Football Otago Youth Development Academy Trust

In a decision issued on 12 September 2019 the Charities Registration Board declined to grant this Trust charitable status. It made that decision essentially on the grounds that the Trust’s primary purpose was not charitable and that any charitable purpose that was discernible was merely incidental to the non-charitable purpose.

The Board found that the Trust was directed at developing young high performance football players selected on the basis of talent and skill, rather than public participation in sport. The Board held that players selected on the basis of talent or skill do not constitute a sufficient section of the public for the Trust’s activities to have the necessary public benefit component. The decision upheld an original notification to the Trust that promoting the development of elite players and sporting success did not meet charitable registration requirements.

It is long standing common law, now reflected in NZ statute law, that the promotion of sport per se is not charitable but that sport may be undertaken as an adjunct to some other charitable purpose such as the promotion of health or education. While the promotion of healthy activity through sport might be charitable the promotion of sporting success has never been. Training and competition may be a means to promote public participation in healthy activity but the Board held that the opportunity to train and compete has to be open to all and not be limited only to those exhibiting skill.

This point is significant because it reiterates a pattern of decision-making by the Board that the benefit of providing training and competition opportunities for high performance or elite athletes is not sufficiently “public” to be charitable. This assertion is not limited to paid or professional athletes but, according to the Board, to any athlete that has been selected as having some talent or skill, for example through team trials. The crux of the Board’s view is that:

Where training and development is not also available to those who have not been identified as talented, there is insufficient public benefit in a charitable sense.

From this view the Board argued that many of the Trust’s objective were not capable of being charitable because they were directed to a “closed group” of athletes. The purposes that could be charitable, ie those that related to the promotion of health and education were directed primarily at developing players selected on the basis of talent and success in competition. Throughout its decision the Board juxtaposed the idea of promoting elite sport (not charitable at all) with public participation in sport (capable of being charitable if in pursuit of health or education purposes). It held that, despite the Trust seeking people from a wide catchment for its trials and planning alternative activities for those not selected, that did not detract from the primary purpose of developing the elite players who were identified as a result of competition.

The conclusion that what might be charitable if generally available will not be charitable if refined by talent and ability is not surprising in the context of the decision the Board had to make. It is important to remember that the decision attempts to define the limits between what sporting activity can be undertaken with charitable status and what cannot. It is not a general commentary on public participation or public benefit, although as noted below that may still be an issue in other areas because of the breadth of the statements made by the Board. In this case, however, the Board uses the argument that public benefit must extend beyond an elite group of athletes to limit charitable status for sport.

Sport cannot per se be charitable and so the likely available charitable purposes (of promoting health and education) must be considered in terms of the benefits they confer on the comparatively few athletes chosen by the Trust. If those charitable purposes must be directed to a sufficiently sizeable section of the public for them to deliver public benefit, there is little to commend them being limited in this case to a chosen few. The talents and ability displayed by those chosen by the Trust have nothing to do with the extent to which their health or education may be enhanced, and so there is no basis on which the limitation of the Trust’s activities to an elite can be justified having regard to health and education.

Arguably this is not the same as competition, and the identification of elite performers, in the context of a purpose that is avowedly charitable. Thus, the establishment of academic competitions and the promotion of academic success through awards to those who succeed is charitable. However, the Board’s decision raises the possibility that, even in this context, there might still be a “cut off” point at which charitable status for the promotion of academic success might be lost.

Take the example of a scholarship that has been endowed for a university. Does the scholarship have to be available to all-comers or can the university set criteria for those applying? Routinely this is the case. What if the criteria effectively limit the catchment of those able to apply or compete for the scholarship to a few and an elite? Again, this is often so. What if the benefit of the award is only available to a few who have already achieved certain rank or qualifications so that they number but a few? An example might be postgraduate work in a particular field. If the scholarship is endowed within the framework of the university itself, or a broad foundation supporting the university, the public benefit of the university or the foundation may be sufficient for the issue never to arise. However, if the scholarship is endowed outside the university, say in a single purpose entity, does the Board’s view that elite benefit is not sufficiently public threaten the charitable status that entity might seek? The Board may not have intended its decision to be taken that far but its language and approach may nevertheless pose wider difficulties than expected or intended.

© G D Clews 2020



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