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Labour’s charity spokeswoman, Louisa Wall, and Christchurch charity expert Dr Michael Gousmett have criticised the lack of accountability of subsidised charitable organisations.
Under the existing law charitable organisations are allowed tax relief, and receive subsidies with no public benefit test holding them to account.
Gousmett says that while charities must make their financial accounts publicly available under the charities register they do not have to explain what they do to justify their charitable status.
Merely operating as a hospital or school is seen to meet the criteria of charitability because it relieves pressure on the public system, even if the charity is charging fees largely unaffordable to most people.
But Wall said charitable trusts that benefit only the wealthy were “creating divisions between the haves and the have-nots”.
“Those who least need charity are benefiting the most. It is helping those who can afford to pay to go to private hospitals and private schools, not those who actually need the help.
“We as a country are giving these organisations up to $600m worth of tax relief under the assumption that $600m should be reinvested back into the community, and if that is not happening we desperately need to change the law”.
In 2010 the Government announced its intention to undertake a first principles review of the Charities Act before 2015.
But last year Community and Voluntary Sector Minister Jo Goodhew said that Government would not, for the time being, proceed with a review of the Charities Act 2005.
“The decision to not conduct a review for now reflects that the regulatory regime for charities is still bedding in and the continuing constrained fiscal environment,” Goodhew said.
Wall fought against the disestablishment of the Charities Commission into the Department of Internal Affairs (DIA) in 2012 and was outraged when the Government decided to quash a review of the Charities Act.
Social Development Partners, an organisation for community organisations, believes that relevant, modern definition of charitable purpose would provide huge support to the community sector.
They say community organisations are “struggling under multiple loads of ever-increasing demand and complexity in community needs, increased compliance and reduced funding.”
“We need a modern definition in order to be able to function in a modern world.”
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