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What’s Your Purpose? The Family First decision and other recent developments in charity law.

08 December 2017

New Zealand currently has over 27,800 charities registered on the Charities Register. Registration can come with tax and other benefits.  In order to get on the Charities Register an entity must apply to the Department of Internal Affairs Charities Registration Board (Charities Board), where the Charities Board will consider whether the entity’s purposes are sufficiently charitable.

Before making the step to apply for registration as a charity, it is important to do some homework. Even though a purpose may seem good, or moral, it does not necessarily mean that it will be considered charitable under the law.

There are four broad categories of charitable purposes known as the ‘four heads of charity’, and are as follows:

  • Advancement of education;
  • Advancement of religion;
  • Relief of poverty; and
  • All other purposes considered charitable by the Court.

 

For an entity to be charitable, it must have one or more purpose that aligns with purposes already considered charitable by the Court and it must provide benefits to the public.  The requirement for a purpose to provide for the public benefit prevents an individual, organisation or closed group from exploiting charitable purposes for private profit. A charity can also have a non-charitable purpose if that purpose is ancillary, meaning it is secondary to the charitable purposes.

A high-profile case involving Greenpeace of New Zealand Incorporated (Greenpeace) in 2014 resulted in the Supreme Court ruling that “a blanket exclusion (on political purposes) is unnecessary and distracts from the underlying inquiry - whether a purpose is of public benefit within the sense the law recognises as charitable”. This case overturned the previous High Court Greenpeace decision that a charitable entity is prohibited from having any political purposes at all.

Following the Supreme Court Greenpeace decision, the Charities Board was directed by the High Court to reconsider Family First New Zealand’s (Family First) registration application. However, the Charities Board maintained its position, and refused to reinstate Family First’s charitable status on the basis that its independent non-charitable purposes were more than ancillary to its charitable purposes.

Once a charity is registered, they are not necessarily safe from being deregistered. The Charities Board has a wide range of powers and discretions in relation to entities registered on the Charities Register, including the power to look beyond a charity’s written purposes and consider whether its actions are charitable. This prevents entities from being able to hide behind their entity documents, and their charitable purposes as recorded on paper.

If the Charities Board finds that a charity’s actions do not align with its charitable purposes, they have the power to deregister that charity. While deregistration means that an entity will lose the benefits it had received from being registered, it does not prohibit an entity from advancing charitable purposes.

 

Jess Collett is a Solicitor in the Commercial Corporate team at Norris Ward McKinnon. You can contact Jess at jess.collett@nwm.co.nz

Aaron Young is a Law Clerk in the Commercial Corporate team at Norris Ward McKinnon. You can contact Aaron at aaron.young@nwm.co.nz