Modernising the Mechanics of Charities in the New Year

Written by Tayla Westman 

Charities play an essential role in our community and are key to providing much needed support.

There are over 28,000 charities registered in New Zealand. About half of all Kiwis are involved in charity work, whether it is as a volunteer or directly with the community. Charities also play a vital role in our economy, having contributed over $20 billion last year.

Much of the law governing charities in New Zealand is set out in the Charities Act 2005 (“the Act”). The Act was established nearly twenty years ago, and Parliament recognised a need to review the legislation in light of the many changes that have occurred since. The journey to review the legislative scheme was first initiated in 2018, and now, over four years later, the Charities Amendment Bill (“the Amendment”) has had its first reading in September. Similarly, we have seen the monumental modernisation of the laws of incorporated societies, with the brand new Incorporated Societies Act 2022. New Zealand has not seen the amendment of the Incorporated Societies Act in over a century.

The overarching goal of the Amendment is to modernise the law governing our charities – ensuring that the Act is “fit for purpose” in the present day. There are five key changes being proposed:

1. Lowering the standard of financial reporting to reduce the compliance burden and recognise that smaller charities are disadvantaged by the current reporting requirements;
2. Providing further detail into the role of officers and the governance of charities;
3. Mitigating barriers to accessing justice by offering alternative pathways for charities in the appeal process;
4. Improving regulatory decision-making requirements to encourage greater transparency and fairness to strengthen transparency with the public; and
5. Evolving regulatory compliance and enforcement tools used for and against charities to improve the ability for charities to prosper and operate appropriately.

The Minister responsible for the amendment, Priyanca Radhakrishnan, summarises the proposed changes as “simply about making things easier for charities and maintaining public support”.  She also described it as being designed to improve accessibility, transparency and “freeing up resources so charities can get on with the mahi that they’re passionate about”. It hasn’t been without push back. The National Party has questioned whether the Amendment falls short of the rigorous modernisation the Act needs. National MP Andrew Bayly has argued it’s more a tweak than a substantive change.

The Amendment has passed its first reading so it now sits with the Select Committee who are inviting submissions until Friday, 9 December 2022. With more than 145,000 Kiwi’s employed full time in jobs in the charitable sector, a high volume of submissions are expected. We look forward to seeing how the Amendment evolves as the bill progresses.

You can read the proposed Amendment here.

More information on how you can make a submission to the select committee is available here.