New charities law reduces admin, demands transparent funding

Parliament’s newly passed charities law expects more transparency over funding, fewer administration requirements and an easier appeals process.

Increased powers have been given to Charities Services – the sector administrator – and to the Charities Registration Board.

Community and Voluntary Sector Minister Priyanca Radhakrishnan says New Zealand’s 28,000 or so registered charities make a great contribution to the country.

The new charities law follows a review by Internal Affairs (DIA). The government ordered the review in 2018 after the Charities Registration Board deregistered Destiny Church’s status as a charity.

The Board said Destiny’s deregistration was in the public interest – it had failed to file financial returns for two years and had ignored multiple warnings in doing so.

Deregistration was as far as the Board could go though.

“Many of New Zealand’s largest charities have significant unexplained accumulated funds. It is important they are transparent about the reasons for holding on to a large quantity of funds, including donations,” says Radhakrishnan.

Very small charities would also be able to get an exemption to financial reporting.

“This will free up resources to allow volunteers to spend more time focused on communities and doing the mahi they are passionate about.”

Making sure all charities are treated equally does matter. “It is important that our system doesn’t work just for those who have the resources to navigate it. The same service and the same access must be available to everyone.”

Proposed changes to the Act

  • Charity requirements – maintaining a charitable purpose, having a rules document, and having qualified officers – will be made explicit.
  • Larger charities (operating expenses over $140,000) must report reasons for accumulated funds on an annual returns form to be designed in consultation with the sector and iwi.
  • Through Charities Services, very small charities can get exemptions from financial reporting. Threshold yet to be developed.
  • Charities Registration Board membership will increase from three to five.
  • The Board may disqualify an officer for ‘serious wrongdoing’ or a significant or persistent breach of obligations, without having to deregister the charity. Part of the ‘serious wrongdoing’ definition will be clarified.
  • The Board must publish decisions if declining an application for registration and deregistering a charity. The Board and Charities Services must publish information on decision-making policies and procedures. Significant decisions will include a clear process for charities to raise objections.
  • Charities Services’ significant decisions, and existing decisions of the Board, will be able to be appealed. Appeals under the Act will go to the TIA first, before the High Court.
  • Charities Services must consult with the sector when developing significant guidance material.
  • Timeframes for submitting objections, administrative information and appeals is extended from 20 working days to two months.
  • DIA will review Charities Services’ performance measures and operational practices.

Radhakrishnan says she expects an amendment bill to be introduced this year, with consultation via the select committee process.

This would be followed up with a process to consider more fundamental concerns raised by the review.


Additional reading

News category: New Zealand, Palmerston.

Tags: , , , , , ,