Following a comprehensive review of the Charities Act, the Government is moving ahead with changes to modernise the legislation that will increase transparency for the public, improve access to justice services and reduce the burden on smaller charities, Community and Voluntary Sector Minister Priyanca Radhakrishnan said.
The review of the Charities Act commissioned by the Government was led by the Department of Internal Affairs.
The changes will include reduced reporting requirements for very small charities, increased transparency on accumulated funds and a more accessible tribunal for charities that want to appeal decisions.
“There are about 28,000 registered charities that contribute greatly to New Zealand society, we want to ensure that our legislative settings are fit for them to continue supporting our communities into the future, Priyanca Radhakrishnan said.
“The past two years have shone the spotlight on the important role they play in supporting New Zealanders. We are progressing tangible changes that will support charities to thrive while ensuring the public have trust and confidence in the charitable sector.”
Very small charities will benefit from an easing of financial reporting requirements to the regulator.
“This will free up resources to allow volunteers to spend more time focused on communities and doing the mahi they are passionate about,” Priyanca Radhakrishnan said.
The changes will lead to greater transparency from larger charities with annual operating expenses over $140,000, requiring them to declare and explain any accumulated major funds such as cash, assets or other resources.
“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.
“Transparency builds trust, and the public need to be able to trust charities responsible with their tax-free income” Priyanca Radhakrishnan said.
As part of Budget 2022, the Government is also investing $1.7 million to enable charities to appeal a wider range of decisions.
Appeals to significant decisions will be made to an expanded Taxation Review Authority instead of the High Court, in response to calls from the sector to make the process less expensive and time-consuming.
The new appeals process will improve access to justice by allowing charities to self-represent and have more relaxed rules of evidence, while the timeframe for lodging an appeal will be extended from 20 days to two months.
“I want to make it easier and less costly for charities to appeal decisions,” Priyanca Radhakrishnan said.
“It is important that our system doesn’t just work for those who have the resources to navigate it. The same service and the same access must be available to everyone.”
A bill is expected to be introduced this year to make these amendments to the Charities Act. The public will have an opportunity to provide feedback through the Select Committee process.
The passing of the Charities Act Amendment Bill will mark the completion of a significant phase of work. After taking action on immediate changes the Minister will then consider a process to address more fundamental issues raised in the review.