By Hayes Knight – 26 November 2012

Minister for the Community and Voluntary Sector Jo Goodhew announced that Cabinet has decided not to proceed with the long-promised review of the definition of charity in the Charities Act. Sadly this is a complete U-turn from Cabinet’s decision on 1 August 2010 that the review would begin in 2013 and be completed by 2015.

Cabinet’s promise of a review was in response to the widely-recognised problem that the definition used in the Charities Act is inadequate for New Zealand in the modern age.

The existing definition has seen some good community organisations either refused registration as charities, or barred from being registered, while also concerns about significant commercial enterprises able to channel tax benefits into private hands, undermining local communities.

Minister Goodhew indicated the decision is driven solely by fiscal risk – if the definition is widened, there would be an unknown number of new charities, thus possibly undermining the tax base. However we are not aware of any actual investigation of whether this possible fiscal risk is real.  While a potential fiscal risk exists it is also possible that a revised definition could actually reduce the fiscal risk rather than increase it.

The former Charities Commission, in one of its last efforts before being disbanded and its operations moved in the Department of Internal Affairs, led a forum with a very wide range of attendees on whether the definition of charity in NZ is relevant and appropriate. The clear consensus was that a review would be beneficial.  However without an innovative Charities Commission to drive this and now with the Minister’s announcement it looks like we will have to wait even longer for this review of the definition of charity in New Zealand.