Charitable sector at risk if standards removed
The charitable sector is at risk if basic registration requirements for non-profit organisations are removed. Concerns have arisen after the Department of Internal Affairs opened submissions to modernise the Charities Act 2005; in its discussion document, the DIA questioned whether current registration requirements are actually working.
The requirements include maintaining charitable purpose, annual reporting, financial reporting requirements, an audit and a review.
Brent Kennerley, Partner and National Head of Not for Profit Services at Grant Thornton New Zealand says, “They serve as the safety measures to ensure transparency within the sector and when executed correctly, they function well and serve an important purpose.
“Kiwis are among the most generous people in the world when it comes to donating their time and money which is why there must be a basic standard to maintain public trust; if reporting isn’t timely and transparent, then the level of engagement the public has in the sector could be severely diminished along with their investment in charitable organisations.
“There are 27,000 registered charities in New Zealand who spend $17 billion and manage $58 billion in assets, so a basic level of standards is essential.
“The reality is every charity should be able to report how much money it has; the current system has four tiers and the most basic is a ‘Simple Format Cash Reporting’. This is the easiest level of financial reporting and it would be reckless to lower the standard any further.”
The Department of Internal Affairs discussion document states many small charities struggle to meet reporting requirements.
Kennerley says, “Charities Services provides an online platform for non-profits to complete basic reporting, so while it’s tempting to do away with a minimum standard for smaller organisations, a better approach could be to make the current process less daunting for smaller organisations by simplifying this system”.
The deadline for public consultation and written submissions about modernising the Charities Act 2005 closes on Friday, 31 May 2019.