The changes that came into force on 5 July 2023 do not require charities to make any changes. Charities should continue to ensure that all decisions are made in the best interests of their charity’s stated charitable purposes, and comply with their current financial reporting and notification obligations.

Note that the Charities Amendment Act does not reduce the financial reporting requirements for small, tier 4 charities. Tier 4 registered charities – i.e., those with annual operating payments under $140,000 – should continue to report under the current standards until new regulations are made. A simplified tier 4 standard was issued in May 2023 which tier 4 charities can use for accounting periods that end after 15 June 2023. 

Charities will need to certify that all the following people are qualified to be an “officer” of a registered charity, list them all on the charities register, and notify any changes to them:

all members of the charity’s governing body;

all persons occupying a position in the charity (such as a chief executive or treasurer) who are able to exercise “significant influence over substantial decisions” of the charity; and

all persons with powers conferred on them to make decisions that would otherwise fall on the governing body (regardless of whether they hold a position in the charity).

From 5 October 2023, the Charities Registration Board will be able to ban any of the above people from being an “officer” of a registered charity by sending them an email to that effect. Having done so, the Board is then required to publish the banning order and the reasons for it on the internet. It is left to charities to work out how to deal with any employment law implications of such an order. Note that for charities that are also incorporated societies, a different definition of “officer” applies under the Incorporated Societies Act 2022.

Every registered charity will need to tick a box in their annual return to say that, in the last three years, they have reviewed their governance procedures (whether contained in the charity’s rules or elsewhere) to ascertain whether they are fit for purpose, and whether they assist the charity to “achieve” its charitable purpose and its obligations under the Charities Act. In addition, new section 36A will provide that the role of an officer of a registered charity includes assisting the entity to “deliver” its charitable purpose, and comply with its obligations under the Charities Act or any other enactment. Charities should be aware that these new provisions do not displace their underlying legal duties, the primary one of which is to act in good faith to further the charity’s stated charitable purposes in accordance with its rules.

Every registered charity will need to ensure that at least one of its “officers” is at least 18. We understand that every registered charity in New Zealand already meets this requirement.

Every “collector” fundraising on behalf of a registered charity will need to disclose the charity’s registration number if requested to do so by a member of the public.

New section 13A will give legal legitimacy to Charities Services’ practice of conducting “charitable purpose reviews”. Charitable purpose reviews are a misnomer, because they primarily relate to a vetting of charities’ activities, often in isolation from the purposes in furtherance of which they are carried out. Aside from failure to file annual returns, charitable purpose reviews are the primary mechanism by which charities are deregistered, or encouraged to voluntarily deregister.

Charities should be aware that important legal documents will be able to be served on them by email, including by email to an “officer” (as widely defined) or similar person. There is no corresponding provision protecting charities in case an email goes astray.

New section 12A can be interpreted to allow Charities Services to “write law”, by posting guidance on its website relating to legal interpretations of the definition of charitable purpose, without any consultation whatsoever.

Charities in tiers 1-3 (that is, with annual expenditure over $140,000) will need to report the reasons why they hold accumulated funds in their annual returns. This change is likely to come into effect in 2024. Charities Services is currently consulting on the annual return forms, and at the time of writing, a number of other changes to the annual return form are also proposed. Charities would be well-advised to provide fulsome responses in their financial statements and annual returns as to the reasons for holding accumulated funds, to demonstrate to decision-makers that this accumulation is indeed being made in good faith in the best interests of a charity’s charitable purposes.

Charities will be able to object to a wider range of decisions made about them by the Board or Charities Services, who must also give the charity the right to appear and be heard (whether in person or by electronic means) before the decision is made. Charities will need to know what provision of the Act a decision is made under in order to know whether they can object to it.

The vast bulk of charities’ appeal rights will be removed: charities will be able to appeal only a limited range of decisions, and appeals will only be able to be made to the Taxation Review Authority (to be known as the “Taxation and Charities Review Authority” or “TCRA” when hearing Charities Act appeals). For most charities, this will make no practical difference. It will if the charity comes under Charities Services’ scrutiny for something and it disagrees or is disadvantaged by any decision. And it will also make a difference to the general climate within which all charities operate, and so will make an indirect difference to all charities. It is not yet clear how the appeals process will work in practice, and whether it will address concerns that charities’ current inability to properly challenge adverse findings of “fact” reached by Charities Services from its internet searches effectively tilts the playing field in favour of Charities Services and the Board. More detail may be provided by regulations which have not yet been released. Case law on the definition of charitable purpose will not be developed unless a TCRA decision is appealed to the High Court. The new appeals process may also have the practical effect of removing charities’ ability to appeal to the Supreme Court.