Charities/NFP - Parry Field Lawyers

Charities often rely on donations and grants to enable them to do their work. Many donors, especially those who make substantial grants, may require that the charity is a registered charity.

The reasons for this vary. It may be that the donor wants to benefit from the tax credit they would receive from giving to a registered charity. It might be because they want the assurance that the donee organisation has passed the requirements of Charities Services to be a registered charity, with good standards of governance in place to help ensure the funds will be used as intended.

Some groups may not want to formalise their initiative by formally setting up or registering as a charity. Others may want to register, but it can take around three months to receive charitable status from Charities Services from the date of application. This can mean that newly established charitable trusts not yet registered with Charities Services are unable to receive funds from some donors. Without funds, charitable trusts are not able to get started with their intended work.

When facing just this situation and looking for a solution, a trustee of an as yet unregistered charitable trust (A) asked if it would be possible for another registered charity (B) to receive funds on its behalf as the donor would only provide funds to a registered charity.

It’s a great question. The biggest obstacle is likely to be that the donor may not agree to provide the funds to B on behalf of A. If it is agreed, we advise having a legally binding contract to confirm that the funds are being held by B ‘on trust’ for A to be provided to A when A is a registered charity.

The most important consideration, especially for B is that the charitable purposes of A must be similar to those of B. This is because what a registered charity does should be to advance its purposes, including fundholding.

The key takeaway – be aware that it takes time to apply for and be granted charitable status and try to factor that into your plans, including when you want to begin your charitable work and when you can accept funding.

We have an extensive suite of free information to assist charities in New Zealand, including our guide Charities in New Zealand a Legal Handbook. We have also prepared many articles for charities. Simply type ‘charities’ into our search (top right-hand corner of our homepage) to discuss a range of topics.

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 on stevenmoe@parryfield.com, sophietremewan@parryfield.com, or annemariemora@parryfield.com at Parry Field Lawyers.

It can be confusing to know when to engage a lawyer and what the terms of engagement and prices will be. We have answered five questions below to help you and your startup ‘get the ball rolling’.

When should you engage a lawyer and how do you find one that suits you best?

It is a relatively straight forward process to set up a company and our view is it can be done without a lawyer. However, legal documents such as a company constitution, shareholder’s agreement, term sheets, though you may have questions such as how many shares to issue or who should be a director, subscription agreements, employment contracts, employee stock option plans (ESOPs) and vesting agreements will likely be needed along the way. While these are not compulsory, they are helpful to determine how the company will be governed, the rights and obligations of directors and shareholders and terms of agreement with investors. Without them the Companies Act 1993 applies which may not be suited to your specific circumstances.

Other legal considerations include how to protect your intellectual property (IP), employment matters or which governance structure will suit your start-up best. It is highly advisable to engage a lawyer when seeking to draft these documents as they can explain which parts of the law such as the Companies Act 1993, Privacy Act 2020, or the Employment Relations Act 2000 will be applicable or can be avoided. To read more about these issues see our Free Start Ups Legal Toolkit and Capital Raising Guides here.

There are multiple ways to find the right lawyer for you:

Attend industry events or conferences;
Get a referral from other founders in your industry;
Law firms websites indicate whether they have experience with startups that are similar to you;
Ask questions such as whether they have experience in your industry or with other founders in your industry;
Ask for clarity on fees. While we do not charge for a first meeting we have heard of other law firms sending a large bill after a first meeting. Have clear communication to avoid surprises.

What are normal terms of engagement?

The terms of engagement set out lawyer-client responsibilities. The client is to provide accurate information and giving clear instructions. The lawyer must abide by confidentiality, conflict of interest and disclosure requirements. The terms outline the scope of the lawyer’s work and their role including their duties. They will state that you authorise credit checks and due diligence services to verify your identify if required. Engagement terms also set out how fees are calculated, including disbursements such as document service fees, when fees are to be paid and how the firm will hold the funds collected by you. It will also outline how to terminate the engagement, make complaints and indemnity clauses.

What are normal prices and bill services for lawyers?

Lawyers are under an obligation not to charge more than what is fair and reasonable for services. Fair and reasonable fee factors include the time and labour spent, the skill and specialised knowledge required, the importance, complexity and urgency of the matter, the degree of risk, the possibility it will preclude engagement of the lawyer by other clients, whether the fee is fixed or conditional, quote or estimate of fees, fee agreement, the reasonable cost of running a practice and the fee customarily charged in the market. Generally law firms have a hourly charge out rate for their lawyers. The more senior the lawyer, the higher the hourly charge-out rate. A partner might be between $400-$600, a senior lawyer $250-$400 and a junior lawyer $180-$280 per hour plus GST.

What types of legal fees should you expect?

The first consultation may be free and the legal fees will vary depending on the complexity of the documents or services you require. The more documents that require drafting, and the more back and forth communications with the lawyer, the higher the costs will be. A complex governance structure will also require more documents drafted. Firms like ours with more experience with startups will have templates to use. If they have worked with startups similar to yours it can reduce the complexity of drafting. Other costs include complying with anti-money-laundering requirements and disbursements.

How can you control costs when raising capital?

The best way to control costs is to plan ahead. Determine early on which documents your startup will need and which governance structure you want. When you engage a lawyer you can then outline exactly what you need and when you need it by. Identify issues regarding your IP, privacy, employment, insurance, health and safety, due diligence and fundraising. This means you will have considered the right things and can go in with questions. This will reduce the amount of communication needed with your lawyer and reduce costs. You should also ascertain the areas in which you do not need a lawyer, for example incorporating a company or reserving its name.

We have supported many startups to get going and have produced a helpful suite of free information to help startups succeed. Our Startups Legal Toolkit is a practical guide for entrepreneurs in Aotearoa New Zealand. It explains how to set up a company, discusses social enterprises and not-for-profits, fundraising, liability and ongoing duties, employment issues and other useful information.

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

How much should charities spend on expenses?

When people donate to charities they rightly expect their donation will go towards the charitable cause. However, charities, like all entities, inevitably incur expenses to enable them to do their charitable work. We were recently asked what proportion of charitable income can reasonably be spent on expenses.

In fact there is no “official” guidance and this is not surprising because every charity is different. It really comes back to the Trustee’s discretion to determine what is acceptable for their circumstances and to best advance their charitable purposes.

What expenses can be claimed?

The Charities Services website provides helpful examples of expenses and these include things like petrol, advertising, professional service fees, office supplies and staff training.

Who is responsible for keeping tabs on expenses?

The officers (trustees, members, directors) are responsible for the financial sustainability of the organisation and ensuring that financial accounting and reporting systems are accurate and transparent. In discharging their responsibilities as officers, they can and should rely on external expertise and services to ensure the financial well-being of the charitable trust; they would most likely be in breach of their fiduciary duties if they don’t do so.

The rules of a charity (Trust Deed, Constitution, Rules) should provide that the organisation may only act to advance its charitable purposes. The payment of salaries and other expenses (provided these payments are reasonable) to advance the charitable purpose is acceptable. It is usually possible to pay those in governance if the rules allow that and the payment is reasonable.

How can you find out what is spent on expenses?

The amount charities spend on expenses is included in their annual reports, which are all publicly available on the Charity Services website and monitored by the regulator, Charities Services. The new reporting thresholds that came into effect from 1 January 2022 require charities with over $550,000 in operating expenditure to be either audited or reviewed, which should also provide public assurance around how charitable funds are used. It is also important to know that there are four different tiers of charity when it comes to financial reporting.

What is the Government’s view?

In recent years a Tax Working Group considered whether there might be an issue in New Zealand with charities accumulating too many assets rather than using assets to further charitable purposes. The Group recommended that the Government periodically review the charitable sector’s use of what would otherwise be tax revenue, to verify that the intended social outcomes are actually being achieved. This shows that Government has a preference for a ‘proactive’ approach to charitable work, and arguably, that means Government encourages reasonable expenditure that enables charities to achieve their intended charitable social outcomes.

A change recently introduced is that charities need to report on how they use accumulated funds.

Key takeaways

Our advice to charities is to keep firmly in mind the need to deliver on their charitable purposes. When it comes to expenses, as long as they are reasonable and in service of the stated charitable purposes, they are likely to be acceptable to Charities Services.

We also recommend keeping good records that show any decisions relating to expenses were duly deliberated, properly authorised and followed due process (including noting and dealing with any conflict of interests), in the unlikely event that decisions are questioned.

Other resources

We have produced a comprehensive library of free resources to assist charitable entities:

Charities in New Zealand Legal Handbook – https://www.parryfield.com/wp-content/uploads/2021/03/Charities-Legal-Handbook.pdf

Incorporated Societies Information Hub – https://www.parryfield.com/home/blogs/resources-for-the-incorporated-societies-act-2022/

Recent changes to the Charities Act – Part 1 – https://www.parryfield.com/recent-changes-to-the-charities-act-part-i/

Recent changes to the Charities Act – Part 2 – https://www.parryfield.com/recent-changes-to-the-charities-act-part-ii/

Charities Healthcheck Guides – https://www.parryfield.com/release-of-charities-healthcheck-guides/

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 on stevenmoe@parryfield.com, or annemariemora@parryfield.com at Parry Field Lawyers

The Incorporated Societies Act 2022 (“Act”) has created new requirements that all incorporated societies must meet in order to reregister under the Act. The most relevant requirements that may prevent your Residents Association from reregistering under the Act are discussed below.

In January 2026, new regulations provided a temporary exemption for Residents Associations under the Incorporated Societies Act 2022. You can read more about this here.

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 members 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 reregister under the Incorporated Societies Act 2022. We have an Information Hub dedicated to the changes in the new Act and what organisations need to do in order to reregister – you can find it here.

There are some requirements under the new Act that may impact your Residents Association and your ability to reregister – here’s what you need to know.

Nominating a not-for-profit entity on wind up

Section 26 of the new Act sets out a list off requirements for what incorporated societies must include in their constitution. We have written a series of six articles on these requirements, which you can find on our Information Hub.

The key requirement for Residents Associations to be aware of is set out in section 26(1)(l). This explains that incorporated societies must nominate a not-for-profit entity (or a class or description of not-for-profit entities) to which any surplus assets are distributed to on liquidation or removal from the register. The definition of a not-for-profit entity is set out in section 5.

Generally, the members of Residents Associations are homeowners in the subdivision or community, so Residents Associations like this who hold land on behalf of members wouldn’t be able to distribute property to members under this provision on wind up.

This will cause issues for many Residents Associations who own common land, as the “winding up” provision will often say that any surplus assets should go to the members – that way the residents will each get a share in the land when the society winds up. If your Residents Association is in this situation just let us know – we are happy to support you in considering your options moving forward.

Purposes – can’t be for the financial gain of members

Under section 26(1)(b) of the new Act a society’s constitution must include its purpose. This makes a lot of sense and may not seem like an issue on the face of it, but the new Act also sets out that the Registrar may refuse to incorporate a society if its purposes are unlawful. An unlawful purpose includes where a society is carried on for the financial gain of any of its members. Section 23 of the new Act then explains that a society must be treated as having the purpose of being carried on for the financial gain of its members where:

it distributes, or may distribute, any gain, profit, surplus, dividend, or other similar financial benefit to any of its members (whether in money or in kind); or
it has, or may have, capital that is divided into shares or stock held by its members; or
it holds, or may hold, property in which its members have a disposable interest (whether directly, or in the form of shares or stock in the capital of the society or otherwise).

The most relevant clause to Residents Associations is the third provision. If the Residents Association’s assets are set to go to members on wind up, then those members would have a “disposable interest” in property. A clause such as this or any other clause in the constitution that suggests members should get the Residents Association’s assets would then be in breach of the new Act.

Section 24 of the new Act provides a list of examples of when a society does not have a financial gain purpose. We think that although some of these could be stretched to apply to Residents Associations, section 23(1)(c) is so clear that it would not make sense to interpret the new Act in that way.

What now?

As some Residents Associations won’t be able to reregister under the new Act with their current land ownership and constitutional structure, it’s time for each of these Residents Associations to consider their options moving forward. This is something we are well placed to advise on, as we regularly come alongside both incorporated societies and property holding organisations to consider their structure options.

If you believe your Residents Association may be unable to reregister under the Act due to the reasons above, please feel free to contact Judith Bullin or Sophie Tremewan at Parry Field Lawyers. Our team are more than happy to assist you to make the changes needed to reregister under the Act.

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.

Most people have heard of incorporated societies, but what about unincorporated societies? In reality, there are thousands of unincorporated societies in New Zealand. They might be sporting groups, hobby groups, community groups, or a group set up for a particular purpose.

Incorporated societies are, as their name suggests, ‘incorporated’. A key benefit of incorporation is that society members are generally not personally responsible for any of the society’s obligations. They become incorporated by registering with the Companies Office and they need to follow the legal obligations set out in the Incorporated Societies Act 2022 and the Charitable Trusts Act 1957.

Unincorporated societies, on the other hand, are typically much less formal, and this comes with advantages and disadvantages. Let’s look at some examples.

Disadvantages relate to the fact that liability can attach to members and the inability to own property:

Limited Legal Status: Unincorporated societies (as opposed to incorporated societies) do not have a separate legal personality. This means they cannot enter into contracts, own property, or sue or be sued in their own name. Individual members may be personally liable for the society’s debts and obligations.
Limited Liability Protections: While members typically have limited liability, their personal assets may still be at risk in the event of legal disputes or financial problems within the society, depending on the circumstances.
Difficulty in Holding Assets: Unincorporated societies cannot own assets in their own right. Any assets are usually held in the names of individual members or office bearers, which can make asset management and ownership more complex.
Limited Funding Opportunities: Unincorporated societies may face challenges when seeking funding or applying for grants from certain organizations or government agencies, as some may prefer to work with registered legal entities for accountability and transparency reasons.
Less Credibility: Compared to incorporated entities, unincorporated societies may be perceived as less credible or less established, which could impact their ability to attract members, volunteers, or supporters.
Limited Access to Legal Remedies: Unincorporated societies may have limited access to legal remedies and dispute resolution mechanisms compared to registered legal entities.
Dissolution Challenges: If an unincorporated society decides to dissolve, distributing assets and resolving financial matters can be more complicated than for registered legal entities.

Advantages relate to their simplicity and flexibility:

Simplicity and Low Cost: Forming and maintaining an unincorporated society is generally straightforward and cost-effective compared to setting up and operating a registered legal entity like a company or charitable trust. There are minimal legal formalities and registration requirements.
Flexibility: Unincorporated societies enjoy a high degree of flexibility in terms of governance, decision-making processes, and organisational structure. They can adapt their rules and operations to suit the needs of their members.
Minimal Reporting Requirements: Unincorporated societies have fewer reporting and compliance obligations compared to incorporated entities. They are not generally required to file annual financial statements with government agencies.
No Shareholders: Unlike companies, unincorporated societies do not have shareholders, which means there are no ownership interests or equity shares to manage. Members usually have equal rights.
Tax Benefits: Depending on their purpose and activities, unincorporated societies may be eligible for tax-exempt status, which can result in cost savings for the organization and its members.

Groups may start out as unincorporated and go on to become incorporated as a way of dealing with the disadvantages. Choosing whether to incorporate or not depends on the group’s goals, size, and activities. Another legal structure such as a charitable trust might be a better option. In this article we compare the two structures.

If you are part of an incorporated society, there are important changes required that you need to be aware of. To help people understand the requirements we have put together an extensive Incorporated Societies Information Hub full of free resources.

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 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 at Parry Field Lawyers.

Charities form a fundamental part of our society, supporting and providing for those in need and the community. However, many charities have rules which really need a refresh as they have been in place for a long time.

One common question we get is where those rules contain a clause in their founding documents stipulating that consent from Inland Revenue Department (“IRD”) is required before making changes to particular clauses. This article will address what a founding document is, what these clauses look like, whether they are still necessary and whether they can be changed.

What are the founding documents of Charities and what clauses require IRD approval?

As charities can be created in various ways, founding documents vary depending on what kind of organisation or structure a charity adopted when it was created. In general, a founding document is a set of rules detailing how the charity is to operate, what the purpose of the charity is, and what exactly the charity does. The three main ways a charity can be structured according to a founding document are:

A Charitable Trust, via a Trust Deed;
A Charitable Company, via a Constitution; and
An Incorporated Society, via a set of Rules, also known as a Constitution.

Within the founding documents of older charities, there is often a clause that states:

“No addition to or alteration of the charitable objects, the personal benefit clause or the winding up clause shall be approved without the IRD’s approval”.

These clauses are usually included within the “Amendment” section of a charity’s founding document. Older formed charities have this clause within their founding documents as it was recommended by past IRD commissioners. The idea behind this clause was to ensure that key clauses could not be easily changed or amended.

Is this clause still necessary? If not, can it be removed and replaced?

Within both Operational Statements 06/02 and 22/04 issued by the IRD, it clearly states that the Commissioner of the IRD no longer gives prior approval to clause changes. Instead, the IRD strongly recommends that charities remove any clauses like this from their founding documents. From these statements, it is evident that IRD approval clauses are no longer relevant and have no effect or use for charities.

Operational Statement 22/04 suggests these clauses be replaced with a new clause that will not permit an alteration, addition, or removal of clauses within a founding document if it does not align with the charitable nature of your charity or provide a pecuniary benefit to any individual. This demonstrates that these clauses can be replaced with another clause that still ensures the founding document cannot be changed too easily.

We frequently help charities amend their founding documents. If you are aware of particular changes you need assistance with or would like us to update your charity’s founding document, please feel free to contact one of our charity specialists Steven Moe, Sophie Tremewan or Yang Su at Parry Field Lawyers.

This article 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.

The new Charities Amendment Act 2023 (the Act) amends the Charities Act 2005. Some of its changes are already in force, having been introduced in July and October this year, while other changes come into force from 5 July 2024. In this two part update we outline the latest changes that apply as of 5 October 2023.

Changes to The Definition, Age and Role of Officers

A key amendment is the expansion of the definition of “officer” under section 4 of the Act to include any persons who has significant influence over the entities substantial decisions, including management or administration. So, an officer can be a trustee, members of board or governing body (if it has one) or persons that occupy other positions (such as a chief executive or treasure) if that position allows them to exercise substantial influence. Officers, according to the new Act, will also include so called “deemed directors”, being persons with whose direction or instruction the entity is accustomed or required to act. As the definition of officer has been expanded, existing and new charities should take care to have clear distinctions between those in governance and management, as well being cautious about the influence of those in management positions.

Furthermore, s 13(1)(e) introduces a new requirement that charities must at any time have at least one officer 18 years of age of older. Also, section 36A outlines the role of an officer of a charity is to “delivery its charitable purpose” and “comply with its obligations” under the Charities Act or other Acts. This is clearly in addition to other fiduciary duties that are already required of officers.

Disqualifying Officers

Section 36C gives the Charities Registration Board the ability to disqualify a person, for not more than five years, from being an officer of a charity by notice. The notice can be by email and the Board must publish notice on their website as soon as practicable. Prior to this new Act, the Charities Registration Board, did not have the ability to directly remove an officer and instead would need to deregister the entity. An officer can be disqualified if they have:

Engaged in serious wrongdoing in connection with the entity; or
Failed significantly or persistently to meet their obligations under the Charities Act or other enactments.

This gives the Charities Board considerable power to ban officers of charities and the circumstances in which these powers will be used is uncertain. Further, the new provision does not yet require the Board to provide the Registrar of Incorporated Societies a copy of a banning order which was previously required.

Consult on Significant Guidelines

Section 12A of the Act has been introduced a new process which requires the chief executive of the Department of Internal Affairs to consult with persons or representatives they consider “reasonable to consult before issuing significant guidelines or recommendations on the best practice to be observed by charities, officers, and persons concerned with the management or administration of charities.” [1] This appears to provide accountability for decision making but it may mean that non-significant guidelines or recommendations need no consultation. Further, it is only a requirement to consult.

Charities Obligations

The new section 13A provides all charities must remain qualified for registration. To remain qualified, charities must maintain income for charitable purposes, have qualified officers and have and maintain rules. This restates some of the key requirements already set out in s 13 but includes the requirement to have and maintain rules.

Extended Timeframes for Providing Information

Section 18 of the Act was amended to increase the time frame in which charities can make submissions when the chief executive is considering whether they qualify for registration. This was increased from 20 working days to 2 months and also includes the time frame that an application will be treated as withdrawn if there is no response to the notice. If the Charities Board declines an application for registration or deregisters of a charity, they must now publish their decision and their reasons for it as soon as practicable on their website.

Requirement to Review Governance Procedures

Charities are now required to review their governance procedures every three years under the s 42G of the Act. In this review charities must consider whether their procedures, within or beyond its rules, are fit for purpose and help the charity achieve its charitable purpose and comply with the Charities Acts’ requirements. How this new duty works in practice is unclear as these terms are neither defined nor explained. However, frequently reviewing and updating rules and procedures is good practice for charities to adopt to ensure safe, smooth and efficient management and operation.

To read part II to this article, click here

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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.

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 at Parry Field Lawyers

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[1] Charities Amendment Act 2023, s 12A.

We continue our two part update covering the changed brough on by the Charities Amendment Act 2023 (the Act). In part one we covered the changes that came into effect in October 2023. In this part two, we cover the changes that are coming into force from 5 July 2024.

Objections

New sections 55A to 55E outline a new process for objecting to decisions made by Charities Services or the Charities Registration Board (the Board). The Act refers to the “chief executive” of the Department of Internal Affairs, but in practice these decisions are made by Charities Services.[1]

What Can Be Objected To?

Charities are now able object to a wider range of decisions. Previously, only proposals to deregister a charity or decline an application could be objected against. Section 55A outlines a list of several decisions made by Charities Services objections can be raised against. These include decisions to remove from the register any document or information related to the entity, a decision to give a warning notice and any decision made by the Board under the Act. Objections can also be raised against any decision made by the registrar.

Deadline For Objections

Before a decision is made, the decision makers must give the charity or person concerned notice regarding the intended decision, the grounds for the decision and the date by which an objection to the intended decision must be received (section 55B). This date will be no later than two months after the date of the notice. This is an increase from 20 working days. Unlike appeals (examined below), objections are therefore made before the decision is made.

Opportunity To Be Heard

Section 55D allows the objector the opportunity to be heard. This can be either in person or by electronic means. Previously, despite the rules of natural justice normally requiring an oral hearing, there was no right to a hearing.

Appeals

Decisions can also be appealed after they are made. There is a new process for this. While not explicitly stated in the Act, it appears that appeals can be made even if an objection was not made against a decision.

What can be appealed?

Section 58A outlines a list of decisions that can be appealed against. These grounds mirror those decisions that can be objected to under 55A. Previously, charities had wider rights of appeal as the grounds were not limited.

Who appeals are made to?

Appeals are now made in the first instance to the Taxation and Charities Review Authority (“TCRA”). Previously, appeals were made to the High Court. The intention behind this is to simplify the process for charities, with the TCRA offering a less formal process.[2] Subsequent appeals to the High Court and Court of Appeal can still be made. An unintended effect could be that charities lose their right of appeal to the Supreme Court, as generally only two appeals are allowed in New Zealand courts.

Deadline for appeals

As with objections, there is a two month time frame for filing an appeal. This was previously 20 working days. However, if it can be demonstrated that there were exceptional grounds that prevented an appeal from being lodged in time, additional time may be allowed.

Costs

Internal Affairs estimated in an impact statement that the cost for an appeal to the TCRA will be $410. This is significantly cheaper than the cost of appealing to the High Court.[3]

Additional change coming: Accumulated Funds

There is an additional change coming regarding charities’ accumulated funds. This is not found in the legislation but in an upcoming change the to the annual return form. Charities with annual expenditure over $140,000 will need to provide reasons in their annual returns for holding the accumulated funds. Charities Services is consulting on the annual return forms and other changes may be coming, likely to happen in 2024. In the meantime, charities are advised to consider the reasons for holding accumulated funds, ensuring it is being done in the best interests of their charitable purposes.

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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.

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 at Parry Field Lawyers

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[1] Department of Internal Affairs “Policy decisions to modernise the Charities Act 2005”, https://www.dia.govt.nz/Policy-decisions-to-modernise-the-Charities-Act-2005.

[2] Department of Internal Affairs “Policy decisions to modernise the Charities Act 2005”, https://www.dia.govt.nz/Policy-decisions-to-modernise-the-Charities-Act-2005.

[3] Department of Internal Affairs “Regulatory Impact Statement: Modernising the Charities Act” (Report, 19 October 2021) at 106 and 107, https://www.treasury.govt.nz/publications/risa/regulatory-impact-statement-modernising-charities-act

School boards are employers which mean they have certain obligations and powers. They can appoint, suspend, and dismiss staff and the principal.[1] They have responsibilities under other Acts such as the Employment Relations Act 2000, the HRA, the Privacy Act 2020 and the Health and Safety at Work Act 2015.

Generally, under the Employment Relations Act 2000 (the ERA) parties in an employment relationship are under an obligation to deal with one another in good faith and not do anything to mislead or deceive each other.[2] The object of the ERA is to build productive employment relationships through promoting good faith.[3]

State and State integrated school boards as employers also have a responsibility to be a ‘good employer’ under the Public Service Act 2020.[4] A ‘good employer’ creates policies accepted as necessary for the “fair and proper treatment of employees in all aspects on their employment”.[5] Each school board will have their own policies in place. They must ensure they comply with their policies and annually report on their compliance.[6]

Staff employed in State schools such as principals, teachers and other staff are generally on ‘Collective Agreements’ with specific terms and conditions covering their roles. Education collective agreements include equal employment opportunity clauses to recognise disadvantaged groups in employment. However, these collective agreements often vary depending on the particular category of school (e.g. primary, secondary or area school). This means there is no one size fits all in relation to employment law obligations for schools. It is advised that you consult a lawyer if you have questions about obligations under your Collective Agreements.

As the employer, the board of a State or State integrated school is accountable for employment matters despite delegating employment management to the principal. These delegations need to be documented so the principal and the board are aware of their responsibilities. When employment issues arise, matters only come before the board through the procedures set out by the board or where a complaint is raised. If the issue is in relation to a principal however the board has direct involvement.

Schools will have performance management processes that teachers and staff are required to participate in. These assess and monitor staff to ensure they are providing effective education and services. Staff skills, knowledge and training are developed in a way that optimises student’s learning outcomes. The school board is responsible for managing the principal’s performance and ensuring the principal effectively undertakes staff performance management also. Professional standards are set out in staff employment agreements which are used to assess performance.

School boards must create a performance management system that fits their school. Section 599 of the Education and Training Act 2020 (ETA) allows the Chief Executive of the Ministry of Education (Secretary) to prescribe matters employers are to have regard to when assessing teacher performance. The Secretary prescribes guidelines setting out what boards need to have in place in assessing the performance of teachers. Current guidelines on the Minister of Education website are based upon s 77C of old repealed Education Act 1989 but can still provide some guidance.

Having good performance management allows teachers to understand what is expected of them and can be aided in achieving those expectations. Frequent conversations regarding any concerns or to ensure progress is being made are important. This removes any surprises or uncertainty when performance is evaluated. Conversations includes appraisal and elicit professional trust and growth.

The ETA removed performance appraisal requirements and replaced it with a professional growth cycle (PGC) which takes a more holistic approach to performance management. The principal or professional leader will design the process for the professional growth cycle while consulting teachers. The Teaching Council dictates elements that will be in the cycle but generally it is up to the leadership team and teachers to determine what it will look like. A summary statement outlines whether the teacher has met the Standards for the Teaching Profession. This new approach focusses on professional learning journeys as opposed to compliance activities as seen in the old approach.

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. Contact Kris Morrison at krismorrison@parryfield.com to request this or for any other questions.

[1] Education and Training Act 2020, ss 128, 129.

[2] Employment Relations Act 2000, section 4.

[3] Employment Relations Act, 2000, section 3.

[4] Public Service Act 2020, section 73.

[5] Public Service Act 2020, section 73(3).

[6] Public Service Act 2020, section 73(1).

State schools, state-integrated schools and kura are governed and managed by a school board. The board is a Crown entity as it receives public funding and is in the public sector. A board has no more than 7 members and at least 3 parent representatives.[1] Members can be co-opted, appointed, selected or elected to the board and members are all equal in standing.

The board is responsible for the governance and management of the school which encompasses setting policies as to how the school is to be controlled and managed.[2] Section 127 of the Education and Training Act 2020 (ETA) sets out a board’s primary objectives when governing a school, they must ensure:

every student at the school is able to attain their highest possible standard in educational achievement; and
the school—
- is a physically and emotionally safe place for all students and staff; and
- gives effect to relevant student rights set out in this Act, the New Zealand Bill of Rights Act 1990, and the Human Rights Act 1993; and
- takes all reasonable steps to eliminate racism, stigma, bullying, and any other forms of discrimination within the school; and
the school is inclusive of, and caters for, students with differing needs; and
the school gives effect to Te Tiriti o Waitangi, including by—
- working to ensure that its plans, policies, and local curriculum reflect local tikanga Māori, mātauranga Māori, and te ao Māori; and
- taking all reasonable steps to make instruction available in tikanga Māori and te reo Māori; and
- achieving equitable outcomes for Māori students.

In meeting these primary objectives, a school board must comply with all obligations under the ETA or any Act, including having particular regard to the statement of national education and learning priorities (NELP) issued by the Minister of Education under s 5, and performing its functions and powers in a financially responsible way.[3] A board must also give effect to a board’s obligations in relation to teaching and learning programmes along with monitoring and reporting student progress.[4] This is inclusive of things such as managing student behaviour, staffing matters, handling complaints, health, safety and wellbeing for students and staff, strategic planning and reporting, building relationships and actively engaging with the community.

A board can appoint, suspend, and dismiss school staff and the principal.[5] The school principal is the board’s chief executive and retains the discretion to manage the school’s day-to-day administration however they see fit, though they must comply with the board’s policy directions.[6] Generally, the board as the governance body determines the what, the ends and the policies whereas the principal as the management leader determines the how, the means and the procedures. Board members are to adhere to any code of conduct issued by the Minister of Education.[7] The Ministry has now issued a code of conduct, which can be found at: https://www.education.govt.nz/school/boards-information/boards-of-schools-and-kura/code-of-conduct/

Private schools are governed and managed by their own independent boards. Managers of private schools must be fit and proper persons to manage the school.[8] When operating the school, managers must have regard to any NELP and ensure when developing and delivering the curriculum the principal and staff have regard to NELP also.[9] The obligation to have regard to NELP is a lower standard than required of State schools that must have particular regard under s 127. This section is in relation to schools ensuring students attain highest possible education standard, the school is safe, observes student’s rights, takes steps to eliminate racism, stigma, or bullying, the school is inclusive and caters for students with different needs and that it gives effect to the Te Tiriti o Waitangi. However, in decision making, managers of private schools still need to have given regard to the NELP.

Primary Objectives for State schools

Part 3, subpart 5 of the ETA governs the administration of all State schools (including State integrated schools but not including private schools). Section 127(1) notes that school boards have several primary objectives in governing a school.

For State integrated schools, the rules in Part 3 (including section 127) are subject to specific provisions set out in Schedule 6 of the ETA that protect the special character of the State integrated school.[10] Boards of State integrated schools must comply with the objectives set out in section 127 of the ETA, but in deciding how to do so they must also act in light of their special character in accordance with Schedule 6.

The primary objectives include to:[11]

ensure that every student at the school is able to attain their highest possible standard in educational achievement;
ensure that the school:
- is a physically and emotionally safe place for all students and staff;
- gives effect to relevant student rights set out in the ETA, the New Zealand Bill of Rights Act 1990, and the Human Rights Act 1993;
- takes all reasonable steps to eliminate racism, stigma, bullying, and any other forms of discrimination within the school;
ensure that the school is inclusive and cater for students with differing needs; and
ensure that the school gives effect to Te Tiriti o Waitangi.

Section 127(2) says that to meet these primary objectives, each school’s board must have particular regard to the NELP issued under section 5. The current NELP identifies six priorities for education:

Priority 1: Ensure places of learning are safe, inclusive, and free from racism, discrimination, and bullying.

Priority 2: Have high aspirations for every learner/ākonga, and support these by partnering with their whānau and communities to design and deliver education that responds to their needs and sustains their identities.

Priority 3: Reduce barriers to education for all, including for Māori and Pacific learners/ākonga, disabled learners/ākonga and those with learning support needs.

Priority 4: Ensure every learner/ākonga gains sound foundation skills, including languages, literacy, and numeracy.

Priority 5: Meaningfully incorporate te reo Māori into the everyday life of the place of learning.

Priority 6: Develop staff to strengthen teaching, leadership, and learner support capability across the education workforce.

Strategic Planning

State and state-integrated school boards must have in place a strategic plan which sets out its strategy for achieving its objectives for a 3-year period (unless determined by the Chief Executive of the Ministry of Education)), and an annual implementation plan each year which sets out how the board intends to implement that strategy during the year.[12]

The strategic plan must be submitted to the Chief Executive and Secretary of the Ministry of Education (the Secretary). Whilst preparing the plan the board is required to consult the school community, school staff, school student (where appropriate), and comply with other regulations such as for State integrated schools, ensuring it reflects their special character.[13] The proprietor of a State integrated School has the responsibility of ensuring the school’s special character is maintained.[14] The secretary can review the plan and require the board to amend it, or the board may make amendments to the plan on their own accord.[15]

The annual implementation plan must contain information required by regulations made under the ETA, it can also be amended by the board.[16] The board has a duty to monitor and evaluate its performance in achieving the objectives set out in the strategic plan.[17] Along with monitoring and evaluating the implementation of its strategy set out in the annual implementation plan in accordance with any regulations made under s 639 of the ETA.

The school’s performance in regard to the Strategic Plan must be reported on in the annual report as per s 145(3) of the ETA. Further, school boards are required to publish their strategic plan and annual implementation plan on their Internet site.[18]

These planning and reporting requirements help schools achieve their goals and remove barriers to success. It encourages relationships between school boards and their communities by facilitating communication and feedback, while increasing accountability of boards to their communities.

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. Contact Kris Morrison at krismorrison@parryfield.com to request this or for any other questions.

[1] Education and Training Act 2020, s 119.

[2] Education and Training Act 2020, s 125.

[3] Education and Training Act 2020, s 127(2).

[4] Education and Training Act 2020, s 127(2)(b).

[5] Education and Training Act 2020, ss 128 and 129.

[6] Education and Training Act 2020, s 130.

[7] Education and Training Act 2020, ss 166-169.

[8] Education and Training Act 2020, sch. 7 cls. 2 and 6.

[9] Education and Training Act 2020, sch. 7 cl. 7.

[10] Education and Training Act 2020, schedule 6, clauses 24 & 58.

[11] Education and Training Act 2020, section 127(1).

[12] Education and Training Act 2020, s 138.

[13] Education and Training Act 2020, s 139.

[14] Education and Training Act 2020, sch. 6 cl. 1(3).

[15] Education and Training Act 2020, ss 140 and 141.

[16] Education and Training Act 2020, ss 143 and 144.

[17] Education and Training Act 2020, s 145.

[18] Education and Training Act 2020, s 146.

Primary Objectives for State schools

Strategic Planning

Christchurch CBD

Christchurch – Riccarton

Rolleston

Hokitika

Auckland