Charity: Getting started in New Zealand

Understanding Charities in New Zealand

Key Differences from Other Legal Structures

• Tax Benefits: Registered charities receive tax exemptions on income and can offer tax benefits to donors.

• Public Benefit: Unlike businesses, charities must operate primarily for public benefit rather than private profit.

• Governance: Charities must have a formal governance structure with responsible persons (officers) who meet legal requirements.

• Accountability: Registered charities must submit annual returns and financial statements to Charities Services.

Legal Requirements in New Zealand

Registration Requirements

• Must have exclusively charitable purposes

• Must provide public benefit (with some exceptions for poverty relief and religious charities)

• Must not be for private profit

• Must have qualified officers who meet the requirements of the Charities Act

Officer Qualifications

• Be at least 16 years old
• Ensures that officers are mature enough to understand the roles and obligations that

• Not be disqualified from being an officer under the Charities Act

• Not be an undischarged bankrupt

• Not be convicted of a crime involving dishonesty

• Not be prohibited from being a director or promoter of a company

1. Be at least 16 years old: This point establishes a minimum age requirement for charity officers. It ensures that individuals taking on these responsibilities are mature enough to understand the roles and obligations that come with being an officer, while still allowing younger people to engage in charitable work.

2. Not be disqualified from being an officer under the Charities Act: The Charities Act outlines specific circumstances under which individuals are disqualified from serving as charity officers. This could include previous misconduct while serving as an officer or engaging in activities that compromise the integrity of the charity. This requirement ensures that only those who are deemed responsible and trustworthy can hold these positions.

3. Not be an undischarged bankrupt: This means that individuals who are currently undergoing bankruptcy proceedings or have not fulfilled the obligations of a previous bankruptcy cannot serve as charity officers. This is to protect the charity from financial irresponsibility and ensure that its officers are in good financial standing.

4. Not be convicted of a crime involving dishonesty: This stipulation prevents individuals who have been convicted of crimes such as fraud, embezzlement, or theft from serving as charity officers. The rationale is to maintain a level of trust and integrity within the charity, as officers are often responsible for handling finances and making ethical decisions on behalf of the organisation.

When to Register as a Charity

• Your organisation's primary purpose aligns with charitable purposes defined by law

• You need tax exemptions to operate effectively

• You want to receive tax-deductible donations

• You plan to apply for grants from funding organisations

• You want to enhance public trust and credibility

Regulatory Compliance

Financial Reporting

• Submit annual returns within 6 months of financial year-end

• Prepare financial statements according to reporting standards set by the External Reporting Board (XRB)

• Have financial statements reviewed or audited if annual expenses exceed certain thresholds

Ongoing Obligations

• Maintain proper financial records

• Update Charities Services about changes to the charity's details

• Comply with the rules in the charity's governing document

• Meet obligations under other relevant legislation (e.g., health and safety, employment)

Alternative Structures

• Not-for-profit organisation: Can operate without charitable registration but won't receive the same tax benefits

• Social enterprise: Combines social mission with business model

• Incorporated society: Suitable for member-based organizations

• Community trust: May be appropriate for managing community assets

Registration Process

1. Prepare governing documents (trust deed, constitution, or rules)

2. Gather the required information about the organisation and its officers
The organisation’s officers must:
Be at least 16 years old
Not be disqualified under the Charities Act
Not be an undischarged bankrupt
Not be convicted of a crime involving dishonesty
Not be prohibited from being a director or promoter of a company
The organisation itself, must:
Have exclusively charitable purposes
Provide public benefit
Not be for private profit

3. Complete the online application through the Charities Services website

4. Pay the non-refundable application fee of NZD$275. This must be paid at the time of application.†

5. Respond to any queries from Charities Services during the assessment process