Charities/NFP - Parry Field Lawyers

A Privacy Law change which affects all organisations in New Zealand has just been implemented. In this article we outline what it means and why it matters.

The change boils down to “IPP3A”, which is an acronym that refers to an addition to the third privacy principle. As a reminder, the privacy obligations in New Zealand are overseen by the Office of the Privacy Commissioner and consists of several privacy principles contained in the Privacy Act 2020.

Those 13 privacy principles cover how an organisation collects data, who it tells about that, how people can update their information and more. We outlined exactly what they are and how they work in this overview. A few years ago, when the Privacy Commissioner visited and ran a seminar at Parry Field, he summarised everything with “don’t be creepy”, which is still the best summary we’ve heard when it comes to the approach to collecting private information.

This new addition relates to a clarification and strengthening of the “indirect collection notification obligations”. Essentially what this means is that if your organisation collects information indirectly about someone and stores it, then you have to let them know.

The Privacy Commissioner gives this example in their helpful guidance here – obviously adapt it for your context and business or charity, but you can see the general principle that emerges:

“Sally makes a claim to her insurance company, Trusted Insurance Co, about damage to her car. She tells them she has taken it to Mater’s Motors for repairs. Trusted Insurance Co asks Mater’s Motors for information about the damage to the car, including whether they thought Sally was responsible for the damage. Mater’s Motors view on whether Sally was responsible for the damage is personal information about Sally. Trusted Insurance Co has indirectly collected Sally’s personal information.”

In this case the insurance company will now have an obligation by taking “reasonable steps” to notify Sally about what it collects about her including (this list is the summary from the Privacy Commissioner’s site).

the fact that the information has been collected,
the purpose of the collection,
the intended recipients of the information,
the name and address of the agency that is collecting the information and the agency that holds the information,
if the collection is authorised or required by law, which particular law, and
their rights of access to, and correction of, their information.

It is worth taking a few minutes to pause and consider if there is any part of your organisation which might collect such information indirectly about people.

Some final reflections / challenges since you have read this far relating to privacy:

Do you have a privacy officer in your organisation?
When was your policy last reviewed and updated?
Have you thought through what you would do if there was a hack of your data and it got disclosed?

We often help organisations with their privacy-related questions. If you would like to discuss your situation or would like assistance to create a bespoke privacy policy for you, feel free to reach out to our team.

Recent changes to the Charities Act 2005 (amended by the Charities Amendment Act 2023) requires all registered charities to review their ‘governance procedures’ at least every three years. The first three-year cycle ends in October 2026 – so this is quickly approaching! This article explains why regular governance reviews matter, not only for legal compliance but also for making sure an organisation’s structure reflects how it operates, and outlines the key documents charities should check, from founding rules and officer records to employment agreements, volunteer arrangements, board charters, and policies.

While this requirement is only for registered Charities, we think that any organisation, especially ones that handles funds, has volunteers or employees or is a party to contracts, should regularly review and keep up their rules and governance procedures up to date. This is important from a legislative and compliance perspective, but also to ensure the governance and structure of an organisation accurately reflects day-to-day operations.

Part of a thorough governance review is looking over records and documents and ensuring that changes and decisions are well-recorded and accurate.

So, what sort of record and document considerations might your Charity need to look over?

Amendments to your rules

Have you amended your Charity’s founding document since it was created? If so, are there clear and accurate records of the rules that the Trust holds, and are the same uploaded to Companies Office and Charities Services (where needed)?

Officers

Have you changed Officers since the Charity was created or more recently, if it was set up long ago? If so, are there clear and accurate records of who the Officers were/are, and when any changes in leadership occurred? Does the Trust hold these documents, and is Charities Services updated with the changes (where needed)? We can assist in clarifying what is needed with these steps.

Employees and volunteers

Are your employment agreements up to date and reflective of current law?
If you have volunteers, do you have any agreements and how to keep track of their voluntary service with your Charity?

Board charter

Board charters are an excellent way of clearly and concisely setting out responsibilities, roles and procedures of a Charity. For example, you could set out your mission/purpose, the stakeholders or communities you engage with, and how meetings are run. If you don’t have a Board Charter, we recommend creating one. It doesn’t have to be complex or lengthy – just reflective of your organisation. If you do have a Board Charter already, consider revisiting it, and checking whether what is set out is accurate and reflects the organisation and the direction it is heading in.

Policies

We recently released a series of these – find out more here.

We can Help

Parry Field lawyers are well-experienced in assisting organisations review, amend, and update their governance procedures and policies. Please reach out to our Impact Team if you would like to discuss how we can assist your organisation.

For more information about the requirement to review governance procedures under the 2020 Amendment to the Charities Act 2005 please see here.

We are often called on to assist incorporated societies with disputes. This is why the Incorporated Societies Act 2022 requires all incorporated societies to have a dispute resolution procedure.

While a procedure is a great starting point, on its own it is not a silver bullet. In this article we discuss why and offer practical tips on disputes.

What disputes do we see?

The most common disputes we see are due to:

People interpreting the rules differently due to ambiguity in the constitution. Where there is ambiguity, there is room for different and even contrasting interpretations and therefore conflict.
Officers simply not following the society’s constitutions. This is a fundamental obligation and failure to do so can raise the ire of members and prompt actions to remove officers.
Personality and behaviour clashes between members or between members and officers, or between officers.
Officers pursuing opposing agendas, leading to conflict within the Committee.

What are the consequences

There is often an emotional toll for people involved and for the wider society. We have seen lifelong friendships destroyed and societies wound up. When lawyers are required, there is also a financial cost for the society that will likely be borne by the society as a whole.

How to prevent disputes

Here are our top tips for avoiding disputes:

Have a clear constitution – Remove ambiguity from your constitution.
Follow the rules – The rules bind members and officers. If the rules are no longer fit for purpose, change them, but avoid simply not following the rules because they are inconvenient.
Communicate well – Members are at the heart of incorporated societies. Keep members informed of what decisions have been made and why. In our experience, the greater the transparency, the higher the trust.
Set behaviour expectations – Constitutions (rules) generally focus on what to do without much focus on behaviour. Consider using a Code of Conduct to set out behaviour expectations, or embed these in the constitution. Consider making it an obligation of membership to adhere to specific behaviours.

How we can help

We can help by updating constitutions and drafting a Code of Conduct. We can also advise on the best way to communicate with members on sensitive matters. Reach out to us if you would like to discuss your situation.

If the dispute escalates, our disputes team is highly skilled in seeking the best legal outcome.

Increasingly, Trustees are asking whether they might become personably liable. This is an excellent question and one that all officers of charities should consider.

We were recently asked whether Trustees can be held personally liable if a Trust becomes insolvent. The short answer is yes, in certain circumstances. However, there are some protections which can limit liability and it will depend on what action the Trustees took. For example, if there was some dishonest action, Trustees could be liable, but for genuine decisions this is less likely.

These principles would also apply to officers of other entity types such as to officers of incorporated societies or directors of charitable companies.

Inbuilt protections for Trustees

Our trust deed limits the liability of Trustees using indemnity clauses like this:

No Trustee hereof will be liable for any liability or expense arising from any cause whatsoever when acting with the authority of the Board and will be entitled if the Trustee has paid the expense or discharged the liability out of the Trustee’s own funds, to reimbursement from the Trust Fund.

However, this is usually followed by wording like this:

UNLESS such liability or expense arose from the Trustee’s dishonesty, wilful misconduct or gross negligence or was incurred without authority from the Board.

In other words, if a Trustee is dishonest, engages in wilful misconduct or gross negligence, or creates liability without the approval of the Board, the Trustee may be held liable. This makes sense – liability limitations exist to ensure Trustees are not unreasonably held accountable for their decisions, while at the same time requiring them to avoid poor behaviour.

If you would like help to create or amend a trust deed, please contact us.

Can insurance help?

Trustee insurance (often called Directors and Officer Liability Insurance) policies may help but often exclude the insolvency of the Trust and any dishonest activities by Trustees.

Insolvency

If the Trust is unable to pay its debts it may apply for voluntary liquidation under section 24 of the Charitable Trusts Act 1957 (“CTA”). A creditor or Official Assignee (a government-appointed person responsible for managing liquidations) may also apply to the Court for the liquidation of the Trust under section 25 of the CTA. In either situation, section 301 of the Companies Act 1993 may apply, and interestingly, this may apply to Trustees as well as Directors of Companies.

Section 301 permits the court to require Trustees to personally repay money or return property, or pay compensation if it appears to the Court that a Trustee “has misapplied, or retained, or become liable or accountable for, money or property of the company, or been guilty of negligence, default, or breach of duty or trust in relation to the company.

While we have not seen any case law about section 301’s application to Trustees specifically, it is useful to be aware that this is a possibility in certain circumstances.

How do Trustees protect themselves?

In many respects, Trustees have similar responsibilities to directors of companies when it comes to insolvency. They need to pay close attention to their financial situation and understand if they are reaching a point when they may not be able to pay their creditors. We recommend:

Paying close attention to the financial situation.
Asking, “Will we be able to pay for the contracts we have with creditors?” If you are unsure, avoid entering into the contract.
If insolvency is looming, seek professional advice urgently.
Consider whether you should contact IRD to explain the situation. IRD and employees rank highly among creditors. IRD often initiates liquidation proceedings.

In a nutshell

Trust Deeds indemnify Trustees for certain matters. These do not include dishonesty, wilful misconduct or gross negligence or taking steps without authority from the Board.
Insurance usually excludes insolvency.
If a Court determines a Trustee has misapplied, or retained, or become liable or accountable for, money or property of the company, or been guilty of negligence, default, or breach of duty or trust in relation to the company, the Trustee may be personally responsible for reimbursement.
Trustees must understand the Trust’s financial circumstances and make decisions that will avoid insolvency.

We can help

We have acted for hundreds of charities and can help your charity as well. Please contact us for specific advice on Trustee liability for your circumstances and how to prevent it.

Many of the same good governance principles apply across all sectors. However, being on a charity or for-purpose board means facing added challenges to those in the commercial sphere. By considering the unique dynamics of charity boards, this article aims to present essential lessons to improve governance in practice, based on helping many hundreds of such groups as the most active law firm in this area.

The unique dynamics of charity boards

Charity boards must find a balance between promoting organisational and public interests and charitable purposes. While board members with expertise in finance, law, or governance are valuable, without a strong understanding of the charity sector and their organisation’s work, their governance may have limited success.

This is particularly so as charity governance is often grounded in ethical or values-based considerations. For example, if a board takes actions which don’t align with values or goals, this can undermine the organisations foundation and reputation. This is particularly detrimental in a sector where maintaining strong stakeholder relationships is key to success. Additionally, where activities are seen as inherently virtuous there can be a lack of organisational accountability.

Key challenges for charity boards

Let’s unpack a few of the key challenges for charity boards:

Role blurring – a common place where things go wrong in charity governance is the blurring of lines between governance and management roles. This creates risk of board members being pulled into day-to-day operations. Although in smaller organisations it is common for people to wear multiple ‘hats’ (often as volunteers), issues arise where the board becomes too concerned with management. To avoid this, clearly define the role of board members to prevent a pull into day-to-day operations and stay focused on the board’s strategic goals.
Legal considerations and checking of rules – along with governance best practice, for many charitable organisations there are specific officer or trustee duties to be complied with under New Zealand law. Additionally, the Charities Act now requires boards to review their rules every three years and ensure they are fit for purpose. For more information see our Charities Handbook and this article on reviewing rules.
Measuring success and impact – this may be difficult in a sector where impact is often qualitative and long-term, making navigating organisational direction difficult.
Aligning organisational and board development – governance must keep pace with organisational growth and goals and aim to keep growing.
Structuring onboarding and reflection – set out clear objectives and ensure regular evaluation of performance. This should include continuing to assess and improve governance practices. A clear board charter will also offer overall guidance – setting out role, relationships, how decisions are made, procedures, inductions, committees.
Understanding your organisation’s purpose – this will help guide decision making, assess the effectiveness of governance, and navigate further growth and goals. Consider, do all your board members say the same thing when asked about purpose?
Balancing professionalism and idealism – in purpose driven organisations this may be particularly difficult amongst board members with different backgrounds.

We help many charities with their governance – let us know if you would like to talk through your situation.

The deadline for incorporated societies to re-register under the Incorporated Societies Act 2022 was 5 April 2026. If your society has not re-registered, the consequences of missing the deadline are serious.

This article outlines what happens for those societies that failed to re-register, and what options are available if that occurred.

The consequences of failing to re-register

Societies that did not re-register by the deadline were removed from the Incorporated Societies Register on 5 April 2026. The practical consequences of this are significant:

The society will no longer be able to operate as a legal entity.
All assets, including property, will need to be disposed of in accordance with the society’s constitution.
The Registrar may step in and direct how assets are distributed, overriding decisions that would ordinarily be made by members or committee members.
Banks will freeze society’s accounts and refuse officers access, making it difficult to pay employees or meet other financial commitments.
Existing contracts including as leases or supplier agreements may be affected, as the entity named in those arrangements will no longer legally exist.

Can a society be reinstated after removal?

Yes, but it involves time, cost, and a period of ongoing uncertainty.

Under the 2022 Act, a society can apply for reinstatement on the ground that it was operating at the time of removal and there is a proper reason for it to continue to exist. This is the most relevant ground for societies that simply missed the deadline.

To apply, the society (or a member, creditor, or other eligible party) will need to provide the societies latest financial statements (if not already filed), confirmation the society has at least 10 members, contact details, and evidence of operation. Evidence of operation can include things such as financial records, meeting minutes, or legal documents. The society will also need to pay a restoration fee of $177.78 plus GST. Applications for this can be made online through the Incorporated Societies Register.

Importantly the society must also submit a constitution that complies with the requirements of the 2022 Act, read more about these requirements here.

Once an application is accepted, it is publicly notified, and there is a 20 working day period during which objections can be made. If no objections are received, the society will generally be restored the following working day.

It is worth bearing in mind that the Companies Office is likely to receive a large volume of reinstatement applications, and there are time frames mentioned above, which mean it will not be quick.

What should your society do now?

If you have missed the deadline and are uncertain about your society’s options, we encourage you to get in touch with us. We can help you understand the reinstatement process and take steps to get your society back on track as quickly as possible.

Starting a charity or for-purpose organisation is an exciting step, but choosing the right legal structure is key if you want to create impact in Aotearoa. The option you select will shape how your organisation operates. Each structure comes with its own advantages and limitations, so it is worth taking the time to understand what fits best with your goals, values, and long-term vision. Below, we explore the three main options available in Aotearoa New Zealand, and what each one could mean for your organisation.

1) Charitable Trust

Charitable trusts are the most common structure for purpose-led organisations in Aotearoa. They are well understood by funders, regulators, and the public, and are designed specifically for charitable purposes.

One of their biggest advantages is perception. Trusts are widely seen as mission-driven and focused on public benefit, which can make it easier to attract donors and partners. They also offer long-term stability, as trustees can provide continuity over time, as well as flexibility.

However, trusts cannot have shareholders or investors, which can limit access to capital. They also come with ongoing compliance obligations through Charities Services, which can add administrative work.

2) Charitable Company

A charitable company is essentially a company operating for a charitable purpose. Companies are one of the most familiar legal structures in Aotearoa, with clear governance rules under the Companies Act. This makes them attractive for organisations wanting strong structure, scalability, and flexibility.

They can also raise capital through shareholders or investors, which can be useful for growth or social enterprise models.

That said, the word “company” can create perception challenges. Many people associate companies with profit maximisation, which may make it tougher to attract donors. Additionally, companies may face higher compliance costs and do not automatically fit within the charitable framework unless they clearly advance a charitable purpose. Therefore, extra caution must be placed to ensure the company aligns with its charitable purposes.

3) Incorporated Society

An incorporated society is a membership-based structure, making it ideal for community-led initiatives. Members have voting rights and can directly influence the organisation’s direction, creating strong engagement and accountability.

This democratic approach can be a strength, but it also comes with trade-offs. Decision-making can be slower, and governance can become complex or even political as membership grows. In some cases, internal dynamics can become challenging to manage.

So, which is right for you?

If your focus is long-term charitable impact and public trust, a charitable trust is often the best fit. If you need flexibility, scalability, or investment, a charitable company may be worth considering. If your organisation is driven by community participation, an incorporated society could be the right choice.

If you would like to discuss which structure is right for your entity, feel free to reach out and contact us. We also provide many resources in the form of articles, guides, videos, webinars and more.

In our dealings with many hundreds of charities, both to set them up and provide ongoing support, there are consistent themes and questions that arise. One of the sources of confusion relate to how boards can improve governance.

There are core duties that must be applied in charity governance to ensure not just legal compliance, but strong governance. But how can your organisation ensure these duties are not only acknowledged, but genuinely put in practice?

In this article, we break down key principles to implement strong governance. As well as this, make sure to check out our free governance resources for Boards to learn even more.

1. Purpose

A strong understanding of your charity’s purpose provides an anchor for all governance decisions. This allows a board to assess whether the actions align with the organisation’s mission and redirect where decisions have “drifted” from this purpose. This also has the benefit of providing a clearer path for navigating the strategic direction and future growth.

2. Foundations

A strong legal foundation, including the legal structure, governing document, and charitable purposes, are all paramount in the organisation’s ongoing success. Board policies also form part of these foundational elements. These create written rules and standards to prescribe operational processes. It is important that board members have a complete understanding of these legal aspects, including a true comprehension of the governing document. There is now an obligation on charities to review procedures every three years as well and ensure they are fit for purpose. Depending on your legal structure individual trustees, committee members or directors should also understand their individual legal obligations under legislation, including as officers under the Charities Act 2005.

3. People

Strong foundations need the right group of people to make a mission a reality. A board should consider whether they have the experience, skills and viewpoints needed to successfully reach goals. This includes recruiting board members with diverse backgrounds and skills, ensuring strong succession planning and fostering a culture that effectively encourages governance and continual learning.

4. Practice

In practice, strong governance requires collective decision-making, clear delegation, and role clarity. All viewpoints need to be heard and genuinely considered, with a focus on big picture governance issues rather than minor operational matters. A common downfall is where lines blur between management and governance roles. Although in smaller organisations it is common for individuals to wear multiple ‘hats’, board members should keep in mind which function they are acting under and keep these roles distinct.

5. Management

There must be an active management of risks, finances, and potential conflict of interest. Risk management should be approached proactively rather than focusing on mere compliance. Financial risks should also be considered in this manner with outlook to future planning. Consider whether you have genuine confidence in the effectiveness of these processes should the worse happen.

6. Accountability

Finally, there must be both public accountability and internal evaluation. Externally your organisation should ensure that all reporting requirements are met to support transparency with stakeholders and regulators. While internally accountability can be met with regular evaluations of board effectiveness. In New Zealand, the registered charities must now review their governance procedures every three years. This will aid ensuring that these key principles and reflected in governance documents and practices. Read more about the requirement in our article here.

This accountability and review should guide improvement of the other principles encouraging updated legal foundations, governance practices, management and even purposes.

If you would like to discuss any aspects of how your governance board operates, feel free to reach out and contact us. We also provide many resources in the form of articles, guides, videos, webinars and more.

IRD recently shared two sets of slides regarding their consultation with charities at the end of 2025.

In this note, we summarise some of the key points they make on a variety of topics. We recommend reviewing the slides yourself (contact Partner, Steven Moe, if you’d like a copy) but this could provide a starting point to show areas that may be of interest.

Donor-controlled charities

Many submitters did not support introducing a bespoke donor-controlled charity regime in the form proposed, preferring better enforcement of existing charity law and fiduciary duties.
Concerns were raised that the proposed definition is too broad and could capture low-risk entities, including certain Māori organisations, iwi entities and widely held structures.
There was support in principle for a minimum distribution rule to ensure tax-benefited funds are regularly applied to charitable purposes.
However, a 5 percent asset-based distribution rate was generally viewed as too high in the New Zealand context. Submitters preferred an income-based approach, flexibility, exemptions and multi-year averaging.
Integrity measures targeting circular arrangements and non-arm’s length transactions were supported conceptually, but many submitters were concerned about complexity and compliance costs.
A cap on donation tax concessions for donations to donor-controlled charities was the least preferred option and was seen as a blunt instrument that could dampen large-scale philanthropy.

Membership subscriptions and member transactions

Inland Revenue has indicated that many member trading and service transactions are taxable under current law, which may bring additional organisations into the tax net.
Submitters expressed concern about compliance impacts, particularly for volunteer-run organisations.
There was strong support for clear, practical guidance with examples.
Many favoured retaining non-taxable treatment for genuine membership subscriptions, with a focus on the substance of transactions.
Some submitters suggested clearer legislative distinctions between commercial trading and social or mutual member activities.

Tax-free threshold

Officials have proposed increasing the long-standing $1,000 tax-free threshold, potentially to $10,000.
There was broad support for increasing the threshold to reflect inflation and reduce compliance costs for smaller organisations.
There was little support for a cliff-face approach that would remove the concession entirely once a threshold is exceeded.
Alternatives suggested included an abating threshold and alignment with financial reporting thresholds.

Filing requirements and RWT exemption

Submitters generally supported simplified filing requirements for small not-for-profits, particularly given their volunteer-led nature.
Education and proportionate compliance responses were preferred over punitive measures.
Concerns were raised about proposals to increase oversight of resident withholding tax exemptions if this shifted compliance costs onto financial institutions.

Donation tax credit simplifications

In-year donation tax credit refunds were broadly supported as a way to improve donor cash flow and potentially support increased giving, provided participation remains voluntary and does not increase administrative burdens on charities.
Allowing donors to allocate their donation tax credit directly to the donee organisation was viewed by many as a potentially more impactful reform.
Practical issues were noted, including donor anonymity, stewardship considerations and whether an allocated credit should itself qualify for a further donation tax credit.

If you have any questions regarding the information above, please contact one of our team.

Published February 2026.

New regulations have provided an interim fix for residents associations left in limbo by new requirements under the Incorporated Societies Act 2022. But as a temporary exemption, residents associations will still need to consider their future structure.

Background

A Residents Association is a type of incorporated society that exists for the benefit of the community it serves. It might maintain community facilities or common areas, or simply serve as a forum for residents to come together and organise community activities. Some Residents Associations will own common land as well.

Most Residents Associations will be registered under the Incorporated Societies Act 1908, which means that they will need to prepare for and re-register under the Incorporated Societies Act 2022. However, the new Act prohibits surplus assets from being distributed to members where the society is wound up.

This will cause issues for many Residents Associations who own common land, as “winding up” provisions often provide that surplus assets should go to the members. For Residents Associations with common land, this ensures that the residents will get a share in the land when and if the society winds up.

This prohibition is to preserve the principle that incorporated societies should not operate for the financial gain of members. However, for Residents Associations that own common land or other property on behalf of residents, if the association was wound up, residents would lose rights to property they justifiably see as being theirs.

What does the exemption mean for residents associations?

In response to these concerns, a temporary exemption has been made allowing Residents Associations to retain the clause in their constitution that enables distribution of surplus assets to members for the transition period.

The exemption is provided for under the Incorporated Society regulations. Residents Associations will still need to re-register under the 2022 Act by the deadline of 5 April 2026. At the same time, they must also notify the Registrar that the constitution they are submitting retains a clause permitting distribution of surplus assets to members if the association winds up.

The temporary exemption will remain in place until 5 October 2028. During this period, Residents Associations must either amend their surplus assets provisions to comply with the Incorporated Societies Act 2022 or consider an alternative ownership structure.

Time to consider an alternative structure?

Although this exemption does not provide a permanent fix for Residents Associations under the new Act, what it does do is provide time for Residents Associations to consider their options and what the best structure will be going forward.

If your Residents Association is in this situation, let us know – we are happy to support you in considering your options moving forward. For further information on how the requirements under the Incorporated Societies Act 2022 will affect Residents Associations, check out this article.

We help with unincorporated and incorporated societies and answer questions all the time. If you would like to discuss further, please contact one of our team.