaacs J) (overruled).

1096 Pemsel’s case [1891] AC 531, 554 (Lord Watson).

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benefactor who had given land on trust to trustees for the Moravians. The trustees of that

land had enjoyed income tax exemption on the rents and other income from that land for

over seventy years when the Commissioners, under the leadership of Gladstone, decided not

to allow income tax exemption on part of the income.1098 The central question for the court

was, then, whether the purposes set out in the trusts were charitable purposes under a

particular Victorian statute1099 and thus exempt.1100 The relevant wording of the trust

provided:

(1.) As to two equal fourth parts thereof, for the general purposes of maintaining, supporting, and

advancing the missionary establishments among heathen nations of the Protestant Episcopal

Church, known by the name of Unitas Fratrum, or United Brethren. (2.) As to another equal fourth

part, towards the maintenance, support, and education of the children of ministers and

missionaries educated, at the school and academy at Fulner, near Leeds, special regard being had

to the children of such ministers as are least able to support the expense of their children's

education, or for the benefit and purposes of any similar school, academy, or establishment

elsewhere within the United Kingdom. (3.) As to the remaining equal fourth part or residue, for

the maintenance and support of certain establishments appertaining to the said Church for single

persons, called choir-houses, within the United Kingdom.1101

The argument for the Commissioners was essentially that in Scotland, from where the appeal

originated, the expression ‘charitable purpose’ excluded advancement of religion and was

confined to aspects of poverty relief. It was conceded by counsel for both parties, and

accepted by all of the Law Lords, that the popular meaning of the term ‘charitable purpose’

1097 Pemsel’s case [1891] AC 531, 554-5 (Lord Watson).

1098 Pemsel’s case [1891] AC 531, 574 (Lord Macnaghten). The year of settlement was 1813. See also Myles McGregor-Lowndes,

'Public/Private Accountability and the Tax Exempt Status of a Charitable Organisation' (Seminar Paper, Social Policy Research

Centre, University of New South Wales, 2003) citing 3 Hansard 170:200ff; W E Gladstone, The Financial Statements of 1853

(1863) 458.

1099 5 & 6 Vict c 35 s 61, No.VI.

1100 Pemsel’s case [1891] AC 531, 539, 541 (Lord Chancellor Halsbury), 554 (Lord Watson), 563-564 (Lord Bramwell), 568-570

(Lord Herschell) and 514 (Lord Macnaghten).

1101 Pemsel’s case [1891] AC 531, 541 (Lord Chancellor Halsbury).

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was problematic.1102 The extent to which the popular and legal meaning of ‘charitable

purpose’ were coterminus was strenuously argued.1103 There was a line of case law reaching

back prior to the Statute of Elizabeth, by which the Courts of Chancery, and later the

common law courts, had exercised jurisdiction over trusts for charitable purposes. Those

trusts had been for purposes other than the relief of poverty.1104 Importantly, they extended

to include trusts for the advancement of religion.1105 For the Commissioners to succeed,

then, a majority would have to hold that a narrow, Scottish meaning, limited to the relief of

poverty, applied to define charitable purpose at law; and that in this case from Scotland (at

least) that meaning excluded the religious purposes set out in this trust settled by Bates.

2. The Ratio Decidendi of the Decision and the Orthodox Reading of the Case

By a majority of four to two, the House of Lords held that the use of the words ‘charitable

purpose’ in the relevant taxing Act1106 extended exemption to the income in question of the

Moravians. The majority view was that income applied ‘for the general purposes of

maintaining, supporting, and advancing the missionary establishments among heathen

nations of the Protestant Episcopal Church, known by the name of Unitas Fratrum, or United

Brethren1107 is applied for a charitable purpose. (The whole court held that the later two

objects were charitable purposes.)1108

1102 Pemsel’s case [1891] AC 531, 542-545 (Lord Chancellor Halsbury), 556-558, 561 (Lord Watson), 566 (Lord Bramwell), 569-573

(Lord Herschell), 580-584 (Lord Macnaghten) and 592 (Lord Morris).

1103 Pemsel’s case [1891] AC 531, 532-539.

1104 Pemsel’s case [1891] AC 531, 534, 543 (Lord Chancellor Halsbury) (‘not necessarily’), 557-559 (Lord Watson), 573 (Lord

Herschell) and 583 (Lord Macnaghten).

1105 Pemsel’s case [1891] AC 531, 534.

1106 5 & 6 Vict, c 35, s 61 No. VI Sched.C.

1107 Pemsel’s case [1891] AC 531, 541 (Lord Chancellor Halsbury).

1108 As to the minority view, Lord Chancellor Halsbury in his dissent opined at 554: ‘That there are some objects which would be

charitable objects under these trusts, I do not deny; but the question here argued is whether the funds are all applicable and applied

to charitable purposes. For these reasons I am of opinion that the judgment appealed from ought to be reversed.’ Pemsel’s case

[1891] AC 531, 554. Lord Bramwell, who wrote his own dissenting opinion concurred with the Lord Chancellor stating: ‘My

Lords, I agree that the respondent is entitled to judgment as to one half of the tax paid. As to the other half I entirely agree in the

opinion of the Lord Chancellor, his reasons and conclusions, and the way he has applied his authorities. But I have some

observations of my own to make.’ Pemsel’s case [1891] AC 531, 563.

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Parts of a judgment are usually cited as articulating the ratio decidendi of a case. That has

particularly been so in Pemsel’s case where the following words from the judgment of Lord

Macnaghten have become famous for articulation of the principle of law emerging from the

case which is that the meaning of the expression ‘charitable purpose’ is not confined in a

taxing statute to relief of poverty but extends to include advancement of religion, as it did in

defining the jurisdiction of the Courts of Chancery. Lord Macnaghten opined:

How far then, it may be asked, does the popular meaning of the word ‘charity’ correspond with its

legal meaning? ‘Charity’ in its legal sense comprises four principal divisions: trusts for the relief

of poverty; trusts for the advancement of education; trusts for the advancement of religion; and

trusts for other purposes beneficial to the community, not falling under any of the preceding

heads. The trusts last referred to are not the less charitable in the eye of the law, because

incidentally they benefit the rich as well as the poor, as indeed, every charity that deserves the

name must do either directly or indirectly. It seems to me that a person of education, at any rate,

if he were speaking as the Act is speaking with reference to endowed charities, would include in

the category educational and religious charities, as well as charities for the relief of the poor.

Roughly speaking, I think he would exclude the fourth division. Even there it is difficult to draw

the line. A layman would probably be amused if he were told that a gift to the Chancellor of the

Exchequer for the benefit of the nation was a charity. Many people, I think, would consider a gift

for the support of a lifeboat a charitable gift, though its object is not the advancement of religion,

or the advancement of education, or the relief of the poor. And even a layman might take the

same favourable view of a gratuitous supply of pure water for the benefit of a crowded

neighbourhood. But after all, this is rather an academical discussion. If a gentleman of education,

without legal training, were asked what is the meaning of ‘a trust for charitable purposes,’ I think

he would most probably reply, ‘that sounds like a legal phrase. You had better ask a lawyer.1109

Within fifty years, and even though Lord Macnaghten’s opinion is quite open textured, this

classification in a ‘legal sense’ into ‘four principal divisions’ had become so dominant that

all legal analysis of the definition of charitable purpose was undertaken with reference to the

1109 Pemsel's case [1891] AC 531, 583-584.

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classification.1110 The focus on these four categories has increased rather than decreased

since 1947 with all of the major texts analysing charitable purpose in terms of the four

heads.1111 Most recently, the High Court of Australia has elected not to disturb this

approach1112 and the Supreme Court of Canada has reached a similar decision.1113 It follows

that charitable purpose, as presently understood in common law countries, is read through a

particular lens that lets through only images shaped according to the ‘four principal

divisions’.

I do not quibble with taking this passage from Lord Macnaghten’s opinion as a declaration of

the ratio decidendi of Pemsel’s case. I might not even quibble with a case that looks to the

four principal divisions as proof that a purpose is charitable. My quibble is with replacing

the method of reasoning that led to the decision in Pemsel’s case with a reference only to the

four heads. The current orthodox reading focuses only on the four heads and in so doing

excludes from view the jurisprudential discussion in which Lord Macnaghten’s judgment is

contextualised. Resolution of the unsatisfactory state of the law at present and addressing

the social concerns discussed in Chatper II requires the identification of the essence and

differentia - unique characteristics that make purposes charitable and differentiate those

purposes from other purposes.1114 Put in a slightly oversimplified manner, I say that the

methodology applied in Pemsel’s case across all the opinions which sought to identify

whether ‘maintaining, supporting and advancing the missionary establishments among

heathen nations’1115 was a charitable purpose has been replaced by a process that requires all

claims to charitable purpose to assert that they come within one of the four categories. I

1110 National Anti-Vivisection Society v Inland Revenue Commissioners [1948] AC 31, 52 -53 (Lord Porter).

1111 H Picarda, The Law and Practice Relating to Charities (3rd ed, 1999); Peter Luxton, The Law of Charities (2001); J Warburton, D

Morris and N F Riddle, Tudor on Charities (2003); Gino Dal Pont, Charity Law in Australia and New Zealand (2000); Gino Dal

Pont, Equity and Trusts in Australia and New Zealand (2nd ed, 2000); Donald J Bourgeois, The Law of Charitable and Non-Profit

Organisations (1990); John Mowbray, Lewin on Trusts (18th ed, 2008).

1112 Central Bayside Division of General Practice Ltd v Commissioner of State Revenue (2006) 228 CLR 168 and Commissioner of

Taxation v Word Investments Limited (2008) 236 CLR 204.

1113 AYSA Amateur Youth Soccer Association v Canada (Revenue Agency) 2007 SCC 42.

1114 See list of reports and inquiries at footnote 22 and discussion in Chapters II and III.

1115 Pemsel’s case [1891] AC 531, 541 (Lord Chancellor Halsbury).

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hasten to add that categorisation is of great utility. I will soon argue for a classification of

forms of public benefit as a solution to the problems discussed earlier.1116 Classification

follows definition of the genus, though, and cannot replace it.

Reading each of the six opinions it is clear that each Law Lord explored the essence of

charitable purpose and the identification of that which differentiates charitable from non-

charitable purpose. The court was divided, but that does not mean that they were divided on

the appropriate method – only on the outcome of application of the common law method to

the facts. The majority comprised Lord Watson, Lord Herschell, Lord Macnaghten and Lord

Morris. In dissent were the Lord Chancellor and Lord Bramwell. Not one of these Law

Lords proceeded by analogy with purposes listed in the Preamble. This was even though it

was observed that the Preamble had become a list or chart or chart of purposes considered

charitable.1117 Nor did any Law Lord rely upon the ‘four principal divisions’. They all

applied usual principles of legal reasoning.1118 The opinions focus on two things in

exploring the concept of charitable purpose at law. Importantly:

a. the centrality of public benefit;1119 and

b. the antecedent jurisprudence anchored in the concept of the pious use.1120

None of the Law Lords, in contrast with the problems listed in Chapter III, opined that the

Preamble does anything other than set out the context of the Statute of Elizabeth. None

1116 See Chapter II Section 5.

1117 Pemsel’s case [1891] AC 531, 581 (Lord Macnaghten).

1118 Pemsel’s case [1891] AC 531, 551-552 (Lord Chancellor Halsbury dissenting), 561 (Lord Watson), 564 (Lord Bramwell also

dissenting), 573 (Lord Herschell), 583-584 (Lord Macnaghten), and 592 (Lord Morris).

1119 All agreed on the centrality of benefiting others, particularly poor persons, to the concept of charitable purpose. The controversy

was whether public benefit extended to evangelisation of the heathen. See Pemsel’s case [1891] AC 531, 541, 552 (Lord

Chancellor Halsbury) 556-557 (Lord Watson); 564-566 (Lord Bramwell also dissenting); 571-573 (Lord Herschell but note

rejection of limitation for public good at 572); 583-584 (Lord Macnaghten); and 592 (Lord Morris).

1120 Pemsel’s case [1891] AC 531, 549 (Lord Chancellor Halsbury agreeing with Lord Watson on application and interchange of pious

and godly in charitable purpose but not as to the extent of its application); 558-559 (Lord Watson); cf 564 (Lord Bramwell also

dissenting but arguably, in agreeing with Lord Chancellor Halsbury, accepts Lord Watson’s analysis on this point – but not the

extent of its application. Note, though, that Lord Bramwell defined charitable purpose without any reference to motive); 572 (Lord

Herschell ‘compassion and sympathy’); 580-581 (Lord Macnaghten); and 592 (Lord Morris).

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considered that it contained the definition of anything in particular of charitable purpose – at

most the Preamble was affirmed as an index or chart.1121

Only Lord Bramwell (who was in the minority) attempted a comprehensive definition of

charitable purpose.1122 The majority were content to decide that religion was within the

scope of the popular and legal definition. The majority pointed to characteristics of

charitable purpose and reasons why advancement of religion was within those particular

characteristics. The ‘four principal divisions’ were not treated as a classification but an

illustration of the central issue in the case, which was that the advancement of religion is

clearly within the scope of the operation of the doctrine of charitable purpose.1123 This is

illustrated by Lord Macnaghten himself who, in the critical section of his reasons so often

quoted observed:

Many people, I think, would consider a gift for the support of a lifeboat a charitable gift, though

its object is not the advancement of religion, or the advancement of education, or the relief of the

poor. And even a layman might take the same favourable view of a gratuitous supply of pure

water for the benefit of a crowded neighbourhood. But after all, this is rather an academical

discussion1124

So, whilst the ‘four principal divisions’ are clearly integral to the ratio decidendi of the case,

they:

a. do not vitiate or replace the underlying jurisprudence that defines the jurisdiction

of courts; and,

b. do not operate as a definition of either:

i. the essence; or

1121 J Warburton, D Morris and N F Riddle, Tudor on Charities (2003) 4. See particularly Pemsel’s case [1891] AC 531, 542-544

(Lord Chancellor Halsbury dissenting), 559 (Lord Watson), 566 (Lord Bramwell also dissenting), 581 (Lord Macnaghten), and

592 (Lord Morris).

1122 Pemsel’s case [1891] AC 531, 563-568 (Lord Bramwell).

1123 Pemsel’s case [1891] AC 531, 557 (Lord Watson), 572 (Lord Herschell), 583 (Lord Macnaghten), and 592 (Lord Morris).

1124 Pemsel’s case [1891] AC 531, 584 (Lord Macnaghten).

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ii. the differentiating features of charitable purpose; but rather,

c. operate as declaratory that certain characteristics, namely: poverty relief;

advancement of education; and advancement of religion, are within the legal

definition of charitable purposes.

D. Two Charitable Purposes: Defining Jurisdiction and Justifying Favour

‘There is no necessary link between charitable status and tax relief,’ declared Luxton1125 –

and he is right. This is not a new idea. The need to distinguish the two different functions

performed by what the law labels ‘charitable purpose’ was highlighted by Lord Chancellor

Halsbury who did not have difficulty with a broad interpretation of the doctrine of charitable

purpose for defining the jurisdiction of the court for regulatory purposes as the Court of

Chancery had done, but considered a different definition should apply to the granting of

favour. He opined:

Now, before proceeding to discuss the words themselves, I somewhat protest against the

assumption that the alternative is to be between a popular and what is called a technical meaning,

unless the word "technical" itself receives a construction different from that which is its ordinary

use. There are, doubtless, some words to which the law had attached in the stricter sense a

technical meaning; but the word "charitable" is not one of those words, though I do not deny that

the old Court of Chancery, in enforcing the performance of charitable trusts, included in that

phrase a number of subjects which undoubtedly no one outside the Court of Chancery would have

supposed to be comprehended within that term. The alternative, therefore, to my mind may be

more accurately stated as lying between the popular and ordinary interpretation of the word

"charitable", and the interpretation given by the Court of Chancery to the use of those words in the

statute of 43 Elizabeth.1126

The Lord Chancellor was, then, of the opinion that, for the purposes of defining jurisdiction

for a taxing statute, a narrow construction of charitable purpose was appropriate but for the

1125 Peter Luxton, The Law of Charities (2001) 30.

1126 Pemsel’s case [1891] AC 531, 542 (Lord Halsbury).

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purposes of a regulating statute, a broad interpretation was in order.1127 Now it might be said

at this point that the Lord Chancellor was in the minority. All of the other Law Lords

concurred, though, on this point that context informs charitable purpose.1128

If all six Law Lords in Pemsel’s case allow for a flexible reading of the meaning of

charitable purpose at common law, I contend that Pemsel’s case itself is authority for

freedom to develop the doctrine of charitable purpose beyond the Pemselian partitioning. If

it is accepted that the ‘four principal divisions’ are not fixed categories determining the

technical, legal definition of charitable purpose, but rather that ‘charitable purpose ‘is used at

different times in varying senses, broader or narrower’1129 there is a basis for at least two

readings of charitable purpose – one broad and one narrow. These two different readings of

charitable purpose logically follow the two quite different functions being fulfilled at law by

the doctrine of charitable purpose. A broad reading logically applies to the defining of a

jurisidiction which I have said is for enabling participation and regulating that

participation.1130 A second, narrow reading is appropriate in the situation where the doctrine

determines entitlement to favour. This division is, I contend, a threshold. It is a threshold

that Lord Cross was willing to acknowedge in observing that the definition of charitable

purpose was influenced in the late twentieth century by revenue considerations.1131 Even if it

is not a division that presently informs the doctrine of charitable purpose, it is a division

which can be reasoned from within the methodology applied in Pemsel’s case but not by

focusing exclusively on Lord Macnaghten’s classification. Following this approach, a gift

for a purpose which is not charitable, for example a gift for a superstitious or indifferent

1127 Pemsel’s case [1891] AC 531, 542 (Lord Halsbury).

1128 Pemsel’s case [1891] AC 531, 573 (Lord Herschell); 565 (Lord Bramwell); 573 (Lord Watson); 586 (Lord Macnaghten); 592

(Lord Morris).

1129 Pemsel’s case [1891] AC 531, 573 (Lord Herschell).

1130 For example this was the original intent of the Statute of Elizabeth.

1131 Dingle v Turner and Others [1972] AC 601, 625, but note that the majority expressly rejected this. J Warburton, D Morris and N F

Riddle, Tudor on Charities (2003) 3. It has been explicitly acknowledged as relevant in Canada. See AYSA Amateur Youth Soccer

Association v Canada (Revenue Agency) 2007 SCC 42.

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purpose, could be recognised as a purpose gift but entitlement to the favours available to

charitable purpose trusts could be declined.1132

The point has been reached where I have argued that regulating can be separated from

favouring as a logical development of the common law traceable to the opinions in Pemsel’s

case. In the next two sections I set out a basis for replacing reference to the spirit and

intendment of the Preamble with reference to altruism and the absence of coercion.

Altruism and coercion are addressed separately. This is because they must be considered

separately for the purposes of defining the organisations that are expressions of civil society;

that is when defining jurisdiction. When the doctrine of charitable purpose determines

favours it seems altruism and voluntarism are opposite sides of the same coin and may be

treated as one. This point will be developed across the next two sections.

E. Reintroducing Altruism in Going Beyond ‘Spirit and Intendment’

It will be recalled that the orthodox understanding of the law is that for a purpose to be

charitable at law, it must fall within one of the four heads of charitable purpose listed by

Lord Macnaghten in Pemsel’s case and be for public benefit.1133 The four heads of

charitable purpose were distilled from the Preamble1134 and charitable purpose remains

defined by reference to the spirit and intendment of the Preamble and public benefit. I

suggest that theory has reached a point where the characteristics of voluntarism and altruism

can replace the reference to ‘spirit and intendment’. Recommendation 7 of the Australian

Charities Definition Inquiry was: ‘That the public benefit test be strengthened by requiring

that the dominant purpose of a charitable entity must be altruistic.’1135 This is not enough,

1132 Morice v Bishop of Durham (1805) 10 Ves Jr 522; see too Adam J. Hirsch, 'Bequests for Purposes: A Unified Theory' (1999) 33

Washington and Lee Law Review 33, 62.

1133 See discussion at Chapter II part 2.

1134 The text of the Preamble was set out in Chapter I.

1135 Inquiry into the Definition of Charities and Related Organisations Report of the Inquiry into the Definition of Charities and

Related Organisations (2001) 14.

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though, because the absence of coercion is an equally important complementary variable for

both defining scope and for acting as a gateway to favour.

Turning then to altruism, and leaving the absence of coercion to the next section, it will be

recalled Lord Macnaghten opined that the foundation of the concept of charitable use is not

in the categories he listed, nor in the Preamble per se but in ‘the piety of early times’.1136

This piety, and its expression through pious uses or charitable purposes, is as important to

the concept of charitable purpose as public benefit. He continued:

… no one I think who takes the trouble to investigate the question can doubt that [the law of

charities] was recognised and the jurisdiction established before the [Statute of Elizabeth] and

quite independently of that Act. The object of that statute was merely to provide new machinery

for the reformation of abuses in regard to charities.1137

In Chapter III, it was noted that the poetic antecedents of the text of the Preamble have

interested jurists. What is remarkable is that the law that lay behind it has not. As the

author’s of Tudor on Charities pointed out, by looking to the Preamble ‘and not behind it,

the courts have built up a great body of case law’.1138

What then was behind the Preamble? The relevant law prior to the Statute of Elizabeth was

organised around a relatively simple concept of the pious use. Defining ‘pious use’ in the

context of the law as it was before the passing of the Statute of Elizabeth is not as simple as

may be thought at first. That is not because a simple legal definition cannot be set out, but

rather because the bare definition without explanation denudes the idea of its very essence.

It must be remembered that the idea of charity in the Preamble was an idea anchored in

notions of civil relations which preceded the present property rights discourse. It may seem

1136 Pemsel’s case [1891] AC 531, 583 (Lord Macnaghten).

1137 Pemsel’s case [1891] AC 531, 581.

1138 J Warburton, D Morris and N F Riddle, Tudor on Charities (2003) 13.

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strange to the twenty-first century citizen of a common law country to be focused on the use

to which something is put rather than on the title or right to use. There is now a widely

accepted belief that once something is ‘owned’ the owner may do as he or she pleases with

it, regardless of moral constraints.1139 The concept of pious use belongs to a different moral

frame. It developed in a community where philosophical, theological and legal debates were

not over the absolute right to private property, but rather whether it was possible to be

property-less as the Franciscans claimed.1140 The use to which something was put, and in

particular whether it was a pious use, was a defining question in this context. The

foundations for the ideas are no doubt Christian1141 and the following quote from Augustine,

in a less well-known work directed to widows, exemplifies the expectation. He wrote ‘but in

you let the love of riches grow cold, and let a pious use of what property you possess be

directed to spiritual delights, that your liberality wax warm rather in helping such as are in

want than in enriching covetous persons’.1142

Both words, ‘pious’ and ‘use’ are important. The ‘use’ must be directed to others who are in

need. The motive must be ‘liberality’ which is contrasted with the self-interested ‘love of

riches’ but this motive is known by its application of property to uses that benefit others. It

is fundamentally a focus on the supply side of the transaction but the reason for supply is

manifest in the form of beneficiary to whom the transfer is made. A twentieth century Pope

illustrated the continuance of the concept and the ideas behind it:

It is very important for these words to sink deep into the mind of every priest. If someone owns

things that are rightfully his, let him be careful not to hang on to them greedily. Instead he should

1139 Matthew Turnour, 'The Stewardship Paradigm' (School of Humanities, Queensland University of Technology, 1999), 48.

1140 Paul Vincent Spade, William of Ockham (2006) Stanford Encyclopedia of Philsophy <http://plato.stanford.edu/entries/ockham/>

at 29 June 2009.

1141 Although the Islamic concept of waqf may have significantly informed the development of the concept into charitable trusts. See:

Monica Gaudiosi, 'The Influence of the Islamic Law of Waqf on the Development of the Trust in England: The Case of Merton

College' (1987-1988) 136 University of Pennsylvania Law Journal 1231.

1142 Saint Augustine, Of the Good of Widowhood (C L Cornish trans, 1887 ed) [trans of: De Bono Viduitatis] New Advent

<http://www.newadvent.org/fathers/1311.htm> at 21 February 2007.

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remember that the prescriptions of the Code of Canon Law dealing with church benefices make it

clear that he has a serious obligation "to use superfluous income for the poor or for pious causes."

May God grant that no one of us ever lets that terrible sentence that the parish priest of Ars once

used in rebuking his flock fall on him: "There are many people keeping their money hidden away

while many others are dying of hunger."1143

Charitable trusts understood in this context are vehicles for legl title – ownership – so that

pious purposes – motives – can be carried into effect. It was this vehicle – a charitable trust

– that the benefactor, Bates created that gave rise to the contest in Pemsel’s case. In such a

context it is not surprising that Lord Watson, whose reasoning was accepted by a majority on

this point,1144 found not just public benefit, but also ‘pious’ motive to be integral to the

concept of charitable purpose at law. He opined:

So far as I am able to discover, "godly" and "pious" as applied to trusts or uses, had, in early times

much the same significance in Scotland as in England. Their meaning was not limited to objects

of a religious or eleemosynary character, but embraced all objects which a well-disposed person

might promote from motives of philanthropy.1145

Lord Watson continued to explain with examples that the epithet ‘godly’ was applied to a

gift by Queen Mary of lands and annual rents for sustentation of the ministry within the

burgh of Edinburgh and the entertainment of its hospitals. In relation to the word ‘pious’ he

gave three examples: ‘the building and repairing of bridges, repairing of churches or

entertainment of the poor’ and referred also to the case of Lord Saltoun v Lady Pitsligo

where ‘the Court of Session held that the repair of a public harbour was a pious use’ within

the meaning of the relevant legislation. His point was clear: if a ‘well-disposed person’ was

1143 Papal Encyclicals, Sacerdotii Nostri Primordia, Encyclical of Pope John XXIII On August 1, 1959 (2000-2008) Papal Encyclicals

Online <http://www.papalencyclicals.net/John23/j23sacer.htm> at 27 September 2005.

1144 Lord Halsbury concurred with the reasoning of Lord Watson on the meaning of Godly and pious informing the understanding of

charitable purpose: He opined: ‘That "godly" and "pious" are convertible terms, and may be so treated, is true’ Pemsel’s case

[1891] AC 531, 549. Lord Bramwell likewise agreed with the reasoning although he came to a different decision: at 563. Lord

Herschell agreed with both Lord Watson’s reasoning and his conclusion: at 574.

1145 Pemsel’s case [1891] AC 531, 558 (Lord Watson), emphasis added.

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motivated by ‘philanthropy’ the courts could find charitable intent as the traditional

conception of pious use or godliness had broad application. Lord Watson did not, though,

just point to motives of philanthropy leading to the provision of physical needs but also those

motives could be to make contributions to religious,1146 intellectual and moral culture.1147

Like Lord Watson, Lord Herschell, whilst agreeing with Lord Macnaghten, wrote his own

opinion. He, also, did not categorise charitable purposes but referenced a motive of

benevolence as integral to charitable purpose. He held:

I think, then, that the popular conception of a charitable purpose covers the relief of any form of

necessity, destitution, or helplessness which excites the compassion or sympathy of men, and so

appeals to their benevolence for relief. 1148

Lord Herschell continued:

Nor am I prepared to say that the relief of what is often termed spiritual destitution or need is

excluded from this conception of charity. On the contrary, no insignificant portion of the

community consider what are termed spiritual necessities as not less imperatively calling for

relief, and regard the relief of them not less as a charitable purpose than the ministering to

physical needs; …It is a mistake to suppose that men limit their use of the word "charity" to those

forms of benevolent assistance which they deem to be wise, expedient, and for the public good.

There is no common consent in this country as to the kind of assistance which it is to the public

advantage that men should render to their fellows, or as to the relative importance of the different

forms which this assistance takes. …1149

My point, then, is that pious uses or charitable purposes are not just public benefiting

purposes. They also have as a central dimension, motive to serve others which is not the

1146 Pemsel’s case [1891] AC 531, 558 (Lord Watson).

1147 Pemsel’s case [1891] AC 531, 561 (Lord Watson).

1148 Pemsel’s case [1891] AC 531, 571-572 (Lord Herschell), emphasis added.

1149 Pemsel’s case [1891] AC 531, 571-572 (Lord Herschell), emphasis added.

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orthodox reading of the law as it presently stands.1150 Ignoring motive is justified under the

doctrine of charitable purpose by focusing entirely on the side of the recipient – the demand

side – not on the supplier, but abandoning that focus to look at the supply side as well as the

demand side overcomes the problems which flowed from focus on public benefit alone. It is

an approach that has assisted economists and can assist lawyers in like fashion. It is, I

suggest, an essential step in bringing clarity to the gatekeeping function of access to favours.

It is critical, I contend, that the motive for supply of a charitable good be for the benefit of

others. To this I will add in the next section that it also be voluntarily provided.

Returning to literature discussed in Chapter V, altruism, it will be recalled, was argued by

people such as Atkinson to be the continental divide between the businesses and civil society

organisations.1151 The non-distribution constraint is accepted as the defining feature, at least

in the context of economic analysis of civil society organisations. If the non-distribution

constraint is considered to be an expression of a very broad form of altruism, then for

analytical purposes there is one characteristic – altruism – as a unit for analysis. If altruism

is accepted as a rough equivalent of pious use, there is, then, a characteristic drawn from and

embedded in the jurisprudence which identifies the uniqueness of the space without

reference to the ‘spirit and intendment’ of the Preamble or the four heads of Pemsel’s case.

The Preamble no longer has any legislative force in Australia,1152 Canada and other common

law countries and the time has come to let it go.1153 If the quest for the ‘spirit and

intendment’ of the Preamble is replaced in part by altruism, and if the economic and social

sciences have methods of identifying and possibly even measuring altruism, then

jurisprudence can draw upon those insights to shape the development of the law in this area.

I conclude this section noting that just as the ‘spirit and intendment’ did not stand alone, but

1150 J Warburton, D Morris and N F Riddle, Tudor on Charities (2003) 7.

1151 See Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501.

1152 For discussion of history generally see: Gino Dal Pont, Charity Law in Australia and New Zealand (2000) 44-57.

1153 See also Vancouver Society of Immigrant and Visible Minority Women v MNR [1999] 1 SCR 10 particularly Gonthier J dissenting

at 32, 40 and Central Bayside General Practice Association Limited v Commissioner of State Revenue (2006) 228 CLR 168, 200-

204 (Kirby J).

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operated in collaboration with public benefit, so altruism does not stand alone, but works in

conjunction with public benefit. I suggest a third dimension; the absence of coercion is also

needed to complete the theory. Absence of coercion is now considered.

F. Reintroducing Coercion in Going Beyond ‘Spirit and Intendment’

It will be recalled that Lord Macnaghten held in that most famous part of his opinion that ‘a

layman would probably be amused if he were told that a gift to the Chancellor of the

Exchequer for the benefit of the nation was a charity’.1154 It is not an absolute rule that a gift

to government cannot be charitable. Lord Chancellor Halsbury in Pemsel’s case cites a

number of authorities to that effect.1155 In Re Cain,1156 a gift to the government of the State

of Victoria Department of Health was held to be for a charitable purpose. Nevertheless there

is a clear dividing line between organisations pursuing charitable purposes and government

at common law.1157 Charitable purpose is characterised by voluntariness. It is the motive for

the gift not the manner in which the public is benefited that distinguishes charitable from

government purposes. Justice Gonthier summarised the law on this point in Vancouver

Society of Immigrant Women:

Two central principles have long been embedded in the case law. Speaking of the existing Pemsel

categories, Rand J. observed …, that "the attributes attaching to all are their voluntariness and,

directly or indirectly, their reflex on public welfare". These two principles, namely, (1)

voluntariness (or what I shall refer to as altruism, that is, giving to third parties without receiving

anything in return other than the pleasure of giving); and (2) public welfare or benefit in an

objectively measurable sense, underlie the existing categories of charitable purposes, and should

be the touchstones guiding their further development.1158

1154 Pemsel’s case [1891] AC 531, 584 (Lord Macnaghten).

1155 Pemsel’s case [1891] AC 531, 544.

1156 In re Cain (decd); The National Trustees Executors Agency Co of Australasia Ltd v Jeffrey [1950] VLR 382, 387.

1157 Central Bayside Division of General Practice Ltd v Commissioner of State Revenue (2006) 228 CLR 168.

1158 Vancouver Society of Immigrant and Visible Minority Women v MNR [1999] Can Sup Ct Lexis 12, 57-58.

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Justice Gonthier effectively equated voluntariness and altruism and I suggest that nothing is

lost by referring to voluntariness and altruism as coterminous when considering the role of

charitable purpose as one of determining favour. For theoretical clarity, though, when

defining civil society organisations for the purposes of enabling or regulating, I contend it is

helpful to keep them separate.

If the provision of a good is coerced then it is not supplied charitably. How much coercion is

tolerable, though, for a purpose to remain charitable? Some funding and perhaps some

contributions of time flow from coercion. A most obvious example is where civil society

organisations pursuing community service purposes are entirely funded by government and

subject to detailed compliance requirements and directions (set out in the form of a contract

or other form of arrangement).1159 Does this remove the requisite voluntariness? In

Australia, at least, the level of independence needed for charities to be distinguished from

government would seem to be low.1160 The outcome of that debate, too, will shape the form

of favour. If the law compels membership of professional associations like a law society or

trade union membership, is that law society or trade union a civil society organisation? How

do we judge these things? The answer, I propose, is that there must be a continuum and the

criterion will not be fundamentally different from that applied when considering altruism.

The difference is that test will be voluntariness as identified by absence of coercion not

altruism as evidenced by absence of self-interest. At some point or points between the

entirely voluntary pursuit of purposes and entirely coerced pursuit of those same purposes, a

threshold will be crossed. That threshold will mark the boundary between civil society and

government.

The supply side variables are capable of measurement in a way that reference to the spirit

and intendment is not. It will be recalled from Chapters V and VI that altruism and coercion

1159 Central Bayside Division of General Practice Ltd v Commissioner of State Revenue (2006) 228 CLR 168, 181.

1160 Central Bayside Division of General Practice Ltd v Commissioner of State Revenue (2006) 228 CLR 168.

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can be identified and measured. This is not to oblige theory development to move to

complex measurement. I suggest that for theory development it is enough to simply decide

that the motive is charitable in a particular case. I leave open the possibility that at a slightly

more sophisticated level altruism and voluntariness might also be measured on a continuum

and inform the basis for favour. The possibility of legislators drawing upon quantitative

analysis of both altruism and voluntariness when determining tax law is possible under this

approach. This is because altruism could be measured in some way. Coercion could be

identified by reference to such things as the capacity to oblige participation, to require

allocation of funds to particular objects, or compel delivery of charitable goods. These

possibilities will be explored in the final chapter.

What though of the role of voluntarism in defining the gateway to favours? If altruism and

voluntarism can be conceptualised as on a continuum then jurisdictions may differ as to the

evidence of altruism and voluntarism needed to access favour. There is not, though, the

classification of either altruism or voluntarism evident in the cases on charitable purpose that

there is in relation to public benefit. Nor is it necessary for theory development in the

context of developing a framework for entitlement to favour to go beyond stating that for a

purpose to be charitable it must be an altruistic and voluntary supply.1161 This is because

public benefit is capable of carrying the burden of differentiating between charitable

purposes.

Different levels of public benefit are evident in the cases for different charitable purposes.

The level of public benefit evident to establish poverty relief is less than that required to

evidence advancement of education.1162 Importantly, then, from a theoretical perspective,

favour is more appropriately linked to public benefit than motive of supply. This is because

it is the outcome not the intent that provides the more compelling justification for favour. In

1161 Vancouver Society of Immigrant and Visible Minority Women v MNR [1999] Can Sup Ct Lexis 12, 57-58.

1162 Internal Revenue Commissioners v Baddeley [1955] AC 572, 591 (Viscount Simmonds).

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the next section public benefit is discussed principally as a framework for determining access

to favour.

G. Reintroducing Public Benefit as a Justification for Favour

In this section I take up the topic of public benefit. I have already discussed how public

benefit can be used to mark out the boundary between civil society organisations and other

forms of association, so I do not revisit that discussion here. In this section I suggest how

public benefit might be used as a justification for favour. In constructing this argument I

take it as given that there is requisite evidence of altruism and voluntariness (absence of

coercion) for the organisations in question to be civil society organisations. I suggest that

civil society organisations are granted favours because they meet a need for charitable goods.

Charitable goods can be segmented for jurisprudential purposes, I suggest, according to the

extent and nature of the public benefit. By extent I mean the extent to which a purpose is for

public benefit. By nature I mean classification into categories of public benefit according to

qualities. Both of these forms of classification seem evident in the cases and I therefore

endeavour to theorise both. The simpler of the two is the extent to which public benefit is

evident and I begin with that. When turning to classification it is evident, though, that the

extent of public benefit informs categories so the theory regarding the nature of the benefit is

informed by, and builds from, the discussion of the extent of the benefit.

1. A Continuum of Public Benefit

At its simplest the extent of public benefit could be assessed on a scale similar to that

proposed by Weisbrod as a ‘collectiveness index’.1163 The greater the evidence of public

benefit the greater the entitlement to favour. This is a very simple, but arguably effective,

framework for progressing jurisprudential development.

1163 Burton A Weisbrod, 'Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy' in Burton A Weisbrod (ed),

The Voluntary Nonprofit Sector (1977) 51, 73.

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An important implication for this way of progressing, worth highlighting at the outset, is that

it provides a way of addressing problems with the concept of public benefit which are

compounding with statutorily added heads of charitable purpose. 1164 It will be recalled from

Chapter II, that with only four heads at common law the concept of public benefit was

deeply problematised.1165 It was not possible to state clearly what public benefit was and

what it was not. The delimiters of public benefit did not work. There were problems with

the levels of public benefit. These are compounded as heads are added. If there are 12 heads

of charitable purpose, as is now the situation in England and Wales,1166 and each head must

prove public benefit but all are different, then how is public benefit to be theorised? In

response to these problems, I suggest that it is possible to maintain one concept of benefit

and to theorise it as a continuum between private and public benefit.

Such a continuum is a logical development from the hierachy which is already the accepted

law set out in the charitable purpose cases. It is well established that the doctrine of

charitable purpose ranked contributions to public benefit in a hierarchical way. Lord

Simonds summarised the case law on this point. He held in Gilmour v Coats:

…[W]hile in every category of legal charity some element of public benefit must be present, the

Court had not adopted the same measure in regard to different categories, but had accepted one

standard in regard to those gifts which are alleged to be for the advancement of education and

another for those, which are alleged to be for the advancement of religion, and it may be yet

another in regard to the relief of poverty. To argue by a method of syllogism or analogy from the

category of education to that of religion ignores the historical process of the law.1167

1164 Extension of Charitable Purpose Act 2004 (Cth); Charities Act 1979 (Barbados) Volume VIII, Title XVIII, Chapter 243; Charities

Act 2006 (Eng.&W) c 50; Charities and Trustees Investment Act 2005 (Scotland), and Charities Act 2008 (NI).

1165 Chapter II Section 5.

1166 Charities Act 2006 (Eng.&W) c 50, s 2(2).

1167 Gilmour v Coats [1949] AC 426, 449.

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The House of Lords reaffirmed these general principles in IRC v Baddeley where, again,

Viscount Simonds, having flagged the so-called ‘poor relations cases’ – which have such a

narrow requirement of public benefit as to be ostensibly private – and having noted that ‘a

different degree of public benefit is requisite according to the class in which the charity is

said to fall’,1168 went on to hold that if a purpose was to fall within ‘the fourth class’ [of

charitable purpose listed in Lord Macnaghten’s judgment in Pemsel’s case] ‘it must be for

the benefit of the whole community or at least of all the inhabitants of a sufficient area.’1169

He warned that failure to take such a broad view of the fourth head was to fail to recognise

that ‘here is a slippery slope.’1170

In summary, then, the common law has a long history of having one class of public benefit,

but assessing it in different ways according to the charitable purpose in question. It is a

logical development of the law to theorise public benefit as on a continuum and to link

entitlement to favour to the extent of public benefit.

Once the concept of a continuum is accepted it does not matter whether there are three heads,

13 heads or any other number of heads of charitable purpose. The question is only where on

the continuum between private and public benefit the threshold for entitlement to favour is

satisfied for a particular expression of charitable purpose. For some heads, such as poverty

relief, more ostensibly private benefit is acceptable as being sufficiently public to be

charitable than for other purposes such as advancement of education.

2. Categories of Public Benefit.

The discussion in the last section highlighted that different expressions of charitable purpose

required different levels of public benefit. What that means, stated inversely, is that public

1168 Internal Revenue Commissioners v Baddeley [1955] AC 572, 590.

1169 Internal Revenue Commissioners v Baddeley [1955] AC 572, 590.

1170 Internal Revenue Commissioners v Baddeley [1955] AC 572, 591.

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benefit is divisible into different levels having regard to the expression of charitable purpose.

In this subsection I suggest that the four ‘principal divisions’ of charitable purpose set out by

Lord Macnaghten as categories of purposes within the spirit and intendment of the Preamble

can be simplified and expanded into three categories of public benefit. Those categories link

to whether the benefit is ostensibly private, quasi-public or public. A number of comments

will help by way of introduction to clear the ground for this construction.

First, Lord Macnaghten held the classification into ‘four principal divisions’ was

‘academical’, so, in and of themselves, his reasons provide freedom to recategorise.1171

Second, it is often overlooked that Lord Watson and Lord Herschell, who also comprised the

majority, categorised charitable puposes differently. The four principal divisions are not the

only framework emanating from Pemsel’s case and it is appropriate to bear in mind the

discussion of the earlier part of this chapter in this context. Third, categorising is, in law as

much as in any other discipline, as William James observed, ‘teleological’. Concepts are

ordered and arranged having regard to the similarities or differences chosen at the particular

time for the particular purpose.1172 It follows from these three observations that given the

level of dissatisfaction with the present law,1173 revisiting the purpose of the arrangement is

appropriate. Further, it is appropriate to ask, if common law courts were freed of the

Pemselian partitioning as the organising idea, and returned to the underlying jurisprudence,

as I contend they may, then what architecture would best suit those developments? Put

differently: if the organising is ‘teleological’ and ‘the ground of conception, varies with the

end we have in view’1174 then what is the purpose of organising charitable purpose?

Charitable purpose is a legal tool, I suggest, to provide a way of addressing society’s

concerns, including those that were set out in Chapter II. Returning to those challenges, it

1171 Pemsel’s case [1891] AC 531, 584 (Lord Macnaghten).

1172 William James, The Principles of Psychology (first published 1890, 1991 ed) 670.

1173 See discussion in Chapters I, II and III.

1174 William James, The Principles of Psychology (first published 1890, 1991 ed) 670.

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will be recalled that the issues were divided into two broad classes: issues that have to do

with the preservation of space free from government and issues that have to do with

entitlement to favour for civil society organisations. I focused on the first of these in Chapter

VII so now put those aside for present purposes. It is the second set of challenges that

determine the purpose of the organising – how to organise entitlement to favour, and how to

justify favour - that is the concern of this section.

Recalling the insight of the late twentieth century, French philosopher, Michel Foucault and

his image of things spread out on a table and arranged to conceptualise the way people bring

order to things I suggest that the charitable purposes cases can be re-organised into three

categories. I contend that favour is extended to civil society organisations when they supply

charitable goods:

1. that Deal with Disadvantage;

2. that Encourage Edification; or

3. that Facilitate Freedom.

Across the next three subsections I will explain what I mean by these terms and why they are

collectively exhaustive although not mutually exclusive categories.

H. Towards an Alternative Classification

1. Beyond Relief of Poverty to Dealing with Disadvantage

Relief of poverty is the first head of Pemsel’s case but conceptually poverty is but one form

of disadvantage. There are many forms of disadvantage and addressing these is frequently

recognised as the pursuit of a charitable purpose. Why is this so? I contend it is because by

dealing with a disadvantage, such as relieving poverty, the citizen helped is able to enjoy

equally with other citizens the benefits and burdens of citizenship in a common law country.

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The foundation of the common law’s jurisprudential obligation to equality under the law is,

according to Brooks, traceable to Cicero.1175 If the common law is taken to have a

commitment to equality, then granting favours to those who voluntarily relieve and prevent

poverty and thus assist the weak to join with the strong in society is to encourage that which

the law itself deigns. As the French Declaration of the Rights of Man put it: ‘[A]ll citizens,

being equal in the eyes of the law, are equally eligible to all dignities and to all public

positions and occupations, according to their abilities, and without distinction except that of

their virtues and talents.1176 It becomes a function of citizens of goodwill to endeavour to lift

all other citizens up so that they may enjoy that equality. This form of charitable good I call

Dealing with Disadvantage.

When Dealing with Disadvantage by the supply of goods, it is enough to supply private

goods to individual persons at a disadvantage. Relief of poverty is the Pemselian genesis of

this category but it is not appropriate to limit the category of relief of poverty because

poverty is but one kind of disadvantage. The broader class of organisation recognised as

Dealing with Disadvantage would include ‘open and nondiscriminatory self help groups’,

added by statute to the list of charitable purposes in Australia1177 for federal purposes only,

and ‘the relief of those in need by reason of youth, age, ill-health, disability, financial

hardship or other disadvantage’ added by statute in England and Wales.1178 It is possible

and, I contend preferable, to reframe the category more broadly to Dealing with

Disadvantage.

So whilst relief of poverty is the head of the doctrine of charitable purpose from which this

category is developed, the category goes beyond relief of poverty to the supply of the goods

that enable those at a disadvantage to enjoy equally with other citizens the basic rights and

1175 Christopher W Brooks, Lawyers, Litigation and English Society Since 1450 (1998) 208.

1176 The Declaration of the Rights of Man 1789.

1177 Extension of Charitable Purpose Act 2004 (Cth) ss 4-5.

1178 Charities Act 2006 (Eng.&W) c 50, s 2(2).

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obligations of citizenship in society. The charitable purpose cases relating to poor relations

and poor employees suggest that as the law presently stands, when Dealing with

Disadvantage, the goods supplied may be private goods and the transferee could be a relative

or an employee.

It is important though to recognise that the class is confined to persons at a disadvantage. It

will be recalled from Chapter II that one of the problems with the Pemselian purpose known

as relief of poverty was that it could be invoke if someone had to ‘go short’ in the ordinary

acceptation of that term, due regard being had to their status in life.’1179 Within this

alternative jurisprudence disadvantage must be established sufficient to invoke the law’s

intervention to advance equality.

Beyond advancing equality there is a second reason why dealing with disadvantage, even for

only one person, is for public benefit in twenty-first century common law countries. It is

because governments in most common law countries take responsibility for this seemingly

private provision by welfare payments. At the most basic level, therefore, the public benefits

by government not having to supply this need. It makes sense, then, that the law would

favour organisations which are the vehicles for Dealing with Disadvantage – at least to the

extent that this reduces the burden on government. This argument is at its clearest in the

context of the supply of private goods but it applies generally to all goods supplied by civil

society organisations that would otherwise have been supplied by goverment. As Ware

succinctly summarised: ‘charities are an excellent instrument for making government

cheaper’.1180

There is then one category: Dealing with Disadvantage. Dealing with Disadvantage does

not, though, cover the field of charitable purpose. There is a need for at least one other

1179 Re Coulthurst [1951] Ch 661, 666.

1180 Alan Ware, Between Profit and State (1989) 142.

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category of purpose that goes beyond the supply of private goods that Deal with

Disadvantage.

2. Beyond Advancement of Education to Encouraging Edification

Advancement of Education is the second head of charitable purpose drawn from Lord

Macnaghten’s opinion in Pemsel’s case but conceptually advancement of education is but

one purpose that finds expression in the supply of quasi-public good that benefit ‘the rich as

well as the poor’.1181 I suggest that advancement of education, and many of the other

purposes that are recognised as charitable purposes under the fourth head are recognised

because they belong to a broad category of goods that edify society. If that is so then a

category of purposes that centre on community development by the provision of quasi public

goods that ‘benefits the rich as well as the poor’1182 is required. Lord Watson identified the

class with reference to ‘intellectual and moral culture’ and seems to include advancement of

religion within it.1183 I call this category ‘Encouraging Edification’. To fall within this

category a purpose must demonstrate that its advancement leads to a greater measure of

public benefit than Dealing with Disadvantage. Encouraging Edification calls for greater

publicness in either the good supplied or the class of recipient. For a purpose to be within

this category the enjoyment of the benefit must be ‘socialised’ to at least subsections of

communities which are sufficiently large to be considered public.1184 Purposes that involve

the provision of social goods such as public art and other cultural activities, are examples of

this. I theorise that it also involves the provision of physical infrastructure that literally

‘edifies’ a community of which the Bridges Portes Havens Causwaies … Seabanks and

Highewaies’ enumerated in the Preamble1185 are the exemplar and of course the twenty-first

century equivalents of such infrastructure such as, public libraries and museums.

1181 Pemsel’s case [1891] AC 531, 583-584 (Lord McNaghten).

1182 Pemsel’s case [1891] AC 531, 583-584 (Lord McNaghten).

1183 Pemsel’s case [1891] AC 531, 557-559 (Lord Watson).

1184 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 565-66.

1185 Preamble to Statute of Charitable Uses 1601 (Eng.&W) 43 Eliz c 4.

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The socialisation of goods suggests communal sharing and so I suggest that favouring

purposes that pursue this edifying role is justified because it advances fraternity. I suggest

advancement of fraternity must at least include purposes that edify the ‘intellectual and

moral culture’ and advancement of religion is justifiable on this basis.1186

Fraternity is a value that may take different forms in different common law countries.

Montesquieu noted and it is worth remembering that ‘[t]he laws of education will be ...

different in each species of government: in monarchies they will have honour for their

object; in republics, virtue; in despotic governments, fear.’1187 Applying this observation to

the current debate over the supply of charitable goods, the point is that what a particular

community will wish to encourage and consequently how it justifies favour will vary

according to its form of government. It will be recalled from the discussion of altruism, that

different nations value public goods differently. Some contribute strongly to overseas aid

and others to blood donation.1188 The level of public benefit needed to satisfy particular

aspects of this class, will therefore be expected to vary between common law countries. The

broader principles that will be consistent, though, are that to be entitled to favour under this

head, a civil society organisation must benefit people which means at least a sub-community

of the community, not just an individual person. Second, and importantly, in the case of

Encouraging Edification, the charitable good supplied may be enjoyed by the rich as well as

the poor (as the object is advancement of fraternity not equality).1189 Having regard to the

economic discourse in such a context, it could be required that the good supplied be both

non-rivalrous and non-excludable for the civil society organisation to be entitled to favour on

the basis of Encouraging Edification.

1186 Pemsel’s case [1891] AC 531, 557-559 (Lord Watson).

1187 Baron Charles De Montesquieu, The Spirit of the Laws, Great Books of the Western World (Thomas Nugent trans, first published

1748, 1992 ed) 13.

1188 See pages 189-191.

1189 See Pemsel’s case [1891] AC 531, 583-584.

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This class of Encouraging Edification is the logical development I contend of the third head

of advancement of education and an over extended fourth head. It will be recalled from

Chapter II that elephant rides by children were included within the third head. It will also be

recalled that the fourth head is simply a grab bag overflowing with purposes that clearly

benefit larger groups of people. I mentioned that the Pemselian purpose of advancement of

religion could be subsumed in this general category of Encouraging Edification. It seems to

me though, that there is a broader function that religion plays, and more generally, that all of

the purposes recognised as charitable cannot be adequately explained within the categories of

Dealing with Disadvantage and Encouraging Edification. Accordingly I propose a third

class which I call Facilitating Freedom.

3. Beyond Advancement of Religion to Facilitating Freedom

As Dealing with Disadvantage and Encouraging Edification focus principally on the

provision of goods that are either tangible or find tangible expression, but the charitable

purpose cases and statutory extension clearly include spiritual and less tangible benefiting

purposes, I propose a third category that begins from, but builds beyond, the advancement of

religion.

This category, I contend, may be seen through the wide angle lens of freedom under the rule

of law. I theorise that it extends beyond organisations pursuing the advancement of religion,

to other civil society organisations that similarly contribute to the common weal. This

argument – that it is possible to move beyond advancement of religion to a broader class of

organisations that contribute to the common weal by fortifying the foundations of society –

is developed from the role of religion in society. As Tocqueville observed with reference to

the role of religion in the United States: ‘Thus, while the law permits the Americans to do

what they please, religion prevents them from conceiving, and forbids them to commit, what

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is rash or unjust.’1190 His point was that religion operated as a moral restraint on unbridled

freedom to ensure that people in that newly democratic nation exercised their liberty as they

should; that is, having regard to others.

Three nineteenth century American cases discussed by Picarda1191 ground the charitable

function of advancement of religion and the role religion plays in encouraging concern for

others and self restraint. This is because these qualities are essential to civilisation and the

welfare of society. In Holland v Peck the court held that religion was ‘the surest basis on

which to rest the superstructure of social order.’1192 In People ex rel Seminary of Our Lady

of Angels v Barber religion was described as necessary to the advancement of civilisation

and the promotion of the welfare of society’.1193 In Gass and Bonta v Wilhite it was held

that religion is a 'valuable constituent in the character of our citizens’.1194 In such a context,

advancement of religion is recognised as a charitable purpose enjoying the favour it does

because of its role in underpinning the social order and creating social cohesion.1195 These

ostensibly charitable purpose cases, read in the context of the common law history set out in

the previous chapter, point to advancement of religion cases forming part of a wider stream

of common law jurisprudence related to the foundations of society. It is not just the

American judges and Picarda who draw this connection.1196 Chief Justice Gleeson of the

High Court of Australia is reported to have declared similarly that ‘religion continues to be

relevant in Australian society because it provides a bridge between “private conscience” and

“the general acceptance of values that sustains the law and social behaviour.”’1197 The

1190 Alexis de Tocqueville, Democracy in America, Great Books of the Western World (George Lawrence trans, first published in

1835, 1992 ed).

1191 H Picarda, The Law and Practice Relating to Charities (3rd ed, 1999) 84.

1192 Holland v Peck (1842) 37 NC 255, 258.

1193 People ex rel Seminary of Our Lady of Angels v Barber (1886) 3 NY St Rep 367 affirmed in (1887) 13 NE 936.

1194 Gass and Bonta v Wilhite (1834) 32 Ky 170, 180.

1195 Patrick M Garry, 'Religious Freedom Deserves more than Neutrality: The Constitutional Argument for Non-Preferential

Favouritism of Religion' (2005) 57(1) Florida Law Review 1, 12.

1196 H Picarda, The Law and Practice Relating to Charities (3rd ed, 1999) 84.

1197 H R Sorensen and A K Thompson, 'The Advancement of Religion is Still a Valid Charitable Object' (Paper presented at the

Charitable Law in the Pacific Rim Conference, QUT, October 2001) 15.

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Nathan Report of 1952-53 pointed to a similar connection.1198 Analogous observations were

made by the Australian Charities Definition Inquiry.1199

That religion operates as a force obliging people to be good and thus underpins society is

anchored in a widely accepted proposition that even though there is a great diversity of belief

amongst religions, in the out-workings of behaviour, all of the major religions teach the

equivalent of what is known in most common law countries as the golden rule. The golden

rule which is often articulated as, ‘do to others as you would have them do to you’1200

exhorts adherents to behave altruistically. The consequence is an argument that religion

provides a glue that binds society together voluntarily into community of citizens – a polis in

the classical Greek sense or civitas in the Latin expression. The effect of such a voluntary

binding together is that it reduces the need for coercive compliance though enforced law. It

also provides the substrate for voluntary concern for others as religious messages ‘conveyed

from pulpits and in numerous publications’ are effective at ‘invigorating ... informal giving

and support’ even if ‘not wholly consistent’.1201 Focused on guilds in the Middle Ages, but

with an eye to the present, Richardson has underscored the role religion plays in ‘bringing

individuals together’ in voluntary associations that ‘fostered trust’ and ‘cooperation’. In

such a context, ‘[c]oercion hovered in the background to force the recalcitrant to contribute

their share and to reassure the compliant’, but it was the religion that unified.1202

This role of religion arguably underpins the judicial pronouncement by Lord Cross, that the

law ‘assumes that any religion is at least likely to be better than none.’1203 This role for

1198 See Charitable Trusts Committee (UK), Report of the Committee on the Law and Practice Relating to Charitable Trusts, Cmd

8710 (1952-53).

1199 See Gino Dal Pont, Charity Law in Australia and New Zealand (2000) 148, adopted by the Inquiry into the Definition of Charities

and Related Organisations Report of the Inquiry into the Definition of Charities and Related Organisations (2001) 175.

1200 The Holy Bible New International Version (1984) Luke 6:31.

1201 Ilana Krausman Ben-Amos, The Culture of Giving: Informal Support and Gift-Exchange in Early Modern England` (2008) 14 and

chapter 7.

1202 Gary Richardson, 'Craft Guilds and Christianity in Late-Medieval England' (2005) 17(2) Rationality and Society 139, 177.

1203 Neville Estates Ltd v Madden [1962] 1 Ch 832, 853.

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religion also seems acknowledged by the famous humanists Ariel and Will Durant, who

observed that no society has yet formed a way of developing morality without reference to

religion.1204 In a legal context Lord Devlin, has noted that no society has yet solved the

problem of how to teach morality without religion.1205 My point in setting this out is not to

argue the polemic point over the virtue or otherwise of religion, but to anchor advancement

of religion as a purpose warranting favour upon its intangible but integral contribution to

public benefit. Further, it is to argue that that contribution is fundamentally rooted in its role

as a moral restraint upon licence so that people voluntarily choose to be good and do good

and this increases liberty. This is because if people willingly choose to be good and do good,

they do not need to be coerced not to do bad and therefore, there is less coercive law required

in that society. Less coercive law means more freedom. The advancement of religion is

therefore favoured in its own right, differently from any role religious organisations play in

Dealing with Disadvantage or in Encouraging Edification. This justification of favour rests

on the role that organisations that advance religion play in encouraging people to be good

and do good and this facilitates freedom.

If this proposition is accepted – that advancement of religion is favoured at least in part

because advancing religion facilitates freedom – it is the facilitating of freedom that is

favoured not just the advancement of religion. The next step in developing a cohesive

jurisprudence that explains a more general basis for favouring advancement of religion and

providing a basis for going beyond this Pemselian purpose is to anchor the basis for

favouring organisations that advance religion in one dimension of freedom recognized by

law; namely the freedom to associate.

1204 Will Durant and Ariel Durant, Rousseau and Revolution: A History of Civilization in France, England and Germany from 1756

and in the Remainder of Europe from 1716 to 1789, Story of Civilization (1967) 184.

1205 Patrick Devlin, The Enforcement of Morals (1965) 42.

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Now it might be that a common law country takes the view that the two are coterminous.

That is that the whole space for facilitating freedom is occupied exclusively by advancement

of religion. It might be thought, that without the centrality of piety and other-centredness

taught by (the Christian) religion that underpinned the common law, there would not be a

justification for extending benefit. But that need not be so. For present purposes, it is

enough to suggest that the concept of advancement of religion can be expanded to a broader

concept. If this is accepted then the following purposes defined as charitable purposes by the

Charities Act 2006 (Eng.&W) s 2(2) could be said to fall within this broader class.

1. the advancement of citizenship or community development; and

2. the advancement of human rights, conflict resolution or reconciliation or the

promotion of religious or racial harmony or equality and diversity.

As these two examples from England and Wales illustrate, common law countries do favour

organisations other than religious organisations that help build and sustain the infrastructure

of democracy. Political parties are also favoured.1206 Given this broader classification, I

contend that the simpler way to address the challenges discussed in Chapter II, regarding the

impossibility of rationally distinguishing political parties and religious charities, is to accept

that they both belong to this one broader class of organisations that facilitate freedom and in

so doing underpin and uphold the infrastructure of a democracy. It follows that the Benefit

law dimension could go beyond the advancement of religion to include a variety of civil

society organisations that facilitate freedom and this could include political parties.

This understanding of the basis for favour that is founded upon, but goes beyond, the favour

granted at common law to charitable trusts for the advancement of religion is enhanced by

1206 Richard Steinberg, 'Economic Theories of Nonprofit Organisations' in Walter W. Powell and Richard Steinberg (eds), The

Nonprofit Sector: A Research Handbook (2nd ed, 2006) 117, 123.

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returning to the Roman root meaning of religion. Etymologically, religion is that which

binds together. It has its root in ‘ligare’ from which the English word ligament is derived.1207

Given the inherently intangible nature of the public benefit associated with this class of

favour how are the indicia of public benefit to be assessed?1208 First it can be said, following

Cocks v Manners that organisations that are ‘adverse to the very foundation of all

religion’1209 or ‘subversive of all morality or religion’1210 are not entitled to favour. This

would seem foundational. Second, as the advancement of religion head of charitable

purpose does not have to demonstrate public benefit as tangibly as the advancement of

education so the public benefit of this head is more ephemeral. This is illustrated by

comparing the following cases. In Re Watson,1211 the foisting on the public of religious

views the value of which seemingly was ‘nil’, was a charitable purpose but in Re Pinion, the

‘foisting upon the public of [a] mass of junk’ was not.1212 It seems that the common law

freedom to articulate views which are ‘in a great measure incoherent and confused’,1213 is

something warranting favourable treatment provided there is some contribution to the social

and political infrastructure that sustains society in the common law country. Lord Herschell,

in particular, commented on the danger of endeavouring to find a consensus on demonstrated

public benefit in this context.1214 The number of people gathered into the relevant

association can be very small and yet, it would seem, there can be public benefit flowing

from the association provided the congregations disperses and ‘mix with their fellow citizens

1207 Oxford English Dictionary Online, Definition of Ligament Oxford English Dictionary Online <http://dictionary.oed.com> at 7

June 2008.

1208 This common law foundation must now be read in some jurisdictions as subject to the need to prove public benefit as in, for

example England and Wales where the Charities Act 2006 UK applies so as to no longer presume religion is for public benefit.

1209 In Re Watson, Decd Hobbs v Smith and Others [1973] 1 WLR 1472, 1473.

1210 Thornton v Howe (1862) 31 Beav. 14.

1211 [1973] 1 WLR 1472, 1478-1479.

1212 Lord Harman summarised the facts:

[Mr Pinion] sought to devote almost the whole of his not inconsiderable estate to a project designed to keep himself and his

family for all time before the public eye by allowing the public to view without cost his studio situate at 22a Pembridge

Villas, Notting Hill, intact with its entire contents.

Re Pinion [1965] Ch 85, 104.

1213 Thornton v Howe (1862) 31 Beav 14 , 20.

1214 See Pemsel’s case [1891] AC 531, 572 (Lord Herschell).

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in the world.’1215 Chief Justice Barwick explained why this was so when holding that the

publication of law reports was a charitable purpose. He held that the ‘public benefit lies in

fortifying the foundations because a society cannot exist as such if it is not based upon and

protected by justice under law: and nurtured by obedience to law.’1216

4. Reasons for Adopting Liberty, Equality and Fraternity

Three categories have now been proposed. I suggest that all of the charitable purposes cases

can be located in one or more of these categories. I have also suggested that whilst the

categories are extensions of the Pemselian purposes they are actually favoured because they

advance values accepted internationally, namely liberty, equality and fraternity. Before

closing this section I must address two concerns and explain why I have chosen

advancement of liberty, equality and fraternity as bases for favour.

First, in relation to liberty, if a very broad reading of advancement of religion is taken at

common law, is there not a risk of advancement of religion being a cloak to cover religious

terrorism? The answer is: no! because the common law already has a mechanism for dealing

with this problem. The common law is clear that the class of advancement of religion is not

open to associations that purport to be religious but are ‘adverse to the very foundation of all

religion’1217 or ‘subversive of all morality or religion’.1218 At a foundational level, there are

some fundamentals that almost all major religions affirm and which underpin civil society.

It would be a logical development of the common law to clarify that entitlement to favour

usually afforded to organisations that advance religion is dependent upon them not actually

adverse to liberty. Put in its simplest, the question of whether a religious or other association

Facilitates Freedom, and thus warrants entitlement to favour, could be determined by the

1215 Peter Luxton, The Law of Charities (2001) 179 citing Neville Estates Ltd v Madden [1962] Ch 832.

1216 Incorporated Council of Law Reporting of the State of Queensland v Federal Commisioner of Taxation (1971) CLR 659, 669;

[1972] ALR 127, 133. The references are set out in context below.

1217 In Re Watson, Decd Hobbs v Smith and Others [1973] 1 WLR 1472, 1473.

1218 Thornton v Howe (1862) 31 Beav. 14.

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extent to which its purposes are to encourage adherents to exercise self restraint and

obedience to the golden rule – love your neighbour as yourself1219 – or, if the organisation

does not subscribe to the Christian tradition, the secular or other religion equivalent.

Recalling the discussion in Chapter VII, the lack of public benefiting purpose does not affect

the rights of the organisations to exist. That is a different issue. It does, though, affect the

right to access favour. If the organisation does not have as its central purpose the

advancement of the golden rule and self restraint (or its secular or other religious equivalent)

then it must show how it otherwise facilitates the freedoms on which common law society

rests. For the purpose of accessing favour all religions are not equal. All religions are not

equal for not all encourage self restraint and the golden rule or a similar other regarding

principle. This brings me to the next point.

Second, is this approach to liberty not encouraging discrimination on the basis of religion –

something which the law is loathe to do? The answer to this also is no; as the basis for

discrimination is contribution to public benefit. Whether or not any organisation is entitled

to favour is based on contribution to public benefit and that is evidenced in the case of the

well established Christian religious traditions by a long history of social contribution across a

great diversity of common law jurisdictions. All religions are not equal for not all encourage

self restraint and the golden rule or a similar other regarding principle. Arguably that makes

it easier for traditional Christian organisations to evidence public benefit as there is a history

supported by case law. My point, though, is that other small or new associations should also

be considered as falling within this class of organisations and entitled to the same favour

provided they too, can demonstrate purposes that Facilitate Freedom by demonstrating that

their purpose is to encourage self restraint and adhere to the golden rule or a similar other

regarding principle. It will be recalled from Chapter I that I mentioned that my Christian

faith informed my approach and that my faith was fundamentally relational not institutional.

1219 The Holy Bible New International Version (1984) Matthew 22:38-40.

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Whilst I have proposed categories that I believe express the doctrine of charitable purpose

better, I cannot avoid the observation that those categories sit comfortably with my Christian

faith.

Why did I choose liberty, equality and fraternity? First and most importantly, when it came

to rearranging the charitable purpose cases on the jurisprudential table in the manner

suggested by Foucault, the evident similarity between these values as broader classes and the

existing heads in Pemsel’s case, stood out. The large fourth head of other purposes

beneficial to the community1220 seemed to both subsume all the others and cried out for

further segmentation. These factors pointed to the possibility that the heads in the Pemselian

partitioning ‘are but instances’1221 of these broader classes. Second, recalling the discussion

in Chapter VII of the capacity of the common law to be informed by the law of nations, the

values have broad international acceptance. The concepts of liberty, equality and fraternity

are set out in the twentieth century’s great charter of human rights.1222 These three values

have been adopted as three heads of the Charter of Fundamental Rights of the European

Union.1223 Some common law countries are signatories to that Charter and so it is easy in

their case to embrace these values. The Constitution of the Republic of South Africa gives

substantial expression to the sentiments.1224 Most other common law countries are

democracies and these values are at least consistent with democracy. It was adopted as the

banner of the ‘social religion’ of the Enlightenment ushered in by the French Revolution. It

was ultimately adopted into the Constitution of France in 1870 and remains in the

1220 See Pemsel’s case [1891] AC 531, 583 (Lord MacNaghten).

1221 Donoghue v Stevenson [1932] AC 562, 580, setting out a model for legal theory development.

1222 For the genesis of this framework see: Karel Vasak, ‘Human Rights: A Thirty-Year Struggle: the Sustained Efforts to give Force

of law to the Universal Declaration of Human Rights’ (1977) 30 UNESCO Courier 11.

1223 The six heads are: dignity, freedoms, equality, solidarity, citizens' rights, and justice.

http://en.wikipedia.org/wiki/Charter_of_Fundamental_Rights_of_the_European_Union.

1224 Constitution of the Republic of South Africa 1996 as adopted on 8 May 1996 and amended on 11 October 1996 by the

Constitutional Assembly One Law for One Nation Act 108 of 1996; s 7 (1) provides: ‘This Bill of Rights is a cornerstone of

democracy in South Africa. It enshrines the rights of all people in our country and affirms the democratic values of human dignity,

equality and freedom..’

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Constitution of France today.1225 Of these words, Pope John Paul II declared: ‘In the final

analysis, these are Christian ideas.’1226 After almost three hundred years, those three graffiti

words, those values, have become a framework for discussing the foundations of society in it

spolitical expression.1227 Second, it follows returning to case law, that if I wish to make a

case that the Pemselian partitioning categories ‘are but instances’1228 of public benefiting

purposes that people will voluntarily and altruistically pursue, that the values of liberty,

equality and fraternity – which seem to be implicit and which articulate values accepted by

both secular and sacred – should be made the explicit standards bearers. My third reason for

adopting these values is their long history in philosophy. Adopting the phrase ‘liberty,

equality, fraternity’ and bringing the ideas as individual concepts into jurisprudential

discourse, explicitly enriches the debate over favour with the debates over these values that

found the common law heritage. My fourth and final reason is that this approach builds a

bridge between the common law and civil tradition (between two cities) by suggesting how

the common law values can be expressed in civil language.

I. From Charities to Eleemosynary Corporations to Civil Society Organisations

The discussion in this chapter, to this point, has focused on purposes but those purposes must

find expression through legal entities. In this section the ancient concept of eleemosynary

corporations is identified as a foundation for civil society organisations in common law

countries. The common law has a long history of recognising not just purpose trusts but

other organisational forms by which purposes similar to charitable purposes are carried out.

The ancient concept of an eleemosynary corporation is an example of such an entity that

could be rediscovered in the twenty-first century and the concept of charitable purpose could

be extended to include a broader range of organisations than charities. The concept of

1225 Constitution of 4 October 1958, Article 2.

1226 Homily at Le Bourget (1 June 1980), 5: AAS 72 (1980), 720.

http://www.vatican.va/roman_curia/pontifical_councils/justpeace/documents/rc_pc_justpeace_doc_20060526_compendio-dott-

soc_en.html.

1227 See Leo N Tolstoy, War and Peace, Great Books (Louise and Aylmer Maude trans, first published 1889, 1992 ed), 682.

1228 Donoghue v Stevenson [1932] AC 562.

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charities as defined in the orthodox way leads back to the definition of an eleemosynary

corporation, provided by Blackstone but rejected by the Privy Council,1229 which ‘is not

confined to mere relief of poverty’ and brings a broader class of organisations into the

common law classification.1230 It will be recalled that Justice Isaacs cited Blackstone as

defining eleemosynary corporations, as organisations that

are constituted for the perpetual distribution of the free alms, or bounty, of the founder of them to

such persons as he has directed. Of this kind are all hospitals for the maintenance of the poor, sick,

and impotent; and all colleges, both in our universities and out of them: which colleges are

founded for two purposes; 1. For the promotion of piety and learning by proper regulations and

ordinances. 2. For imparting assistance to the members of those bodies, in order to enable them to

prosecute their devotion and studies with greater ease and assiduity. This, of course, is not

exhaustive, but is illustrative.1231

I do not adopt the title eleemosynary corporation, and the definition is ‘not exhaustive, but is

illustrative’, but if the discourse returns to this juncture it can build from it to a broad class of

civil society organisations and break out of the preoccupation with charities as defined with

reference to trusts in an orthodox way. Recalling the discussion in Chapter III the

foundations for this development are embedded in the common law prior to the Statute of

Elizabeth.

J. Conclusion

In summary, it is possible to read Pemsel’s case in such a way as to accept the division

between regulating and favouring. It is also possible to read Pemsel’s case as not

compelling a reading of the Preamble through the the Pemselian partitioning which became

the orthodox approach in the twentieth century. The consequence of that is that, in relation

1229 Chesterman v Federal Commissioner of Taxation [1926] AC 128.

1230 Chesterman v Federal Commissioner of Taxation [1926] AC 128.

1231 Chesterman v Federal Commissioner of Taxation (1923) 32 CLR 362, 384 (Isaacs J).

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to setting out a basis for entitlement to favour, charitable purposes are those purposes

pursued through a civil society organisation by which charitable goods are provided for

public benefit. Charitable goods supplied for public benefit are capable of being arranged on

a continuum. This enables difference of extent to be identified and helps with clarity.

Second, the nature of charitable goods can be reclassified. I propose as an example that

public benefit be reclassified into three categories:

a. private goods supplied to a person for the purposes of Dealing with

Disadvantage; thereby advancing equality;

b. quasi-public or public goods supplied to people for the purposes of Encouraging

Edification; thereby advancing fraternity; and

c. ligaments binding the polis together which Facilitate Freedom and thus advance

liberty.

I suggest that these three categories of advancement of equality, fraternity and liberty can be

utilised as bases for favour. I suggest that these classes can be more useful for

discriminating between those seeking entitlement to favourable treatment based on

voluntary, altruistic contributions of public benefit. It may well be that the groups are

subsegmented or placed into only one category or set out on one continuum. Finally, I

pointed to the ancient concept of eleemosynary corporations as an idea from which the

concept of civil society organisation could be developed.

K. Postscript

This chapter opened with reflections on the confusion between Charles Darnay and the

lawyer who gave his life for his client, Sydney Carton. Sydney Carton was a most unlikely

hero. He was described as more like a jackal than a lion.1232 His faults were legion but he

had a singular ability which is often found in lawyers: the capacity to distil from the

1232 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 90.

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disparate and sometimes conflicting evidence an explanation that is consistent with the case

being made. The next chapter is Sydney Carton’s. This and the earlier chapters, like witness

statements taken in preparation for court, provide the disparate and sometimes conflicting

evidence. In the next chapter, the essential information now fully extracted, is

parsimoniously organised into a useful alternative theory: a jurisprudence for civil society.

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IX A JURISPRUDENCE FOR CIVIL SOCIETY

A. Preamble

Chapter II began with the image of an old Dr Manette voluntarily imprisoned and cobbling

shoes. Notwithstanding this initial impression of a man past his prime and incapable of

substantial contribution, Dr Manette continued a central character in Dickens’s Tale for he

was, to use Dickens’s phrase, ‘recalled to life’.1233 He was led out of that little room into a

social context where there was significant foment against the way society and law were

constituted. Into that context, he sought to make a significant contribution for good as he

had historically and in the midst of controversy. Dr Manette remains a typology of

charitable purpose in common law societies. Led out of its imprisonment behind the

Pemselian partitioning, I suggest that charitable purpose, also, can be ‘recalled to life’.1234

Acknowledging there may be controversy and misunderstandings in its history, and yet also

because of that controversial and misundertood history, charitable purpose remains a potent

force for good. Like Dr Manette, charitable purpose, freed of the Pemselian partitioning,

can continue to play a central role in the development of this branch of the law that serves

social engagement and voluntary contribution in common law countries. This chapter

suggests how.

B. Introduction

This thesis began with an observation that a jurisprudence for civil society could be seen in

outline in the doctrine of charitable purpose and more distinctly, when contextualised in

those branches of law that regulate and favour altruism and voluntary contributions of public

benefit. This Chapter brings together the principles developed in each of the chapters

discussed and so completes the argument of this thesis: that Beyond Charity: Outlines of a

Jurisprudence for Civil Society provides a framework for reconciling, into cohesive

1233 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 5-54.

1234 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 14.

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jurisprudential architecture, the laws applying specifically to civil society organisations, not

just charities. Across the previous eight chapters the elements of that outline have been

identified. The overarching hypothesis set out in Chapter I has been tested. A way in which

the doctrine of charitable purpose could be released from the Pemselian partitioning and

developed by returning to the use of usual common law method has been proposed. A way

of developing the doctrine of charitable purpose into a jurisprudence for civil society has also

been suggested. Further, each of the subhypotheses have also been tested.

1. It is evident from the analysis in Chapter II, that there are at least some aspects

of the doctrine of charitable purpose that warrant development.

2. It is evident from Chapter III, that the doctrine of charitable purpose is capable

of development using the common law method. The ossification of the doctrine

of charitable purpose is due to failure to appropriately apply common law

methodology. This problem can be overcome by abandoning the ‘technical’,

one-dimensional concept of charitable purpose by which:

a. charities are defined, and by which the jurisdiction of the law of

charities is determined; and

b. by which entitlement to favour is determined,

in favour of a jurisdiction derived from common law principles yet determined

by reference to civil society organisations.

3. Across Chapters VII and VIII, it has been argued that the law applying to civil

society organisations has two dimensions which correspond to the two functions

performed by the doctrine of charitable purpose. They are: first, determining

jurisdiction for the application of laws, and second determining entitlement to

favours. This broader class of civil society organisations proposed here, is still

identified by reference to charitable purposes. The charitable purposes

referenced, though, are not technically defined and entitlement to favour is also

not technically defined.

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4. Across Chapters IV, V and VI, it has been shown that the charitable purposes by

which civil society organisations are defined, are in essence purposes which are:

a. altruistic;

b. for public benefit;

c. performed without coercion.

These charitable puposes differentiate civil society organisations from the three

other organisational forms and purposes, namely:

a. business, which is manifest in the pursuit of self-interest, that is, lack

of altruism;

b. government, which is characterised by coercion, that is, lack of

voluntariness or freedom; and

c. family, which is characterised by being private not public.

5. Across Chapters IV, V and VI, it has been argued that the charitable purposes by

which entitlement to favour is determined, are those purposes pursued through a

civil society organisation by which charitable goods are supplied for public

benefit. Charitable goods supplied for public benefit are usually supplied

through a civil society organisation, and can be set out on a continuum and

arranged into alternative categories. Three alternative categories of public

benefit proposed are:

a. private goods supplied to a person for the purposes of Dealing with

Disadvantage, thereby advancing equality;

b. quasi-public or public goods supplied to people for the purposes of

Encouraging Edification, thereby advancing fraternity; and

c. ligaments binding the polis together which Facilitate Freedom to

advance liberty.

The argument is, then, well advanced, but has not yet fully delivered on the

promise made in Chapter I, as the final subhypothesis has not been tested. It will

be recalled that the final subhypothesis was:

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6. These developments amount to the outline of an alternative jurisprudence which

warrants its own space in legal theory.

It remains then to offer outlines of a fully fledged jurisprudence for civil society. The

process is undertaken in a series of steps. First the one dimensional limitations in the

doctrine of charitable purpose are developed into a two dimensional space for laws that

regulate participation in civil society. This two dimensional space is then developed into

three dimensions to accommodate favour. A discussion of how ordinal, and possibly

cardinal, units of measure might be applied within the now completely constructed

framework follows. That leads to a discussion of seven ways in which this framework of a

jurisprudence for civil society is superior to the law of charities. Examples of the way the

framework could be applied judicially and in a policy context are offered to assist in

explaining its operation. Included in these examples are definitions of charitable purpose

and civil society organisation suitable for jurisprudential application. Difficulties envisioned

in implementing the framework are then discussed. It remains only to locate this fully

fledged alternative jurisprudence within the wider body of jurisprudential discourse. The

law of charities is presently positioned in legal theory as a subset of private law. I suggest

that if this alternative jurisprudence is accepted, there is a need to create space for this new

body of theory between the present division of laws into public and private. A ‘third’ space

in legal theory is proposed. Suggested paths for further research close the substantive

discussion in this chapter, which leads into concluding comments on the thesis as a whole.

C. One Dimension: Rediscovering the heart of charitable purpose

As the common law presently stands, charitable purpose has lost its heart. It is technically

defined and it is one dimensional – a civil society organisation either has a technically

defined charitable purpose, or it does not. The analysis is confined to nominal measurement:

to which class does an organisation belong, charitable or not charitable? This concept of

charitable purpose does not provide any way of distinguishing the regulating function of law

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from the favouring. It also does not provide broad, useful categories for distinguishing types

of charitable purpose further, or the extent to which the public must benefit.

In this new alternative jurisprudence, a common meaning of charitable purpose takes centre

stage, and not a technical definition. The heart of charitable purpose is rediscovered. This is

not achieved by abandoning the theory from which the technical meaning emerged, but

rather by returning to it, and fulfilling it more completely. Second, within the class of

charitable purposes there are presently the four classes: relief of poverty, advancement of

religion, advancement of education, and other purposes beneficial to the community, but

these classes (as presently limited) do not advance inquiry beyond ‘nominal’ measurement.

They simply assist in answering the broader question: charitable purpose or not? As

presently applied, they are not useful classes for differentiating between purposes. These

heads do point, however, to reasons why the common law grants favour to civil society

organisations. The challenge taken up from this one dimensional approach is to develop,

from within this jurisprudential space, differentiated classes that are helpful in distinguishing

between civil society organisations and their others, and also for differentiating within the

class of civil society organisations.

In summary then, the one dimensional mapping of the common law into charities and non-

charities, following the current orthodox approach of the law of charities, is not a particularly

useful categorisation for analytic purposes. It provides, though, a way of identifying

essence, it points to indicia of differentiation, and it suggests characteristics of classes for

more sophisticated subcategorisation. A better form of ‘measurement’ of the organisations

regulated or favoured as civil society organisations would be preferable. Toward that

outcome, the next two sections build from these core concepts.

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D. Two Dimensions: Rediscovering differentia

1. Introducing the Components of the Theory

In the orthodox understanding of the doctrine of charitable purpose, the regulating function

was not distinguished from the role of favouring.

The scope of the regulating dimension of the jurisprudence is all of the laws that enable and

regulate voluntary association for common purposes. It is the subject of this section. At the

centre of the regulating dimension of the jurisprudence is the formation, conduct, regulation

and dissolution of civil society organisations including (but not limited to) charities. It is

necessary to define the characteristics of civil society organisations so that it is clear which

organisations are within the class of organisations to be enabled or regulated, as the case may

be, and which are not. Clearly it is necessary to go beyond the Preamble and the Pemsel's

case categorisations for the definition, as the scope is broader than charities.

Over the last six chapters, it has been theorised that civil society organisations have as their

essence charitable purpose and as their ‘others’ business, government and family. Civil

society organisations are those organisations that manifest:

i. Altruism;

ii. Benefit for the public; and where

iii. Coercion is sufficiently absent for the association to be voluntary.

From the earlier chapters it was established that for the purposes of this jurisprudential

analysis, altruism, benefit of others and absence of coercion, are identified by a combination

of two of three factors. The three factors are:

1. The otherwise remoteness of the people associating (‘xenos’ – for convenience

labelled ‘X’);

2. The reason for associating is voluntarily to benefit others (‘why’ – for

convenience labelled ‘Y’); and

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3. The number of persons associating (for convenience labelled ‘Z’).

Altruism can be assessed by a combination of X and Y. When strangers associate to pursue

purposes which benefit persons other than themselves, altruism is present. The more

disparate the origins of the persons, and the more the purposes are for others’ benefit, the

greater the altruism. A civil society organisation is altruistic.

Benefit can be assessed by a combination of X and Z. If a large number of people, who

would otherwise be strangers, voluntarily associate then the association is public. If a small

number of people associate for private purposes (such as a family gathering to celebrate

Christmas) the association is private. A civil society organisation is public benefiting.

Coercion’s absence can be assessed by a combination of Y and Z. If the association is of a

large group of person but the reason for association is coerced, then the fundamental

character of voluntariness is missing. It is an arm of government. A civil society

organisation is a voluntary association.

These three dimensions – altruism, benefiting the public and absence of coercion – are set

out in relationship for the purpose of theory development. They are now discussed in order.

2. Altruism

In Chapter II and III, it was noted that the doctrine of charitable purpose set the boundary

between charities and their other by reference to the Preamble, and its spirit and intendment;

and in Chapter V, it was observed that other disciplines would look for more direct

evidences of altruism. It will be recalled from Chapter V that the United Nations Handbook

of National Accounting: Handbook on Non-Profit Institutions in the Systems of National

Accounts provides a method for valuing volunteer labour input, having regard to the two

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presently dominant methods of opportunity cost and market or replacement cost.1235 As gifts

of time and money are indicia of altruism and are capable of quantitative measurement they

could be utilised in law as indicia of charitable purpose. I contend that the time has come to

abandon reference to the spirit and intendment, of the Preamble. The reasons why the

Preamble continued to be adopted were discussed in Chapter III, but the conclusion to which

I came by the end of Chapters V and VIII, was that if there were ever legitimate reasons

requiring reference to the Preamble, those reasons were no longer an insurmountable

obstacle to an alternative, based solely on assessment of altruism and absence of coercion. It

will be recalled from Chapter V that there was a vast array of organisational forms that all

manifest altruistic purposes to differing extents. It was suggested there that the altruism,

manifest in the purposes of these organisations, was not the same. Some purposes were

more altruistic then others. It followed that organisations might be valued according to the

extent to which they manifested altruism. A manifestation of altruism could be, for example,

the source or application of resources being gifts of time or money. The ranking could be set

out diagrammatically in the figure below:

Figure 5 Altruism Continuum

Altruism Continuum

Self interest Charity

It was suggested that different courts, legislators or regulators may draw upon different

factors to inform them of how much, or how little, altruism was evident in a particular

purpose. As Lord Macnaghten observed: ‘Many people, I think, would consider a gift for

the support of a lifeboat a charitable gift,’ and ‘even a layman might take the same

favourable view of a gratuitous supply of pure water for the benefit of a crowded

1235 United Nations Department of Economic and Social Affairs Statistics Division, Handbook on Non-Profit Institutions in the System

of National Accounts (2003) 69. See also Matthias Benz, 'Not for the Profit, but for the Satisfaction? - Evidence on Worker Well-

Being in Non-Profit Firms' (2005) 58 Kyklos 155.

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neighbourhood’1236 but how are judges, legislators and regulators to decide? The problem is

how to measure, and possibly compare, altruism as an indicium of charitable purpose in

lifesaving organisations and aquaduct service providers. There was not a universally agreed

means of measurement of altruism. Factors that inform altruism and indicia of altruism

capable of quantitative measurement were, however, identified. It may therefore be possible

not only to rank but to quantitatively compare organisations according to the extent that they

manifest altruistic purposes. Reducing the measurement to a percentage or scale of zero to

100, a continuum suited to Anheier’s civil society diamond analysis emerges.1237

3. Benefit

It will be recalled from Chapters II and VIII that it is clear from the cases on charitable

purpose that manifestations of public benefit are necessary for charitable purpose to be

established and that the level of publicness in those manifestations varies within the four

heads of charitable purpose set out in Pemsel’s case. The level of publicness required for

advancement of religion and relief of poverty is significantly lower than that required to

establish a charitable purpose based on advancement of education or the more general fourth

head, other purposes beneficial to the community. It was also evident from Chapter IV that

scholarship over the last 30 years has theorised public benefit, refining it significantly

beyond the general proposition set out in the cases on charitable purposes. In Chapter IV it

was concluded that, as with altruism, there is evidence in the literature of methods of grading

or ranking publicness, and objective criteria by which publicness can be assessed. That

ranking turned upon the extent to which the purpose is to benefit the public as distinct from

being for private benefit. It was observed that between the completely public purposes

which lie at the heart of charitable trusts, and the purposes of civil society organisations that

exist entirely for the private benefit of families, lies a continuum of publicness. At one

extreme is the most public of trusts. At the other there are small private clubs. This

1236 Pemsel’s case [1891] AC 531, 584 (Lord Macnaghten).

1237 Helmut Anheier, Civil Society Measurement, Evaluation, Policy (2004) 32.

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continuum is conveniently labelled the ‘Benefit Continuum’ and can be represented

diagrammatically as follows:

Figure 6 Benefit Continuum

Benefit Continuum

Private benefit Charity

It was concluded that whilst different courts, legislators or regulators may draw upon

different factors to inform them of how much, or how little, public benefit must be evident to

belong to civil society, and different factors may be taken into account, or differently

weighed, in deciding the extent to which public benefit was evident, some quite sophisticated

criteria for assessing publicness have emerged. These indicia could significantly inform the

more general principles for legal theory development. It will be recalled from Chapter III,

that all charitable trusts were originally considered public trusts and if charitable trusts are

taken as the foundation typology of the voluntary public, organisational form for the supply

of goods (which they were), then charitable purpose resides at one extreme of the Benefit

continuum and at the other there are organisational forms which are purely for private

purposes. In Chapter VIII the ranking (and categorising) of public benefit was discussed in

some detail. This ranking provides a basis for legal theory to go beyond the general idea of

‘public’ to a continuum of publicness which may be ranked on a Benefit continuum.

4. Coercion

Charitable trusts, and more generally charitable organisations, are recognised by the

voluntariness of involvement and the voluntariness of supply of goods and services. In that

voluntariness, these organisations are distinguishable from government.1238 Through

government members of a community participate and contribute goods and services, but the

participation and contribution are obliged by the coercive force of law. If a citizen does not

1238 Central Bayside General Practice Association Limited v Commissioner of State Revenue (2006) 228 CLR 168, 181.

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comply with the rules of a society in a given jurisdiction, sanctions can be imposed and

compliance compelled. By contrast, in civil society organisations, particularly those

pursuing charitable purposes, participation is characterised by voluntariness. Similarly, a

citizen does not have freedom to choose whether or not to repair ’[b]ridges Portes Havens

Causwaies … Seabanks and Highewaies’1239 or contribute to poverty relief where the

government pursues these purposes – contributions are compellable by law and the transfer

of assets through taxation to government of those purposes is coerced. These differences

between civil society organisations and government were identified generally in Chapter VI

and explored in a legal context in Chapter VII.

As with the recognition of altruism and public benefit in civil society organisations, it was

noted that coercion is not one dimensional. Whilst all people and organisations in a

jurisdiction are subject to myriad laws of a general nature (such as the traffic control

regulations) there is a continuum of coercion. At one extreme, again, is the religious

charitable trust where the common law protects the right to voluntary involvement in the

pursuit of objects that advance religion. At the other extreme are civil society organisations

over which government exercises substantial control through setting of purposes by statute;

control over who is appointed to or removed from the board; and control over funding.

Examples of the latter include some professional bodies with responsibility for regulation of

whole sectors of society such as those overseeing the registration and conduct of various

professions. The continuum between these extremes again can be illustrated on a continuum

as follows:

Figure 7 Coercion Continuum

1239 Preamble.

Government

Coercion Continuum

Charity

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The philosophical contests over the extent to which citizens should be permitted to associate

free of the coercive influences of government are such that different courts, legislators and

regulators may draw upon different factors to inform them of how much, or how little,

communities should be allowed to self organise and self regulate through civil society

organisations. There may be debates over whether too much external regulation might be a

threat to the trust and charity which are the very essence of the sector itself.1240 Different

factors may be taken into account, or differently weighed, in deciding the extent to which

such freely chosen organisation must be for common good to be allowed to occur. There is

no dispute, though, that there is a coercion continuum between the religious freedom enjoyed

at common law and the complete control by government. At some point the level of

coercion is so great that the organisation is an arm of government.

E. Civil Society Space

Redefined as altruistic, public benefiting, voluntary associations, the legal space defined by

reference to charitable purpose could become coterminous with the definition of civil society

set out above. All of the continua have charitable purpose as a starting point and charity is

differentiated from three others. Those three others are: business (the first sector);

government (the second sector); and family (the fourth sector). Charities and related

organisations are included in the third sector. At some point on these lines, drawn between

organisations with charitable purposes and each of these others, a boundary is crossed from

civil society (as it is emerging), to one of these others.

1240 Michael Power, The Audit Society: Rituals of Verification (1999) 97-98.

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Figure 8 Charity Continua

When drawn in this way, the overlapping conceptions between charity and civil society are

even more apparent. Civil society is differentiated from business by altruism, from family

by benefits being public not private, and from government by its voluntariness, that is,

absence of coercion. At a certain point there is insufficient altruism, public benefit or

voluntariness to call the organisation a civil society organisation. When the concept of a

charitable purpose is expanded in the way proposed here, it reaches to the borders of civil

society. By joining the lines, then, a theoretical space is created which is the bounds of this

new jurisprudence for civil society which has charitable purpose – as expanded – at its

centre. That space looks, in a theoretical sense, like this:

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Figure 9 Charity Continua and Civil Society Space

The theoretical space will change shape according to the society. For example, in the

context of a small government state where voluntary philanthropic organisations are

constrained compared to business and family, but carry a larger share of responsibility for

the meeting of society’s needs, the space would be diagrammatically expressed as follows:

Figure 10 Defining Boundaries and Expanded Civil Society

In a society where the government, business and family dominate, the space would be

contracted on all sides and might be expressed as follows.

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Figure 11 Defining Boundaries and Constrained Civil Society

F. Introducing Dynamic Boundaries

Once a definition of the whole of civil society is set out in this way, it is apparent that there

will be contests over where each of these theoretical boundaries is to be drawn. In the

Scottish context, the common law concept of the public trust1241 might be rediscovered as a

progenitor of the common law civil society organisation in addition to, or separate from, the

creatures of statute in the country. In the United States there are hundreds of thousands of

organisations, including literary clubs, sporting organisations, unions, trade associations,

political organisations, churches, hospitals, condominium and neighbourhood associations

which are exempt from income tax, and yet their exempt status is not linked explicitly to

pursuing a common law, charitable purpose. There the link is to a list in a statute – the scope

is set by section 501(c)(3) of the Internal Revenue Code. The Australian,1242 New

1241 In that jurisdiction it is clear that public trusts are a broader class and charities are a subclass of that broader class and the effect of

the passsing of the Charities and Trustees Investment Act 2005 (Scotland) has been that the ranks of non-charitable public trusts

may well be increased by trusts which either are unable to satisfy the new public benefit requirement or choose not to register as a

charity under the legislation. See The Scottish Law Commission, Report on Variation and Termination of Trusts, Report No 206

(2007) Para 6.4. See also: Christine R. Barker, 'The Reform of Charity Law in Scotland' in Paul Bater, Frits Hondius and Penina

Kessler Lieber (eds), The Tax Treatment of NGOs: Legal, Ethical and Fiscal Frameworks for Promoting NGOs and their

Activities (2004) 33. 34.

1242 Income Tax Act 1997 (Cth), Division 30.

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Zealand1243 and United Kingdom1244 governments assess differently what is, and what is not,

to be favoured with donor preferred status, with a more direct focus on charitable purpose.

There are, though, many organisations that enjoy the same favours as charities but which are

not charities.1245 A notion of dynamic boundaries is needed to accommodate these

differences, for some common law countries may wish to include some organisations

thought to be at the margins, which others wish to exclude. Examples include trade

associations that might be considered business, small religious cults that might be considered

family, and some government-controlled professional associations. The contests over where

these boundaries lie are, though, reducible to three, so far as is relevant to the development

of this jurisprudence, and they are over:

1. the extent to which the purpose is altruistic, which is manifest in the contest over

where the boundary between the space for civil society should end and the space

for business begin; and

2. whether the association is private or public, which is manifest in the contested

boundary between civil society on the one hand and small private groups such as

family on the other; and

3. freedom, which is manifest in the contest over the boundary between the space

for civil society on the one hand and the extent of government intrusion into that

space on the other.

Diagrammatically, the space for civil society and consequently, its organisations, is then

better described in the more complex way below, with charitable purposes as the essence. On

each of the three continua of altruism, benefit and coercion, there is a contested point where

the space for civil society ceases and its other begins. That is the point of differentiation.

1243 Income Tax Act 2004 (NZ) s CW36.

1244 Income Tax Act 2007 c 3 (UK) ss 413-446.

1245 E.g. Income Tax Act 1997 (Cth) Division 50.

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Figure 12 Dynamic Boundaries for Civil Society Space

The law of charities marks out more than just a space. It also involves a basis for entitlement

to favour. It is now appropriate to introduce this next dimension into the framework.

G. Three Dimensions: Adding Depth by Favour

1. Introducing the Elements of Favour

The second dimension of this jurisprudence for civil society is that it sets out a framework

for analysing entitlement to favour. This framework goes beyond, but is built from, the

general proposition that the common law grants favour to civil society organisations that

manifest charitable purposes. The common law favours are, though, relatively modest

compared with the statutory, particularly taxation favours. The common law classification is

important, more as a gateway to statutory favours, than in its own right. I suggest that once

there is evidence of voluntariness and altruism it is the extent or nature of public benefit that

justifies favour. If extent is taken as the relevant criterion then benefit can be theorised as on

a continuum between private and public. Once the requisite level of publicness is attained

entitlement to favour follows. If the nature of the public benefit is the criterion, I propose

that the classes of charitable purposes – relief of poverty, advancement of religion,

advancement of education, and other purposes beneficial to the community – become the

guides to broader categories justifying favour. Within this alternative framework, favours

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are enjoyed by civil society organisations when they pursue charitable purposes by which

charitable goods are supplied for public benefit.

Charitable goods supplied for public benefit are:

a. private goods supplied to a person for the purposes of Dealing with

Disadvantage thereby advancing equality;

b. quasi-public or public goods supplied to people for the purposes of

Encouraging Edification thereby advancing fraternity; and

c. ligaments binding the polis which Facilitate Freedom to advance liberty.

2. Dealing with Disadvantage

When Dealing with Disadvantage, even the supply of private goods to individual persons at

a disadvantage is a supply of charitable good. Relief of poverty is the head of the doctrine of

charitable purpose from which this category is developed. The framework goes beyond

relief of poverty, though, to the supply of the goods that enable those at a disadvantage to

enjoy the basic rights and obligations of citizenship equally with other citizens. It advances

equality. The charitable purpose cases relating to poor relations and poor employees suggest

that as the law presently stands, when Dealing with Disadvantage, the goods supplied may

be private goods and the transferee could be a relative or an employee.1246 It is to the public

benefit for private goods to be supplied to a person at a disadvantage, such as bread to be

supplied to a starving person, whether or not the person is a relative. When dealing with

disadvantage to bring equality, a common good can be a private good supplied to an

individual person.

1246 Dingle v Turner [1972] 1 All ER 878, 888.

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3. Encouraging Edification

To be classified as a common good that Encourages Edification and thus, advances

fraternity, greater publicness in either the goods supplied, or the class of recipient for the

good or service, is required.1247 Advancement of education and the more general category of

other purposes beneficial to the community are the heads of the doctrine of charitable

purpose from which this category is developed. The framework goes beyond advancement of

education and other purposes beneficial to the public, though, to the supply of goods that are

at least quasi public and that encourage the edification of communities – or at least

subsections of communities which are sufficiently large to be considered public. The

provision of social goods, such as the arts and other cultural activities, are examples of this

kind of common good; as is the provision of physical infrastructure like bridges, sea banks,

public libraries and public museums. A greater level of public benefit is required when

pursuing purposes classed as Encouraging Edification than when pursuing purposes Dealing

with Disadvantage. To be entitled to favour for pursuing purposes that Encourage

Edification, as the law presently stands, a civil society organisation is likely to be required to

supply at least quasi-public goods and many people must enjoy the benefit. In the case of

this class of Encouraging Edification, the quasi-public good may be enjoyed by rich as well

as poor1248 (as the object is advancement of fraternity not equality). In economic terms,

arguably, to be common goods that Encourage Edification, the goods or services supplied

must be both non-rivalrous and non-excludable. When Encouraging Edification, a common

good must be for people, not just a person.

4. Facilitating Freedom

Facilitating Freedom is the basis for favour based on holding society together. This basis for

favour is founded upon, but goes beyond, the favour granted at common law to charitable

trusts for the advancement of religion. The charitable purpose cases make it clear that

1247 Gilmour v Coats [1949] AC 426, 449.

1248 Morice v Bishop of Durham (1805) 10 Ves Jr 522; Pemsel’s case [1891] AC 531.

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religion is to be favoured. The public benefit in the advancement of religion was self evident

in the much more homogenous social context in which the law of charities developed.

Religion plays a role in binding people together in society through encouraging self-restraint

and concern for others. This binding together voluntarily reduces the need for unity coerced

by government and thus Facilitates Freedom. This advances liberty. It follows from this

discussion, that advancement of religion need not be the only purpose entitled to favour. The

recent extension of charitable purpose by statute in England and Wales1249 to include

advancement of citizenship or community development, the advancement of human rights

and conflict resolution or reconciliation, can all be included within this aspect of this legal

universe. The definition of this class is a matter for each common law country to determine.

At its narrowest, the class could be confined to advancement of religion as it has been at

common law.1250 At its broadest, the class could be extended to include all civil society

organisations that are vehicles by which social cohesion is strengthened. The class would be

extended to include organisations pursuing political purposes and more generally, lobbying

and advocacy. This means that goods that are both rivalrous and non-rivalrous, excludable

and non-excludable could be within this class.

5. Summary of Third Dimension of Favour

In summary then, within the framework of this jurisprudence, favour is afforded to civil

society organisations that voluntarily provide charitable goods that advances equality,

fraternity or liberty. The good of the polis is the basis for favouring civil society

organisations with purposes that Facilitate Freedom. The benefiting of people is the basis for

Encouraging Edification in civil society organisations. When Dealing with Disadvantage is

the basis for favouring a civil society organisation, it is enough that the public benefit

1249 Charities Act 2006 (Eng.&W) c 50, s 2(2).

1250 Ian Ellis-Jones, Beyond the Scientology case: Towards a Better Definition of What Constitutes a Religion for Legal Purposes in

Australia Having Regard to the Salient Judicial Authorities from the United States of America as well as Important Non-Judicial

Authorities (PhD Thesis, Sydney University of Technology 2007).

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manifests in the supply of a good to a person who is at a disadvantage. This could be

summarised in a table.

Figure 13 Extent of Benefit Guide to Essential Characteristics

Extent of Benefit Rivalry Excludability

Dealing with

Disadvantage

Person Rivalrous Excludable

Encouraging

Edification

People Non-rivalrous Non-excludable

Facilitating Freedom polis (community as

a whole)

Both rivalrous and

non-rivalrous

Both excludable and

non-excludable

In the same way that concepts of measurement were applied to altruism, benefit and

coercion, measurement principles can be applied generally to public benefit or to the specific

expressions of equality, fraternity and liberty. So within this jurisprudence, these concepts

can be treated as dynamic, and the entitlement to favour will move with the values of the

particular common law country along a continuum of favour, if all are aggregated as public

benefit, or along continua of equality, fraternity and liberty. Laying each of these concepts

out on a continuum or continua, rather than confining the discourse within the rigid

Pemselian partitioning, sets out the architecture for a more expansive discussion.

It follows that because both ‘public’ and ‘benefit’ are contested concepts, different levels of

publicness are required for Dealing with Disadvantage, Encouraging Edification and

Facilitating Freedom. Further, different common law countries will place different weight,

at different times, on different forms of benefit. To return to the example of Gladstone,1251

he might confine the concept of charitable purpose only to the supply of charitable goods

that Deal with Disadvantage, but his government might allow such charitable goods to be

1251 Myles McGregor-Lowndes, 'Public/Private Accountability and the Tax Exempt Status of a Charitable Organisation' (Seminar

Paper, Social Policy Research Centre, University of New South Wales, 2003) citing W E Gladstone in 3 Hansard 170, 200

reported in The Financial Statements of 1853 (1860-63) 458.

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supplied to relatives. It is to be expected, then, that theorists will sometimes return to the

foundational variables for identifying civil society organisations and apply those variables to

valuing the supply of charitable good. It will be recalled that the foundational variables are:

1. the otherwise remoteness of the people associating (‘xenos’, for convenience

labelled ‘X’),

2. the motive for associating is voluntary to benefit others (‘why’ for

convenience labelled ‘Y’), and

3. the number of person associating ( for convenience labelled ‘Z’)

So I suggest that, as with charitable purpose, the definition of charitable goods will also be

informed by reference to a combination of ‘X’, ‘Y’ and ‘Z.’

As a matter of logic, entitlement to favour extended to civil society organisations cannot ever

be greater than the space allowed for civil society organisations. So in the context of this

jurisprudence, Benefit law can be considered as a third dimension built upon Association

law.1252 This entitlement to favour is also built upon, and developed from the conceptions of

charitable purpose, so it conceptually makes sense to set favour as a third dimension. It is

appropriate to express it diagrammatically as a third dimension in the form set out below.

1252 An important caveat which is beyond the scope of this thesis to explore is that businesses sometimes enjoy benefits similar to civil

society organisations For example, Export Expansion Grants Act 1978 (Cth).

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Figure 14 Civil Society Space and the Favour Dimension Pyramid

This basis for favour, built on a foundation of liberty, is ‘the surest basis on which to rest the

superstructure of social order’1253 and is ‘necessary to the advancement of civilisation and the

promotion of the welfare of society.’1254 It forms the basis of a robust jurisprudence to guide

legal reform and maintenance of social space where people voluntarily associate for purposes

of public benefit.

H. Moving Beyond ‘Nominal’ Measurement of Charitable Purpose

At the end of Chapter III it was noted that the analysis of charitable purpose was limited to

‘nominal’ measurement (charitable purpose or not). Moving beyond nominal measurement,

to at least ordinal ranking of altruism, public benefit and coercion, is clearly a possibility in

light of the discussion in chapters IV, V and VI. Authors such as Hansmann,1255 Atkinson1256

and James1257 have offered alternative classifications and rankings for division of the social

space occupied by civil society organisatons. Nominal measurement was proposed by

1253 Holland v Peck (1842) 37 NC 255, 258.

1254 People ex rel Seminary of Our Lady of Angels v Barber (1886) 3 NY St Rep 367 affirmed in (1887) 13 NE 936.

1255 Henry Hansmann, 'Reforming Nonprofit Corporation Law' (1981) 129 University of Pennsylvania Law Review 500, 503.

1256 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 565-66.

1257 Estelle James, 'The Nonprofit Sector in Developing Countries: The Case of Sri Lanka' in Estelle James (ed), The Nonprofit Sector

in International Perspective - Studies in Comparative Culture and Policy (1989) 289, 292.

Dealing

with

Disadvantage

Encouraging

Edification

Facilitating

Freedom

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Weisbrod for classification of these organisations, according to contributions to public

benefit, through a collectiveness index.1258 Colombo and Hall pointed to the use of money

received by way of donation in the context of deciding taxation favours for charities.1259

These are important insights that could inform common law development of the theoretical

analysis of the space occupied by civil society organisations, and entitlement to favours

associated with the provision of charitable goods in civil society. Without an overarching

framework that shows how these insights can be located in common law theory, however,

they remain of no practical use to a jurist seeking to give voice to the underlying

philosophical battles in a policy context. Adopting an alternative jurisprudence which

centres not on charities, but on civil society organisations, in the way proposed here,

facilitates adoption of these insights into common law theory development. This is possible

because, even at the highest level of ratio measurement, there is the possibility of objectively

and numerically measuring the variables with ratio measures such as money, time or hours.

If that is so, then each of the variables could be set out not just on a continuum, but on a

continuum which is quantitatively measured. The diagram below is an example:

Figure 15 Variables on a Continuum Quantitatively Measured

Whilst it is beyond the scope of this thesis to descend into policy, it should be noted that over

the thirty years since Weisbrod’s linear specifications, economists have developed quite

1258 Burton A Weisbrod, 'Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy' in Burton A Weisbrod (ed),

The Voluntary Nonprofit Sector (1977) 51, 73.

1259 John Colombo and Mark Hall, The Charitable Tax Exemption (1995) 217.

Variables on a Continuum

Charities Others

0 10 20 30 40 50 60 70 80 90 100

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sophisticated models of measurement.1260 These insights could inform jurists seeking to

develop policy if they could be set free from the present orthodox understanding, an

understanding which requires reasoning by analogy from a long list of purposes, some of

which are irrelevant (payment of sixteens), and some of which are inappropriate (marriage of

poor maids). The next section illustrates how this alternative jurisprudence could be applied

whilst remaining at the level of theory – without descending to policy.

I. A More Powerful Analytical Framework is Available for Legal Theorising

The jurisprudential framework developed in this thesis is arguably a superior analytical tool

for legal theorising than the present Pemselian partioning, because it does not just say what

the law is, it explains why it is the way it is. It demonstrates this superiority in at least seven

ways:

First, the jurisprudence proposed here goes beyond the law of charities in that it sets out a

way of bringing the laws specifically applying to civil society organisations into a coherent

framework. Taking charity in its popular sense as the starting point, it has been argued that

all laws specific to civil society either enable or regulate association, that is, they are laws

facilitating freedom of association or they are laws granting favour. As favour is built on

freedom to provide charitable goods voluntarily, the disparate regulating law and the

plethora of exceptions and exemptions to laws that apply to individuals and business may be

perceived not as exceptions, but as part of a way that a society favours voluntary, altruistic

contributions of public benefit.

Second, this jurisprudence adopts methodologically sound categorisations. In this alternative

jurisprudence the categories are clearly defined with explicit and recognisable differentia.

1260 See for examples Ottorino Chillemi and Gui Benedetto, 'Uninformed Customers and Nonprofit Organisations: Modelling 'Contract

Failure' Theory' (1991) 35 Economics Letters 5; and John Cullis, Philip Jones and Constantine Thanassoulas, 'Are charities

efficient 'firms'? A Preliminary Test of the UK Charitable Sector' (1984) 44 Public Choice 367, 369.

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By returning to classical definitional tools, it is possible to go beyond what has become the

‘orthodox’ reading of Pemsel’s case, to that case’s underlying jurisprudence and build, from

that underlying jurisprudence, a framework. This framework is not plagued by the problems

of method besetting the ‘orthodox’ reading of the Preamble and Pemsel’s case, and already

articulated in overruled authority.1261 This jurisprudence for civil society provides a way of

breaking free from the ‘spirit and intendment’ of the Preamble. This legal theory is thus

suitable for use in addressing twenty-first century issues, without violating the common law

commitment to precedent.

Third, this jurisprudence expands and yet marries the space of charitable purpose with civil

society in a way that enables and encourages law to be informed by, and to accommodate,

cross disciplinary analysis and debate.

Fourth, this jurisprudence accommodates diversity of worldviews through dynamic

boundaries where the law of charities is fixed and excludes or suppresses diverse voices. In

the philosophically, politically and religiously diverse multicultural circumstances of most

common law countries at the beginning of the twenty-first century, providing a framework

that can accommodate debate over changes, and setting out a framework in which those

changes can be implemented, are integral to providing access to justice.

Fifth, the jurisprudence provides a more just foundation for all civil society, by going beyond

advancement of religion, to freedom of association and beyond that in the context of favour

to advance liberty. In pluralist common law countries it may well be appropriate to favour

organisations that advance religion. But if it is not the religion itself but the contribution

religion makes that justifies favour then it is just for other organisations that make a similar

contribution to enjoy favour also.

1261 Chesterman v Federal Commissioner of Taxation (1923) 32 CLR 362.

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Sixth, the jurisprudential framework proposed provides either a measurable continuum of

public benefit to assess the extent of public benefit or categories that cover the field and

allow subsequent development by going beyond:

1. poverty relief to Dealing with Disadvantage to advance equality;

2. advancement of education and other purposes beneficial to the community to

Encouraging Edification to advance fraternity; and

3. advancement of religion to Facilitate Freedom.

Seventh, this proposed alternative jurisprudence for civil society redefines the theoretical

landscape so that charity, as it is commonly understood, reclaims the central position in

jurisprudential thought in this area of law. The release from the technical legal meaning of

charitable purpose makes the concepts more intelligible to lay participants in the sector.

J. Applying a Jurisprudence for Civil Society to Go Beyond Charities

1. Introduction

A theoretical contribution is not significant unless others can discern the implications of that

theory. So, whilst this work is entirely theoretical, in this section examples of how the

theory could be applied are provided. A narrow path is journeyed. Every endeavour is made

not to stray into the valley of policy, nor ascend the mountain of normative pronouncements.

In each illustration the focus is on options, not outcomes.

This thesis began with a chorus of dissatisfaction and frustration with the present

understanding of the doctrine of charitable purpose. It will be recalled that the

dissatisfaction and frustration is such that common law countries have had almost 30

inquiries into the law and regulation of charities over the last 60 years. It will be recalled,

also, that many jurisdictions have passed legislation defining or extending the common law

definition of charitable purpose. These legislative patches do not address, let alone resolve,

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the underlying problem associated with defining a charitable purpose. Jurists required to

distinguish charitable purposes from other purposes remain without explicit rationale for

differentiation. The first example suggests how the ideas set out in this thesis provide a basis

for identifiying the essence of charitable purpose and distinguishing it from non-charitable

purposes. It sets out a basis for developing theory to the next stage of a ‘coherent basis for

the law for civil society in general’.1262 Chapter II began with the realisation that ‘there are

no existing theories of civil society regulation on which the laws could be placed’.1263 In this

subsection, practical ways in which this theory could be used to solve these problems are

offered.

In the second example, problems with the concept of public benefit are discussed. It will be

recalled from Chapter II that the concept of public benefit was deeply problematised and

from Chapter I that Irish and Scottish legislation1264 provide recent, substantive attempts to

define public benefit in the context of charities. This second subsection maps a bridge

between the theory set out in this thesis and the practical challenges faced by judges and

regulators, in applying the concept of public benefit set out in that legislation.

A third example suggests ways in which the theory might be applied to resolve some of the

deeper challenges embedded in relying upon the common law doctrine of charitable purposes

as a gateway to favour under taxation legislation. This section addresses the more general

challenge, also identified in Chapter I, of articulating principles to regulate access to favours

enjoyed by civil society organisations under taxation laws across the common law world.

1262 Mark Freedland, 'Charity Law and the Public/Private Distinction' in Charles Mitchell and Susan Moody (eds), Foundations of

Charity (2000) 111, 123.

1263 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 44B

(citations removed).

1264 Charites Act 2008 (NI) s 3; Charities and Trustees Investment Act 2005 (Scotland) 10, s 8.

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The final subsection points to the discussion across chapters IV, V and VI as examples of

how the philosophical contests can inform policy debate.

2. Resolving Foundational Puzzles and Identifying Genus and Form

It will be recalled from Chapter I that the central puzzle is how to define the relevant

organisations. In extending the definition of charitable purpose to the boundaries of civil

society, and by defining civil society in a dynamic way, the thesis provides definitions that

may be formulated classically. Such a definition of charitable purpose formulated in a

classical way might be phrased as:

A charitable purpose is a purpose pursued voluntarily, altruistically and for public

benefit. A business, government or family purpose is not a charitable purpose.

An implication of this for judicial officers is that the alternative jurisprudence requested by

Justice Kirby and required by the Australian High Court before change would be

contemplated, has been framed.1265 An argument has been advanced in this thesis as to how

the common law doctrine of charitable purpose could be developed beyond the Pemselian

purposes.

Defining charitable purpose is not, however, enough. The threshold central puzzle is how to

define the relevant organisations that make up civil society. So, of equal if not greater

importance, is the need for a comprehensive definition of the organisations that make up the

sector as a whole. Such a definition, formulated in a classical way, might be as follows:

1265 Central Bayside General Practice Association Limited v Commissioner of State Revenue (2006) 229 ALR 1. See comments of the

majority (Gleeson CJ, Callinan, Heydon and Crennan JJ) at footnote 6 and 15-37 (Kirby J). The Australian High Court stands

alone in this request. The Canadian Supreme Court has eschewed responsibility for this development declaring that, ‘wholesale

reform [as distinct from] incremental change… is best left to Parliament. … [and] substantial change in the definition of charity

must come from the legislature rather than the courts.’ See AYSA Amateur Youth Soccer Association v Canada (Revenue Agency)

2007 SCC 42 [44] (Rothstein J delivering the judgment of McLachlin CJ, Bastarache, Binnie, LeBel, Deschamps, Fish, Charron

and Rothstein JJ).

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A civil society organisation is an organisation that pursues purposes voluntarily,

altruistically and for public benefit. Civil society organisations are distinguished

from government organisations by their voluntariness, from businesses by

participation being for altruistic purposes, and from family and other private groups

by the purposes being public.

An implication of this definition of civil society organisations is that legislators such as the

Australian Senate, seeking to develop law for the sector as a whole,1266 has a comprehensive

definition of the organisations making up the sector as a whole. A second implication is that

it provides a theoretical basis for the extensions that have already occurred. Take the

extension of charitable purpose to include ‘open and non discriminatory self help groups’ as

an example.1267 It will be recalled from Chapter II that the eighth recommendation of the

Australian Charities Definition Inquiry was ‘that self-help groups which have open and non-

discriminatory membership be regarded as having met the public benefit test’.1268 The

theoretical challenge was how such an apparently private purpose could be theorised as

being charitable? Participation in such a group is voluntary and altruistic, but the challenge

is to identify the public benefit as distinct from private benefit. Within the context of this

discussion it is evident that the public benefit is in Dealing with Disadvantage. The

legislation actually adopts this concept and limits the purpose to ‘assisting individuals

affected by …a particular disadvantage or discrimination’.1269 This theory provides a

rationale.

1266 Australia Parliament Senate, 'Inquiry into the Disclosure Regimes for Charities and Not-For-Profit Organisations' (2008).

1267 Extension of Charitable Purpose Act 2004 (Cth) ss 4, 5.

1268 Inquiry into the Definition of Charities and Related Organisations Report of the Inquiry into the Definition of Charities and

Related Organisations (2001) 14

1269 Extension of Charitable Purpose Act 2004 (Cth) s 5(2).

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The dynamic nature of these definitions of charitable purpose and civil society organisations,

informed by the variable continua of altruism, benefit and coercion, (the elements of

charitable purpose) permit different jurisdictions to draw different, but nevertheless quite

bright lines between what is a civil society organisation and what is not. Take the area of

coercion as an example. Courts in one jurisdiction might determine that any control of an

organisation by government, such as a veto right with respect to appointment of a board

member, might take the organisation out of the class of civil society organisations into the

class of government organisations. Courts in another jurisdiction might consider an

organisation to be a government organisation only if the majority of the board were

appointed by government. A third might look only to the capacity of government to control

membership. In each case, the line between what is a civil society organisation and what is a

government organisation is clear, but different. Where the boundary line is drawn will

almost certainly be different from one common law country to another, but what is critical

for theory development is that the boundary can be drawn and in different places having

regard to the extent of coercion.

It is possible to push the theory much further, however, by having regard to the measurability

of the variables that inform the concept of charitable purpose. If altruism, benefit and

coercion are measurable, and measured, and then the inter-relation of these variables is

considered, conceptions of both charitable purpose and civil society organisation can be

lifted to new levels of precision. The remainder of this subsection suggests how.

Assume that altruism drives the pursuit of an ostensibly charitable purpose and can be

measured as the percentage of the organisation's income that is sourced from donations.

Assume that donations come in only two forms, money and time, and that the value of time

can be converted to money. It is possible, then, to have a value of between zero and 100 for

altruism. Call this value ‘A’. If the pursuit of a charitable purpose is evidenced by altruism,

and altruism is measured only by the supply side of an organisation’s income and is further

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limited only to donations, as a percentage of income, then a way of distinguishing genuine

civil society organisations from for-profits in disguise is apparent.1270 If there is no evidence

of altruistic purpose then the organisation is a business. Most civil society organisations

would have a voluntary board, at least, and usually some additional voluntary donations of

labour. A voluntary board coupled, with a non-distribution constraint in the organisation’s

constituent documents, may be sufficient evidence of altruism for some, even most courts,

legislatures and regulators to conclude that there is sufficient altruism evident for an

organisation to be a civil society organisation.1271 That might not always, however, be the

case.

This jurisprudence enables calculation of an altruism value to assist more precise analysis of

purpose. Once a value for altruism has been calculated in the manner suggested above, then

a fixed amount of altruism evidenced by donations as a percentage of total income could be

set as a prerequisite in a manner similar to that proposed by Columbo and Hall.1272 For

example, for an organisation to be a civil society organisation, not less than five percent, of

its income must be sourced from donations. If less than five percent of the income of an

organisation is from donations then the organisation could be deemed to be a business, as it

would lack sufficient evidence of altruism. A similar approach can be taken with public

benefit and coercion. Public benefit is discussed next.

Assume that pursuit of public benefiting purposes can be measured as a percentage of the

organisation's income that is applied to delivering charitable goods. Again, assume that

charitable goods are provided in only two forms, money and time, and that the value of time

1270 For simplicity in theory development the discussion is confined to income but it could be extended to include capital

contributions. This extension could be important in practice because, as Atkinson has observed, one of the fundamental indicia of

a civil society organisation is that the initial capital was donated. See Rob Atkinson, 'Nonprofit Symposium: Theories of the

Federal Income Tax Exemption for Charities: Thesis, Antithesis, and Syntheses' (1997) 27 Stetson Law Review 395, 523.

1271 Rob Atkinson, 'Nonprofit Symposium: Theories of the Federal Income Tax Exemption for Charities: Thesis, Antithesis, and

Syntheses' (1997) 27 Stetson Law Review 395, 523.

1272 John Colombo and Mark Hall, The Charitable Tax Exemption (1995) 217.

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can be converted to money. It is possible, then, to have a value of between zero and 100 for

assessing levels of public benefit. As with altruism, discussed above, organisations that did

not evidence a satisfactory level of public benefiting purpose would be excluded from the

class of civil society organisations. At the simplest level only minor public benefit might be

required. For example, in the context of a religious organisation, courts, legislatures and

regulators may conclude that there is sufficient public benefit evident for the organisation to

be a civil society organisation if it provides services of public worship available to the

community as a whole and the occasional wedding or funeral for anyone in the polis. That

might not always, however, be the case.

This jurisprudence enables calculation of a public benefit value of a purpose to assist more

precise analysis. At the simplest level a fixed amount of income, perhaps ten percent, might

need to be applied for a purpose to evidence public benefit. Determining how much income

is applied for public benefit might be achieved in a number of ways. Atkinson’s idea of

requiring evidence that the funds applied have been ‘socialised’ contains possibilities.1273 In

the context of a Christian religious congregation, a socialising calculation of the value of

time (lay and clergy) and the amount of money applied for the benefit of non-members as a

percentage of total income in a particular period could be made. For example, if less than

five percent of total income was ‘socialised’ for the benefit of the polis by application to

non-members then it might be determined that the religious organisation should be treated as

a private club, and a part of the class called ‘family’ in this thesis, and not a civil society

organisation.

It will also be recalled that public benefit can be theorised as divided into categories of goods

that Deal with Disadvantage, Encourage Edification, or Facilitate Freedom. Different levels

of public benefit might be required for these different categories of public benefiting

1273 Rob Atkinson, 'Altruism in Nonprofit Organisations' (1990) 31 Boston College Law Review 501, 565-566.

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purpose. For example, an organisation that has the purpose of Dealing with Disadvantage by

the supply of private goods, such as bread to persons, might be excluded from the class of

civil society organisation if for example more than five percent of the private goods supplied

were provided to members or were sold at fair market value. This is because both supply to

members and sales at fair market value are indicia of private benefiting purposes. In a

context where the good supplied is essentially private a high standard of publicness might be

set. For quasi-public goods, the threshold percentage of members benefiting or fair market

value sales might be lifted while still allowing for the good to be ‘socialised’. In addition to

the requirement of ‘socialisation’ of funds applied by an organisation, courts, legislatures and

regulators could require a minimum number of persons to be in financial and voting

membership of an organisation for any good applied for the benefit of members generally to

be socialised. For example, the Australia Income Tax legislation requires, among other

things, that if an environmental organisation is a corporation and enjoys donor preferred

status it must maintain no fewer than 50 individuals who are financial and voting

members.1274 For public goods such as a free-to-air radio station it might be enough that it

provides the service in compliance with relevant laws to the polis generally.

Coercion as the reason for pursuit of a purpose can be similarly theorised as a continuum

and the example discussed at the outset of this section dealing with the concept of dynamic

boundaries illustrated this. For simplicity, because in practice coercion is often perceived as

either-or, and to progress the discussion, assume that an organisation is either controlled or

not controlled by government.1275 If government controls the organisation, it would have a

coercion value of zero. If government cannot control the organisation at all it would a

coercion value of 100. Call this value ‘C’.

1274 Income Tax Assessment Act 1997 (Cth) s 30-260.

1275 The law of common law countries provides sometimes quite sophisticated methods of assessing control and these could inform

this discussion e.g. Corporations Act 2001(Cth) s.50AA.

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Once altruism, benefit and coercion all have values of between zero and 100 it is possible not

just to assess the variables that evidence a civil society organisation but also to bring these

together to assess civil society organisations as a whole in the manner proposed by

Anheier.1276 Using the variables above, if the value of A x B x C is zero, then the

organisation is government controlled and not a civil society organisation. On the other

hand, if the value of A x B x C is not zero, then the organisation could be a civil society

organisation. Whether or not the organisation is a civil society organisation would depend

upon where the numeric ‘line’ was drawn between civil society organisations on the one

hand and businesses and family on the other. There could be one number to assess charitable

purpose and there could be a minimum number applied to the source of funds to assess

altruism, or to the application of funds to assess public benefit. Below these numbers an

organisation is not a civil society organisation. This would be because there is insufficient

altruism, or public benefit and consequently there is insufficient charitable purpose. How

could such numbers be calculated?

To apply these principles a jurist could take the financial statements of a civil society

organisation. From the financial statements of any well managed civil society organisation

with adequate recording systems it would be possible to calculate the source and application

of funds. From these records it would usually be possible to identify what percentage of

income is sourced from donations. Also from these records, it would be possible to assess

the application of the funds and, using criteria discussed in this thesis, the extent to which

funds were applied to private purposes could be calculated. For these purposes some courts,

legislatures and regulators might be satisfied with that level of discussion and fixing these

variables in the way suggested so far.

1276 See discussion at pages 252 to 255.

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It is possible, though, to drill deeper and in particular contexts that may be necessary. It will

be recalled that informing these variables of altruism, benefit and coercion is another layer of

variables:

1. the otherwise remoteness of the people associating (X),

2. the motive for associating being voluntary to benefit others (Y), and

3. the number of persons associating ( Z).

Civil society organisations could be even more precisely defined having regard to these

deeper variables in assessing charitable purpose, if necessary. This may be particularly

helpful in developing criteria to assess the source and application of funds for the pursuit of a

particular charitable purpose. For example, no evidence of remoteness might be required if a

good supplied is a public good but at least some remoteness might be required if the good

supplied is a private good. Thus the inclusion of self help groups within the class of charities

in Australia required that the group be open and non-discriminatory.1277 This requirement

would not be needed for a public radio station as any person with access to the frequency

could listen.

Exceptions are readily identifiable for all of the examples set out in this subsection. There is

a need for sophisticated development of the measurement of charitable purpose. Some

organisations evidence little or no altruism and are entirely commercially funded but the

extent of their public benefiting and the absence of coercion clearly establish them as

charitable. Some organisations evidence low levels of altruism and public benefit but are

clearly not government, business or family so must, by definition, be civil society

organisations. It is a matter for the relevant court, legislature or regulator to decide where

the lines are. This could be informed by developments in the doctrine of private benefit and

the way in which section 501(c)(3) of the Internal Revenue Code of the United States has

1277 Extension of Charitable Purpose Act 2004 (Cth) ss 4-5.

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been applied.1278 It is beyond the scope of this discussion to explore these further. The point

is that this theory provides principles for the development of much more sophisticated tools

for analysis than the nominative charitable-purpose-or-not approach of the present law of

charities framework.

3. Practical Guidance for Determining Public Benefit

Public benefit is a concept central to charitable purpose but, as Chapter II illustrated, is

deeply problematic. It will be recalled from Chapter I that an approach taken in the United

Kingdom is to require public benefit to be proved. Both Scotland and Ireland have

legislation that sets out the criteria for assessment and the Charities Commission discharges

this function for England and Wales.1279 The Irish legislation, which substantially follows

the Scottish model, provides a public benefit test. The relevant section provides:

The “public benefit” test

3.—(1) This section applies in connection with the requirement in section 2(1)(b) that a purpose

falling within section 2(2) must be for the public benefit if it is to be a charitable

purpose.

(2) In determining whether that requirement is satisfied in relation to any such purpose,

it is not to be presumed that a purpose of a particular description is for the public benefit.

(3) In determining whether an institution provides or intends to provide public benefit,

regard must be had to—

(a) how any—

(i) benefit gained or likely to be gained by members of the institution

or any other persons (other than as members of the public), and

(ii) detriment incurred or likely to be incurred by the public,

1278 John Colombo, 'In Search of Private Benefit' (2006) 58(5) Florida Law Review 1063, 1064-1080.

1279 Charites Act 2008 (NI) s 3; Charities and Trustees Investment Act 2005 (Scotland) 10, s 8; Charities Act 2006 (Eng.&W) s 4. The

Charities Commission released further guidelines in December 2008. See The Charity Commission for England and Wales,

Charities and Public Benefit: The Charity Commission's General Guidance on Public Benefit (2008).

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in consequence of the institution exercising its functions compares

with the benefit gained or likely to be gained by the public in that

consequence, and

(b) where benefit is, or is likely to be, provided to a section of the public only,

whether any condition on obtaining that benefit (including any charge or fee) is

unduly restrictive. 1280

When both the Irish and Scottish Explanatory Memoranda are referred to for guidance there

is nothing of substance to assist the judges or regulators in deciding how this duty is to be

discharged.1281 The factors to be taken into account are simply listed. It will therefore be

necessary for judicial officers and regulators to develop criteria by which they discriminate

between organisations that are charities and those that are not. The way in which public

benefit is theorised in this thesis could assist in providing criteria for assessing public benefit

in two principal ways.

First, the notion of a continuum of public benefit might assist. In deciding whether or not an

organisation provides or intends to provide public benefit the judge or regulator is required

to undertake a weighing of factors. This is not explicated as a continuum, but the concept of

a continuum is implicit or can be drawn from the wording of the section. In weighing

publicness of the benefit when considering subsection (a) the factors to which regard must be

had may be summarised as:

1. remoteness (X), informed by whether or not the persons benefiting are members;

and,

2. the number of persons benefiting (Z) measured in part by the extent to which the

numbers benefiting may be described as the public as a whole or only a subsection

1280 Charities Act 2008 (NI) s 3. The Scottish legislaiton is in similar terms. See Charities and Trustees Investment Act 2005

(Scotland) 10, s 8.

1281 See Explanatory Memorandum to Charities Act 2008 (NI) and Expanatory Memorandum Charities and Trustees Investment Act

2005 (Scotland).

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of it.1282

Second, when the factors set out in subsection (b) are considered there will be challenges for

judges and regulators, when assessing fees or charges, to find a basis for discriminating

between appropriate and inappropriate fees. In this context the distinction between public,

quasi-public and private goods utilised in economics and applied within this alternative

jurisprudence provides another useful tool. This thesis provides a bridge for the introduction

of those economic concepts into the doctrine of charitable purpose. The categories of

Dealing with Disadvantage to advance equality for persons, Encouraging Edification to

advance fraternity for people and Facilitating Freedom to advance liberty for the polis

provide useful categories to assist in this discriminatory analysis. 1283 The table below

illustrates this.

Figure 16 Type of Charitable Goods and Public Benefit Guide

Column 1

Type of

Charitable Good

Column 2

Extent of

Benefit

Column 3

Requirement to be of public

benefit

Column 4

Example of evidence of

public benefit purpose

Private good Person Deals with Disadvantage to

advance equality

Providing bread to

starving persons.

Quasi-public good People Encourages Edification to

advance fraternity

Providing free drawing

classes for children.

Public good polis

(community as a

whole)

Facilitate Freedom to advance

liberty

Providing free-to-air

radio

In Ireland or Scotland, the judge or regulator must inquire as to the extent of the benefit.

Here the division into three classes may be particularly useful. For example, the judge or

regulator might utilise the division set out in Column 2 to ascertain whether persons, people

or the polis benefit. In that context having different classes such as those listed in column 3

1282 Notably motive (Y) is not included.

1283 The Charity Commission for England and Wales has stated that the test is ‘whether or not there is sufficient opportunity to benefit

for those who cannot afford to pay’: The Charity Commission for England and Wales, Public Benefit and Fee-charging (2008) 3-5

and Annex C.

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may assist. As case law develops the examples in Column 4 would become otiose but in the

short term may guide classification as to whether or not the purposes pursued benefit the

public.

In the context of private goods such as the supply of food to persons clearly the person

receiving it would have to be at a disadvantage denying them equality. A much broader

category of people would need to benefit if the good is a quasi-public good that advances

fraternity such as education in the form of free drawing classes for children. Recalling the

discussion in relation to liberty in Chapters II and VIII, the polis could be benefitted by the

public good of a free-to-air radio station including one conducted by religious organisations,

ethical societies, or any community association. This could be so even though the

membership of the civil society organisation Facilitiating Freedom is quite small and

ostensibly the benefit is enjoyed by a relatively small number of persons who are

predominantly members. The utilisation of the measurement of benefit and, importantly

‘detriment’ (the Irish legislation term) or ‘disbenefit’ (the Scottish legislation word) or ‘any

detriment or harm’ (the UK Charity Commission)1284 discussed earlier, might also inform

consideration of these issues having regard to issues raised by Atkinson, and having regard

to the Bob Jones University case from the United States.1285

4. Applying A Jurisprudence for Civil Society to Income-Tax Issues

The problem of distinguishing public from private benefit, discussed in the last section, often

forms part of a broader concern which centres on the level of favour granted to charities

under income taxation legislation. This broader issue, identified in Chapter I, has troubled

jurists across the centuries. The issue remains the same: from Lord Bramwell’s colourful

dissenting conclusion in Pemsel’s case in 1891:

1284 The Charity Commission for England and Wales, Charities and Public Benefit: The Charity Commission's General Guidance on

Public Benefit (2008).

1285 Bob Jones University v United States, 461 US 574, 591 (1983) discussed in Rob Atkinson, 'Nonprofit Symposium: Theories of the

Federal Income Tax Exemption for Charities: Thesis, Antithesis, and Syntheses' (1997) 27 Stetson Law Review 395, 426.

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... the State will be a subscriber of £17 a year to supporting, maintaining, and subsidising "the

missionary establishment among heathen nations of the Protestant Episcopal Church known by

the name of the Unitas Fratrum, or United Brethren." Whether this was meant by the authors of

the Income Tax Act, if it was, why, and whether it will be continued, are questions not before

us.1286

to Justice Kirby’s like dissent in December 2008 that:

Although the Parliament may provide specific exemptions, as a generally applicable principle it is

important to spare general taxpayers from the obligation to pay income tax effectively to support

or underwrite the activities of religious (and also political) organisations with which they

disagree.1287

The issue is that there are differring opinions on the extent to which the pursuit of charitable

purposes should entitle an organisation to favourable treatment under the particular income

tax laws of the relevant common law country. Put generally, it will be recalled from Chapter

I, the question is: how can income tax favours extended to charities be justified?

This section does not seek to answer the question but to illustrate how the theory, developed

in this thesis, can be utilised to justify or deny favours in a much more sophisticated way

than the simple charitable-or-not paradigm presently utilised by the common law.

Recalling the measurement theory discussed at the end of Chapter III, charitable purpose

does not have to be confined to simple nominal measurement. For example, if charitable

purpose is ranked on a scale of zero to 100, and theorists value entitlement to income tax

favours on a similar scale, then it could be argued that the greater the charitable purpose

1286 Pemsel’s case [1891] AC 531, 568 (Bramwell LJ).

1287 Commissioner of Taxation v Word Investments Limited (2008) 236 CLR 204, 248 (Kirby J dissenting).

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value, the greater the claim to entitlement to favour. The graph set out below illustrates this

point.

Figure 17 Tax Exemptions and Charitable Purpose Continuum

It is possible to progress the framework further. Entitlement to favour is linked to the supply

of charitable goods. Charitable goods have both a source and an application dimension. As

to source, charitable goods can be altruistically and voluntarily supplied. As to application,

charitable goods can be applied for public benefit. These indicia of charitable purpose

provide not only a mechanism justifying favour but also tools for precluding from favour.

The criteria can be quite simple. Favour is justified if it is extended to civil society

organisations that pursue purposes that facilitate altruistic and voluntary supply of charitable

goods that are applied for public benefit. Each jurisdiction can decide where to draw the

line in relation to the different forms of favour such as tax exemption and donor preferred

status. The principle is relatively clear, however, and the tools for assessing the extent of

charitable purpose elucidated above are capable of application in this context. There are two

significant implications of this for policy development.

First, access to favour should be related directly to the criteria that justify favour – not the

Pemselian purposes. It follows that there is a need to distinguish between the extent or

Charitable purpose continuum

Partially taxed

(Mutuals)

pure charity self interest

Taxed

Tax exempt

Donor favoured

Grants recipient

Favour co

ntinuum

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nature of contributions to public benefit. This thesis provides tools for that project which

has so confounded the orthodox understanding of the doctrine of charitable purpose. As the

common law is presently framed, a charitable trust for promulgation of seemingly useless

religious writings, such as was the case in Thornton v Howe1288

will enjoy all the same

favours as any other charitable trust. This thesis separates conceptually the freedom of

persons to form and conduct a charitable trust from that trust’s entitlement to enjoy favours.

A common law country adopting this alternative jurisprudence, that separates entitlement to

exist from favour, may chose to favour or not favour a trust for promulgation of seemingly

useless religious writings without denying the underlying charitable nature of the trust.

Second, building from the first point made in this section, the concept of dynamic boundaries

provides opportunities for significantly greater flexibility, particularly to legislators and

regulators wishing to subsegment charities. For example, as a matter of policy a common

law country’s government could choose to extend or reduce the purposes linked to favour in

very precise ways over very precise periods of time. Significant complexity in the

implementation of these options can be foreseen, but the point for policy development is that

when the entitlement to favour is shifted from charitable purpose per se to the extent or

nature of public benefit, policymakers are given greater flexibility with the concept of

charitable purpose than has hitherto been the case. This flexibility is increased because

within this jurisprudence the boundary between public benefiting purposes enjoying favour

and public benefiting purposes not enjoying favour is dynamic.

In setting out these observations my purpose is not to argue for a particular form of taxation

of charities or more generally civil society organisations. My purpose is to illustrate how,

concerns regarding taxation policy related to civil society organisations in general and

1288 (1862) 31 Beav. 14.

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charities in particular, could be addressed by focusing on concepts of altruism, voluntarism

and public benefit as indicia of charitable purpose.

5. Applying the Principles in Foundational Philosophical Contests

Finally, but equally importantly, there is architecture for policy debate in which the contested

philosophical a priori assumptions find voice. This occurs through the debates regarding the

contested variables – altruism, benefit and coercion. Across Chapters IV, V and VI ideas as

to how the debate process might evolve from contested philosophical foundations was

canvassed. Importantly for policy development, there is a way forward. The discussions

across chapters IV, V and VI suggest directions but not answers.

Each of the subject areas of contested a priori assumptions - altruism, benefit and coercion -

have been set out for theoretical discussion as on continua where the philosophical contest

can be expressed. The exploration has led to the possiblity of measurement of the variables

at a much more sophisticated level than merely a nominal measurement approach. Case law

and policy development can draw explicitly upon the long and often divergent philosophic

history of ideas that inform conceptions of altruism, public benefit and the role of the state.

Part I closed with a concern that as jurists journeyed into the deeper, philosophical contests

over the factors that inform charitable purpose, they were embarking on a trip like the trip

Merry and Pippin made into Fangorn Forest where, having entered, it seems there is no way

out.1289 The journey into this theory, has produced, though, quite the opposite result. The

deeper the investigation into a priori assumptions the clearer the jurisprudential framework

for their analyis that has emerged.

1289 J R R Tolkien, The Lord of The Rings, The Two Towers (1965) 74-109.

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K. An Analytical Framework that may be Difficult to Implement

In the preceding section some of the problems with implementing this theory were touched

upon but the thrust of the argument was as to its usefulness. Having stated the reasons why

the framework should appeal, and how it might be applied to address some of the challenges

raised in Chapter II, it is appropriate to note some reasons why this alternative jurisprudence

might not be attractive.

First, the model could mean the end of the unity of the common law concept of charities. As

this body of law with its statutory overlays in various common law countries, is already quite

diverse, this framework, far from unifying, arguably licenses further differentiation across

common law jurisdictions.1290

Second, the hope for clarity in conceptions of public benefit through better measurement,

might be thwarted either by complexity or by the lack of measurability of key variables. The

cost of measurement could prove prohibitive. I have set up, but not chosen between, a

concept of public benefit as on a continuum and also as divided into three categories

developed from the Pemselian purposes. This could lead to confusion, make implemention

difficult in the context of one particular jurisdiction, and make it unworkable across

jurisdictions.

Third, there are significant obstacles to its acceptance at an applied level even if it is

theoretically appealing, and those obstacles themselves may warrant its abandonment. The

highest courts across the common law world have all affirmed the Pemselian partitioning. It

is almost universally declared not only by the judiciary, but by almost all commentators, that

if there is to be a change, it is the responsibility of the parliaments and not the courts. When

we turn to parliamentary responses, it is uniformly to retreat to the four heads of Pemsel’s

1290 Kerry O'Halloran, Charity Law and Social Inclusion: An International Study (2007) 3.

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case and add further heads. Even if a superior court wished to undertake the changes, whilst

technically possible by returning to the common meaning of charitable purpose, incremental

judicial would be difficult. Further, the beginning would have to be for a court not bound by

the jurisprudence in Pemsel’s case to adopt that approach. That would be unlikely in the

current context without the judgment affirming part of a larger theoretical work such as that

set out here, and that is an unusual approach for a common law court.1291

Fourth, the widening of the class that includes charities is likely to startle revenue authorities

and could be seen as a threat to those organisations already enjoying the favours.1292 This is

likely, in the broader political arena, to further prejudice the prospects of changing to a

framework such as that set out here.

Fifth, the arguments in this thesis have been confined to the common law at an international

level. The constitutional and narrower statutory context has been ignored. These are

significant limitations associated with this approach which have been mentioned in Chapter

I. Beyond that though, even if the framework itself is useful, the content may be deeply

contested, making what appears relatively clear in theory difficult to apply in practice. For

example, I have suggested that it is possible to draw from and build on Garton’s thesis,1293 by

simply declaring that the unique identifier is the common meaning of charitable purpose. It

might be, though, that the purpose of civil society is something else, or as Garton suggests, it

is impossible to state. Further, using classical definitional theory to develop a quite

sophisticated concept of charitable purpose as the heart of civil society, might be only one

alternative applying in one jurisdiction. There are other ways of viewing both charitable

purpose and civil society organisations. Both the sectoral analysis and the division of laws

1291 AYSA Amateur Youth Soccer Association v Canada (Revenue Agency) 2007 SCC 42, [44] (Rothstein J); Vancouver Society of

Immigrant and Visible Minority Women v MNR [1999] Can Sup Ct Lexis 12, 57-58; Central Bayside General Practice

Association Limited v Commissioner of State Revenue (2006) 229 ALR 1, 15-37 (Kirby J).

1292 AYSA Amateur Youth Soccer Association v Canada (Revenue Agency) 2007 SCC 42, [44] (Rothstein J).

1293 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005).

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into public and private can be suggested at an international level but are not uniformly

accepted.1294

Sixth, the breadth of the work has come at the price of depth of legal analysis. The

thousands of cases following Pemsel’s case by which the orthodox approach developed have

not been analysed. It is my view that the decision in Chesterman’s case1295

is a critical

juncture, and that retracing steps back to that case provides a way out. However, the

exploration of that case law is beyond an outline such as this, and there is a need to test the

thesis sketched here against the cases following Pemsel’s case. Similarly, the law antecedent

to Pemsel’s case has only been touched upon. The concept of the pious use is a very rich

concept but it has only been partially explored and others could take a different view on how

it might inform theory development. At many points the opportunity to go deeper has been

sacrificed to the overarching object of sketching the wider vista of all of civil society and that

arguably renders the work too theoretical to be of practical use in particular contexts.

Seventh and finally, all change brings with it instability. Changes of the magnitude which

could flow from adopting this alternative jurisprudence, are capable of creating significant

instability.1296 That instability itself is likely to be an obstacle to implementing changes

consonant with the theory laid out here.

1294 As was mentioned in Chapter I Section 3, analysis of society in terms of sectors, particularly when discussing civil society

organisations, came to prominence through the United States Filer Commission, although it was initially suggested by Amitai

Etzioni. See Helmut Anheier and Regina List, A Dictionary of Civil Society, Philanthropy and the Non-Profit Sector (2005) 264.

The black market arguably amounts to a fifth sector to be considered. See Jonathan Edward Garton, The Regulation of Charities

and Civil Society (D Phil Thesis, University of London, 2005) 44A. That there should be any sectoral analysis of society is

contested. See Simone Chambers and Will Kymlicka, Alternative Conceptions of Civil Society, The Ethikon Series in

Comparative Ethics (2002). Margaret Thatcher’s famous quote: ‘There’s no such thing as society’ evidences that even the concept

of society is contested. See Brian Deer, Epitaph for the Eighties? 'There is no such thing as society' (2006)

<http://briandeer.com/social/thatcher-society.htm> at 30 January 2006. As to the division of law into public and private, this

seems to be less contested, but in the United States it seems to be a less commonly utilised theoretical construct. See discussion in

Chapter I Section 4.

1295 Chesterman v Federal Commissioner of Taxation (1923) 32 CLR 362, 384 (Isaacs J).

1296 AYSA Amateur Youth Soccer Association v Canada (Revenue Agency) 2007 SCC 42, [44] (Rothstein J); Central Bayside General

Practice Association Limited v Commissioner of State Revenue (2006) 229 ALR 1, 15-37 (Kirby J) and see discussion of majority

above at foonote 6.

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Acknowledging that these (and no doubt other) objections can be raised to this alternative

jurisprudence, my object is now substantially completed. My object has simply been to

sketch the outline of one alternative jurisprudence. In so far as the work is an attempt to

traverse between the current non-legal literature and the jurisprudence, crossings have been

forged but completed bridges have not been constructed. Others may choose to cross in

other ways and at other places. This outline points some ways, though, that those non-legal

streams of discourse can inform legal theory. The next section completes the thesis by

suggesting where this alternative jurisprudence might be located in current jurisprudential

theory.

L. Location in Current Jurisprudential Theory

From Chapter I it will be recalled that the sectoral analysis of society led to recognition of

what was initially called the third sector, and which is here labelled civil society. The

argument developed so far points to a need for legal theory to develop a recognition of this

‘third’ space and a body of law here called a jurisprudence for civil society. Just as civil

society is characterised by voluntary participation so a jurisprudence for civil society has as

its foundation, voluntary association. As most common law societies are free and encourage

voluntary contributions of public benefit, this jurisprudence has a second dimension. That

second dimension is that it is the body of law by which ‘peculiar favour’1297 is extended to

civiil society organisations. The alternative jurisprudence proposed in this thesis

encompasses, then, only two types of laws: laws that regulate and laws that grant favour.

Where people wish to contribute voluntarily for public benefit, the function of the law

changes from that of proscribing, to that of enabling through minimum regulation. The law

may go further and favour but it does not have to favour. The laws by which society

regulates, and sometimes favours, those organisations by which citizens voluntarily

1297 Pemsel’s case [1891] AC 531, 583 (Lord Macnaghten).

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participate and contribute to society (other than for personal gain), sets the scope of this

alternative framework.

The re-categorisation to include a jurisprudence for civil society is based on realigning

boundaries between classes of laws to bring into one class the laws applying to civil society

organisations. Once that broad class is recognised it is argued that class is capable of

division into two subcategories. Association law is the first subcategory. It is the umbrella

under which is gathered all the laws that enable and regulate persons as they associate freely

for the voluntary pursuit of common interests beyond business, government and family.

Benefit law is the second. It is the subcategory of law that grants favours to organisations

that contribute to public benefit which a society wishes particularly to encourage by granting

favours. I mentioned in Chapter I that in this body of law it is the organisations, as distinct

from individuals or institutions, that are the focus of this thesis.1298 I set out reasons for this

in Chapter I and they do not need to be canvassed again here. It follows that if the law does

not relate to civil society organisations it is not a part of this body of law.

Civil society law stands between, but is differentiated from, the two great dividers of legal

theory: private law and public law.1299 It warrants its own space in legal theory. Figure 18

below, developed from Figure 1, illustrates.1300

1298 See page 20.

1299 John H Farrar and Anthony M Dugdale, Introduction to Legal Method (3 ed, 1994) 15.

1300 See page 24.

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Figure 18 Jurisprudence with a ‘third’ Space for Civil Society

It may be asked why Benefit law is not drawn as a complete subject of Association law. It is

true that most of the time it will be a subset of Association law. There are cases though,

where civil society is strengthened by favouring businesses through such things as

favourable income tax treatment and grants. For that reason, it seemed better to treat it as a

separate division.

Common law development, unlike some other areas of law, does not require a revolution.

By gradual changes, building from precedent in accordance with the principles laid out here,

the common law can be developed. Such a process can give voice to the values of liberty,

equality and fraternity that are so central to democracy without depriving citizens, like

Sydney Carton and his young seamstress friend, of their liberty, let alone their life.1301

M. Paths for Further Reseach

This thesis has constructed an architecture that is highly contestable. In this section, some of

the more obvious paths for further research are suggested.

1301 Charles Dickens, A Tale of Two Cities (first published 1859, 2000 ed) 388-389.

Law

Public Law Civil Society

Law

Private

Law

Association Law Benefit Law

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First, the suggestion summarised in the last section needs to be tested. That is, whether it is

appropriate for law to follow other disciplines in this way is a threshold question for

research. It follows that there is a need for inquiry into the broader implications of this

conception, whether it is sustainable and, if it is, theory and policy implications flowing from

it.

Second, the bridge between law and other disciplines has been spanned but needs

fortification from both sides for ideas to travel efficiently to and from the island that is the

law of charities. For example, theorists in disciplines other than law, particularly those

working with Anheier’s civil society diamond, might explore how the interface sketched

here works in policy development. This will probably best be achieved at the specific,

applied level of topics such as favouring the pursuit of political purposes, public benefit and

measurement of altruism.

Third, the suggestion that all of the cases on charitable purpose fit within this alternative

jurisprudence needs to be tested.

Fourth, the link between the foundations of charitable purpose and the constitutional

freedoms are not well developed. Research to test the strength of support for the overarching

concept is required, to ascertain the level to which precedent exists in a particular common

law jurisdiction to support the general proposition suggested here.

Fifth, the thesis avoided many of the challenges raised in philosophical theory by taking the

common law, casuist approach and limiting discussion to particular examples from the case

law. That approach begs the question as to whether this framework could be located within

broader philosophical paradigms. In Chapter I, the possibility of links to Rawls were

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avoided, but a Rawlsian analysis of the approach would be interesting.1302 Similarly, there

was reference to Rorty and whether this thesis could sit within a postmodern legal

agenda.1303 These broader philosophical questions are open for consideration.

Finally, each of the seven factors commending this alternative jurisprudence mentioned in

section I and each of the seven difficulties mentioned in section K of this chapter, suggest

paths for further research.

N. Conclusion

A theoretical framework, bringing together the laws applicable to civil society organisations,

has now been outlined. Arguably the gap in legal theory which surrounded the third sector’s

law has been filled. This has been achieved by the expansion of the doctrine of charitable

purpose to the boundary of civil society. The doctrine has been located in a wider

jurisprudence, linked to the sectoral analysis adopted in other disciplines and a class has been

created which Garton hoped for, but doubted was possible.1304 The law applying to the

variety of ways that people associate and transfer goods voluntarily in common law countries

in the twenty-first century has been brought into an overarching framework which is no

longer centred on that small percentage of the total number of civil society organisations

called charities.1305 The doctrine of charitable purpose has been released from the ossified

shackles of ‘four principal divisions’ and is free to develop having regard to statutory

developments. The research question shaping the thesis has been answered. A jurisprudence

for civil society has been offered that brings into a unifying whole the common law centred

on the doctrine of charitable purpose that regulates and favours voluntary contributions of

public benefit. It offers a simpler and more cohesive explanation of this ‘legal universe’. By

1302 See page 35.

1303 See page 36.

1304 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 30.

1305 Jonathan Edward Garton, The Regulation of Charities and Civil Society (D Phil Thesis, University of London, 2005) 14; Myles

McGregor-Lowndes and Matthew Turnour, 'From Charity to Civil Society' (Paper presented at the ARNOVA Conference,

Atlanta, 15 - 17 November 2007) 3.

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401

not being referent to an ancient statute nor dependent upon inadequate categories set in a

nineteenth century case, but rather being drawn from, and integrated into, current

conceptions of civil society it is, to repeat Copernicus, ‘that which is easiest to grasp’.1306

Further, this jurisprudence for civil society is not that radical, for its pedigree leads back

through Pemsel’s case to the foundations of the law that preceded the Preamble. The only

difference, arguably, is that instead of referencing the cumbersome and incomplete list in the

Preamble, or the definitionally unsatisfactory four principal divisions set out in Pemsel’s

case, the reference is to a concept of charitable purpose which is more parsimonious and

more definitionally satisfactory. In this jurisprudential universe it is ‘charitable purpose’ in

an ordinary broad sense – the sense overruled in the Australian High Court’s decision in

Chesterman’s case1307 – that is the central concept. This concept of charitable purpose

identifies charitable organisations by their altruism, public benefit and absence of coercion.

It is a concept of charitable purpose that identifies charitable goods as goods sourced

altruistically and voluntarily and applied for public benefit. It is this concept of charitable

purpose that is the gravitational force that holds all of the laws of this legal universe together.

Closer to the centre of this universe, charitable purpose is more evident because altruism,

voluntarism and the benefit to the public are more evident. The more evident altruism,

voluntarism and public benefit in the purpose pursued, the more favour is justified.

Acknowledging that departure from reference to the Preamble and Pemsel’s case is a

paradigm shift, I nevertheless contend that it is a logical development and one well overdue.

Contributions to philosophy are rarely much more than the application and extension of old

insights to emerging challenges. As I was developing this paradigm it became evident to me

that what was emerging seemed very close to an exhortation the apostle Paul wrote to the

early Christian community in Galatia and I close acknowledging his prescience: ‘You…

1306 Nicolaus Copernicus, On the Revolutions of the Heavenly Spheres (2nd ed, 1542) 508.

1307 Chesterman v Federal Commissioner of Taxation (1923) 32 CLR 362, 384 (Isaacs J).

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were called to be free. But do not use your freedom to indulge the sinful nature; rather, serve

one another in love. The entire law is summed up in a single command: ‘Love your

neighbour as yourself’.1308

O. A Final Postscript

At the outset I stated that the city metaphors of Dickens and Augustine enriched exploration

of charitable purpose. Those typologies carry the concluding thoughts. In the earthly city,

as Augustine observed, people found peace in a form of government that bound people

together through expression of common values. Common law countries recognise the right

of the individual to personal peace and part of that is not only freedom of religion but also

freedom of association. They have also recognised the role of religion in binding society

together. Enabling free association permits those of like mind to so govern themselves

corporately having regard to the appropriate limits. The rivalry between this association and

the state has been identified, and as Dickens retold, will lead to bloody violence if liberty,

equality and fraternity are denied by the state. In the earthly city, peace is achieved by

accommodating contested self-interest. Peaceful association through accommodating

competing interests is not, though, the end of city metaphors or the scope of law for civil

society; for civil society, is more than self-government.

There is a second city in Augustine’s framework and that is a city founded on charity. It is

his heavenly city which, it will be recalled, is commingled with the earthly city. There is

another city in Dickens’s Tale also. It is the city that did not experience a bloody revolution.

It was the sanctuary to which Dickens’s ‘heroes’ fled: a common law city that affirmed and

defended a space for charity in its law. A jurisprudence for civil society is both a defence of

the voluntarily chosen earthly city and a framework for encouraging by favours, the pursuit

of a journey to the heavenly city. It is a tale of two cities in a very specific context.

1308 The Holy Bible New International Version (1984) Galatians 5:13-14.

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Family Law Act 1974 (Cth)

Human Rights and Equal Opportunity Commission Act 1986 (Cth)

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Statute of Poor Relief 1601, 43 Eliz c 2

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Trade Practices Act 1974 (Cth)

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