24 May 2004

The deadline of Thursday 3 June 2004 for submissions on the Charities Bill to Select Committee is looming.

At first glance the Bill seems straight forward but as you will see below there area plethora of issues.

To assist you with drafting your submission we have collated some of the key points on how the legislation will affect Maori interests.

1. Bloodties & Charitable Status

In the past, the fact that a group is joined by bloodties would deny the group charitable status, regardless of whether the activities and purpose of the group are charitable. This is no longer the case under clause 4(3)(a) of the Bill.

On the otherhand however, the organisation must be run maintained exclusively for a charitable purpose. Although this is left up to common law to define, it will no doubt be a strict test. With a stricter reporting regime (annual returns etc)and vetting by the Commission, an entity may have charitable status one year and see it taken off them the next.

A marae

This has ramifications for Maori Authorities seeking charitable status that engage in both charitable activities (education grants etc) and provide dividends to owners. The latter would probably be judged pecuniary profit to an individual, which is not allowed under the Bill. Thus would compromise their charitable status, resulting in deregistering.

1. Compliance costs

There is no guideline in the Bill as to how much information is required for registering a charity and the time it will take.

1. Registration Number

The Bill provides that a charitable entity must display their registration number. According to the Bill this could mean on every piece of documentation. The rationale for this is that it gives the public the ability to check the charity by way of its registration number. Basically this provision is too wide and needs to be restricted.

1. Offences

There is an introduction of new penalties and new regime of transferring responsibility onto trustees for offences. TRUSTEES CANNOT SEEK INDEMNITY INSURANCE.

The issue is how will this impact on the charities sector? Are there likely to be less charities because of it and for Maori authorities especially those that are statutory bodies with charitable status.

1. Offences – a charity can be deregistered if engaged in any activity not charitable. This provision is too broad; there is no guidance as to what is a charitable purpose’ – could mean anything???
2. Autonomy of the Charities Commission

The planned Commission will be a crown entity; essentially crown entities must give effect to government policy at the end of the day. The problem is that the commission serves two purposes, the first one as a regulator and the second one as an advisor to the charities sector. These two roles are obviously at conflict.

Another issue is that the commission is to be funded by the charities sector so you would think there has to be some benefit for the sector – will be difficult considering the nature of a crown entity, need to have a body that is autonomous.

1. Appeals – to be done through the District Court. This is good as D.C is more accessible, less costly. However the decision of the D.C is final – cannot appeal to higher court.
2. Timing issues - changes must be notified to the Commission within 20 days of being made. is this a realistic timeframe, suggested that it is too short. Also have 4 months to give annual returns – is this enough time?
3. If applying for charitable purpose you cannot have previous criminal convictions – not sure if Bill is specific about what type of convictions whether it is limited to fraud/dishonesty convictions. If not this may disadvantage many Maori as we have high stats in this area and will mean Maori entities cannot apply for charitable status if trustees have previous convictions – need to check details.
4. Filing of annual returns – required to do this annually. I think it includes financial reports etc..which will mean duplication for many Maori entities under Te Ture Whenua or Maori Trust Boards Act which are also required to file their annual reports – make a submission to avoid duplication.

Something to think about:

Organisations can carry out commercial activities as long as money is distributed for charitable purposes – how does this affect Maori Authorities as most give out education grants and the like but also make dividend payments to shareholders.