We have helped many overseas charities set up in New Zealand. Why is it an attractive place to set up? This is a very generous country with a population that is open to supporting others. Also, the regulatory environment makes it easy to start a charity. In this article we want to outline some of the key things to know from an overseas perspective if you are looking to set up here.
Before we dive in please note that with this focus we have not gone into the detail of the process to set up a charity itself which we already covered in detail in this article so read that one in combination with this one. Instead we are thinking about the key things to know if you are an overseas charity which is looking to set up in New Zealand.
What we find is that the following are the crucial points to consider:
- Purpose – focus on New Zealand? Is the new charity being set up to do the work you do in another country on the ground here? Or are you looking to fundraise in New Zealand to send the funds back offshore? The answer to this is really important because a New Zealand charity can be set up easily BUT will only qualify for tax donee status (favourable tax position and ability to issue receipts to donors so they can claim back 1/3 of what they give) if 75% of the funds are used in New Zealand.
- Purpose – focus offshore? If you plan to send the funds back offshore this is important to be clear about at the start. If the funds raised here are to go offshore then you may still qualify if you can come under Schedule 32 status (funds are to be used offshore for humanitarian purposes) – we go into detail about this here as we have helped close to 20 obtain this status.
- Trustees: It will help with the application to show a connection to New Zealand so rather than having all offshore trustees it is best to have a majority who are here in New Zealand. It is possible to have only offshore trustees but if you do then this is likely to convert the trust into a foreign trust with some accounting implications (speak to your accountant about this).
- Accounting and tax: picking up on that last point it is important to structure things well so that you are in the best position from a tax and accounting position so as well as talking to your lawyer make sure you get input from an accounting professional.
- Connection to overseas entity: It will be important to think through how closely aligned the new entity will be. For example, should all new trustees be approved in writing by the overseas charity? Will there be an MOU in place about how things will run? Will there be a license agreement about the use of trademarks? All these things need to be thought through. It may be that instead of a close connection that it is intended that the new entity is to be independent – that’s fine too.
- Understand the local context: Find out more about how things operate here for charities – you can do that by downloading our free book for Charities in New Zealand here. We also host a call every two months for the impact sector where many people share about what they are seeing – examples of these are here. It may help to get a better understanding of the society here too – for example the relations with Māori and the unique value that brings to the way we operate here. Many charities choose to include a clause about honouring the principles of the Treaty of Waitangi or translating headings in their Trust Deed. The point is it helps to get to know the local landscape and we can help with that process. One of our Partners hosts a podcast called seeds theseeds.nz which has hundreds of interviews with local people doing good so there are many stories to learn from.
Our team is experienced with overseas entities coming here and setting up charities and social enterprises. We would be happy to assist you in your journey. For more information, please feel free to contact Steven Moe stevenmoe@parryfield.com or 021 761 292, Aislinn Molloy aislinnmolloy@parryfield.com or Michael Belay michaelbelay@parryfield.com We also have free resources for start-ups, boards and companies including a “Start-ups Legal Toolkit” which covers the key issues we see people face when starting out.
