Charities/NFP - Parry Field Lawyers

We are pleased to announce the release of our paper on Fundholding.

Fundholding is a flexible solution that can apply to many groups seeking to carry out charitable purposes, but are held back by common barriers, such as administration or a lack of funding streams.

The paper focuses on:

Discussing the basic elements of a charity in New Zealand and why fundholding might be an option for some projects;
Defining fundholding;
Discussing the various forms of fundholding;
Outlining the key provisions for a written fundholding agreement; and
Giving examples of fundholders in New Zealand.

We are at the early stages of the journey here in New Zealand. It is our hope that by preparing this paper that it will bring into sharp focus the potential of fundholding but also the challenges that will be faced to implement it well here.

Thank you to all those who contributed to the paper.

We help hundreds of charities and are New Zealand’s leading lawyers for this sector – if you’d like to discuss this or any topic, let us know.

You can download the paper here.

Launch of our Fundholding Paper. Recorded 4th March

Who is liable if there is a breach of health and safety? A new case gives us some insights.

A former Port of Auckland CEO was found guilty for breaching his duties as an officer under the Health and Safety at Work Act 2015 (the “Act”). It is an important reminder that all officers have critical roles to play in health and safety – even if they are operating at some distance from ‘where the work is done’.

The former CEO, Mr Gibson, was found guilty as an officer of failing to exercise due diligence under section 44 of the Act. A port worker died while loading containers on a ship berthed at the port. The judgment found Mr Gibson had exposed the worker to a risk of being struck by objects falling from cranes.

In this situation, the port was first found guilty and required to pay a fine of $561,000.

Why is this newsworthy?

We are more used to hearing about directors and / or entities being charged with health and safety at work breaches. This situation is about an officer being found in breach.

Under the Act, any person that has ‘significant influence over a Person Conducting a Business or Undertaking’ (“PCBU”) may be an ‘officer’ and subject to officer duties and liable for any breaches of these.

It is a little confusing as to why the Board itself was not also held liable.

What does due diligence mean?

The Act (Section 44) requires officers to exercise care, diligence and skills to ensure the PCBU (in this case the port) complies with its duty. The Act says that due diligence includes taking ‘reasonable steps’, as set out in column A of the table below. Note the use of the word ‘and’ at the end of each point – officer due diligence includes all of the matters.

Failure to exercise due diligence is a strict liability offence – an officer need not have acted recklessly or intentionally to be found in breach of the requirement.

In this situation, the Court noted, among other things, that the CEO had been put on notice regarding insufficient monitoring of ‘work as done’ in a report from KPMG and had not taken action to implement its recommendations.

The Court also noted that the CEO should have known there were shortcomings around the management of exclusion zones and should have addressed these in a timely manner.

What can officers do to help ensure they are exercising due diligence?

In column B we provide some suggestions for how an officer might exercise due diligence, including useful questions for officers to ask.

We do not suggest relying on this or any other industry guides – what due diligence constitutes is specific to the circumstances and the nature of the work. The court may consider industry standards and guidelines when determining if an officer has exercised due diligence, but this is not determinative.

Column A	Column B
(a) to acquire, and keep up to date, knowledge of work health and safety matters; and	How mature is the PCBU’s safety culture? What message does leadership send through its actions and words? Are we continuing to upskill our health and safety governance knowledge?
(b) to gain an understanding of the nature of the operations of the business or undertaking of the PCBU and generally of the hazards and risks associated with those operations; and	Know the business, what it involves, the tasks and how they are performed. What are the special health and safety implications for our work? Get expert advice on the hazards and risks.
(c) to ensure that the PCBU has available for use, and uses, appropriate resources and processes to eliminate or minimise risks to health and safety from work carried out as part of the conduct of the business or undertaking; and	What policies and procedures are in place? How often are they reviewed and updated? What personal protective equipment is available? What training is provided?
(d) to ensure that the PCBU has appropriate processes for receiving and considering information regarding incidents, hazards, and risks and for responding in a timely way to that information; and	What health and safety monitoring is done, how often and by whom? Are ‘near misses’ recorded? What trends are emerging from the data?
(e) to ensure that the PCBU has, and implements, processes for complying with any duty or obligation of the PCBU under this Act; and	What action is taken following any near misses or incidents? How well do you understand the duties set out in the Act?
(f) to verify the provision and use of the resources and processes referred to in paragraphs (c) to (e).	What records are there to confirm that actions around health and safety?

What else can officers do in terms of health and safety?

Leaders set the tone from the top. When leaders demonstrate visible leadership in health and safety, it shows that it is an important part of the organisation’s culture.

Visible leadership includes more than just making and following rules. It means taking a genuine interest in how health and safety is managed and understanding and acting to remove any barriers to a safety culture. Officers should ask to visit the relevant PCBU and to speak to workers, to ask workers what is working well and what could be improved when it comes to safety.

They should also act in a timely manner to address any shortcomings in health and safety.

Resources

There are many resources available to help officers at all levels with health and safety governance, such as:

Institute of Directors Health and Safety Governance: A Good Practice Guide: https://www.iod.org.nz/resources-and-insights/guides-and-resources/health-and-safety-a-good-practice-guide#

Parry Field Lawyers Charities Healthcheck Part 3 People: https://www.parryfield.com/wp-content/uploads/2024/06/Part-3_People_Charities-Healthcheck_PF.pdf

Worksafe – Health and safety leadership guide: for owners and company directors of small to medium businesses: https://www.worksafe.govt.nz/managing-health-and-safety/businesses/guidance-for-business-leaders/

This article is intended for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please contact a qualified legal professional. Reproduction is permitted with prior approval and credit to the source.

A recent decision by Charities Services is a reminder that charities have restrictions around political activity. In late 2024 the charities regulator signalled its intention to deregister the Te Whānau o Waipareira Trust – the key reason being the trust’s perceived political activity, namely money provided to a political party and a political candidate.

Why not support politics with charitable donations?

Charities may engage in political activity, the proviso being that it must further the charity’s stated purposes. Only recently confirmed by Greenpeace is that charities may also have political purposes – however, this does not extend to supporting particular political parties or political candidates. Below are some reasons why.

A charity’s funds must only be used to support the charity’s purposes and should be non-partisan. Some of a political party or candidate’s policies may be consistent with a charity’s purposes, however, the political party or candidate is likely to have much wider ranging policies overall, extending well beyond those of the charitable trust. This makes it difficult to argue that supporting a political party or candidate is consistent with a charity’s purposes.
If a charity donates money to a political party or candidate, it is using money intended for ‘charitable purposes’ for ‘partisan and non-charitable purposes’. Consider a donor – how happy would they be with their donation being used to support a political party or candidate?
At least at face value, a charity donating to a particular political party or candidate is not consistent with the touchstone for charities – selflessness. It could certainly be perceived as self-serving, particularly if a person is both involved in the trust and a politician that trust gives to – a conflict of interest. It would be perverse for funding from one government to be used to assist another political party into power – or if funding originating from government was used to endorse or support its re-election.

Remuneration

There is no doubt that remuneration of executives in charities is just as important as remuneration in other entity types. It is critical for attracting and retaining good quality staff. Decision makers should keep in mind Charities Services guidance about remuneration when deciding what should be paid – the payment of salaries and other expenses are acceptable provided the payments are “reasonable” to attract the right people to work and advance the charitable purpose.

Te Whānau o Waipareira Trust has also raised eyebrows by choosing to pay executives considerably more than the market rate and more than comparable charities. It’s average salary was $510,000 for 13 executives.

In deciding what is reasonable, a trust should benchmark itself against similar entities with similar purposes and of a similar size. Decision-makers should also take care to ensure that their decisions would meet ‘the front page of the newspaper’ test – would people be shocked and dismayed if the salaries became public?

Public trust

There is a broader issue at stake when charities go rogue, by supporting politics for example. These negative examples tend to be the charities that receive the most media attention, for all the wrong reasons. This undermines public trust and confidence in the charitable sector overall, making it harder for reputable charities to do critical work.

We will be watching with interest for the outcome for Te Whānau o Waipareira Trust as this will have implications for all other charities in New Zealand.

We help hundreds of charities and are New Zealand’s leading lawyers for this sector – if you’d like to discuss this or any topic, let us know. Also check out the free videos and books at www.parryfield.com

This article is intended for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please contact a qualified legal professional. Reproduction is permitted with prior approval and credit to the source.

All incorporated societies in New Zealand need to reregister under the Incorporated Societies Act 2022 by April 2026 or they will cease to exist and have their assets distributed.

What does this mean in practice? The consequences are significant for your existence, assets and name.

The incorporated society will cease to exist. This means the incorporated society would be removed from the register and its assets distributed. There are only limited reasons that this could be undone, so it’s important for incorporated societies to meet the reregistration deadline.
The incorporated society will no longer have the right to make decisions on its own behalf, including what happens to any assets. The Registrar could put the society into liquidation and have its assets distributed in accordance with its constitution.
The name of the incorporated society will no longer be protected, so another group may take that name, impacting on the brand and marketing.

Before they can reregister, all incorporated societies must update their constitutions to meet the requirements under the new Act.

We are New Zealand’s legal experts on incorporated societies. We are helping incorporated societies of all types and complexities to update their constitutions – we would be delighted to assist your society as well.

Find out more on our comprehensive Incorporated Societies Information Hub or get in touch for a free 20 minute conversation.

Most entities will be aware that if they issue debt securities (otherwise known as taking money by loans) they have obligations under the Financial Markets Conduct Act 2013 (the “FMCA”). Charities need to be aware that the same obligations apply to them if they issue debt securities.

Some charities might be in a position of issuing debt securities by having loans made to them. The FMCA defines a debt security as a right to be repaid money, or interest on money, which is deposited with, lent to, or otherwise owing by any person.

The FMC rules require charities to prepare a detailed PDS (Public Disclosure Statement) – unless they fall within an exemption. Common exemptions for a charity are:

Small offers, raising money from less than 20 people, in 12 months and it is less than $2 million; or
Wholesale Investors – getting the people who are loaning funds to certify they know what they are doing.

If charities use an exemption category they need to provide documents which clearly indicate that the entity is relying on an exemption and has appropriate disclaimers. They can also mix and match, for example, $2m from Small Offer exemption, and $2m from Wholesale Investors.

Examples of the wording to use are in this article. Although the article was written for start-ups and family and friends investing money, the same principles apply.

When it comes to actually preparing loan documents, we can assist with ensuring they are compliant with the FMCA.

If an exemption applies it will reduce the amount of information that needs to be supplied. However, at all times charities will need to monitor what is being provided to ensure that it is accurate and fairly represents the position. The key is to avoid any hint of misrepresentation of facts and information. Even presenting information which is true could be misleading if not disclosed in the right way. Information should be true and accurate.

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This article is intended for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please contact a qualified legal professional. Reproduction is permitted with prior approval and credit to the source.

For more guides for charities check out our free information and information hubs, like these:

The effects of Better Public Media Trust v AG and what it means for advocacy charities.

The Court of Appeal decision Better Public Media Trust v Attorney-General from November 2023 lays down some guidance as to advocacy charities. In its decision, the court discussed and drew analogies from the Supreme Court judgements Re Greenpeace (SC) and Family First (SC).

The Case Facts and History

The Charities Board declined Better Public Media Trust’s (the “Trust”) application to be a registered charity under the Charities Act 2005. The Trust’s purpose is primarily to advocate for media platforms which are publicly owned. [1] In its view the Trust’s advocacy purpose of promoting public media, particularly its benefits and importance and advocating for public media’s funding and support, is not directed toward a charitable end. [2]

The High Court Judge upheld the Board’s decision, finding the advocacy purpose was not charitable as it was not beneficial to the community. [3] One reason was because there was no connection between its purpose and the public benefit. However, the Court of Appeal found the High Court erred in its decision.

Court of Appeal’s Findings

The Court of Appeal found the Trust did meet the fourth head of charitable purpose under s 5(1) of the Charities Act, being a charitable purpose “beneficial to the community”. To determine this it looked at analogous charitable objectives. It found that the Trust’s means and manner of carrying out its purposes were achieved by presenting all viewpoints in order to help inform viewers and readers of public media issues. This differed from the Trust in Family First (SC). In that case, the Supreme Court found the Trust’s means and manner of achieving its purpose were not beneficial to the community as it promoted one sided views and information only reflecting its view.

Further, the Court of Appeal did not find that there is a general prohibition on advocacy and it stated that the Trust advocating for publicly funded media does not mean it lacks a charitable purpose. [4] In Re Greenpeace (SC) advocating for environmental protection was able to be charitable; similarly, in Latimer v Commissioner of Inland Revenue advancing Māori claims before the Waitangi Tribunal were charitable as it promoted racial harmony and social cohesion. The Trust’s additional purpose of protecting and promoting democracy in New Zealand was also analogous to Re Draco Foundation (NZ) Charitable Trust.

What does this mean for charities?

It is clear that the courts determine whether a charity’s object amounts to a charitable purpose by looking to other similar charitable objectives. [5] The trust’s purpose can be determined from both its trust deed and activities. [6] Furthermore, a trust is not disqualified from being registered simply because its purposes conflict with other opinions and interests, nor because its primary purpose is advocacy. [7] However, where its purpose is primarily advocacy it seems that it is more likely to be considered charitable if it ensures opposing views are heard to inform people of all views, not just ones advocated by the trust.

It is clear that each case turns on its own facts and analogies to trusts with similar purposes. Therefore, it is difficult to draw the line of what is a charitable purpose and what is not, particularly in relation to advocacy notwithstanding the recent Supreme Court cases.

This article is intended for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please contact a qualified legal professional. Reproduction is permitted with prior approval and credit to the source.

We support many charities and have prepared many free guides such as:

[1] Better Public Media Trust v Attorney-General CA171/2020 [2023] NZCA 553 at [80]-[82].

[2] Better Public Media Trust v Attorney-General at [57]-[58].

[3] Better Public Media Trust v Attorney-General at [66] and [81].

[4] Better Public Media Trust v Attorney-General at [36].

[5] Better Public Media Trust v Attorney-General at [35].

[6] Better Public Media Trust v Attorney-General at [87].

[7] Better Public Media Trust v Attorney-General at [83] and [36].

Who do I need to notify?

If you are an incorporated organisation it is important that you notify the Companies Office. If you are registered as a charity, it is important that you contact Charity Services and let them know too. This is to ensure that your details are publicly up to date on both registers.

If you are registered with both, you will have to apply for a name change with the Companies Office before you notify Charities Services.

It can also be useful to let your members or the public know of the name change, to ensure your community is kept up to date.

Note: We often see organisations wanting to use a te reo Māori name. We suggest consulting and getting advise on this as it is something that should be gifted (rather than using google translate!)

Updating your name through the Companies Office

If you’re updating your details online, you must have:

a RealMe login
an online services account with the Companies Office
authority to manage information for your charitable trust board.

If you do have the above, then you can change your organisation’s name following the below steps:

Log in to your online services account.
On the dashboard, select the charitable trust board you wish to update from ‘My Businesses’.
On the ‘View Details’ page, select the ‘General Details’ tab, and click the ‘Change Name’ button.
Enter the proposed new name, and to confirm it can be used, click ‘Name Availability Check’.
If you have documentation to support your application, click ‘Upload’ to attach documents. Please note, these documents will not be available for public view.
Complete the signatory details and click on ‘Submit’.

More information can be found here.

Updating your name through Charities Services

To update your name, simply login through the online portal and fill out the Update Details form online. You can also download and complete the paper form and send that in. Ensure that you have any information you may need on hand (for example if you are using the same name as another entity that will be wound up, ensure you have written consent). More information can be found here.

This article is for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please contact a qualified legal professional. Reproduction is permitted with prior approval and credit to the source.

Launch of our Fundholding Paper. Recorded 4th March

Why not support politics with charitable donations?

Remuneration

Public trust

The effects of Better Public Media Trust v AG and what it means for advocacy charities.

The Case Facts and History

Court of Appeal’s Findings

What does this mean for charities?

Who do I need to notify?

Updating your name through the Companies Office

Updating your name through Charities Services

Christchurch CBD

Christchurch

Rolleston

Hokitika