Modernising the Charities Act 2005

Updated 26 October 2021

Status update on Modernising the Charities Act

The targeted engagement phase of this work has been completed. Themes from the discussions and the submissions will likely be provided on this webpage following Cabinet consideration of the policy proposals, rather than the end of September as previously advised. If the Cabinet paper is approved it will be proactively released within 30 business days of the Cabinet decisions being made – likely to be early 2022.

The Policy team would like to thank all of you who engaged with us during this year, including the meetings that were held during lockdown in August and September. Your time and knowledge is much appreciated and you have greatly helped the work we were able to develop.

Resuming work to modernise the Charities Act 2005

Te Tari Taiwhenua Department of Internal Affairs (the Department) is resuming targeted engagement with the charitable sector and other interested parties to inform advice to the Minister for the Community and Voluntary Sector on detailed legislative amendments to the Charities Act.

The initial topics to be advanced are focused on changes to address some of the practical day-to-day process and transparency issues faced by the charitable sector, to allow charities to focus on working with communities. These topics are:

  • reporting requirements for small charities;
  • charities’ business and accumulation activities;
  • investigating potential improvements to the appeals mechanism;
  • matters relating to the regulator; and
  • duties of officers of charities.

Many of New Zealand’s more than 27,000 charities engaged with us in 2019 and provided us with a lot of information about the issues they are facing. This previous work forms a solid foundation to work from and there is now an opportunity to continue engagement with a more targeted group of stakeholders to provide important input as we develop policy options. It is expected that this work will lead to legislative proposals in 2022-2023.

Overview of the charitable sector and the Charities Act

Overview

The charitable sector contributes significantly to New Zealand society. These charities contribute in diverse areas including sports, recreation, arts, culture and heritage, emergency and social services, health, education, religion, conservation and the environment. There are more than 27,000 registered charities in New Zealand. The sector has an annual total income of more than $18 billion and it is supported by more than 230,000 volunteers and 180,000 paid part-time or full-time staff.

Charities Act 2005

In 2005, the Charities Act was enacted. The Act aims to promote public trust and confidence in the charitable sector. It provides for the registration of societies, institutions, and trustees of trusts as charitable entities. It also places certain obligations on charitable entities, such as annual reporting. Being listed on the charities register entitles an organisation to tax exemptions on most income under the Income Tax Act 2007. Registration on the charities register is voluntary. 

Link to Charities Act 2005 (Legislation NZ website)

Background to the work to modernise the Charities Act

The original Charities Bill was introduced into Parliament in 2004, and led to establishment of a Charities Commission. The charities register (which provides the purposes, activities and annual returns for all registered charities) commenced in 2007.

In 2010, the former Minister for the Community and Voluntary Sector announced an intended review of the Charities Act 2005, to assess both the effectiveness of the Charities Commission since its inception in 2005 and the “charitable purpose” definition.

However, in 2011, the Government disestablished the Charities Commission, transferring its functions to the Department of Internal Affairs and an independent Charities Registration Board. This was part of the Crown Entities Reform Bill: https://www.parliament.nz/en/pb/bills-and-laws/bills-digests/document/50PLLaw19581/crown-entities-reform-bill-2012-bills-digest-no-1958#RelatedAnchor

Cabinet decided in 2012 not to continue with a review, as the new regulatory regime was still bedding in, and the definition of charitable purpose was considered to be generally working reasonably well. The following Cabinet papers and minutes related to that decision were proactively released by the Minister:

In 2018, the Minister for the Community and Voluntary Sector announced that a review of the Act would be undertaken, noting that while the fundamentals of the Act are considered sound, there are a range of substantive issues that would be considered. The February 2018 edition of the Charities Services newsletter outlined that preparatory work to begin a review of the Charities Act was well underway.

Read the Minister's media release on the Beehive website (24 May 2018) 
Read the newsletter or to subscribe to future editions of the newsletter (Charities website)

The Minister announced the terms of reference for the review in May 2018. The full terms of reference can be found here: Earlier documents.

The Department’s work on the Charities Act was paused in May 2020

Public consultation 2019

DIA hosted 27 community meetings about Modernising the Charities Act between 6 March and 18 April 2019 in the following locations:

  • Porirua (Pasifika charities)
  • Carterton
  • Wellington
  • Wellington (Māori charities)
  • Whangarei
  • North Shore
  • Waitakere
  • South Auckland
  • Auckland Central
  • Hamilton
  • Whakatane
  • Rotorua
  • Lower Hutt
  • Hawke’s Bay
  • Gisborne
  • New Plymouth
  • Palmerston North
  • Nelson
  • Christchurch
  • Dunedin 
  • Invercargill

Community meetings raised a number of common themes, summarised below:  

DIA also hosted an online meeting presentation. This was the same presentation that DIA staff made at community meetings. At the end of the presentation, DIA staff also answered some common questions that had been raised at community meetings.

This video is  available to watch on demand at the link below:

Summary of submissions from public consultation

  • The Department announced the release of the summary of submissions from public consultation on Modernising the Charities Act in December 2019.
Modernising the Charities Act 2005 - Summary of submissions (PDF, 1.3MB)
Read the media release: Summary of public feedback on Charities Act released (10 December 2019)
  • The summary of submissions summarises the views of 363 individuals and organisations that submitted on the discussion document between late February and 31 May 2019. All written submissions have also been published on this website.
  • The submissions are available here: Submissions. For further information see: Questions and Answers 
  • The next step is to carefully work through the complex issues raised by submitters and identified in the discussion document. The Department will provide advice on these issues to the Minister for the Community and Voluntary Sector. No legislative changes will be proposed without further consultation. 
  • The Department’s work on the Charities Act was paused in May 2020. We intend to advise Ministers on re-commencing the work, in late 2020. The Department will advise the sector of the government’s intended policy process for considering issues raised in public consultation, when this process has been agreed.

Core Reference Group (CRG)

The Department established the CRG to assist- work to modernise the Act. As outlined in the terms of reference, the Department will work closely with the CRG on the review.  The Department is working with members to confirm their involvement as sector representatives on the work to modernise the Charities Act. 

Earlier documents

Contact the team

If you can’t find the information you need on this page or if you have any further questions please email charitiesact@dia.govt.nz