Not for Profits - Parry Field Lawyers

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 $33,000. 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?
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:

Inland Revenue, Charities and Not-for-profits Information Sheet (28 May 2026)
Taxation (Budget Measures) Bill No. 3 (28 May 2026)
Government press release on improving tax rules for charities (28 May 2026)

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

If your organisation is listed on Schedule 32 of the Income Tax Act 2007 and you are thinking about a name change, the good news is that the process is more straightforward than many people assume. Here is a practical overview of what is involved.

What is a Schedule 32 entity?

Schedule 32 status gives qualifying charities, whose purposes are mainly overseas, the ability to issue receipts to their donees for donations made to the charity. The donees can use those receipts to claim a credit or deduction against their income tax.

Can a Schedule 32 entity change its name?

Yes. There are generally no restrictions from Inland Revenue’s perspective on a Schedule 32 entity changing its name. However, there are a couple of practical considerations to keep in mind. The proposed name also should not create confusion for the public by being too similar to another existing organisation.

Does the legislation need to change first?

Ultimately, yes, to formally update Schedule 32 to reflect the new name, an amendment to the legislation is required. That means the change needs to be included in a Parliamentary Bill, which then goes through the full legislative process. This can take time.

However, the legislative update does not need to happen before your organisation starts using the new name. In practice, once the name has been changed on the relevant registers (the MBIE register and the Charities Service register), your organisation can start operating under the new name right away.

What about IRD?

Once the register updates are done, you or your adviser should notify IRD’s operational team. You can do this through myIR or by emailing charities.queries@ird.govt.nz. IRD will then update their systems to reflect the new name for tax purposes and will also update the Approved Donee Organisations list on their website.

The legislative amendment to Schedule 32 can then be progressed in due course. IRD’s policy team can initiate that process, but it is important to let them know the new name as soon as possible. IRD has noted that they sometimes do not hear about name changes until years after the fact, which can cause complications.

Summary

In summary, the process would roughly follow the these steps. Firstly, consider your new name and receive advice on whether it is likely to be approved. If the new name will likely be approved, then proceed with updating your name on the MBIE and Charities Service registers. Once that has been done, then you can notify IRD’s operational team via myIR or the charities queries email. Also make sure IRD’s policy team are informed, so the Schedule 32 legislative amendment can be initiated. From this point the legislative change can follow in due course and does not hold up the name change itself.

We can help

If your organisation is considering a name change and you would like advice on the process or any related legal matters, we would be happy to assist. This article is a general guide only and is not intended as legal advice. Please get in touch with our team if you would like to discuss your specific situation.

Independence on a charity board is essential for building trust and promoting transparency. It supports good decision-making by providing objective oversight and managing potential conflicts of interest, giving stakeholders confidence that the charity’s choices are genuinely in its best interests. A common question is: how many independent board members are needed when a company becomes a charity?

There is no universal rule, but becoming a charity represents a significant shift in mindset. In a private company, a small group of people may hold multiple roles such as, directors, shareholders, and employees, without much public scrutiny. Once an entity registers as a charity, the organisation exists to advance charitable purposes for the public benefit and ideally continues beyond the founders’ involvement. Registration brings benefits such as tax concessions and credibility, but it also entails greater accountability, transparency, and public scrutiny.

Risks of a Non-Independent Board

If the same individuals act as directors, shareholders, and employees, conflicts of interest can arise, particularly regarding remuneration, contracts, or other benefits. For example, it is inappropriate for people to decide their own salaries or employment terms. Any remuneration should be set at market rate, and those receiving it should not participate in the decision-making process.

Managing Conflicts of Interest

Charities Services’ guidance explains that conflicts of interest can be actual, potential, or perceived, and may be financial or non-financial. While conflicts are common in charities, poor management can lead to disputes, bad decisions, or reputational damage.

To manage conflicts effectively, a charity should:

Maintain a clear conflict of interest policy and an interests register
Ensure conflicts are declared at the start of meetings
Exclude conflicted individuals from discussions or decisions
Record how conflicts are handled in the minutes
Report significant conflicted transactions as related party transactions in the financial statements

Practical Guidance on Board Composition

For a company converting to a charity, it is generally expected that around half the board be truly independent. This ensures that conflicted individuals can step aside from decisions affecting their own pay or position while leaving enough independent members to make valid decisions.

Our experienced team help many charities with their governance. If you would like to talk through your situation, feel free to reach out.

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.

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.

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.

When we talk about funding for charities and not-for-profits, many of us still default to the traditional model of donations, grants, and fundraising events. That approach can be powerful, but it is only part of the picture. A growing number of organisations are blending those familiar methods with a newer paradigm that treats their purpose as something to partner with and invest in, not simply to sponsor. By exploring tools such as impact investment, social enterprises, and income generating assets, it becomes possible to build more sustainable models that sit alongside, rather than replace, the old funding routes. Below are examples of some funding sources.

Under old paradigm: this is a continuation of an older charity mindset that asks people to donate to a cause and involves:

asking for donations from the public
running events, fundraisers, or dinners
seeking grants from local government
seeking funding from central government directly, if there is a relationship with a department
lottery grants or community organisation grants
apply for funding from privately endowed foundations (check their criteria)
Iwi-based organisations
approach community foundations (often a regional focus), energy trusts, or gaming trusts

Under new paradigm: seek partnership via impact investing and look for ways that a business element could be combined to ensure sustainability, such as charging for services or goods, or creating an asset of value. This is hard work but it is often a more long-term approach and can be done in combination with more traditional approaches. This could involve:

a start-up that creates an app to generate income, while also advancing purpose
a business that employs the people you want to help (for example, employing former prisoners)
providing an investment opportunity for property with housing or temporary accommodation, where income is also generated while the purpose fulfilled

For further information, an overview report with examples from the Centre for Social Impact is here.

Can a trust, or its trustees collectively, be regarded as a “person” and therefore held directly accountable for breaches of Health and Safety law? In this article, we consider how a tragic accident in 2020 led to a court ruling on this issue, clarifying the liability of trustees under the Health and Safety at Work Act 2015 and highlighting the consequences for those managing unincorporated trusts.

On 17 September 2020, a tragic accident occurred where a child’s jacket was caught in machinery and the child was fatally injured. The farm where the accident occurred was owned by RH & Jury Trust (the Trust), an unincorporated trust. WorkSafe New Zealand charged the Trust with breaching the Health and Safety at Work Act 2015 (“HSWA”), as a “person conducting a business or undertaking” (“PCBU”) under sections 37(1), 48(1) and 48(2)(c).

The District Court ruled that the Trust nor the Trustees could be charged with the aforementioned breaches, and WorkSafe appealed this decision as a point of law to the High Court. The High Court had to determine whether a trust (or its trustees collectively) constitute a “person” under the HSWA.

While the Court determined that the Trust is not a “person” under section 16 of HSWA, it did determine that the trustees come within the definition of “person” as an unincorporated body of persons.

This decision now allows for the trustees themselves to be prosecuted collectively under the HSWA as a “person”. Crucially, because the trustees can now be considered “a body of persons”, the higher penalties under the HSWA become available – including the maximum fine of $1.5 million.

Implications:

Trustees cannot assume that the trust structure shields them from liability when it comes to Health and Safety.
Trustees of unincorporated trusts can be prosecuted collectively for breaches of the Health and Safety at Work Act 2015.
This opens the door for significant penalties, including the maximum fines under section 48(2)(c) of the Health and Safety at Work Act 2015, which are up to $1.5 million.
Regular risk assessments, policies, and documented compliance measures are essential to diminish the risk of liability.

We help many charities, Trusts, and other entities. If you have any questions on this topic or others, feel free to contact us and check out our free resources on our website.