13 August 2009
Thinking Of Donating To A Charity?

The Charities Commission is urging anyone thinking of volunteering or making a donation to a charity, to start by checking the information available on the Charities Register at www.charities.govt.nz

The Register brings together comprehensive information about more than 23,000 charities on a publicly-searchable “live” database, including their rules, contact details, and a summary of their activities

Trevor Garrett, the Commission’s chief executive, says that people interested in a charity’s finances should, as a starting point, look at the information in the Annual Return together with the financial statements of the charity – both are available on the Register.

”If it has filed an Annual Return with us, you can see how much income the charity received during the financial year and the sources of that income, as well as how much money it spent during the year, broken down into various categories, such as grants, donations/koha, membership fees and so on. It also shows expenditure broken down into categories such as salaries and wages, grants paid and so on.”

He says that it is important to remember that charities can present their financial accounts in any way or format they wish, though. “The Charities Act does not require any particular format or standard, so both documents should be read together to get a clearer picture.”

“The Register is a tool that people can use to help keep charities accountable and honest about what they are doing. If you need some very specific information that isn’t on the Register though, you may prefer to contact the charity directly, or check their website.”

ENDS

13 August 2009
NEWS BACKGROUNDER

Are there rules about how much charities must spend on their cause?
Charities are sometimes asked “how much of the money donated to you is spent on your cause and how much goes to administration and other costs?”

There are always costs associated with raising money and providing services and these vary according to the nature of the charity and the work that they do, and the decisions that those running the charities make. Examples of the range of costs a charity could incur include purchasing sausages for a sausage sizzle or prizes for a raffle, through to paying nurses or counsellors to provide services to the sick.

There is no law or rule of thumb about how a charity spends donations that have been given to it for the general purposes of that charity. Charities are free to make their own choices about such things as paying staff, buying supplies (for example stationery), paying rent, paying for power and phones or any other costs used in delivering its services.

The Charities Act prevents “private pecuniary profit” though, which means charities registered under the Act must not be established for private financial gain.

However, in order to carry out their charitable purposes, charities may purchase goods and services, and pay for such things as salaries and wages at normal market rates. The Commission must be satisfied that all money and benefits flowing from a charity are directed towards advancing its charitable purposes.

Anyone with concerns or complaints about any aspect of a particular charity should talk directly to the charity or to the Charities Commission.

Can the Charities Commission look into a charity or its fundraising?
The Charities Commission has recently established a monitoring and investigations team, to scrutinise charities’ activities and the information they provide, to ensure that they are not engaged in “serious wrongdoing” and that they continue to meet the requirements of the Charities Act, and are wholly charitable in their purposes and activities.

The Commission can look into a charity’s fundraising if it believes that there is dishonesty involved, or a conflict of interest, or the possibility of the charity being really set up for private financial profit, or if it thinks the charity isn’t fulfilling its charitable purpose.

The Commission’s monitoring team makes its own enquiries and responds to complaints or information it receives about charities where there is evidence to suggest that there may be a breach of the Charities Act.

What is “reasonable” for a charity to spend on fundraising?
There are no hard and fast rules – or regulations – about this. This is something that individual charities make their own decisions about.

Members of the public can then make their own decisions about whether they wish to support a particular charity, based on the information available from the Charities Register and from the charity itself.

ENDS

Notes to the reporter:
For more information or to search the Charities Register, visit the Charities Commission's website www.charities.govt.nz

© Scoop Media