New Zealand Law Society - Charities Services outlines how to end a charity

Charities Services outlines how to end a charity

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When a charity ends its operation for good, it’s not a case of just shutting the shop, turning the key and moving on.

Andrew Phillips is an enrolled solicitor with a Master of Laws and has worked with Charities Services over the past four years.

In his latest blog, he outlines what to do when a charity ends.

“When a charity ends its operations for good, any surplus resources, funds and property should be applied to charitable purposes. How a charity winds up depends on the type of organisation. Charities can be incorporated as companies, trust boards or societies, or exist as unincorporated trusts or societies,” he says.

He goes on to say that for most charities, following the payment of all debts and liabilities, they’ll need to evaluate what is left.

“In general, any surplus should be given to charitable purposes, consistent with their rules. A non-charitable group can receive the funds, as long as it is clear the funds will be used for charitable purposes.

He says the most important point is for charities to read and follow their rules documents. Rules provisions might limit distributions to a particular organisation, or a particular area, or type of charity.

“Where a charity does wind up, and doesn’t apply the surplus funds to charitable purposes, we may make a referral to the Attorney General’s office to take further action,” he says.

Mr Phillips points to a high profile example, after a Charities Services’ investigation in 2015.

“The Glenn Family Foundation Charitable Trust removed itself from the Charities Register indicating it intended to wind up. As the Trust didn’t appear to follow the winding up provisions in its trust deed, we referred the issue to the Attorney General,” he says.

He says the Solicitor General (exercising the power of the Attorney General) disputed the winding up.

“After Sir Owen Glenn, the previous chair of the Trust, made a payment in excess of the disputed amount to a proposed new medical school at the University of Waikato, the Solicitor General accepted the dispute was resolved,” he says.

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