Applications by non-profit organisations for financial hardship status

Overview

This guideline outlines the requirements relating to applications made by non-profit organisations to the Information Commissioner for financial hardship status under section 67 of the Right to Information Act 2009 (Qld) (RTI Act). The process followed by the Information Commissioner in assessing and deciding these applications is also set out in this guideline (PDF, 95.06 KB).

This decision-making function of the Information Commissioner1 is a new function under the RTI Act — it was not within the Information Commissioner's jurisdiction under the repealed Freedom of Information Act 1992 (Qld) (repealed FOI Act)2.

The effect of a decision of the Information Commissioner that a non-profit organisation has financial hardship status is that any processing charge or access charge, relating to an access application made under the RTI Act by the non-profit organisation, must be waived3.

A decision of the Information Commissioner that a non-profit organisations has financial hardship status has effect for one year from the date of the decision4.

Further information regarding the procedure to be followed by agencies and Ministers in relation to waiver of charges is set out in the Guideline: Fees and Charges.

Application for financial hardship status

How to make an application

A non-profit organisation may apply to the Information Commissioner for financial hardship status by making a written application in one of the following ways:

In person: Level 7, 133 Mary St Brisbane
Post: PO Box 10143, Adelaide Street, Brisbane, Qld 4000
Email: administration@oic.qld.gov.au

When to make an application

If you wish to make an access application but think your organisation is in financial hardship and cannot afford to do so, you can apply to the Information Commissioner for a decision about your financial hardship status before you make an access application to an agency or Minister.

The Right to Information Application Form5 identifies that applications for financial hardship status need to be made before applying for access to documents6.

Making a financial hardship status application prior to making an access application ensures:

  • the Information Commissioner has sufficient time to assess the application and make a decision on financial hardship status before an agency or Minister begins preparation of a charges estimate notice (which may end up being unnecessary if charges have to be waived)
  • where an application is granted by the Information Commissioner, you can then make an access application to an agency or Minister and be certain that your organisation will not have to pay any processing or access charges in relation to the application
  • where an application is not granted by the Information Commissioner, you may choose not to proceed with making an access application because your organisation cannot afford to pay the processing and access charges.

Time taken to process applications

The RTI Act does not set out a timeframe within which the Information Commissioner must decide an organisation's financial hardship status.

Where legislation does not provide a timeframe for doing something, it is to be done as soon as possible7.

The Information Commissioner recognises that non-profit organisations which apply will, in most cases, be relying on the outcome of an application for financial hardship status in order to proceed with making an access application (and potentially have the related processing and access charges waived).

What applicants need to provide

If your organisation is applying for financial hardship status it will need to provide the Information Commissioner with evidence that it is:

  • a non-profit organisation
  • in financial hardship.

These requirements are examined in sections 2.4.1 and 2.4.2 of this guideline.

Providing as much evidence as possible to the Information Commissioner with the application for financial hardship status, will help the Information Commissioner provide you with a quicker decision.

Non-profit organisation

To support an application for financial hardship status, your organisation must firstly show that it is a non-profit organisation, ie an organisation that is not carried on for the profit or gain of its individual members8.

The RTI Act does not set out the type of evidence that is required to satisfy this requirement. To satisfy the Information Commissioner you should provide documentary evidence, eg a copy of your organisation's constitution or rules of incorporation. The documents must contain clauses that demonstrate the non-profit character of your organisation, eg non-profit and dissolution clauses.

Examples

Non-profit clause

The assets and income of the association shall be applied solely in furtherance of its above-mentioned objects and no portion shall be distributed directly or indirectly to the members of the association except as bona fide compensation for services rendered or expenses incurred on behalf of the association.

Dissolution clause

In the event of the association being dissolved, the amount that remains after such dissolution and the satisfaction of all debts and liabilities shall be transferred to any association with similar purposes which is not carried on for the profit or gain of its individual members.

Financial hardship

Your organisation must also provide the Information Commissioner with evidence that it is in financial hardship.

Such evidence may be provided in the form of:

  • annual audited accounts certified by an accredited accountancy firm or a party pursuant to section 59(1) of the Associations Incorporation Act 1981 (Qld)
  • Statement of Assets and Liabilities and Statement of Revenue/Earnings for the current and previous financial years
  • a tax exempt certificate or a Statement of Revenue/Earnings or equivalent from the Australian Taxation Office
  • documents showing the nature and size of the organisation's funding base
  • any other relevant information about the organisation's financial situation, particularly concerning its liquidity.

If an application for financial hardship status does not include the evidence set out above, the Information Commissioner may request that such information be provided before the application is processed.

The Information Commissioner will not be able to make a decision on your organisation's financial status unless you provide sufficient evidence to satisfy the Information Commissioner.

Deciding an application

Financial hardship

The RTI Act does not define the term financial hardship nor does it prescribe factors to be taken into account or tests to be applied by the Information Commissioner in deciding an application for financial hardship status.

However, section 67(1) of the RTI Act identifies several factors which the Information Commissioner must consider in deciding whether a non-profit organisation has financial hardship status, as follows:

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

Note

In deciding financial hardship status, the RTI Act does not require the Information Commissioner to compare an organisation's financial position with the estimated processing and access charges, as was the previously the case under section 35A(2)(b) of the repealed FOI Act.

The term financial hardship is used in section 66(2)(a) of the Freedom of Information Act 1982 (Cth) (Commonwealth FOI Act) in regards to factors which the Administrative Appeals Tribunal of Australia (AATA) must take into account in determining whether to recommend to the Attorney-General that an applicant's costs in relation to a proceeding in the AATA be paid by the Commonwealth.

In WAJ and Commonwealth Ombudsman; Brown (No.2)9, Deputy President Hotop considered the meaning of financial hardship as it appears in the Commonwealth FOI Act and summarised some of the authorities on the term as follows:

  • The term "hardship" is defined in The Macquarie Dictionary as follows:
  • "1. a condition that bears hard upon one; severe toil, trial, oppression, or need. 2. an instance of this, something hard to bear."
  • In The New Shorter Oxford English Dictionary the definition of "hardship" is as follows:
  • "1 The quality of being hard to bear; painful difficulty. 2 Hardness of fate or circumstance; severe suffering or privation. Also, an instance of this. ..."
  • In Re Kabalan (1993) 113 ALR 330 the Federal Court of Australia (Gummow J) said (at 332):
  • "Any condition which presses with particular asperity upon a person may be described as a hardship."
  • Similarly, in Re Hounslow [(1985) 7 ALR N362] the Tribunal, in the context of s.66(2)(a) of the FOI Act, said (at N 367):
  • " 'Hardship' is a strong word and in our view severe circumstances would need to be demonstrated before it became applicable."
  • In Re Paterson (No 2) [(1985) 8 ALD 227] the Tribunal, again in the context of s.66(2)(a) of the FOI Act, said (at 238):
  • "... 'financial hardship' means hardship caused to the applicant by reason of the financial burden of being obliged to meet the costs of the application from its own resources. ... It is not enough ... for the applicant to assert that if it is obliged to meet its own costs, it will deplete the funds otherwise available to it to pursue its objects. Every successful applicant, no matter how wealthy, would suffer financial hardship on that basis."
  • Similarly, in Re Bailey and Commonwealth Tertiary Education Commission (1986) 12 ALD 165 the Tribunal, in the context of the discretionary power to remit a charge imposed in respect of a request for, or the provision of, access to a document under the FOI Act (see, now, s.29(5)(a) of the FOI Act), said (at 167):
  • "... financial hardship surely amounts to more than that a person, irrespective of his financial situation, has to meet a charge from his own resources."10

Deputy President Hotop reasoned that the applicant in WAJ had the financial capacity to pay the costs of the proceeding without placing himself in a 'financially embarrassing situation or in financial difficulties'11.

The reasons of Deputy President Hotop and the authorities set out above have been referred to with approval in several recent judgments of the AATA12. In Van De Wiel and CASA, Deputy President Forgie distinguished financial hardship as it appears in the Commonwealth FOI Act from 'severe' or 'serious' financial hardship which is required by other legislation such as the Social Security Act 1947 (Cth).

The interpretations of financial hardship set out above provide guidance on interpretation of this term. The question of whether an organisation is in financial hardship status must be determined objectively13 and will depend upon the particular circumstances of the case14.

The Information Commissioner must make an evaluative judgment following a consideration of all the relevant evidence, including:

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

These considerations are examined below.

Nature and size of the organisation's funding base

In order to operate in a financially sound manner, non-profit organisations require funding from other sources. Most commonly, this funding is obtained through the private sector or government grants and assistance.

Example

The fact that an organisation receives significant government funding as opposed to having the capacity to raise funds itself, may indicate that:

  • its finances are strictly limited
  • it is providing a service in the public interest.

A non-profit organisation in such a position may be found to be in financial hardship status.

The nature and size of an organisation's funding base is likely to be a significant factor in deciding whether an organisation has financial hardship status.

This information should be easily identifiable in the documentary evidence provided by your organisation in support of its application for financial hardship status, eg its constitution or governing documents.

Amount of liquid funds

Liquid funds is not defined in the RTI Act.

Notably, the term is not one that is generally used in a financial or accounting context — the more commonly used term to describe an organisation's ability to meet short-term financial obligations is liquidity.

Accordingly, in analysing the "amount of the organisation's liquid funds", the Information Commissioner will consider the organisation's liquidity.

Definition

The Macquarie Online Dictionary defines liquidity as follows:

  • "the state of having assets either in cash or readily convertible into cash"

An organisation's liquidity is commonly determined by using the following liquidity analysis calculations:

  • current ratio
  • quick ratio
  • working capital.

The calculations listed above provide a measure of an entity's ability to pay its short-term obligations and meet unexpected demands on its cash resources15.

The current ratio is the most common measure of an organisation's financial strength—it measures an entity's ability to satisfy its obligations in the short term and the margin of safety to creditors.16 It is calculated by dividing the total current assets by the total current liabilities.

A generally acceptable ratio is 2:1 but what is satisfactory will depend upon the nature of the organisation and the specific characteristics of current assets and liabilities. A low ratio may indicate inability to meet short term debts in an emergency whereas a high ratio is considered favourable to creditors but may indicate excessive investment in current assets that may not be producing profits17.

One of the limitations of the current ratio is that it includes inventory and prepaid assets in the current assets figure. However, these items are not as liquid as cash, marketable securities, current bills receivable and accounts receivable18.

The quick ratio, sometimes referred to as the 'acid test' ratio, is a more rigorous measure of liquidity that is used to supplement the current ratio. It is calculated by dividing the total current assets (excluding inventory) by the total current liabilities.

The quick ratio is a more exacting measure than the current ratio because by excluding inventory, it concentrates on the most liquid assets. A quick ratio of 1:1 is generally considered satisfactory. The higher the ratio, the more liquid the entity is considered. A lower ratio would indicate that, in an emergency, the entity may be unable to meet its immediate obligations19.

If the majority of an organisation's liquid assets are constituted by accounts receivable, ie money owing to the organisation, this should be taken into account and balanced against the organisation's accounts payable figure.

An organisation's working capital may also be used to measure an organisation's cash flow and is calculated by subtracting total current liabilities from total current assets. The result of the calculation must be a positive number.

Note

LIQUIDITY CALCULATIONS

Current ratio = total current assets / total current liabilities

Quick ratio = (total current assets – inventory) / total current liabilities

Working capital = total current assets – total current liabilities

If the current ratio is greater than 2 and the quick ratio is greater than 1, it is assumed that an organisation can meet short-term financial obligations within the ordinary course of business as they arise.

This example balance sheet (PDF, 57.57 KB) sets out information required to conduct a liquidity analysis using the calculations described above. The ratio calculations relevant to the example balance sheet are also set out on the following page of this guideline.

In this example, the liquidity analysis of the organisation, Not for Profit Inc., indicates that the organisation is able to meet its short term financial obligations because:

  • its current ratio exceeds 2:1
  • its quick ratio is 1:1
  • the working capital is a positive figure (and quite substantial).

Although the quick ratio for the year 2008 falls below the generally acceptable level of 1:1, it can be seen that the organisation has improved its financial position during the 2009 period. Accordingly, if Not for Profit Inc. was to apply to the Information Commissioner for financial hardship status, it is unlikely that its application would be approved given its healthy financial position. The Information Commissioner would however, also need to consider the nature and size of the organisation's funding base before reaching a decision.

As set out above, the RTI Act requires the Information Commissioner to consider an organisation's liquidity and its funding base when deciding a financial hardship status application — the Information Commissioner does not need to compare an organisation's financial position with the estimated charges for an access application, as was the case under the repealed FOI Act. There are two reasons for this:

  • applications to the Information Commissioner for financial hardship status must be made before an access application is made and therefore, there will be no estimated charges to make any comparison
  • decisions on financial hardship status are valid for one year after they are made whereas under the repealed FOI Act a separate decision on the financial hardship status of an organisation had to be made every time it made an access application.

Making the decision

Once the Information Commissioner has examined all the evidence provided by your organisation and conducted a liquidity analysis, the Information Commissioner will decide whether or not the non-profit organisation has financial hardship status.

The Information Commissioner must give your organisation prescribed written notice of the decision20.

Note

PRESCRIBED WRITTEN NOTICE

Section 191 of the RTI Act and section 199 of the IP Act provide that a prescribed written notice must include:

  • the decision
  • the reasons for the decision
  • the day the decision was made
  • the name and designation of the person making the decision; and
  • if the decision is not the decision sought by the person—any rights of review under the RTI Act or IP Act in relation to the decision, the procedures to be followed for exercising the rights and the time within which an application for review must be made.

Right of review

If the Information Commissioner decides that your organisation does not have financial hardship status, the prescribed written notice must set out the review rights in relation to that decision.

The right of review from a decision of the Information Commissioner not to give an organisation financial hardship status is set out in section 120 of the RTI Act as follows:

  • 120   Appeal to Queensland Civil and Administrative Tribunal for review of decision about financial hardship status
    • A non-profit organisation may apply, as provided under the QCAT Act, to QCAT for a review of a decision of the information commissioner made under section 67.

The Queensland Civil and Administrative Tribunal (QCAT) commenced on 1 December 2009 pursuant to the relevant chapters of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act) which is also came into effect on 1 December 2009.

Non-profit organisations can apply to QCAT for review of decisions made by the Information Commissioner on financial hardship status as QCAT and the QCAT Act have commenced. The RTI Act they delay of QCAT starting by creating a delayed right of appeal to QCAT as follows:

  • 203   Delayed appeals and applications to QCAT
    • ...
    • (2)   If a person may, within a period, apply to QCAT under section 120 or 121 before QCAT comes into existence, the person may apply to QCAT within that period after QCAT comes into existence.

Non-profit organisations wishing to apply for review by QCAT, of a decision of the Information Commissioner not to grant financial hardship status, will need to refer to the QCAT Act for information regarding timeframes, rules and procedures.

Review by Supreme Court

A non-profit organisation that is dissatisfied with a decision of the Information Commissioner not to grant financial hardship status can also, in some circumstances, seek review of the decision by the Supreme Court of Queensland by making an application for a statutory order of review under section 20 of the Judicial Review Act 1991 (Qld) (JR Act)21.

An application for review under the JR Act can only be made on one or more of the grounds set out in section 20(2)(a)-(i) of the JR Act.

For information about commencing proceedings in the Supreme Court of Queensland go to the Queensland Courts website.

Your organisation should consider obtaining independent legal advice before making a judicial review application.

Effect of a decision

Organisation has financial hardship status

The effect of a decision of the Information Commissioner that a non-profit organisation has financial hardship status is that any processing or access charge for an access application made under the RTI Act by the organisation must be waived22.

Further information and guidance on the process relating to waiver of charges under the RTI Act is set out in the Guideline: Fees and Charges.

The decision has effect for one year from the date of the decision23.

If during the year that a decision that your organisation has financial hardship status is in effect, there is a substantial improvement in your organisation's financial circumstances, you must, as soon as is practicable, give the Information Commissioner written notice of that improvement24.

If your organisation has been granted financial hardship status by the Information Commissioner, when making an access application to an agency or Minister, you will need to provide the agency or Minister with evidence of the Information Commissioner's decision—this can be done by attaching the decision notice to your access application25.

Organisation does not have financial hardship status

If the Information Commissioner decides that your organisation does not have financial hardship status, you may not make another application for a decision under section 67(1) of the RTI Act unless either of the following applies:

  • there is a substantial deterioration in your organisation's financial circumstances26
  • more than one year has passed since the date of the Information Commissioner's decision.27

Substantial improvement or deterioration

The terms substantial improvement and substantial deterioration are not defined in the RTI Act and therefore, should be given their ordinary meaning as set out below.

Definitions

The Macquarie Online Dictionary sets out the following definitions:

substantial: of ample or considerable amount, quantity, size, etc ... of real worth or value.

improvement: the act of improving; the state of being improved; a change or addition whereby a thing is improved; some thing or person that represents an advance on another in excellence or achievement; a bringing into a more valuable or desirable condition ... making or becoming better; a betterment.

deterioration: to become worse; to make worse; make lower in character or quality.

Accordingly, if your organisation's financial circumstances considerably improve or become better within the year that a financial hardship status decision is in effect, you must, as soon as is practicable, give the Information Commissioner written notice of the improvement under section 67(4)(a) of the RTI Act.

In contrast, if your organisation suffers a considerable worsening in its financial circumstances within a year of a decision being made that it is not in financial hardship status, you may re-apply to the Information Commissioner for a decision on your organisation's financial hardship status.28

Whether your organisation's financial circumstances have undergone a substantial improvement or substantial deterioration will depend upon your particular situation and will be determined by the Information Commissioner objectively, based on supporting evidence. The box below provides guidance on such determinations.

Example

SUBSTANTIAL IMPROVEMENT

Using the ratios set out above as a guide, if at the time of a decision that an organisation was not in financial hardship, the organisation's:

  • current ratio was less than 2
  • quick ratio was less than 1,

but following an incident/change in the organisation’s finances, the:

  • current ratio increases to more than 2
  • quick ratio increases to more than 1,

it will be assumed that an organisation can meet short-term financial obligations within the ordinary course of business as they arise — this may constitute a substantial improvement in financial circumstances.

SUBSTANTIAL DETERIORATION

Using the ratios set out above as a guide, if at the time of a decision that an organisation is in financial hardship status, the organisation's:

  • current ratio was 2 or more
  • quick ratio was 1 or more
  • ratios have since fallen below those levels as a result of an incident/change in the organisation's finances,

this may amount to a substantial deterioration in the organisation's financial circumstances.

Revoking a decision

The RTI Act provides that the Information Commissioner may revoke a decision that a non-profit organisation has financial hardship status on the basis of its financial circumstances29.

If a decision that your organisation has financial hardship status is revoked, the Information Commissioner will, as soon as practicable, give you prescribed written notice of the revocation.30

The requirements of a prescribed written notice are summarised in section 4 of this guideline and are examined in detail in the Guideline: Statement of Reasons - Making decisions under the RTI Act and IP Act.

The prescribed written notice of the revocation will set out the right of review to QCAT under section 120 of the RTI Act.31

If the Information Commissioner revokes a decision on financial hardship status while your access application is being processed by an agency or Minister, you must immediately advise the agency or Minister that the decision has been revoked.32

Summary

Applications by non-profit organisations for financial hardship status need to be made to the Information Commissioner before an access application is made to an agency or Minister. Accordingly, if your organisation wants to apply to an agency or Minister for access to documents, you should consider the content of this guideline before making an access application.

To ensure the efficient processing of applications by the Information Commissioner, you should include as much evidence as possible with your application for financial hardship status— see section 2.4 of this guideline.

Once the Information Commissioner makes a decision on the financial hardship status of a non-profit organisation, that decision will be published on the Information Commissioner's website and have effect for one year from the date of the decision.

If your organisation has been granted financial hardship status by the Information Commissioner, you will need to provide the agency or Minister with evidence of the Information Commissioner's decision when making an access application during the year in which the decision has effect.

  • 1 Set out in section 129(b) of the RTI Act. [up]
  • 2 The chief executive of the Department of Premier and Cabinet was the prescribed person for making such decisions under schedule 4, part 3, section 10(3) of the repealed FOI Act. [up]
  • 3 Section 66(2)(b) of the RTI Act. [up]
  • 4 Section 67(3) of the RTI Act. [up]
  • 5 The approved form for access applications under the RTI Act. The form can be accessed at the Right to Information website. [up]
  • 6 At point 9 of the approved form. [up]
  • 7 Section 38(4) of the Acts Interpretation Act 1954 (Qld) [up]
  • 8 This definition is set out in the dictionary in Schedule 6 of the RTI Act. [up]
  • 9 [1999] AATA 13, 14 January 1999 (WAJ). [up]
  • 10 [1999] AATA 13 at paragraph 21. [up]
  • 11 [1999] AATA 13 at paragraph 22. [up]
  • 12 Van De Wiel and Civil Aviation Safety Authority [2006] AATA 207, 7 March 2006 at paragraphs 12-21 (Van de Wiel and CASA) and Brighton-Stangstins and Australian Competition and Consumer Commission [2008] AATA 773, 29 August 2008 at paragraphs 40-42. [up]
  • 13 Van De Wiel at paragraph 17. [up]
  • 14 FG O'Brien Pty Ltd v Elliott [1965] NSWR 1473 at 1475. [up]
  • 15 Hoggett and Edwards, Financial Accounting in Australia, 4th ed. (2000), p 570 (Hoggett and Edwards) [up]
  • 16 Hoggett and Edwards at page 570. [up]
  • 17 Hoggett and Edwards at page 570-571. [up]
  • 18 Hoggett and Edwards at page 571. [up]
  • 19 Hoggett and Edwards at page 571. [up]
  • 20 Section 67(4) of the RTI Act. [up]
  • 21 Copies of Queensland legislation can be obtained online. [up]
  • 22 Section 66(2)(b) of the RTI Act. [up]
  • 23 Section 67(3) of the RTI Act. [up]
  • 24 Section 67(4)(a) of the RTI Act. [up]
  • 25 Refer to section 7 of the approved RTI application form. [up]
  • 26 Section 67(7)(a) of the RTI Act. [up]
  • 27 Section 67(7)(b) of the RTI Act. [up]
  • 28 Section 67(7)(a) of the RTI Act. [up]
  • 29 Section 67(4)(b) of the RTI Act. [up]
  • 30 Section 67(5) of the RTI Act. [up]
  • 31 This is considered in section 4.1 of this Guideline. [up]
  • 32 Section 67(6) of the RTI Act. [up]

Current as at: October 24, 2017