Regulator fiddles while charities burn
Author: Garth Nowland-Forman
A review of the hastily amended Charities Act 2005 was first promised immediately after its passing in response to it being rushed through under urgency, after a massive rewrite at the Select Committee stage. Subsequently there was no proper consultation on its final form. In the lead up to the 2017 election, the Labour Party then promised to “prioritise the long-promised review of the Charities Act that National abandoned, beginning with a first principles review of the legislation, including examining, updating and widening rather than narrowing the definition of charitable purpose.”
When the current review was launched in 2018, the regulator convinced the government to go back on its pre-election promise, failed to offer a ‘first principles’ review, and specifically excluded the definition of charitable purpose from its terms of reference. Last week the government released the results of this review by the regulator, the Department of Internal Affairs - Charities Act changes to benefit NZ Communities | Beehive.govt.nz
As Sue Barker [charity law expert and recipient of the 2019 Law Foundation International Fellowship on a world leading framework for charities law] concludes “the proposals will do nothing to support New Zealand’s communities, and are more likely to act perversely to preclude the real issues from being addressed.”
There is some marginal relaxing of onerous reporting obligations for small charities with under $140,000 expenses. The irony, however, is that there was always a very low compliance rate amongst the smallest charities, so it is just beginning to recognise reality.
Most of the review proposals, however, are a waste of time – offering little real improvement and in many cases just increasing the regulatory powers without any empirical evidence that there is a problem that needs to be addressed. Charities with operating expenses over $140,000, for example, will have additional disclosure obligations on reserves. The proposal on access to judicial reviews will (despite the misleading rhetoric in the report), in fact, restrict review rights to just four areas. This is despite Parliament’s original intention to allow charities to be able to appeal all decisions made under the Charities Act (something always opposed by Internal Affairs).
Almost none of the substantial issues of concern raised by charities in four years of consultation have been listened to or recognised in this hastily, cobbled together report which continues the trend of tipping the scale in favour of excessive regulation, rather than facilitating a sector to better promote community benefit and build social cohesion.