The Department of Internal Affairs has released a summary of public submissions which were made during its consultation on modernisation of the Charities Act 2005.

The consultation followed release of a discussion document by the department in February 2019. A total of 363 written submissions were received in response over the consultation period, which ran from late February to the end of May.

Most submissions were received on the section on obligations of charities, with 283 submitters commenting on this.

Over one-third of submitters commented on the scope of the review, with nearly all of these stating that the scope of the review should be widened to include the definition of charitable purpose, tax issues, and other legislation that impacts charities. A high proportion sought an independent review of the Act, with concerns about the independence of the review being expressed.

Submissions on the vision and policy principles stated that the key challenges for the sector were sustainability and financial viability of organisations, recruitment of good people to governance and staff roles, retaining good reputations and increasing compliance costs.

Of the submitters that commented on obligations of charities, 171 specifically commented on why they registered and what support was required to meet their statutory obligations. More than two-thirds of these submitters confirmed that the reasons set out in the discussion document for registering as a charity, such as charitable status and tax benefits, were relevant to their decision to register.

More than two-thirds of these submitters noted a lack of capacity and capability in the sector and considered further support was needed from government to help charities meet their statutory obligations, such as updating Charities Services of any changes to charity details.

Of the submitters that commented on obligations of charities, 211 specifically commented on reporting requirements. More than two-thirds of these submitters favoured reducing reporting requirements for small charities. Suggestions for achieving this included: increasing the maximum expenditure of a tier 4 charity, introducing a ‘micro entity’ or ‘tier 5’ reporting tier and simplifying the current reporting forms.

Next steps

The department's General Manager Policy, Raj Krishnan, says the strength and diversity of views that came through means it must take its time to carefully work through the complex issues raised.

“We need to ensure modernisation of the Act suits the needs and requirements of the charitable sector. We will continue to engage and involve them throughout this process and no legislative changes will be proposed without further consultation,” he says.