When Purposes Become Outdated: Can Charitable Purposes be Changed?

Society changes. Language evolves. Gold rush towns become ghost towns. What made sense in 1950 may be impossible, impractical, or simply no longer appropriate today. If a charity’s purposes have become outdated and there is no power in the trust deed to amend them, trustees can apply to the High Court under Section 32 of the Charitable Trusts Act 1957.

The Three Legal Tests

The court can make changes if one of three tests is met:

1. Impossible: The purpose can no longer be carried out at all. For example, a trust established to support a district health board that has since been disestablished.
2. Impracticable: The purpose could technically be carried out, but it is not feasible in practice. For example, a trust set up to establish a school in a specific town that has since become a ghost town.
3. Inexpedient: The purpose is no longer suitable, advisable, or useful. This is a value judgement by the court. Examples include trusts that impose conditions that no longer make sense given advances in medicine or society.

When assessing any application, the court will try to make the smallest possible modification, staying as close as it can to the original intention of the founder, while taking into account changed circumstances and who the founder intended to benefit.

The Role of the Attorney General

Before a court will make changes to charitable purposes, the Attorney General must be notified and given the opportunity to provide their view. The Attorney General effectively acts as the conscience of charities in New Zealand, ensuring that the public benefit rationale for charitable status is being upheld. If the Attorney General raises concerns, the court will take those seriously.

Section 32 vs Section 33: Purposes vs Powers

It is worth understanding the distinction between two key provisions in the Charitable Trusts Act 1957:

• Section 32 deals with amending purposes (also called objects). This is the harder test, requiring one of the three grounds above to be met.
• Section 33 deals with amending administrative or management powers. The test here is lower. A court can amend these powers if doing so would facilitate the objects of the trust, meaning it simply needs to make it easier to advance the charitable purposes.

Reviewing Your Governing Rules

The Charities Act now requires officers of a charity to review their governance procedures every three years. The first cycle of that review concludes around October 2026.

When reviewing your trust deed, start with the amendment or variation clause. This tells you what you are permitted to change and under what conditions. Some clauses only allow administrative changes. Others may ring-fence the purposes entirely, meaning any change to those would require a court application.

Key things to look for include:

• Whether your purposes still reflect what your charity actually does
• Whether the language is current and appropriate
• Whether your rules assist you to comply with the Charities Act
• Whether your amendment clause gives you the flexibility you need

In some cases, particularly where a trust deed is very old and has no variation provision at all, it may be more practical to establish a new charitable trust and transfer assets across, rather than attempting to amend the existing one.

What Does a Court Application Actually Involve?

Going to court to change charitable purposes is not a quick process. Here is a realistic picture of what is involved:

• Gathering background information about the founder’s original intentions, which may require going back through archives or historical records
• Preparing a well-articulated application that explains where the trust started, where it is now, and why a change is needed
• Liaising with the Attorney General’s office, which may involve back-and-forth correspondence or meetings with Crown Law
• Filing documents in the High Court and waiting for a hearing date, which is typically several months away from the time of filing
• Responding to any interested parties who may appear in response to advertising requirements

Before committing to a court application, it is worth obtaining legal advice on: what can be done; what should be done; and what is most cost-effective.

If any of this raises questions about your own organisation, we would be happy to talk it through. Parry Field Lawyers has teams across five offices and works with charities of all sizes on governance, trust law, and purpose-related questions.