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.

Source

• RNZ

According to the Department of Internal Affairs policy general manager, Raj Krishnan, the issue of tax exemption for religious charities such as Sanitarium and Destiny Church will not form part of the review.

Krishnan said lots had changed for the more than 27,000 charities since the Charities Act had been implemented more than a decade ago.

The Department of Internal Affairs received more than 300 submissions about charities and Krishnan said there had been numerous calls for religious charities' tax exemption to be scrapped.

Many of the submitters considered 'furthering religion' not to be a charitable activity.

Last May, Cabinet made the decision not to include the issue in the review.

The Charities Act has been in place since 2005 and, in a statement, the Government says it is there to help society through the effective impact of charities.

"Charities play a vital role in supporting the wellbeing of people and communities throughout New Zealand. Public feedback gives us a chance to hear what needs improving so charities can continue to thrive and make a difference," Krishnan said.

"An effective Act will help ensure that our charities sector is as impactful as possible and enjoys the public's trust and confidence."

Twenty-one community meetings will also be held throughout the country over March and April as part of the public consultation process, reports RNZ.

The tax-free status applies to all registered charities, including charitable trusts, iwi groups and not-for-profits.

The government's Tax Working Group has been looking at charities as part of its wide-ranging review of New Zealand's taxation.

Last year the Auckland City Council conducted an urgent review of rates bills after, without consultation, hundreds of the city's churches were issued new rates bills.

The council claimed many Churches were using parts or all of their property for business rather than religious purposes.

Sources

• RNZ
• Department of Internal Affairs
• CathNews
• Image: Vinnies

Charities who spend more than $1m per year are being forced to open up their books, in some cases for the first time, under new laws which came into effect this month.

The Charities Service say the new laws will bring greater transparency in the sector, but churches say they are having to spend up to $100,000 on auditing fees.

CHARITABLE STATUS

* For charities with an annual expenditure of $1m or more: Financial statements must be audited by a qualified accountant

* If spending is between $500,000 and $1 million: Financial statements must be reviewed by a qualified accountant

* Less than $500,000: Can choose to have their financial statements reviewed or audited.

* NZ's registered charities receive about $1.2b each year in donations.

Source

• www.stuff.co.nz

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."

Source

• Stuff.co.nz
• National.org.nz
• socialdevelopment.org
• Image: Thomas.co.nz