Charities/NFP - Parry Field Lawyers

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.

If you have been successfully reinstated, please see here for more information on the 2022 Act and what obligations and responsibilities your Society has.

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.

With the introduction of the Incorporated Societies Act 2022, every incorporated society must have a fair, transparent, and accessible process for dealing with disputes and complaints. This change is intended to help disputes to be resolved efficiently, while ensuring all parties are heard and treated fairly.

The below is a general guide on navigating a dispute under the Incorporated Societies Act 2022, please refer to your society’s constitution for further details, or get in touch for assistance.

When would an issue be called a ‘dispute’?

Disputes commonly arise between a society and its members, between members themselves, or between a member and an officer of the society where the matter relates to the affairs, rules, or decision-making of the society.

A dispute may concern:

an alleged breach of the constitution or policies;
unfair treatment of a member (for example, a member’s rights or interests have been damaged); or
conduct that is said to be inconsistent with the Act or the society’s governing documents.

Current and former members may bring complaints where the issue relates to their membership or prior involvement with the society.

How do I make a complaint?

If you have a complaint, you should read through and follow the process outlined in the society’s disputes policy. Usually this involves raising your complaint in writing and providing it to the society’s secretary or another officer nominated to receive complaints.

The complaint should clearly identify:

who is making it;
who it concerns;
the substance of the issue; and
sufficient detail so that the society can understand what has occurred and what outcome is sought.

Once the complaint has been received, the society should acknowledge the complaint within a reasonable timeframe and outline the steps that it will follow under its disputes process.

Investigating and determining a dispute

After the society receives a complaint, it must determine whether its disputes process should be engaged. If it does proceed, the committee may investigate and determine the matter itself or appoint an independent person or panel to do so. Whoever undertakes this role for the society must act impartially and without conflicts of interest.

The investigation should be proportionate to the nature of the dispute. This may involve seeking further information from the parties, reviewing relevant documents, and making reasonable inquiries to understand the facts.

When all relevant information is considered, the decision-maker must reach a determination. This must be fair, reasonable, and consistent with the Act and the society’s constitution. The outcome, together with reasons for the decision and any required actions, should be communicated to the parties in writing.

If I raise a complaint, what are my rights?

A person who makes a complaint must be given a reasonable opportunity to be heard before the dispute is determined. In most cases this will involve providing written submissions and supporting information. Where appropriate, the decision-maker may also allow the complainant to be heard orally.

What if I’m the subject of a complaint?

Any person who is the subject of a complaint is entitled to procedural fairness. They must be informed of the complaint and the allegations made against them in sufficient detail to enable a proper response.

Before any adverse decision is reached, you must be given a reasonable opportunity to present your position, provide explanations or evidence, and address the issues raised. No disciplinary or other adverse action should be taken unless this opportunity has been afforded.

If you are concerned that an issue may engage your society’s disputes resolution procedure, or if you would like to know more about what procedure your society should follow – get in touch with us.

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.

After a year of uncertainty, and a consultation for charities earlier in the year, we now have an update on the issue of taxation of business income for charities.

As a reminder, there was a consultation paper put out on this topic at the start of the year by Inland Revenue (IRD). To read more on the philosophical position around why charities have tax concessions you can read the paper that our Partner, Steven Moe, wrote with Craig Fisher, which is available to download here.

In response to the consultation, around 900 submissions were received by the IRD – a very high level of feedback.

In May, it was announced no changes were due in the Budget on this topic, but we understood it was still being considered.

Now we have heard during a speech at an event hosted by the International Fiscal Association, Minister of Revenue Hon Simon Watts mentioned that he has decided not to continue work on the taxation of the business income of charities. We heard from the IRD that apparently, “Ministers were concerned the complexities, compliance costs and distortions associated with a change would impose significant costs on charitable organisations and distract them from their core purposes. However, he said he expects Inland Revenue to increase its enforcement efforts to make sure charity businesses are complying with the existing rules.”

Our view is that this is a positive development as it will provide certainty for charities on this position. There is still likely to be other points that are consulted on, which we will be involved in and will share updates on developments.

If you’d like to subscribe to our Impact email newsletter, which goes to more than 1,000, you can sign up here.

Published 6 November 2025.

One of the most important roles in an organisation is that of the CEO. They help to lead both internally and externally and have a focus on the implementation of the vision and mission.

But what happens when the role changes and there is a transition of CEOs? Here are a few ways to ensure a smooth transition and ensure that the new CEO can feel like they can begin a new era, without having to do things the way they have previously been done.

Staff communications: Ensure there is an announcement to all staff with both the current and future CEO to announce the transition, including rational, timeline, and expectations.
External communications: Consider how the news will be provided externally to customers, suppliers and others.
Meeting key people: It is a good idea to ensure that the old CEO introduces the new CEO to key people. For charities, it would be good to make sure that donors are informed about the change, as often the relationship is with the CEO.
Training for the new CEO: It might be worth asking the new CEO if they have any particular area they would like training in – some possible areas could be: governance, delegation skills, presentation skills, report preparation, EQ skills, or other topics.
Internal transition: Shadowing of roles could be helpful between the old CEO and the new CEO. It is also important to ensure that the CFO discusses how the finances work.
New beginnings: Having said that, it is important that the new CEO is not left with the legacy of the old CEO. In other words, a Board should be ready and allow them to start doing things their own way. As part of this, it could be important that the old CEO leaves completely and does not stay on. Otherwise, the new CEO cannot make their own way (sometimes with mistakes) and try different things.
Marketing: The changeover can be a good chance to refresh the marketing strategy and explaining of what the purpose of the organisation is.
Employment: Get a contract agreed at the start the process which is clear on expectations and responsibilities.
Performance review plan: Create a plan from the beginning on how reviews will happen and when, so there can be clear understanding from the start.

We help many organisations which have new CEOs and hope this list is of help to consider. A transition can be very positive and a good thing for the organisation.