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

The sector collectively manages  $65b in assets

Maria Robertson is the deputy chief executive at Internal Affairs who has responsibility for the Charities Service.

She says that of the more than 28,000 charities on the register only one was deregistered for serious wrongdoing over the past year.

Another handful received formal warnings, with some of those voluntarily deregistering.

A series of investigation reports prepared by the Service, and obtained by the New Zealand Herald under the Official Information Act, show:

• Some occasionally have trouble following rules about who is qualified to manage them. Those convicted of dishonesty offences are not permitted to do so.
• Sometimes  fail to be sufficiently transparent. These failings raise the risk of funds going missing.
• In several cases investigators found evidence that charities were being run for personal gain, not for charitable purposes.

An Internal Affairs Charities Service investigation dubbed "Operation Timepiece" into the New Zealand-registered Mulligan, Shepherd and Birdy Charitable Trusts Charitable Trust found some donations were made locally to Starship and Plunket.

However the vast majority of its distributions - almost $5m since 2012 - were directed offshore to a related Swiss entity.

Officials concluded the complex structure - involving multiple layers of entities from New Zealand, Switzerland, Panama and the Isle of Man, $140m in foreign currencies and a stock portfolio managed at Swiss banks - was likely designed to avoid the scrutiny of the United States' Inland Revenue Service.

Source

• nzherald.co.nz
• nzherald.co.nz
• Image: radionz.co.nz

If anything is uncovered a full investigation will then be carried out.

But stripping Destiny Church of its charity status risks turning Charities Services into a censor, a charity law expert says.

To be removed from the charities register the law requires evidence of "serious wrongdoing", said Sue Barker, director of law firm Charities Law and also the co-author of The Law and Practice of Charities in New Zealand.

"And deregistering a charity for "speaking out" could have the "chilling effect" of silencing others, Barker said.

"Do we really want the charities register to be the chief censor?

Destiny Church is registered under its Auckland, Christchurch, Hamilton, Nelson, Taranaki, Tauranga, Wellington, Whakatane, and Whangarei branches.

There are 27,934 registered charities in New Zealand, according to the Charities Services. There are hundreds, if not thousands, which fail to get onto the register, Barker said.

"It's already very hard ... I argue we want them on the register because then they're subject to all this transparency."

"If they're not on it, and are carrying on with their work, what regulation are they subject to? Probably not any."

Barker said Tamaki himself is not a charity so his income should be taxable.

"I am not aware of his tax profile but I'm presuming he is an employee and he should pay tax on the income that he receives, unless he has an exemption but I can't think of one that he would qualify for," she says.

On Friday a spokesperson for the church said they have had no communication with Charities Services so would not be commenting on the development.

Source

• nzherald.co.nz
• stuff.co.nz
• nzherald.co.nz
• lawsociety.org.nz
• Image: resources.stuff.co.nz