2015 Annual Meeting
The 2015 Annual Meeting was held on the 21st of October in Auckland. Over 250 representatives of registered charities attended to hear about our work over the last year, about updates in key areas, and to ask questions.
In contrast with previous years, our focus was on presenting information about our work, responding to questions, creating opportunities for one-on-one discussion, and providing information and resources.
Attendees received a summary of our key activities over the last year and some sector information in a one-page handout.
Hon Jo Goodhew the Minister for the Community and Voluntary Sector opened the meeting and her speech.
Lesa Kalapu, the General Manager of Charities Services, spoke about the year in review and looking ahead.
Charities Services staff gave updates to the meeting on these three key areas: charitable purpose, changes to the annual return, and compliance.
As at every Charities Services annual meeting there was a question and answer session with questions from the audience. This year charities were invited to submit questions in advance to the meeting as well. There wasn’t time during the meeting to read out the questions we received in advance, but they are included in the record of the questions and answers below.
Thank you to those who attended.
Questions and answers
Record of questions from attendees and answers from Charities Services.
Wrongdoing in the community
Q: What is your protocol for posting about investigations? There is no feedback from Charities Services so what is your protocol/policy about what to share with the public about what is happening in an investigation.
A: Because of the potential impact and the reputation to the charity we need to be careful.
We work through the issues with the charity and we may feedback after the investigation is complete.
Q: Virtually, you are remaining mute and I think it is better to communicate what is going on in that area so that the sector are informed.
A: There has to be a balance for the charity.
Personal Information of Officers
Q: It can be really difficult to get people on to committees. If Charities Services ask specific questions (eg date of birth information) I can see that is a problem for people going forward.
A: This (information asked for in the annual return) is not going to be public information and we need to be very clear about that.
Q: Will there be a save and continue to fill in the new online annual return form?
A: Yes - that is intended.
Structure of registered charities
Q: Is it possible for an individual person to be registered as a charity? Or do you have to be a charitable trust or an incorporated society?
A: An individual would not be registered because an individual is not an entity capable of being registered under the Act. You need to have two or more people bound together by a rules document and you can be an unincorporated society.
Q: We think you should advocate to the government that poor people need housing and it should be included as a charitable purpose.
A: We do discuss things with the Minister. There are many areas where home ownership is ok. It is possible for charities that focus on relief of poverty to qualify, even if they provide home ownership programmes. The focus is on whether home ownership is necessary to relieve a need. The case of Queenstown Lakes explains that although housing is a right, home ownership is not. The court said in that case that if there are other options rather than home ownership, for example commuting or renting, then it may not be charitable.
Q: How long before you take action on overdue annual returns?
A: The best thing is to communicate with us and let us know if you have an issue in your organisation that means your return will be late.
Q: If we put in our annual return as it stands we think that you will come back saying it's not good enough.
A: Currently there is no minimum requirement for annual returns.
Q: Can directors accept remuneration? Can they be paid?
A: As long as it is “reasonable” then there is not an issue. We are aware of other directors being paid.
Q: Remuneration - Have you thought about publicising information about which band a director’s salary could fit in to?
A: No, however related party transactions will need to be reported under the new reporting standards and therefore information in the financial statements will be more transparent. We note that you won't be able to search across the register to find this information.
Q: I am wondering about charitable status and elite sport and America’s Cup, Rugby World Cup, Paralympics etc. Can you clarify?
A: The case of Travis Trust confirmed that the promotion of sport in and of itself is not charitable and does not have a sufficient public benefit. However, if a group is about public participation in a healthy sport, it will often be seen as promoting health and qualify. We note that elite disabled sport such as the Paralympics is usually charitable, as it advances a public benefit and it is open enough and accessible to any disabled person who wants to pursue it.
Q: Will the charitable status of religious organisations change in the future?
A: The advancement of religion is in the Charities Act 2005 as a charitable purpose and if that changes it will be because Parliament has changed the law.
Q: Will Charities Services have guidelines about what is to be included in administration as there are no guidelines. What will we call administration when we are doing the work that Charities Services requires us to do to comply under the Act? What is a good measure of an administration cost?
A: There is no standard for administration. Administration covers what is essential to the running of your organisation. We don't say that money is wasted on administration as it takes a strong organisation to do good work. We don't make a judgment about what is wasteful or not. We encourage people to talk about what makes their organisation sustainable.
Q: How are we making filing online easier for people?
A: Please pick that up with the manager of Capability and Engagement at Charities Services in the afternoon break.
Q: Charities have to pay astounding auditing fees. Could you try and do something about having a register of people to audit accounts that aren't so expensive. How do we get value for money?
A: The standards require auditing, not us. It is not our role to advise who is a good auditor as we are the regulator. The sector needs to network to find that information. We advise you to get in touch with the Institute of Chartered Accountants.
New levels requiring audit have been set by law and there are different drivers for why people require audited accounts. Funders require them or your own rules may require them. We have been advocating in meetings around the country and across government on your behalf. We remind people what the impact is on the sector when requiring audited accounts.
Uploading financial statements
Q: What is upload performance- what does that mean?
A: This is the electronic way of showing us your financial statements. The “Performance Report” now includes non-financial information as well as financial information and it is the new name for the financial statements under the new reporting standards.
Q: One of the slides used the term “populates summary information”. What does it mean?
A: Some of the information that you put in is automatically “populated” which means automatically filled in for you.
Q: Can we have the slide up again re your balance date.
A: Your performance report is due with your annual return six months after your balance date.
Q: The reporting of metrics of Charities Services (the handout given to attendees) does not compare to the last year, why not?
A: This is the first year that we have created this report and we will take on board what you have mentioned for the future. The other side of the paper is a snap shot of the sector.
Incorporated Societies Act
Q: Can you give us some insight as to whether the reporting will be the same with the Companies Office for Incorporated Societies?
A: We are currently talking with officials about the changes to the Incorporated Societies Act.
Review of the Charities Act
Q: Is there any timetable for a review of the Charities Act and if not, why not.
A: The position of the Government is that the Act will not be reviewed.
Q: Tell us more about problem gambling and advocacy, ancillary purposes and political advocacy? Is it a general warning that we shouldn't support political parties?
A: An organisation can be a political organisation and be a charity but you must have charitable purposes and advance charitable public benefit. The Board has recently decided that the restoration of Christchurch Cathedral meets this test, because the restoration of established heritage buildings is charitable, even though this may be a controversial issue. If advocacy is a small part of your overall purpose then your organisation remains charitable.
Taxation of charities
Q: I’ve heard a report about taxing charities. Is this true? Will you fight to defend us?
A: We are not aware of the report or any media coverage on this issue. Registered charities have a tax exemption.
Q: The model in the UK is that any salary payments that are over $100,000 to an organisation’s board members have to be included on the annual return form. Do we have a policy in that area and can we take a lead from the UK?
A: The Department of Internal Affairs delivers policy advice to Ministers and we look to overseas jurisdictions when thinking about change.
Q: Are there any charitable organisations you support?
A: Every organisation on the register has met the legal test for eligibility as a charity, and their information is publicly available.
Q: Are there any organisations that you can't support?
A: We assess all charities in the same way and analyse them to see if they meet the test of what is charitable under the law. If the organisation meets the test then it gets registered.
Record of written questions submitted in advance of the meeting and answers from Charities Services.
Q: Following Charities Services' review of He Korowai Trust for selling renovated ex-State Houses, we would like to ask whether this has ramifications for other Charities.
The Nelson Enterprise Loan Trust (NELT) lost its charitable status in January 2011. We would like to ask whether the review undertaken by Charities Services in relation to He Korowai Trust has any implications for NELT.
A: Any entity that has come off the Charities Register can reapply for registration. Its application will be assessed in the light of the law as it stands when the application is considered. Any entity that is thinking of assisting people into home ownership may want to talk to our registration team before they put in an application.
New reporting standards
Q: Our elderly volunteer treasurer does not use XRB accounting, his system is older. With our budget under $15,000, should we continue as is for the annual documents or pay someone to transfer to XRB? (We don’t have spare budget money so would need to apply for this cost).
A: All charities are required to use the new reporting standards. There is no need to have a “system” as such. Charities of your size can use paper-based cash accounting and there are resources to help you with this, including a template with guidance notes, on our website. Please do note that we are happy to provide paper copies if that is helpful.
Q: How can insignificant board members of charity groups get their complaints solved? For example, the Human Rights Commission will investigate ALL complaints yet the Charities Services investigates what it considers important. Since ALL board members think themselves somewhat important, can you provide tips to help board members when they really need assistance?
Idea 1: Get a petition up and going
Idea 2: Go through community lawyers
Idea 3: Involve other government agencies
A: Charities Services receives hundreds of complaints in a year and we simply don’t have the resources to investigate every one.
We will look into issues within a charity where the risks to its eligibility for registration or to its effective and legal operation are highest. This will primarily involve investigations into a breach of the Charities Act or whether anyone in connection with a charity has engaged in serious wrongdoing. This is the area we work in to ensure trust and confidence in the charitable sector.
We don’t look into minor governance issues or internal disputes between members of a charity. We do encourage charities to work through their issues themselves and depending on what those issues are, we can direct them to resources that can assist.
In response to the above ideas:
Idea 1: A petition will not affect our decision as to whether or not we investigate unless it raises fresh allegations and/or provides additional evidence
Idea 2: It depends on the allegations/issues/circumstances
Idea 3: It depends on the allegations/issues/entity type/circumstances
Q: When new charities request registration do you consider whether there is already a similar charitable group doing the SAME work with the same mission in the same area? Surely any new group should be encouraged to join an already established charity with the SAME GOALS instead of competing for funds and a place in the community
A: We assess each application on its merits to see whether or not it meets the charitable purpose test, and otherwise meets registration requirements.
Charities Services does not have the mandate to decide whether there are already ‘enough’ charities in an area or sector or refuse entry to organisations that do qualify.
Our open data provides information on what charities exist in each sector and location in New Zealand, and in our “how to register” guide, we encourage new applicants to check the information on the register and consider whether they need to set up a new charity, or support the work of a charity that already exists.
Time spent applying for grants
Q: I realise that, when distributing public and tax payer funds to charities, there needs to be a thorough process of allocation and assessment to ensure the best value is achieved with no room for fraud. However, for a small charity, relying on volunteer Trustees and a part time manager, the time spent applying for grants from government departments, not always successfully, and then supplying accountability reports, is large and may be growing. Is there anything that the DIA can do to lessen the burden, e.g. for Lotteries grants and DOC funding?
A: DIA (The Department of Internal Affairs) has spent considerable resource to develop the new online grants system, keeping the scarce resources of the sector front and centre when the solution was developed. The system has been designed so that once a group has set itself up, previous records are easily available. This should reduce the time organisations spend when applying for DIA administered grants.
We know that some funders are looking at the cost of application for their grants, and this is a driver behind awarding multi-year grants.
Through our engagement work, Charities Services highlights effective use of charitable resources as one of our key focuses – we try not to waste your time and money and on your behalf we raise that issue with other parts of government and other funders.