Application of section 67 RTI Act

Relevant considerations

1. Is the applicant a non-profit organisation?

Schedule 6 of the RTI Act defines 'non-profit organisation' as 'an organisation that is not carried on for the profit or gain of its individual members'.

In assessing whether an organisation is carried on for the profit or gain of its individual members the Information Commissioner has referred to the organisation's:

  • objectives, as set out in its Constitution1
  • objectives, as published on its authorised website2
  • principal activity during the financial year as outlined in its Financial Report;3 and
  • distribution of funds and assets as set out in its Constitution.4

Where an organisation's funds and assets are to be used to further the organisation's objectives and cannot be distributed to its members, even upon dissolution, then the organisation is not carried on for the profit or gain of its individual members.

2. Is the non-profit organisation in financial hardship?

The issue of financial hardship is determined objectively depending on the particular circumstances of the case.5

The Information Commissioner has previously referred to the Macquarie Dictionary for the meaning of the word 'hardship', finding the term 'implies a level of severe toil, trial, oppression or need' and 'severe circumstances would need to be demonstrated before it became applicable'.6

In determining whether a non-profit organisation is in financial hardship it is necessary to consider:7

  • the nature and size of the organisation’s funding base; and
  • the amount of liquid funds.

a) Nature and size of funding base

In assessing the nature and size of the organisation’s funding base, the Information Commissioner has previously considered:

  • the organisation's various sources of funding, eg government grants, private donation and fundraising activities;8
  • the discretionary nature of the organisation's funding base;9 and
  • the organisation’s current cash position.10

In analysing the organisation’s funding base, the Information Commissioner has considered that:

  • an organisation which receives 91% of its funding from government grants has strictly limited independently obtained finances11
  • an organisation which receives small donations from members and does not undertake regular revenue raising activities may be reliant on a discretionary and highly unpredictable funding base and is therefore more likely to be in financial hardship.12

b) Liquid funds

The Information Commissioner has previously used the following financial analysis tools to determine the financial condition of a non-profit organisation:13

  • Current Ratio
  • Quick Ratio
  • Working Capital

i) Current Ratio

The Current Ratio is determined by dividing the total current assets by the total current liabilities. If an organisation's Current Ratio is greater than 2:1 then the organisation should be able to meet its short-term financial obligations within the ordinary course of business and is less likely to be in financial hardship.14

ii) Quick Ratio

The Quick Ratio is determined by dividing the total current assets (less inventory) by the total current liabilities. If an organisation's Quick Ratio is greater than 1:1, then the organisation should be able to meet its short-term financial obligations within the ordinary course of business and is less likely to be in financial hardship.15

iii) Working Capital

Working Capital is determined by subtracting total current liabilities from total current assets. If an organisation's Working Capital is positive then this indicates liquidity. If the Working Capital is a negative value, the organisation generally will not have sufficient liquid funds to cover its liabilities and is therefore more likely to be in financial hardship.16

3. Updates and revocation of financial hardship status

Under section 67(3), the Information Commissioner's decision that a non-profit organisation has financial hardship status remains effective for one year following the date of decision. During this period, the organisation must give OIC written notice of any substantial improvement to its financial circumstances.

The Information Commissioner may revoke the organisation's financial hardship status on the basis of the organisation's financial circumstances.

If an organisation receives notice of revocation of its financial hardship status while it is in the process of making an access application, the organisation must advise the agency or Minister processing the application.

Where financial hardship status is not granted, the organisation may not make another application for financial hardship status for one year unless there is a substantial deterioration in its financial circumstances.

  • 1 (Unpublished OIC Decision). [up]
  • 2 (Unpublished OIC Decision). [up]
  • 3 (Unpublished OIC Decision). [up]
  • 4 (Unpublished OIC Decision). [up]
  • 5 (Unpublished OIC Decision). [up]
  • 6 (Unpublished OIC Decision). [up]
  • 7 Section 67(1) of the RTI Act. [up]
  • 8 (Unpublished OIC Decision). [up]
  • 9 (Unpublished OIC Decision). [up]
  • 10 (Unpublished OIC Decision). [up]
  • 11 (Unpublished OIC Decision). [up]
  • 12 (Unreported OIC Decision). [up]
  • 13 (Unpublished OIC Decision). [up]
  • 14 (Unpublished OIC Decision). [up]
  • 15 (Unpublished OIC Decision). [up]
  • 16 (Unpublished OIC Decision). [up]

Last updated: March 16, 2012