New Zealand Law Society - Charities law needs shakeup, Fellowship winner says

Charities law needs shakeup, Fellowship winner says

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By Lynda Hagen

A first-principles review of New Zealand’s charities law is essential to ensuring many deserving organisations gain – or simply retain – charity status, a Law Foundation-backed researcher says.

Charities expert Sue Barker says more than 10,000 charities have been deregistered since the Charities Act 2005 came into force. She says the very narrow interpretation of eligibility for charity status is making New Zealand an international outlier, and current review plans will not deal with the fundamental problem.

“The Charities Act is a case study in fast law not making good law,” Ms Barker says. “We need to step back and ask what we are trying to do with this regime. Currently, we are preventing good charities from doing their work.”

Sue Barker’s drive to reform charities law has earned her the country’s leading legal research award, the 2019 New Zealand Law Foundation International Research Fellowship. First awarded in 2002, this year’s Fellowship will be the final award before the Foundation goes into recess next year. The fellowship is worth up to $125,000 annually for research that makes a significant contribution to New Zealand law.

“I’m absolutely honoured to be the 2019 International Research Fellow and very grateful to the Law Foundation for supporting this work,” she says.

“Charities are fundamentally important to society – health, education, housing, poverty reduction, closing the wealth gap, protecting the environment, wellbeing, you name it. Yet the charities sector is often overlooked, or treated as an afterthought. It also suffers from a lack of research. What the award says is that charities matter, and that it’s worth taking the time to try to get the legal framework right.”

Approach to eligibility

Some decisions by the agencies responsible for administering the Charities Act show the stringent approach these bodies are taking to eligibility for charity status. In 2010 they deregistered the Queenstown Lakes Community Housing Trust, a council-supported body that helps residents into affordable housing. The decision, which appeared to overlook important public benefits, led to a review of every social housing provider in the country, in the middle of a housing crisis. The Government changed the law to settle the trust’s $6 million tax bill and give community housing providers their own specific tax exemption. But unfortunately this didn’t solve the problem, as without registered charitable status many social housing providers cannot access funding.

Another example is Greenpeace – 11 years since first applying, the organisation still does not have a final decision on its application for registration. In the face of catastrophic climate change, is our community well-served by preventing charities from furthering their charitable purposes?

Ms Barker is director of a Wellington law firm specialising in charities law. She says the current review of the Charities Act is a once-in-a-generation opportunity to create a world-leading framework of charities law for New Zealand – one that genuinely facilitates rather than frustrates charitable work. But there are difficulties with the nature, scope and timing of the review.

She is a member of the Government’s Core Reference Group for reviewing the Act. Together with Dave Henderson from Trust Democracy and with philanthropic support, she has collaborated with Internal Affairs on 23 consultation meetings around the country.

“It really is important to make the most of this opportunity – it might be decades before there’s another chance. The International Research Fellowship will enable me to take a sabbatical for a year to fully review all 363 submissions on the review and spend time in Australia, Canada, the UK and Ireland, to really understand how their regimes are working and lessons for us.

“The aim is to provide an independent perspective on what a world-leading charity law framework might look like. This would feed into the government’s current review process, to assist with the development of law reform in this important area,” she says.

Lynda Hagen is Executive Director of the New Zealand Law Foundation.

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