All registered charities must now review their governance procedures every three years[1]. We see this as important for charities to ensure their key documents are still fit for purpose.

Why this requirement has been introduced

The policy goal seems to be to help charities succeed.

Some charities are large, well-established entities with robust governance procedures and highly-experienced people governing them. There is a reasonable likelihood that they review their governance procedures routinely.

However, a large proportion of charities are small and many are governed by people with mixed governance understanding and capability. We talk to many people governing charities who have not looked at their governance documents for years and some who are operating outside of what their rules allow. This places the people governing the charity at risk of doing something that is not legally permitted. It can also lead to charities not being well run and potentially failing.

We see this new obligation as the codification of good practice. Every charity (every legal entity) should regularly pause and reflect on how they operate. It will be time well invested.

What are ‘governance procedures’?

What does the term ‘governance procedures’ mean? The Charities Act does not provide any firm answers, but we suggest governance procedures include, but are not limited to:

  • Key documents
    • The key governing document – a charitable trust deed for charitable trusts, a constitution/rules for charitable incorporated societies, or the constitution for charitable companies.
    • Secondary documents supporting the rules, such as bylaws, regulations, charters or policies.
  • Important practices
    • How the charity deals with conflicts of interest.
    • How does the charity deal with disputes and complaints.
    • How the charity recruits and onboards new trustees or officers.
    • The effectiveness of meetings and relationships.
    • Financial practices.

How to satisfy the legal requirements

Below is a simple approach which can be tailored to your charity and circumstances. We suggest you focus on what you feel needs most work, most urgently. You do not have to do all of this at once and that is not the intention. You have a three-year window so we suggest scheduling the reviews across your calendar of meetings.

The checklist below may help.

Step 1 – Look at your rules

When were your rules drafted or last updated?
Do you follow the rules? If not, why not? Do the rules need to be updated to reflect how you operate in practice?
Do the rules reflect recent legal changes such as the Charities Amendment Act 2023, the Trusts Act 2019 and the Incorporated Societies Act 2022? Remember, the legislation will usually trump the rules, so being aware of the legal changes is important for keeping those in governance safe.
Do you understand what every part of your rules mean? Ask for legal advice if something in the rules is unclear – you need to know what you are required to do and why.
Document your review briefly, setting out what you considered and what action you propose to take.

 

Step 2 – Update your rules (if NECESSARY)

Consider updating your rules if they do not reflect current practice and/or do not take account of recent law updates.
You may need legal advice to do this properly. Don’t forget to update Companies Office and Charities Services.
Document that you have amended your rules or why you haven’t if they are fit for purpose.

 

Step 3 – Review your supporting documents

Read over the documents. Do they correspond with your rules? Do they make sense? Is anything out of date?
If you don’t have a Board Charter, consider creating one. These make it easier to onboard new governors and make it clear how relationships are to work. There are excellent templates available free online that you can tailor to your circumstances.
If you do not have a Health and Safety Policy or a Privacy Policy, we recommend having these drafted to ensure you and any employees, contractors and volunteers understand their legal obligations.
If your charity involves vulnerable people and/or children, we also urge you to have a Child Protection / Vulnerable Persons Policy and Police Vetting Policy.
If you amend existing policies or draft new ones, ensure that these are well-communicated to all relevant people.

 

Step 4 – Review your practices

Does the charity have robust processes in place to manage conflicts of interest? If not, we recommend creating and following a policy and introducing an Interests Register.
How do you induct new trustees/officers onto the Board? What documents do you provide to support their understanding of what’s involved and key decisions from the past? A Board Induction Pack is ideal.
Do you review your meetings? This can help put a focus on constructive relationships and efficiency.
Are your financial processes robust? Are you confident that all payments are made according to your delegations? Is more than one trustee/officer required to approve payments?
Do your contractors and employees have proper contracts in place? Is there are clear understanding of who owns intellectual property?
Once you have considered the above, identify what could use some improvement and get to work. Then document what you reviewed, and what action you took as a result of the review.

 

Our key takeaways

Charities that invest in reviewing their governance practices will benefit by ensuring documents and practices are up-to-date, helping to keep people and the charity safe and effective.

Avoid a last minute scramble by scheduling the process throughout the three-year timeframe.

We would be pleased to assist if you would like some support when reviewing your documents.

More information

We help charities to thrive. That’s why we provide a wide range of free resources to support them. Visit our Charities Information Hub for advice and guides.

We welcome questions too and offer free, no obligation 20 minute conversations – just get in touch.

 

[1] This is a new requirement set out in section 42G of the Charities Act 2005.

Please note that this article is not a substitute for legal advice and you should contact your lawyer about your specific situation. Please feel free to contact us by completing the enquiry form or call us on 03 348 8480.

In our series of articles on “demystifying the role of Trustees of charitable trusts” we answer some of the questions we hear most often from Trustees. In this article we focus on the legal liabilities of Trustees. In our other articles we explore Trustee Delegations, Trustee Powers and Trustee Duties.

People who are already a Trustee of a charitable trust or considering becoming one are wise to think about what their liabilities are or would be. The good news is that most modern Trust Deeds, such as our form of charitable trust, contain a number of protections for Trustees as well as steps that can be taken. Let’s consider these.

Incorporation with the Companies Office

Many, but not all, charitable trust Boards are incorporated with the Companies Office. Incorporation means that the Trust is a separate legal entity, separate to the individual trustees. Without incorporation, the Trustees themselves would need to enter into the contracts on behalf of the Trust, opening them to personal liability. If you are unsure if your charitable trust is incorporated, you can check here by doing a search on the name of the trust. If the charitable trust is not incorporated, it is a simple process to incorporate the trust and we can help.

Protections in the Trust Deed

Trust Deeds often provide a number of protections for Trustees from liability, although this will depend on when and how the Trust Deed was drafted.

Some typical examples of clauses that protect Trustees from liability are:

  • A clause that protects Trustees against responsibility for the actions or inactions of other Trustees with respect to trust money, noting that in spite of this, each Trustee will be answerable and responsible for their own actions or inactions.
  • A clause that means that a Trustee is not liable for any Trust property expenses or charges.
  • A clause that entitles current and retiring trustees to an indemnity out of the Trust Fund for any loss or liability that a trustee occurs while acting or failing to act as a trustee (meaning the Trust will cover your loss).
  • A clause that means Trustees will not be liable for any liability or expense arising from any cause whatsoever when acting with the authority of the Board, which:
    • Entitles a Trustee who has paid the expense or discharged the liability out of the Trustee’s own funds, to reimbursement from the Trust Fund; or
    • In any other case, the Board must pay the expense or discharge the liability directly from the Trust Fund.

What is not covered?

Note that Trust Deeds do not generally protect Trustees when a liability or expense arises from a Trustee’s dishonesty, wilful misconduct or gross negligence, or was incurred without authority from the Board. In these situations, you will be liable.

What does dishonestly mean in this context? It would typically involve behaviour that is a breach of the duty of honesty and good faith that Trustees owe as fiduciaries of the Trust, and whether their conduct would be considered dishonest by the standards of ‘ordinary decent people’.

Wilful misconduct essentially means intentional or reckless conduct that involves a Trustee’s conscious choice to breach their fiduciary duties. It contrasts with mere negligence or accidental wrongdoing and is characterised by deliberate wrongdoing, including dishonest acts or conscious disregard for duties.

Gross negligence can be thought of as unreasonable behaviour which would amount to an extreme departure from the standard of care expected of a Trustee.

If there is gross negligence or wilful misconduct it may also reach the standard for criminal liability as well.

In addition to the protections provided by the Trust Deed, Trustees may wish to consider taking out Officers and Directors Liability Insurance, depending on the risk profile of the Trust’s activities (as it may be necessary).

In summary

The first place to look when understanding your potential liability as a Trustee is the Trust Deed itself. If you cannot see comparable clauses to those set out above, you may wish to amend the Trust Deed to include similar protections.

While there are generally protections for Trustees against some liabilities, this does not protect Trustees when a liability or expense arises from a Trustee’s dishonesty, wilful misconduct or gross negligence or was incurred without authority from the Board.

Please get in touch if you have any questions about your Trustee liabilities. If you reach out to us, we would be pleased to discuss these with you and potentially to amend the Trust Deed to best protect the Trustees.

 

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The information contained in this outline is of a general nature, should only be used as a guide and does not amount to legal advice. It should not be used or relied upon as a substitute for detailed advice or as a basis for formulating decisions. Special considerations apply to individual fact situations. Before acting, clients should consult their Parry Field Lawyer.

Our charitable trust clients often ask what powers Trustees have. It is a great question to be asking. While Trustees tend to have quite wide powers, sometimes the powers are restricted by the wording of the Trust Deed. Knowing what is permitted is important so that Trustees do not accidentally exercise powers they do not have.

This article is part of a series on “demystifying the role of Trustees of charitable trusts”, where we answer some of the questions we often hear from Trustees. In our other articles we explore Trustee Delegations, Trustee Duties and Trustee Liabilities.

How to find out what powers Trustees have

Trustees can refer to two places to check what powers apply to their particular charitable trust – the Trusts Act 2019 (“Act”) and the charitable trust’s Trust Deed.

Trusts Act 2019

The Act says Trustees have all the powers necessary to manage the trust property including, all the powers of an absolute owner of the property, and all the powers necessary to carry out the trust. It also sets out other specific powers including those applicable to investment, how to deal with returns and accounts, and the apportionment of receipts and outcomings between income and capital.

Trust Deed

A Trust Deed typically gives more detail about the powers of Trustees, and in some cases, limits the powers available to Trustees.

Some of the typical powers found in Trust Deeds include the power:

  • To use the Trust Fund as the Board thinks necessary or proper in payment of the costs and expenses of the Trust, including the employment of professional advisers, agents, officers and staff (which may include a Trustee or Trustees);
  • To purchase, take on a lease or licence or exchange or hire or otherwise acquire, develop, improve or otherwise deal with any land or personal property and any rights or privileges or sell, exchange, lease or dispose of any land or personal property which the Board thinks necessary or expedient for the purpose of attaining the objects of the Trust;
  • To invest surplus funds in any way permitted by law for the investment of trust funds and upon such terms as the Board thinks fit;
  • To borrow or raise money (including borrowing for investment purposes or lending to someone else) with or without security and upon such terms as the Board thinks fit;
  • To make payment or contribute to any charitable organisation which has purposes similar to the Trust; and
  • To do all things which are incidental to or conducive to or desirable to enable the Trustees to give effect to and to attain the Charitable Purposes of the Trust.

When a Trust Deed is drafted, the initial Trustees may choose to restrict powers for particular reasons. For example, a Board might choose to put a limit on the amount of money a Trust may borrow, or limit the manner in which a Board is allowed to invest the Trust Fund. If a power is restricted, Trustees must adhere to the restrictions. If Trustees make a decision without the legal power to do so, the decision may be questioned and found to be invalid, resulting in the unwinding of the decision and any other consequences.

Keeping Trustee duties in mind

We recommend also keeping Trustee Duties in mind when considering the powers of Trustees.

For example, section 30 of the Act sets out the Trustee duty to invest prudently, which is a default duty. Default duties can be modified by the wording in a Trust Deed. Our Parry Field charitable trust deed includes the following clause which modifies that default duty:

“Section 30 of the Trusts Act 2019 and other legal provisions and rules of law which constrain Trustees’ investment duties do not apply and are excluded by this Deed. Instead the Trustees must invest in the manner they believe in good faith to be in the best interest of the purposes of the Trust.”

Our modified clause is a slightly lower threshold than the unmodified duty to “invest prudently”, which is arguably beneficial for Trustees.

What can Trustees do to change their powers?

If Trustees wish to widen or restrict the power of Trustees, they will generally be able to do so by amending the Trust Deed, which can typically be done by signing a Deed of Variation. Note that this ability will depend on the wording in the Trust Deed on how to amend the document. Check out our other resources for more information on how to change a Trust Deed.

In summary

Trustees of charitable trusts typically have quite wide powers, however, these may be limited by what is stated in the Trust Deed. Trustee powers can also be affected by the Trustee duties set out in the Trusts Act, although the default duties can be modified by the Trust Deed.

If you have any questions about the powers of Trustees for your particular charitable trust, please do not hesitate to get in touch. We would be pleased to help clarify what is permitted, to help Trustees make sound decisions within their permitted powers.

 

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The information contained in this outline is of a general nature, should only be used as a guide and does not amount to legal advice. It should not be used or relied upon as a substitute for detailed advice or as a basis for formulating decisions. Special considerations apply to individual fact situations. Before acting, clients should consult their Parry Field Lawyer.

It is relatively common for Trustees of charitable trusts to delegate some functions and responsibilities to other people. However, it is important to understand what delegations are legally permitted and what is not able to be delegated, and the implications.

While Trustees can appoint others to assist with the operations of a charitable trust, we urge Trustees to keep in mind that they themselves are ultimately responsible for all decisions, even if they have delegated a task or function to another person.

This article is part of a series on “demystifying the role of Trustees of charitable trusts”, where we answer some of the questions we often hear from Trustees. In our other articles we explore Trustee Powers, Trustee Duties and Trustee Liabilities.

What can be delegated?

A charitable trust’s Trust Deed (also known as ‘rules’ or a ‘constitution’) will generally permit Trustees to delegate some powers, authorities and discretions exercisable by the Board to a Trustee, an officer or employee or any attorney, agent or other person nominated by the Board, subject to the restrictions under the Trusts Act. For example, a Trustee may not appoint a person to exercise or perform on their behalf these particular functions, among others:

  • a function that is, or is related to, the determination of whether, when, or in what way any trust property should be distributed, used, possessed, or otherwise beneficially enjoyed, including a power of appointment;
  • a power to appoint a person to be, or to remove, a Trustee of the trust; or
  • a power to resettle the trust, or to amend, revoke, or replace all or any terms of the trust.

Delegation when absent from New Zealand

Another useful option to be aware of is that a Trustee may also delegate all or any of their powers and functions under the trust where the delegation is necessary because a Trustee is absent from New Zealand, unable to be contacted temporarily, physically incapacitated temporarily or lacking the capacity to perform as a Trustee temporarily. Note the use of the word ‘temporarily’ which indicates this is not intended to be a long-standing or frequently used option.

The delegation can be done by power of attorney appointing any suitably qualified person to be a Trustee (provided that person meets the requirements of section 96 of the Trusts Act to be a Trustee, for example, excluding an undischarged bankrupt, a child, someone who lacks the capacity to be a Trustee or a body corporate that is subject to an insolvency event).

Keeping an eye on things

If a Board does delegate something, they are obliged to keep an eye on the arrangements. Section 68 of the Trusts Act requires Trustees to keep under their review the arrangements for how the appointee acts and how the arrangements are put into effect. They must also be willing to intervene if required, and to give directions to the appointee, or to amend, revoke, or replace the appointee, as required.

No delegation when executing deeds

One thing that Trustees cannot delegate is the signing of a deed. A deed is a particular type of legal contract that typically has high legal significance. An example is a Deed of Lease.

Under section 19 of the Charitable Trusts Act 1957, when Trustees enter into a deed on behalf of the trust, two Trustees must sign the document and affix the common seal. (All charitable trusts in New Zealand must have a common seal for this reason. Find out more in our article.) Trustees should also check what other signing requirements are in place within the Trust Deed.

If a deed is executed without following the process under the Act (and the Trust Deed), if the validity of the deed were questioned there is a risk that the deed may be found to be invalid leading to various possible consequences.

Trust Advisors

Trustees are ultimately the key decision makers for a Trust. However, the Trusts Act 2019 at section 74 permits Trustees to appoint special trust advisors to advise the Board, for example, if Trustees need specialist advice about a particular matter. Trustees are not obliged to follow any advice provided by a special trust advisor. Note that special trust advisors do not have the powers of a Trustee and even if Trustees follow a special trust advisor’s advice, the Trustees have responsibility as the decision-makers.

In summary

Delegation is a useful way of managing the work load in charitable trusts as long as Trustees keep in mind that they are always ultimately responsible for the actions of the Trust, and that not everything is able to be delegated.

If you have any questions about delegation within charitable trusts, please do not hesitate to get in touch. We would be pleased to help clarify what is permitted, to help Trustees make sound decisions within their permitted powers.

 

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The information contained in this outline is of a general nature, should only be used as a guide and does not amount to legal advice. It should not be used or relied upon as a substitute for detailed advice or as a basis for formulating decisions. Special considerations apply to individual fact situations. Before acting, clients should consult their Parry Field Lawyer.

Thousands of New Zealanders are Trustees of charitable trusts, providing governance for thousands of diverse charities. In our series of articles on “demystifying the role of Trustees of charitable trusts” we answer some of the questions we often hear from Trustees. In this article we focus on the legal duties of Trustees. In our other articles we explore Trustee Delegations, Trustee Powers and Trustee Liabilities.

Impact of the Trusts Act 2019

The Trusts Act 2019 (“Act”) helps to clarify Trustee duties by placing them in legislation. Previously the duties existed in case law (law determined by the courts) so were not as readily accessible.

Trustees are fiduciaries of a Trust and it makes sense that they are held to high standards. The role of a fiduciary is characterised by the obligation of loyalty and good faith, avoiding conflicts of interest, acting honestly, and not profiting from a position. These responsibilities are reflected in the mandatory duties of Trustees in the Trusts Act, which cannot be modified.

Mandatory duties

These duties are compulsory for all Trustees. They are as set out below, with a brief explanation of what each duty refers to:

  1. Duty to know the terms of the trust – this basically means that Trustees need to know what the Trust Deed says and what it means.
  2. Duty to act in accordance with the terms of the trust – this requires Trustees to ensure that they make decisions that are permitted by the Trust Deed. Trustee powers are typically quite wide, but sometimes these are restricted in the Trust Deed, for example, there may be a limit placed on whether the Trust can enter into a loan. Trustees need to know what is permitted and restricted by the Trust Deed before they act or they risk making a decision that is not legally valid.
  3. Duty to act honestly and in good faith – this requires that when making decisions, Trustees genuinely consider their decisions, consider all important information and act without an ulterior motive, including avoiding self-interest.
  4. Duty to further the permitted purpose of the trust in accordance with the terms of the trust – the ‘purposes’ of a charitable trust is the beating heart of the trust, setting out why the trust exists. The purposes should guide all decisions.
  5. Duty to exercise the trustee’s powers for a proper purpose – this requires that Trustee decisions align with the Trust purposes and not exceed these, and are not exercised for personal or collateral reasons.

Default duties

The default duties in the Act, which can be modified, are:

  • The general duty of care;
  • Duty to invest prudently;
  • Duty not to exercise power for own benefit;
  • Duty to consider exercise of power;
  • Duty not to bind or commit trustees to future exercise of discretion;
  • Duty to avoid conflict of interest;
  • Duty of impartiality;
  • Duty not to profit;
  • Duty to act for no reward; and
  • Duty to act unanimously.

The default duties may be modified, provided the modifications are set out in the Trust Deed, which usually happens when the Trust Deed is drafted. For Trust Deeds that have existed since before the Act, the Act still applies, including all of the default duties. However, it is usually possible to amend a Trust Deed and the default duties can be modified then by adding a schedule to the Trust Deed.

Examples of modifications

As an example, without modification, the duty to invest prudently requires Trustees to invest with the care and skill that a prudent person of business would exercise having regard to any special knowledge or experience that the Trustee has and if the person acts as a Trustee in the course of a business or profession, to any special knowledge or experience that it is reasonable to expect of a person acting in the course of that kind of business or profession. This is a relatively high threshold to meet. Our charitable trust deed typically modifies this duty and replaces it with a duty to “invest in the manner Trustees believe in good faith to be in the best interest of the purposes of the Trust”, which is a slightly lower threshold for Trustees to meet, while still requiring Trustees to exercise due diligence.

Another default duty that is sometimes modified is the duty to act for no reward. Without modification this duty means that Trustees should not be paid for their role as Trustees. However, Trustees may decide that payment is appropriate to the circumstances of the Trust and permit the Trustees to be paid, provided the payment is commensurate with market rates.

One default duty that we regard as very important and would not recommend modifying is the duty to avoid conflicts of interest. At times, a Trustee’s personal or financial interests may conflict with those of the Trust. A simple example is if a Trustee owns a catering company and the Trust needs to provide catering for a function. The Trustee should disclose their interest and may provide a quote for this service to the Trust, and best practice requires that the Trustee then recuse themselves from the decision around the catering. We also encourage Trustees to create and maintain a conflict of interest policy including an interests register to keep this duty front of mind.

Finally, the duty to act unanimously can be a high threshold to meet so we expressly modify that requirement.

In summary

The duties of Trustees illustrate the weight of the role of Trustees. It is an important role and consequently involves considerable responsibility. Trustees can be found personally liable if they breach one of their duties.

It is possible to modify the default duties in the Act so that Trustees are held to a slightly lower threshold. Please get in touch and we can assist you to amend your Trust Deed or answer any questions you may have about what duties apply to your circumstances and what this means in practice.

 

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The information contained in this outline is of a general nature, should only be used as a guide and does not amount to legal advice. It should not be used or relied upon as a substitute for detailed advice or as a basis for formulating decisions. Special considerations apply to individual fact situations. Before acting, clients should consult their Parry Field Lawyer.

Charitable purpose is more than a line in a trust document. It is the beating heart of an organisation, its North Star, and the aim which it must legally pursue.

What is a Charitable Purpose?

New Zealand’s Charities Act defines what purposes are charitable, drawn from centuries of case law dating all the way back to the Statute of Elizabeth in 1601. Those four heads are:

  • Advancing religion
  • Advancing education
  • Relieving poverty
  • Any other purpose benefiting the community

That fourth category is not a catch-all. It is heavily shaped by case law and can be a difficult category to qualify under in some circumstances.

Importantly, a charitable purpose is not simply a values statement or a marketing message. If you are a trustee, you are legally required to advance those purposes in perpetuity. That is what sets a charity apart from a business. There are currently around 29,300 registered charities in New Zealand. With charitable status comes a significant privilege, including tax benefits, and with that privilege comes accountability.

The Trust at the Heart of It All

The word “trust” is not incidental. When a founder establishes a charitable trust, they are entrusting others with their gift, their vision, and their intention. Trustees have been entrusted to carry that forward.

This means that as a trustee, your job is not to ask what you feel like doing. It is to ask what the founder was trying to do, and then do that.

The founding gift sets the aim and defines the purpose. Trustees must look back to understand what was originally intended, and then operate within those boundaries.

What Can Go Wrong: Scope Creep and Purpose Drift

One of the most common issues we see is purpose drift. A charity is set up to run a preschool. Funding becomes available for high school students. Then more funding arrives for another initiative. Over time, an organisation can drift far from its original purposes, and no longer operate within the legal protection those purposes provide.

A helpful analogy is to think of your charitable purpose as a driver’s licence. If you hold a motorbike licence, you are not permitted to drive a car, even if it would be more comfortable or practical. The same applies to a charitable trust. You can only use the assets for the purposes for which they were established.

This is not just a governance concern. It is a legal one.

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.

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

Charitable purpose is not a formality. It is the legal and moral foundation of everything a charity does. Understanding what your purposes are, whether they remain fit for purpose, and what options are available if they need to change is one of the most important things a trustee can do.

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.

 

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The information contained in this outline is of a general nature, should only be used as a guide and does not amount to legal advice. It should not be used or relied upon as a substitute for detailed advice or as a basis for formulating decisions. Special considerations apply to individual fact situations. Before acting, clients should consult their Parry Field Lawyer.

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.

 

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The information contained in this outline is of a general nature, should only be used as a guide and does not amount to legal advice. It should not be used or relied upon as a substitute for detailed advice or as a basis for formulating decisions. Special considerations apply to individual fact situations. Before acting, clients should consult their Parry Field Lawyer.

Adopting and adhering to recognised charitable purposes is an essential requirement for organisations in New Zealand to become registered charities.

Beyond compliance, however, charitable purposes can also be understood as Kaupapa. They guide the organisation’s decisions, shape its priorities, and provide a clear foundation for how it operates.

Having worked with hundreds of charitable organisations, our key message is this: the heart of the organisation is the purpose. It is what motivates people to do the work and is often the first thing that comes to mind when explaining why their organisation exists.

This purpose then becomes a lens for decision making. It helps determine how resources are applied, how financial and operational choices are made, and determines who sits on your Board. It also informs the activities a charity undertakes to fulfil its charitable purposes and meet one of the four recognised purposes to be registered as a charity:

  • advancing education
  • reduction of poverty
  • advancing religion
  • purposes beneficial to the community

Clearly defining your purposes is, therefore, a key first step for charities.

Those familiar with management terms will know the importance of having an organisational mission. The mission is the guiding light for employees and provides a lure to would-be customers. While a vision looks to the future, mission statements embed action into purpose.

This is no different for a charitable organisation. Being able to clearly communicate purpose or purposes allows an organisation to tell the world (and potential donors) what it does and why.

More fundamentally, it allows those who run or govern charitable organisations to fulfil their legal obligations when it comes to acting in the best interests of the charity.

Recent changes to the Charities Act 2005 require charities to undertake governance reviews every three years. Charities should use this an opportunity to ensure that any policies, procedures, and capability are consistent with their purposes.

Equally, charities might identify where gaps exist and how these can be filled to help better fulfil their purposes.

For well-established or long-standing charities, a governance review is also an opportunity to ask whether the organisation’s purposes remain fit for purpose. Over time, organisational focus can shift. A review allows charities to consider whether their kaupapa still reflects the work they do today and the impact they seek to have in the future.

If you’d like to find out more about how clearly stated charitable purposes can better serve your organisation, get in touch with our experienced Impact team. We would be happy to answer any questions that you have.

 

This article is provided for general informational purposes only and does not constitute legal advice. The information provided may not be applicable to your specific circumstances. You should seek independent advice from a qualified New Zealand lawyer before making any investment or immigration decisions.

From 1 June 2026, migrant investors applying under New Zealand’s Active Investor Plus (AIP) Visa will have broader options to support philanthropic causes. The Government has updated the immigration instructions to allow:

  1. Growth Category applicants to invest up to 20 percent of their total investment in philanthropy. For a minimum NZD $5 million investment, this means up to NZD $1 million may be donated.
  2. Balanced Category applicants, with a minimum NZD $10 million investment, can continue to allocate any portion to eligible philanthropy.

Changes have also been made in that there are new requirements for philanthropic investments which apply to both the Growth and Balanced categories.

Which charities can receive philanthropic investment?

The charity must:

  • be a New Zealand registered charity;
  • have at least five years of compliant annual returns for the five years immediately before the investor’s application;
  • have current Inland Revenue donee status;
  • report to Charities Services under Tier 1, Tier 2 or Tier 3; and
  • use the donated funds exclusively for domestic causes within New Zealand, which must be evidenced by a written agreement between the principal applicant and the receiving charity.

Department of Conservation projects

In addition to registered charities, philanthropic investment may support specified Department of Conservation (DOC) initiatives, providing a pathway for conservation and environmental contributions.

Conflicts of interest and existing links

Applicants and certain family members must disclose pre-existing affiliations with recipient organisations, including membership, trusteeship, or close family connections. Immigration New Zealand may decline applications if donations result in direct private benefits, financial or in-kind, to the applicant or family.

What this means for charities

These changes create new funding opportunities, but only compliant charities qualify. Charities should ensure they maintain compliant returns, donee status, Tier reporting, and processes to manage conflicts of interest. Preparing template donation agreements or confirmation letters is advised to confirm funds are used domestically.

What this means for migrant investors

The changes offer flexibility to include charitable and conservation contributions in investment strategy. Donations must comply with the new requirements to count toward the investment and visa eligibility. Investors should verify recipient eligibility and assess potential benefits to themselves or family members before donating.

If you are considering this visa and want to understand how philanthropic giving might fit into your investment structure, we would be happy to help you work through the detail. You can reach out to our experienced team here.

 

This article is provided for general informational purposes only and does not constitute legal advice. The information provided may not be applicable to your specific circumstances. You should seek independent advice from a qualified New Zealand lawyer before making any investment or immigration decisions.

29 May, 2026

Donation tax credits allow for a percentage of charitable donations to be claimed back as a reduction in income tax or as a refund. For a person who donates to charity, this means that they can receive one third back if they claim it at the end of the financial year. For example, if you give $300 to charity then you can claim back $100.

As part of the New Zealand Government’s 2026 Budget there are big changes to donation credits for donors who make large donations. Under the new changes, a donor who donates $100,000 or more in a year to any organisation will only be able to claim back a tax credit of $33,333.33, with the change coming into effect from 1 April 2027. Once they go above that threshold they will not be able to claim back additional amounts. The Government’s rationale for this change is to ensure the donation tax scheme is financially sustainable and avoid “donor controlled” situations, where a person donates money to a charity they control but receives the one third back.

Of course, this will not affect most donors. However, that justification ignores some of the likely impacts of this which signal a broader shift. It seems likely that the proposed change will disincentive the biggest donors from making large donations. It also signals a subtle message about support of charities and reduces the incentives to do so. The reality is that the biggest donors give the biggest amounts, so it will have an outsized impact on charities.

For a charity, it is worth considering the following:

  • If you were expecting large donations, perhaps contact those donors to have them give in this financial year, before the changes come into effect? (Recognising IRD have stated they will monitor this “in case it gives rise to any integrity concerns.”)
  • Will this actually affect your charity? Perhaps not, given few charities have these sorts of large scale donors. But maybe take this as a challenge to reconsider your strategy for fundraising and see if you can attract some of the donors who can give $100,000?
  • What is your strategy when it comes to fundraising – how can you proactively consider different forms? For example, via wills/bequests, large gifts, one-offs, or fundraisers.

Every year, many eligible donors do not claim back their donation tax credits through IRD. Donation tax credits can be claimed back for any donation made to a donee organisation for donations over $5. We are currently preparing a paper regarding the introduction of a ‘Gift Aid’ system here, which would be similar to the UK.

It is worth noting that the regulatory statement issued has the following comments on what was considered but rejected: “Other options, including multiple rates, removing certain charitable purposes, or introducing a United Kingdom-style gift aid scheme, were considered but not progressed due to complexity, or fiscal or timing constraints. Removing all donation tax concessions was also considered but rejected as inconsistent with the Government’s objective of supporting charitable giving. Increasing direct funding by Government support was not considered, noting this approach is preferred by the community and voluntary sector.”

Some of those points are worth being aware of. For example, we can guess but wonder what is meant by considering “removing certain charitable purposes”?

It is challenging times for charities and the cost of living crisis is having a dampening effect on charitable giving. This change will likely have a more chilling effect for charities than the likely positive impact to the Government of how much they pay to generous donors as tax credits.

It is worth mentioning that there are always green shoots of innovation and hope. We recently released the Changing Paradigms book (downloadable here) with 24 leaders describing how our paradigms of thinking need to change. Last week, we also held the Seeds Impact Conference with a panel on innovation and charities which was most encouraging (you can listen here). There are good things happening in this sector, we just need to tell the stories and get the information out about what is being done.

Our team supports hundreds of charities and if you would like to discuss anything in this article please let us know. We are also helping many charities go through a “governance review” that involves looking at the rules of the charity to consider if changes are needed to keep them fit for purpose (a recent change that requires all Charities to confirm this by October 2026).  You can find out more about our resources for charities on our website.

 

To read more visit:

 

Please note that this article is not a substitute for legal advice and you should contact your lawyer about your specific situation.

29 May, 2026

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