A recent decision by Charities Services is a reminder that charities have restrictions around political activity. In late 2024 the charities regulator signalled its intention to deregister the Te Whānau o Waipareira Trust – the key reason being the trust’s perceived political activity, namely money provided to a political party and a political candidate.
Why not support politics with charitable donations?
Charities may engage in political activity, the proviso being that it must further the charity’s stated purposes. Only recently confirmed by Greenpeace is that charities may also have political purposes – however, this does not extend to supporting particular political parties or political candidates. Below are some reasons why.
- A charity’s funds must only be used to support the charity’s purposes and should be non-partisan. Some of a political party or candidate’s policies may be consistent with a charity’s purposes, however, the political party or candidate is likely to have much wider ranging policies overall, extending well beyond those of the charitable trust. This makes it difficult to argue that supporting a political party or candidate is consistent with a charity’s purposes.
- If a charity donates money to a political party or candidate, it is using money intended for ‘charitable purposes’ for ‘partisan and non-charitable purposes’. Consider a donor – how happy would they be with their donation being used to support a political party or candidate?
- At least at face value, a charity donating to a particular political party or candidate is not consistent with the touchstone for charities – selflessness. It could certainly be perceived as self-serving, particularly if a person is both involved in the trust and a politician that trust gives to – a conflict of interest. It would be perverse for funding from one government to be used to assist another political party into power – or if funding originating from government was used to endorse or support its re-election.
Remuneration
There is no doubt that remuneration of executives in charities is just as important as remuneration in other entity types. It is critical for attracting and retaining good quality staff. Decision makers should keep in mind Charities Services guidance about remuneration when deciding what should be paid – the payment of salaries and other expenses are acceptable provided the payments are “reasonable” to attract the right people to work and advance the charitable purpose.
Te Whānau o Waipareira Trust has also raised eyebrows by choosing to pay executives considerably more than the market rate and more than comparable charities. It’s average salary was $510,000 for 13 executives.
In deciding what is reasonable, a trust should benchmark itself against similar entities with similar purposes and of a similar size. Decision-makers should also take care to ensure that their decisions would meet ‘the front page of the newspaper’ test – would people be shocked and dismayed if the salaries became public?
Public trust
There is a broader issue at stake when charities go rogue, by supporting politics for example. These negative examples tend to be the charities that receive the most media attention, for all the wrong reasons. This undermines public trust and confidence in the charitable sector overall, making it harder for reputable charities to do critical work.
We will be watching with interest for the outcome for Te Whānau o Waipareira Trust as this will have implications for all other charities in New Zealand.
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This article is intended for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please contact a qualified legal professional. Reproduction is permitted with prior approval and credit to the source.
