This is part of a series on charities in Australia. Read more of the series here.
Several Hillsong Church entities have enjoyed the benefit of total secrecy and almost a complete lack of accountability to the federal government regulator, due to being classified as basic religious charities (BRCs).
However, events triggered earlier this year threaten to undo the special governance and tax exemptions pivotal to the church’s financial success. Hillsong might have generated millions and millions of dollars through various revenue streams, but it has maintained its charity status because it says the purpose of all that money is to advance religion.
We now know, courtesy of a court filing made by Hillsong finance and governance staff member Natalie Moses, that several Hillsong charities have been under investigation by the Australian Charities and Not-for-profits Commission since March this year. This coincides with the period when the church’s founder, pastor Brian Houston, was forced to step aside after revelations of “moral transgressions”. Houston’s fall from grace led to huge internal ructions, with several US Hillsong entities deserting the Houston ship.
The multinational corporate enterprise that is Hillsong Church operates a maze of charities in Australia, with 18 separate entities receiving various tax exemptions.
Moses’ court filing reveals that the ACNC has been investigating two Hillsong charities with BRC status. (There are two other BRC entities in the Hillsong group.)
It means the ACNC has finally sprung into action to peer inside what are effectively black holes of key financial and governance information. Moses’ statement of claim points to a host of irregularities in the movement of money between Hillsong’s entities — pointers that have no doubt helped steer ACNC investigators in the right direction.
The investigation by the regulator — along with Moses’ whistleblowing — may threaten key elements of the church’s financial viability.
At the same time, the investigation, belated as it is, raises questions about why it took the ACNC so long to act — as well as about the rules the regulator works with, not only in relation to Hillsong but also to other large churches whose operations are cloaked in the secrecy of BRC status. (Organisations assess themselves as being eligible for BRC using five criteria.)
If Hillsong has hidden behind the secrecy of a BRC to move assets around tax-free and without accountability, then what of others?
The serious risk to Hillsong
Hillsong operates four charities that, as BRCs, are not required to file any financial information to the regulator. Nor can any of the charity’s directors be removed.
The defining feature of a BRC is that the entity’s purpose is “the advancement of religion”. So how do Hillsong’s BRCs measure up?
- Community Venues Ltd was registered as a BRC in 2021. According to Moses’ federal court statement, the entity is the owner of Melbourne’s Festival Hall, acquired by Hillsong for $23 million. Moses’ statement of claim questions how Community Venues got the money to carry out renovations on Festival Hall, alleging that Hillsong’s offer of tax deductions for donations was “fraudulent” as they were “not properly tax deductible”.
- Hillsong Church Australia also has six business names. According to the Australian Business Register, these include food outlets Comma Coffee and Bella Burgers, as well as Hillsong Night School — which charges fees for courses — and Amplified Education Academy.
- The Trustee for Hillsong International encompasses a dozen separate entities that drive Hillsong’s multimillion-dollar music and broadcast operations. They include Hillsong Music Publishing, Hillsong UNITED, Shout! Music and SHOUT! Music Publishing. Hillsong claims that the entity exists to “promote the Christian faith”. However, Moses’ court filing alleges that artists classified as “pastors” received millions of dollars in royalties from music sales.
- HC Australia Property Trust holds and provides properties for the church’s ministries in Australia as well as providies financial support for ministries.
The anomalies bank up
Under the ACNC’s regulations, an entity cannot be a BRC if it could be registered with another subtype (for example, advancing education).
A key question for the ACNC and the government is how exemptions ostensibly intended to take the pressure off small, volunteer-run churches can end up providing secrecy for a multimillion dollar operation — big enough to own and renovate Festival Hall and to run a hugely profitable international music business.
A technical line of defence
Adding to the complicated Hillsong picture, three of the church’s BRC charities are set up as trusts, registered under state law, in NSW. Trust deeds show that the entities are owned ultimately by Hillsong Church Inc, incorporated in Texas, USA.
It raises the question of whether or not the ACNC, which is governed by federal laws, has enforcement powers over a state-registered entity.
The ACNC said it was unable to comment on the circumstances of a particular charity. A spokesperson said that “speaking generally” the ACNC had jurisdiction over all charities registered with the ACNC, in relation to their registration as a charity.
Hillsong has previously said it values “good governance”, that it is co-operating with the ACNC and that it will defend the allegations which have been made in the federal court action.
Crikey two days ago asked Assistant Minister for Competition, Charities and Treasury Andrew Leigh if he plans to address the appropriateness of the BRC exemptions. We have not received a response. Crikey’s request remains open.
