Policy & Law Reform Advocacy

1. The question

Prof. Deen Sanders has expressed an interest in contributing his legal-reform expertise to LWD under theory-of-change principles — identifying the specific legislative and regulatory settings that fail Australian households facing terminal illness with consumer debt, and drafting the reform pathway.

The question posed to the CFO Advisor is narrow and clean: does the Constitution of Life Without Debt Ltd permit donations to fund that work?

This memo answers that question in three parts: (i) the clause that permits it, (ii) the three qualifications that constrain it, and (iii) the governance path to green-light the stream properly.

2. Short answer

3. The enabling clause — Clause 4(c)

Clause 4 — the paramount clause — states that the purposes of the Company are exclusively charitable, being four items. The third is directly on point:

“to advance social or public welfare in Australia by educating creditors, the medical community, the legal community, and the Australian public about the intersection of terminal or serious illness and financial hardship, and by advocating for policy and industry reform directed to relieving that hardship, in ways that further, and are ancillary to, the benevolent relief described in paragraph (a)”

Clause 5(f) then supplies the operational power: the Company may “conduct research, publications, education, campaigns and advocacy directed to the purposes in clause 4.”

The drafting is deliberate. “Policy and industry reform” is broad enough to cover:

1. drafting legislative-reform position papers identifying the specific provisions of the Bankruptcy Act 1966, the National Consumer Credit Protection Act 2009 (particularly the hardship regime), the Insolvency Practice Rules (Corporations) 2016, and ASIC RG 96 as they apply to terminally-ill debtors;
2. preparing model bills, model regulator guidance, and explanatory memoranda for those reforms;
3. authoring submissions to Senate committees, Treasury consultations, ASIC / AFCA / ACCC consultations, and Law Reform Commission inquiries;
4. providing the legal-mind analytical layer for the Theory of Change evidence base — the causal chain from the current legislative settings, through the harms they impose on the beneficiary class, to the proposed reform and the estimated relief it would generate;
5. engaging with industry bodies (the Australian Banking Association, AFIA, Financial Counselling Australia, the Consumer Action Law Centre) on voluntary code reform where legislative reform is impractical or premature;
6. appearing before Senate Estimates or the House Standing Committee on Economics to give evidence, and meeting with MPs of any party where the meeting is about the substance of the reform (not the fortunes of the party).

4. Three qualifications

Constitutional permission is not the same as unlimited discretion. Three qualifications in the Constitution and the surrounding regulatory law constrain how — and how much — this work can be funded.

4.1 Qualification 1 — the “ancillary” test in Clause 4(c)

The advocacy purpose is expressly “in ways that further, and are ancillary to, the benevolent relief described in paragraph (a).” This is not decorative language. It is the ACNC’s Public Benevolent Institution (PBI) test written into our own constitution.

Operationally: this means every engagement with Prof. Sanders (or any other advocacy engagement) needs a short “how this advances benevolent relief” memo attached to the engagement letter — a plain-English 1–2 paragraph statement drawing the causal line from the reform sought back to the benevolent relief of the beneficiary class. That is the paper trail that protects the PBI classification when the ACNC reviews the AIS.

4.2 Qualification 2 — the political-purpose bar in Clause 6.2(b)

Clause 6.2 — the restriction-on-powers clause, which by Clause 6.3 overrides any other clause in the Constitution to the extent of any inconsistency — provides:

“The Company must not: … (b) engage in or promote activities that are unlawful, or contrary to public policy, or that promote or oppose a political party or candidate for political office”

This is the standard Aid/Watch Incorporated v Commissioner of Taxation [2010] HCA 42 boundary written into the Constitution. The High Court in Aid/Watch confirmed that advocacy for law reform is a permitted charitable purpose in Australia, and specifically rejected the older English rule that political-purpose advocacy was per se non-charitable. But Aid/Watch did not authorise partisan campaigning — and Clause 6.2(b) codifies that limit.

Permitted on LWD funds (advocacy for law reform)	Not permitted on LWD funds (partisan campaigning)
Submitting to public inquiries; publishing position papers; drafting model amendments; meeting with MPs of any party about the substance of the reform; appearing before Senate committees; engaging with regulators (ASIC, AFCA, ACCC); engaging with industry codes	Endorsing a party or candidate; opposing a party or candidate; branding LWD to a partisan campaign; making donations to political parties; running “how to vote” material; lobbying for outcomes whose predominant beneficiary is a party rather than the beneficiary class

Practically, the guardrail for Prof. Sanders’ work is that meetings with MPs are conducted on a bipartisan basis, submissions are made public, and no LWD communication endorses or opposes any political party or candidate for office. This is fully compatible with sustained, effective advocacy — it just requires that the advocacy be about the reform, not about the players.

4.3 Qualification 3 — the payment mechanism must sit inside the permitted-payments carve-out

Clauses 7 (Not-for-profit character) and 23 (Directors’ remuneration), read together with the Related-Party Transactions Policy, govern how Prof. Sanders may be paid. The mechanism depends on his role at the time payment is made:

Deen’s role at time of payment	Payment mechanism	Controls
Director / Responsible Person (if appointed to the Board)	Permitted-payments carve-out under Clause 7.3(b), delivered as Directors’ fees or a professional-services engagement	Market rate, Board-approved with Deen recusing (Clause 23 + Conflicts of Interest Policy), documented in the Related-Party Transactions Register, disclosed in the Annual Information Statement (AIS)
External professional (contractor / retained counsel, not a Director)	Straightforward supplier expense under Clause 5 general powers	Market rate, engagement letter on file, documented in the Related-Party Transactions Register because Deen is a “person of influence” regardless of formal role, invoices describe charitable-purpose work (not personal work)

Either way, the invoices and timesheets must describe charitable-purpose work under Clause 4(c) — not general legal advisory work, and not work whose predominant beneficiary is Prof. Sanders personally, another entity he controls, or any non-charitable third party.

5. Governance path to green-light the stream

The clean way to open this properly — producing a paper trail that would satisfy the ACNC on a routine AIS review, and that Prof. Sanders would sign as a professional-standards subject-matter expert — is a four-step sequence:

Step 1 — Board resolution adopting a Policy & Law Reform Advocacy Policy

At the first constitutional Board meeting, adopt a short (2–3 page) formal policy that:

1. recites the Clause 4(c) authority as the enabling purpose;
2. restates the Clause 6.2(b) partisan bar as the guardrail;
3. sets an annual advocacy-spend cap as a percentage of total charitable expenditure — my proposal is 15% cap for the first three years, on the reasoning that (i) the direct-relief work must visibly remain the dominant activity for PBI purposes, (ii) 15% is comfortably below the “substantial” threshold the ACNC would view with concern, and (iii) it leaves scope for the reform stream to grow into as the direct-relief programme reaches scale;
4. requires Board pre-approval for any single engagement above $10,000 and Chair-plus-CFO pre-approval below that threshold;
5. requires a plain-English “how this advances benevolent relief” memo attached to every engagement above $10,000, and to every engagement below that threshold in aggregate quarterly review;
6. requires that the finished work product is published (position papers, submissions, model amendments) so the public-benefit character of the expenditure is demonstrable;
7. requires annual reporting to Members and to the ACNC AIS: the Annual Policy & Law Reform Advocacy Report naming the reforms pursued, the spend, the outcomes achieved (or not), and the beneficiary-class impact.

Step 2 — Engagement letter with Prof. Sanders

A single-page engagement letter citing:

1. the Clause 4(c) purpose that the engagement advances;
2. the specific scope of work (e.g. “a legislative-reform position paper on the compassionate-discharge provisions of the Bankruptcy Act, addressing the intersection with terminal illness”);
3. the compensation, at market rate for professional-regulation subject-matter expertise at HA5 level (Prof. Sanders’ rate as an independent professional adviser is the reference point);
4. the intellectual-property position — LWD owns the work product for its charitable purposes; Prof. Sanders may cite the work in his academic capacity;
5. the conflict-handling protocol (recusal from Board discussion of his own engagement; disclosure of any professional overlap with the reform target);
6. a “how this advances benevolent relief” memo attached (the Section 4.1 requirement).

Step 3 — Related-Party disclosure filed

Because Prof. Sanders is on the HAS §8.5 governance roster as an HA5 accountable sign-off, the engagement is filed in the Related-Party Transactions Register at inception, regardless of whether he holds a formal Director role at that time. This is the disclosure discipline that keeps the ACNC comfortable and protects the transaction from later challenge.

Step 4 — Annual reporting to Members and to the ACNC

At each Annual General Meeting, and in the ACNC Annual Information Statement, the Annual Policy & Law Reform Advocacy Report is presented and filed. This is the transparency signal that keeps the stream sustainable. If the reform stream ever grows to look material against the direct-relief stream, the AIS makes that visible, and the Board has the data to re-set the 15% cap or re-scope the stream.

6. Caveat and sign-off path

This separation of the memo-review step from the engagement step is the discipline that protects both LWD and Prof. Sanders. He gets to say what he thinks the professional standards require, independently of whether he is later paid; LWD gets an authoritative sign-off from someone who cannot later be criticised for having authored his own retainer.

7. Illustrative work streams that would satisfy the discipline

To make the discussion concrete, four illustrative engagements that would sit clearly inside all three qualifications and the governance path:

Engagement	Clause 4(c) linkage	Estimated spend band
Legislative-reform position paper: compassionate-discharge provisions of the Bankruptcy Act 1966 in the context of terminal illness — identifying failures, proposing amendments	Direct: reform would materially reduce the debt burden the beneficiary class carries at end of life	$8,000–$15,000
Submission to Treasury on the NCCP hardship regime — the case for a specific terminal-illness pathway	Direct: reform would materially expand the hardship options open to LWD advocates working with beneficiaries	$5,000–$10,000
Legal-mind analytical layer of the Theory of Change — the causal chain from current legislative settings to beneficiary harms to reform to relief, with case law and empirical citations	Direct: underpins every subsequent advocacy engagement and the AIS narrative	$15,000–$25,000
Industry-code engagement with the Australian Banking Association on treatment of terminally-ill debtors under the Banking Code of Practice	Direct: voluntary code reform is often achievable before legislative reform and delivers relief on the same beneficiary class	$10,000–$18,000

Total illustrative first-year advocacy envelope in this scenario: $38,000–$68,000. Against a projected first-year total charitable expenditure envelope for LWD, this sits comfortably below any reasonable reading of the 15% cap in Section 5, and comfortably above the token-effort threshold that would render the advocacy stream ineffective.

8. Recommendation

1. Adopt this memo as the constitutional basis for a policy-and-law-reform advocacy stream at LWD, subject to HA4 sign-off (Laurence) and HA5 sign-off (Lisa).
2. Table the draft Policy & Law Reform Advocacy Policy (to be authored on the back of this memo) at the First Board Meeting, adopting the 15% cap and the governance path in Section 5.
3. Invite Prof. Sanders to review this memo in an arm’s-length capacity (i.e. before, and separately from, any engagement discussion).
4. If Prof. Sanders concurs, and Laurence and Lisa sign, issue the first engagement letter as a bounded pilot — my recommendation would be the “Legal-mind analytical layer of the Theory of Change” engagement (item 3 in Section 7), because it produces a durable foundational asset for every subsequent piece of advocacy work.
5. Review at the end of the first year via the Annual Policy & Law Reform Advocacy Report — and calibrate the cap and the stream forward from evidence, not from theory.

9. Document control

Field	Value
Document type	Constitutional advisory memo — CFO Advisor to Board
Version	v0.1 (draft, pending HA4 + HA5 sign-off)
Author (HA level)	CMO Agent under standing delegated authority (HA2, paired with Carla Oliver at HA4)
Approvers required	Laurence Hugo (HA4, legal soundness) · Lisa Newman (HA5, governance accountability)
Independent stress-test	Prof. Deen Sanders (HA5, professional-standards subject-matter expertise) — arm’s-length from any subsequent engagement
Related documents	Constitution (Clause 4(c), Clause 5(f), Clause 6.2(b), Clause 7, Clause 23) · Conflicts of Interest Policy · Related-Party Transactions Policy · Theory of Change · HAS §8.5 blended-workforce design
Compliance envelope	Pre-establishment. [ACNC registration pending] · [DGR endorsement pending] · PBI endorsed. Clause 4(c) advocacy purpose to be enlivened only after ACNC registration is granted.
Superseded by	The Policy & Law Reform Advocacy Policy once adopted by Board resolution at the First Board Meeting