Charities/NFP - Parry Field Lawyers

Raffles are a common way to raise money for worthy causes. What may surprise you is that there are laws that govern how raffles need to be run. For example, it is illegal to run a raffle online. It pays to be aware of the rules before organising a raffle. Here are some important things to know.

Where are the rules?

The laws around raffles are found in the Gambling Act which exists among other reasons to ensure the integrity and fairness of games, and ensuring that money from gambling benefits the community. It’s useful to keep in mind that these laws are not there to make life difficult but to guard against improper use of funds.

What can raffles be used for?

The raffle proceeds can be used for a charitable purpose, or a non-commercial purpose that is beneficial to the whole or a section of the community. So raising money for a registered charity is fine, as is raising money for the local football club. It is not acceptable for someone to run a raffle to raise money so they can go on holiday or buy a new laptop.

What prizes are permitted?

Most prizes will be fine to raffle. However, alcohol and tobacco products prizes are illegal, as are firearms, explosives, restricted weapons or airgun. It is also illegal to offer a taonga tuturu as a prize (an object over 50 years old that relates to Māori culture, history or society and was manufactured, modified, used or brought into New Zealand by Māori), or a voucher or entitlement to commercial sexual services.

A licence is sometimes needed

Most small raffles are pretty straightforward to run. However, if the combined value of prizes is more than $5,000, and the turnover (the money raised) is more than $15,000, a Class 3 licence is needed. Apply for a licence on the DIA website.

What’s involved in a Class 3 licence?

Among other things, there are special requirements for what needs to be on the tickets. The prize needs to be worth at least 20% of the prize’s ‘gross potential income’ (which is the amount you expect to raise, calculated by multiplying the number of tickets by the cost of each ticket). Within 3 months of the raffle finishing the organisers must provide an audited Audit and Prize Statement to the Secretary. More information is set out on the DIA website.

Other rules

Even if you do not need a licence, there are other rules to be aware of, including:

The rules for the competition must be clear to all participants.
If tickets are sold to the general public, the time and location of the prize draw must be open to the public.
Prizes can only be given to winners and must be given to winners within 3 months of the result, unless the winner cannot be identified or located or does not accept the prize. Prizes cannot be changed once the raffle has started.

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This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

As you may know, all incorporated societies in New Zealand must re-register under the new Incorporated Societies Act 2022 (the “new Act”). If this is news to you, we have written an article about it here.

The new Act requires a society’s name to end with either ‘Manatōpū’, ‘Incorporated’ or ‘Inc’ (or more than one of these if you so wish). However, to change your society’s name, even just one word, you must reregister first then apply to the Registrar for a name change.

To change the name of your society, you need a RealMe® login, an Incorporated Societies Register online services account, and you need the requisite authority in your society to manage information on your society’s register. You need to log into your online services account and select ‘Name Change’ on the ‘View Details’ page and type in the new name. You may click ‘Name availability check’ to make sure you can use the name. If there are any documents in support of your name change (i.e. if another entity has provided consent for you to use the name) you should include these. Then, after completing the signatory details you can submit it. See Companies Office for more information about naming your society here.

The Registrar must then approve the name and will send an email confirmation that they have registered the change within three working days. An updated Certificate of Incorporation will be sent to you. You do not need to update your society’s constitution as it will be treated as having the new name; however, this should be done in your next general meeting.

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We have supported many incorporated societies and produce many free guides and resources on our Incorporated Societies information hub here. This article is not a substitute to legal advice and if you have any questions please do not hesitate to contact our experts here at Parry Field Lawyers.

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 on stevenmoe@parryfield.com sophietremewan@parryfield.com or annemariemora@parryfield.com.

Payroll giving occurs when employers enable their employees to make donations directly from their gross wages. The tax benefit is that the amount of PAYE or withholding tax the employee pays is reduced by the amount of their donation. They also receive a ‘tax credit’ from the donation, which is 33.3% of the donation value.

Payroll giving is therefore a bit simpler than making a donation directly to a charity as donors do not have to submit their donation receipts to IRD to claim the tax credit.

What needs to be in place for payroll giving?

Employers will only be able to offer this service if they file their payroll taxes electronically. They can either use the myIR online service, or attach files from their own payroll software.

Even if an employer has the ability to use payroll giving, it is discretionary. Employers may also use their discretion to choose how the donations will operate, for example, they may designate specific charities that can be donated to, and they may designate a minimum donation amount.

Only ‘tax donee’ organisations can receive payroll donations.

What is a donee organisation?

IRD maintains a list of donee organisations. Charities are added to the list if they use at least 75% of their funds within New Zealand (that is, they operate “wholly or mainly” here), or for the public good if an organisation is not a charity. For more on the threshold, you can check to see if a charity is on the IRD donee organisation list here.

Other resources

The IRD has put together this excellent guide to payroll giving.

It is also possible to claim tax credits on donations to charities supporting overseas causes.

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

If you would like to discuss further, please contact one of our team, stevenmoe@parryfield.com, or annemariemora@parryfield.com at Parry Field Lawyers.

We are often asked when a charity will be registered after applying to Charity Services. This is because the time between applying and getting positive news can be 12 weeks, or more. The simple answer is Charities Services can backdate to when you first applied, but there are two criteria under section 20 of the Charities Act 2005 (the Act) that must be considered. These might affect if they can backdate and are:

When did Charities Services receive a “complete” application?
Was the entity “qualified for registration” as a charitable entity at all times during the period between the effective registration date and the date the entity became registered as a charitable entity?

A completed application requires a completed application form and a copy of the entity’s legal rules. An entity is “qualified for registration” where the application meets all key registration requirements under the Act. This could have an impact on the date. For example, if an entity was required to amend its rules to meet these requirements, then Charities Services can only backdate the registration date to the date of these amendments were legally effective. However, the High Court has allowed the backdating of an application where such amendments were “for the avoidance of doubt”.

Charities Services have the power to backdate an application to the date they received a complete application for an entity that is qualified for registration at all times from the period of effective registration and the date of actual registration. A backdated registration is referred to as the effective registration time, being the date registration was effective rather than when it occurred.

The High Court has interpreted the Charities Services ability to backdate as a means of addressing the otherwise adverse consequences for charities of administrative delays. However, this discretionary ability was not found to extend to charities that have been deregistered and have applied for another application to be registered. The Court, alternatively, does have the power to do so. This means that if a charity wishes to have a backdated registration following deregistration it would need to appeal to the courts for an order to do so.

In summary, while most applications can be backdated if you are asked to amend your documents it may not be possible unless the changes are not very material. We have helped many charities get registered and are happy to provide advice for your specific situation or answer any questions you may have.

If you have any further queries please do not hesitate to contact one of our experts at Parry Field Lawyers- stevenmoe@parryfield.com, sophietremewan@parryfield.com, michaelbelay@parryfield.com or annemariemora@parryfield.com

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

As a charity your models have been built on a foundation that people who want to support doing good will do so by giving you money. The binary approach we all grew up with in our culture is:

In other words, people will give you some of their profits out of their excess: the success of their companies or investments, to support your good works.

The philanthropic sector is often based on a scarcity mindset. It relies on generosity from those with the ability to give, also usually involving a power imbalance, resulting in a “Please, sir, I want some more”, approach, like in Oliver Twist.

I’m pleased to say that an important paradigm shift in this thinking is here, though it is like an incoming tide or a sprouting seed. Both take time for change to be seen, but can deliver better outcomes for everyone.

The ingredients for a different recipe are worth considering and ask yourself this: how might this new way of thinking change your approach to funding your next blue skies project?

The end result could be positive in one of two different ways:

First, as an organisation you create a structure that others can invest in; or
Second, you invest some of your funds in a venture that aligns with your mission.

Impact investments can be through debt (loans) or equity (shares). So, what are the ingredients?

By Steven Moe

Head of Impact Team at Parry Field Lawyers

stevenmoe@parryfield.com 021 761 292

LinkedIn here

What is the minimum age of a trustee?

We often get asked about whether a young person can become a trustee. There are a few points to consider which we are going to go into here. The minimum age of a trustee is 18 years old under the Trusts Act 2019 (Trusts Act) under sections 15 and 20. However, the minimum age of an officer of a charity is 16 years old, as long as one of the trustees of the charity is at least 18 years or older.

How does this work?

An officer in relation to a charitable entity is someone in a position of significant influence over substantial decisions of the entity. It includes trustees of a trust, a member of a board, and a person occupying any other position that allows them to exercise such influence.[1] It also includes a person with powers conferred on them to make decisions which would otherwise fall to trustees, members of the board or the entity’s governing body.

Charities Services has stated that any person under the age of 16 is disqualified from being an officer under section 36B of the Charities Act 2005 (Charities Act). This acknowledges that people of 16 or 17 years of age can partake in charitable work as an officer. Charities are still required to have at least one officer that is 18 years or older as an essential requirement under section 13 of the Charities Act. The difference in age requirements for trusts and charities comes down to the responsibilities in each role, specifically in entering contracts and holding property.[2]

So, where someone of the age of 16 or 17 cannot be a trustee of a trust they may be an officer of a charity if there is at least one officer that is 18 years or older at any given time.

What does this mean for charitable trusts?

Where a charitable organisation wishes to be a charitable trust, the officers all need to be 18 or older to comply with the Trusts Act. If the charity wishes to be an incorporated society, they require one person that is 18 years old or older to be the contact person.

How about for an incorporated society?

Incorporated societies allow under 18-year-olds to be officers provided they are not under the age of 16 years of age.[3] However, the Incorporated Societies Act 2022 requires every society to have at least 1 contact person who is at least 18 years of age.[4]

How about for a charitable company?

The Companies Act 1993 provides that anyone under the age of 18 are disqualified from being a director of a company. The Charities Act 2005 confirms that individuals that are disqualified under the Companies Act are also disqualified from being officers of charitable entities also. This means directors of charitable companies must be 18 years or older.

We have supported many charities and produce lots of free guides such as the Charities in New Zealand Legal Handbook. If you have any further queries please do not hesitate to contact one of our experts at Parry Field Lawyers- stevenmoe@parryfield.com, sophietremewan@parryfield.com, michaelbelay@parryfield.com or annemariemora@parryfield.com

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

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[1] Charities Act 2005, s 4 meaning of “officer”.

[2] Contract and Commercial Law Act 2017, s 86.

[3] Incorporated Societies Act 2022, s 47.

[4] Incorporated Societies Act 2022, s 113-114.

ChatGPT is a chatbot that was released in November 2022 and it has certainly got people talking. Some say it heralds the demise of lawyers, among other professionals, because of its ability to answer questions and draft documents. We tested it for ourselves and while we believe it does have implications for lawyers, we do not recommend doing away with your legal advice just yet.

A chatbot uses artificial intelligence to simulate human conversation using a large language model, in this case text. Our instruction to ChatGPT was: “Draft a Trust Deed for a New Zealand charitable trust.”

The chatbot’s response was partly correct but overlooked critical details needed to make the document legally valid. It ignored the need for a ‘donor’, the person who creates the trust. It failed to stipulate that Trustee signatures need to be witnessed, which is fundamental to the deed being in the proper form. It included only some of the mandatory duties of Trustees. Overall, it performed at a 5/10, but as the document generated would not be legally binding, it was a ‘fail’. In reality, people can already find better templates for charitable trust deeds using a standard internet search.

We also asked ChatGPT: “Is it better for my organisation to be an incorporated society or charitable trust?”

The chatbot set out some of the differences and similarities but wasn’t overly useful. A much more useful comparison is already available, for example, on our website: https://www.parryfield.com/incorporated-societies-vs-charitable-trusts/

Of course the question was a trick one because we did not provide any details of the organisation and each organisation is different. ChatGPT cleverly noted this at the end of its answer: “Ultimately, the choice …… will depend on the specific needs and goals of your organisation. It is advisable to seek legal advice and consider all relevant factors before making a decision.”

We couldn’t agree more. Our team has helped countless clients with exactly this question because it can be confusing. Our legal advice is based on decades of experience across hundreds of organisations and all entity types. At this stage it is only real-life lawyers who can elicit from clients the critical information to advise on the best entity type.

Our verdict

ChatGPT does not purport to provide legal advice. It acknowledges its limitations including that it may occasionally generate incorrect information or produce harmful instructions or biased content.

However, ChatGPT is just one AI tool. The legal profession has already embraced AI for things like contract reviews, research and document discovery. In a legal first in 2022, an AI start-up in the United Kingdom was used to sift through hundreds of documents in a murder trial saving the legal team four weeks.

AI offers enhanced efficiency and might just free lawyers up from many of the repetitive and mundane tasks they currently undertake, which could be good for lawyers and clients. However, it is a little while before it is advisable to hand over real legal challenges to an AI ‘lawyer’.

We recently helped to edit a collection of essays on the topic of AI and the law for The Law Association which you can download here.

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

We help with charity set ups and answering questions all the time. If you would like to discuss further, please contact one of our team on stevenmoe@parryfield.com, michaelbelay@parryfield.com, sophietremewan@parryfield.com, or yangsu@parryfield.com at Parry Field Lawyers

Why minutes matter

Accurate and thorough board minutes are as critical for charitable entities as they are for companies. Well-written minutes help to ensure charitable entities are legally compliant and assist effective and efficient governance. They are an important record for current, absent and future board members about meeting discussions and decisions as they provide concise summaries of key points discussed.

Furthermore, accurately noting conflicts of interest, identifying documents tabled during meetings, and maintaining a list of action items all help the board to manage its workload and responsibilities effectively, ensuring progress is tracked and necessary actions are completed for future meetings.

Legal Requirements

In New Zealand, different types of charitable entities have specific legal requirements for meeting minutes.

Charitable Trusts: The Trusts Act 2019 requires trustees to keep core documents, including any records of trustee decisions made and any written contracts entered into, which will typically be records in minutes.[1]

Incorporated Societies: The Incorporated Societies Act 2022 stipulates that minutes of annual general meetings must be maintained.[2] Sections 89 allows resolutions to be passed without a meeting, for example, via email, if a society’s constitution allows. Failure to adequately hold and maintain minutes for annual general meetings constitutes an infringement offense, carrying a $500 fee per violation.

Charitable Companies: The Companies Act 1993 requires charitable company directors to maintain detailed minutes of all directors’ and shareholders’ meetings, documenting decisions and resolutions. The Companies Act also requires that minutes be accessible for inspection by directors, shareholders, and regulatory authorities.

What minutes should include

There are numerous templates available for minutes. Our advice is to tailor any template to the needs and preferences of your entity.

The administrative basics.

Start and finish times.
Name of chair.
Name of minute taker.
Attendance: those present and absent, and whether a quorum was established and maintained.
Date, Time, and Location: Schedule and details for the next meeting.

Each agenda item.

Note the item number and topic and keep this consistent with the agenda for ease of reference.
Note key points discussed. Record sufficient detail for people to understand the topic and discussion. Avoid unnecessary detail. Avoid attributing any comment to a particular Board member.
Resolutions: Detail the specific resolutions. We recommend that the chair sit beside the minute-taker and verbalise the proposed resolution for the meeting to hear. This allows meeting attendees to hear what is being minuted, to ensure it is accurate and makes sense.
Good minutes should signal whether something was simply ‘noted’ or ‘resolved’. If something is being tabled for the awareness of the board but does not require a decision, it is enough to note what was tabled and that it was noted. If the board paper has asked the Board to make a decision, the minutes should state that the matter was resolved.
If relevant, note whether voting was unanimous, tied, or whether a casting vote was necessary. (Tip – refer to your entity’s rules to see what is required for decision making.)
Note whether any attendees absented themselves due to a conflict of interest.
Actions: List any actions, who the actions are assigned to, and the date required. It can be useful to list the actions in a separate part of the minutes for easy reference.

Distribution

It is best practice to send the draft minutes to Board members within a week of the meeting, or soon after. Board members should review these while the content is still fresh, and send any proposed amendments to the Chair.

Approval

The approval of minutes should be a standard agenda item for each meeting. At this time, the Chair will ask if any board members have changes to the minutes. The meeting minutes can then be ‘approved’ or ‘approved subject to the changes noted’.

Storage and Accessibility

Minutes must be securely stored while also being readily accessible if required.

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This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

[1] Section 45, Trusts Act 2019.

[2] Section 84, Incorporated Societies Act 2022.

Why good papers matter

Board papers help to ensure effective and efficient board meetings and well-informed decision-making. They should be clear, concise, and structured to assist decision-making while avoiding unnecessary detail.

Board members, including those in charitable entities, have a number of duties. Well-informed, well-constructed board papers will assist board members to consider what matters and make appropriate decisions.

These should be provided well before the meeting itself so they are ‘taken as read’.

What sections should be included?

Use your judgement and adjust the length and detail of the paper to suit the matter being considered.

Here are some suggestions on what to include, depending on the topic. It may be helpful to develop a board paper template to help writers.

Consultation

Detail who wrote the paper, who else was involved, and whether any other consultation or engagement is needed, for example, with employees, iwi, funders.

Choose the right speakers

Organise the right people to speak to the paper and ensure they understand the content and can answer questions.

A short Introduction and purpose

Include a summary of the main points at the start and highlight key information or questions to address.

Be clear about whether the paper is for ‘information’, ‘noting’, ‘decision-making’, or ‘advice’. Set out what decision or recommendation is being proposed.

Background

Provide essential context. Outline what is proposed and why and related issues. Using the 4Ps framework (‘Position, Problem, Possibilities, Proposal’) can be helpful. If similar topics have been discussed previously, refer to them for deeper insight. This section should summarise key points from detailed materials and allow the board to understand the current outlook, critical events and significant issues.

Proposed activity

What action is required and what are the timelines?

Financial summary

If a decision has a significant financial impact, provide information that allows decision-makers to understand how that would impact your organisation. Outline what alternatives were considered.

For significant investments, evaluate cash flow impacts and payback periods using methods like cost-benefit analysis, net present value, and internal rate of return. Other tools include ratio analysis, period comparisons, and trend forecasting. State whether the proposed expenditure is within budget.

Risks and benefits

Outline any risks , for example, quality, safety, finance, employment, reputation, and environment. Consider these in the context of your organisation’s risk tolerance. Explore the consequences of not taking the recommended action, providing a balanced view that weighs risks and benefits. Outline mitigation strategies.

Impact

Explain what impact this has had already, if relevant.

Recommendation and Resolutions

Each recommendation should state the proposed resolution, explain why it is the optimal choice, and include a summary of alternatives when applicable. The draft resolution should be ready for the Board’s direct approval.

More tips

Tailor papers to your board. Boards need a strategic view, so avoid operational details.
Have detailed information available on request or place it in an appendix.
Keep language clear and avoid unnecessary words. Avoid jargon and acronyms.
Follow up. After meetings, follow up on action items and decisions, assigning clear responsibilities and deadlines for each task.
Review and edit papers to avoid errors.
If the papers is an important one, seek feedback on the draft.
Provide board members with enough time before the meeting to properly consider the papers.
Get good advice. It is common for the chair and the CEO to work closely on board papers. Papers may also need accounting or legal input. It is worth getting good advice to ensure the ramifications of all potential decisions are considered and understood.

We have an extensive suite of free resources for charities, including our Charities Legal Handbook and Incorporated Societies: Information Hub (which features a free Guide for Navigating Re-Registration, webinar recordings and an FAQ with nearly 150 questions). We also often write articles about specific aspects of charities law. Here are some recent ones:

Recent changes to the Charities Act – Part 1

Recent changes to the Charities Act – Part 2

Transitioning from an incorporated society to a charitable trust

Let us know if you would like to have input on any legal issues you may be facing.

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This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

In our article on Privacy for Organisations we talk about how to stay safe as an organisation. But what about if you have shared your personal information with an agency? How do you stay safe as an individual? Let’s look at some frequently asked questions.

FAQs

1. Do agencies need to tell you if your information is involved in a privacy breach?

Agencies must report serious breaches to the Privacy Commissioner and the affected individuals. A serious breach is one that has or is likely to cause serious harm to those affected. Failure to notify the Privacy Commissioner of a notifiable privacy breach may result in a fine of up to $10,000 or the issue of a public compliance notice.

2. How can you check if your information has been leaked?

Check at haveibeenpwned.com

3. What happens if your privacy is breached?

Contact New Zealand’s national identity and cyber support community service IDCARE on 0800 121 068.

4. How do you ask an agency for your information?

Use this form, or request the information by phone, email or letter. Agencies must reply within 20 working days, or 10 days for urgent requests, but can refuse for valid reasons.

5. How do you correct your information?

Contact the agency, explain the error, and ask for it to be corrected. If the correction is refused, you may complain to the Privacy Commissioner.

6. How do you make a complaint?

Try to resolve it with the agency first. If that doesn’t work, complain to the Privacy Commissioner. They will not investigate situations from long ago or that didn’t cause you harm, or things like family disputes, someone else’s personal information, or vexatious matters.

7. Are there any special rules for sensitive personal information?

Codes of practice exist for some sensitive types of personal information, such as for health, credit and superannuation.

8. How do you keep your own information safe?

Your personal information is important to you and may be valuable to others who can benefit from it. Be thoughtful about giving out your personal information. Many agencies provide a discount when your join their ‘club’. Ask yourself if it is really worth it.

When asked for your details by email or phone, question why it is needed and confirm the collection is valid.
Monitor your email and bank accounts and be alert for any suspicious behaviour.
Use complex passwords and change them monthly—it’s worth the effort.
Report breaches.

9. What if you need to breach a privacy obligation?

Look at the guidance and contact the Privacy Commissioner’s Office for clarification.

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This article is merely on overview of the Privacy Act. We recommend visiting the Privacy Commissioner’s website.

It is not a substitute for legal advice and you should contact a lawyer about your specific situation. If you think your privacy policy is insufficient (or non-existent!), we strongly encourage you to get in touch with us. We’d love to help. Contact Steven Moe at stevenMoe@parryfield.com or Aislinn Molloy at aislinnMolloy@parryfield.com.

FAQs

This article is merely on overview of the Privacy Act. We recommend visiting the Privacy Commissioner’s website.

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