Update Newsletter: February / March 2012
Amendments to Charities Act mean changes for charities
Three changes to the Charities Act 2005 have been made by Parliament, which has passed the Statutes Amendment Act (No.2) 2011.
They take effect immediately. At least one change will affect every charity. There is more detail on our website about the changes, but in brief:
ALL registered charities must now tell the Charities Commission if a certified officer becomes disqualified.
Your charity won’t continue to qualify for registration if an officer becomes disqualified AFTER they have been certified. For example, if an officer becomes bankrupt part way through their term of office.
Charities may wish to periodically check that their officers remain qualified. The Commission has developed a template letter and checklist you can send to each of your officers, to help you with this. (We suggest you do this prior to your AGM).
The definition of “officers” has been widened (except for charities that are trusts), to include both members of your highest governing body AND anyone in a ‘position to have significant influence’ over your management or administration.
This means that if your charity is not a trust, you may now have to certify people such as (for example) your:
- chief executive
- finance officer
- paid or unpaid staff who manage contracts for the charity
- paid or unpaid staff that have access to, or control over, your charity’s funds or its financial arrangements.
This change clarifies the definition of charitable purpose in relation to amateur sport.
You won’t need to take any action in relation to this change.
The Commission has already registered a number of amateur sports organisations that fulfil charitable purposes. This change won’t have any impact on any currently registered sports charity.
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Update on legislation disestablishing the Commission
In October 2011, the Government introduced the Crown Entities Reform Bill to Parliament, which included amendments to the Charities Act 2005.
The Bill will disestablish the Charities Commission and move its registration, monitoring and investigation and education functions to the Department of Internal Affairs as of 1 July 2012.
On 21 December, the newly elected Government reinstated the Bill (which lapsed when Parliament rose for the election), confirmed its reference to the new Government Administration Select Committee, and has now scheduled the Committee to report back to the House on the Bill by 30 March 2012.
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Make sure your Annual Return counts!
Much of the research looking into what drives public trust and confidence in charities, and donor behaviour, shows that the public expect charities to be open, transparent and accountable.
And that starts with the very basics, such as ensuring complete and correct Annual Returns and financial statements are submitted to the Charities Commission on time.
During 2010, the Commission deregistered around 918 charities for failing to file Annual Returns, which included a number that filed only incomplete Returns.
Annual Returns must be complete
The Commission won’t accept incomplete or incorrectly completed Annual Returns, as they don’t comply with the Charities Act.
When filing your Annual Return, please remember to send us:
- an Annual Return form, online or on paper, with all applicable questions completed, including the statements of financial performance and position (question 25 in the paper form –Form 4) and
- a copy of your charity’s financial statements.
What does “incomplete” mean?
Annual Returns are incomplete if you:
- write “see accompanying financials” in response to Question 25 on the paper form (that is, the financial information requested in the online form)
- haven’t completed all the applicable questions
- haven’t sent us financial statements for a full financial year
- send financial statements for the wrong financial year
- send the Annual Return and financial statements, but the information in the two documents is not consistent
- send us financial statements that don’t belong to the charity that’s been registered - for example, if they belong to a larger, unregistered, non-charitable parent body, or your social club.
What will the Commission do if you file an incomplete Annual Return?
The Commission won’t publish the incomplete Annual Return on your charity’s summary page on the Charities Register. We will do our best to contact you to ask for the missing information.
Your summary page, visible to the public, will show a “missing” Annual Return.
If we don’t receive the missing or correct information, or any reply, within a reasonable time, your charity will be deregistered. This means you won’t be able to access all the benefits of registration, including charitable tax status.
Donee status (granted by Inland Revenue) may also be revoked, which means that your donors won’t be able to claim tax credits on their donations.
So remember, incomplete Annual Returns don’t count. Make sure yours does!
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Need help with your Annual Return?
Charities have six months from the end of their financial year to file their Annual Return with the Commission. We encourage charities to file online, because it is easier, and (if a fee is payable) it is cheaper.
The Commission has developed “plain language” help notes for anyone sitting down to complete an Annual Return:
Feedback from charities is that most people find it relatively quick and straightforward to file an Annual Return.
Forgotten your username or password, when logging in to your account to complete your Annual Return?
Remember that your User ID is the charity reference sent to you when you first applied to register – not your charity’s CC number (given to you after you were registered, and published on your charity’s individual summary page on the Charities Register).
You should keep your password in a safe place (and if finishing your role with the charity, include it as part of the handover to your successor, who can then change it to their own password).
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Some suggested Annual Return “dos” (and one don’t)
Annual Returns on the Charities Register are now the “go to” place for anyone wanting to find out more about how a charity is using its funds. It’s especially important for charities to file their Annual Return on time, and to ensure that the information published about them on the website is accurate, and gives the best possible picture of the charity and the work it does.
Here are some suggested “dos and don’ts” when filing your Annual Return:
DO make sure you file on time!
Annual Returns are due within six months of a charity’s financial year-end. You can check your charity’s financial year-end date on your summary page on the Charities Register, and the Commission will also send you a reminder email.
DO complete the Annual Return form (especially the financial information) and attach a copy of your financial statements
Make sure you answer all the applicable questions in the Annual Returns form – Form 4. Data from this form gives an overall picture of the charitable sector, and is accessed by the public, funders, government agencies, and others. A form filed without financial statements is classed as “incomplete”, and won’t be published on the Charities Register. It’s especially important to complete Question 25 (as it’s numbered on the paper form), which asks for some of the figures from your financial statements.
DO consider including a non-financial report (your Chair’s report or similar) in your financial statement
If you wish, you can include non-financial information with your financial statements (save them as part of the same document, so you only need to attach one document) explaining how your charity has been achieving its charitable goals during the year, and “telling your story”. Include relevant information to help the public ‒ and funders ‒ understand where your income has come from, and how it is being used to achieve your charitable goals.
DO consider filing online, especially if you haven’t tried it before
It can be cheaper and easier! (We are always making improvements to the forms, so they are simpler, and more intuitive to complete, and so the help notes are more helpful).
DO make sure your financial statements relate only to the charity you have registered
not your parent organisation or a non-charitable part of your organisation. Some charities have mistakenly given us the financial statements for their much larger parent organisation, or even their social club, instead of their own financial statements, showing only the money received and used for charitable purposes.
And after all, there’s really only one (important) “don’t”:
DON’T forget or ignore your obligation to file your Annual Return!
Failing to file a complete Annual Return can lead to your charity being removed from the Register, and the loss of tax exemption and donee status.
If in doubt about when your Annual Return is due, check your listing on the Charities Register.
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Taking charities’ data to the regions
Having successfully promoted charities’ data to central government agencies in 2011, we’re now taking it out to the regions, targeting city, regional and district councils as well as District Heath Boards and large funding bodies.
The promotion has been aimed at groups which will find the most benefit from accessing and using the data. The Commission’s Open Data promotion manager Emily Marden says that these benefits will vary depending on the priorities of each organisation.
Auckland, Whangarei and Hamilton City councils attended workshops in February and have responded very positively to the information the data can provide them about charities in their region, according to Emily.
“Workshop attendees are quite surprised by the breadth and scope of the data. People at the workshops are very excited about this tool and often leave the workshop saying they can’t wait to have a ‘play’.
District Health Boards, who manage and fund contracts with many of the charities contained in the data are similarly impressed by the ability to glean financial information and the user-friendly format of the Advanced Search function.
Large funders that have participated in workshops are exploring ways in which the data can assist them in making strategic funding decisions, as well as supporting processing systems for grants.
Anyone wanting to know more about charities’ data can visit the website and click on the ‘Search’ button.
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The Commission has recently confirmed four new appointments, and warmly welcomes:
Liz Beavon – senior adviser, Charities Law
Liz Beavon has been appointed to the position of senior advisor – Charities Law, in the Registration team.
Liz has 25 years of broad legal experience, primarily in commercial law, in both the private and public sectors and as a principal of her own law practice.
Liz has a knowledge of charities law and she previously approved income tax and other tax exemptions for charities while working at Inland Revenue. Liz was most recently an acting registrar on contract at the Waitangi Tribunal.
Liz has an LLB and a BA, and started with us on Monday 20 February.
Rachael Horton – general manager, Monitoring and Investigations
Rachael Horton has been appointed to the position of general manager, Monitoring and Investigations, coming to us from the Department of Internal Affairs, where she was manager, Intelligence, in their Policy, Regulatory, and Ethnic Affairs Branch.
The intelligence unit provides tactical, operational, and strategic intelligence advice to the Branch as well across the Department. She has also lead international work on casino and gaming sector vulnerabilities to money laundering and financing of terrorism.
Before joining Internal Affairs, Rachael was with the New Zealand Police.
Rachael has a Diploma in Policing and a Master of Public Management, and joined us on Monday 13 February.
Brendon Ward – general manager, Education
Brendon Ward has been appointed general manager, Education, by the Commission.
His most recent role was as the manager responsible for organising the volunteer programme for the Rugby World Cup.
Previous to that he was chief executive of the NZ Recreation Association, and was with Water Safety New Zealand. He is currently a Board member of WSNZ.
rendon has represented New Zealand at water polo, has been an international water polo referee, and has been a sports commentator at Olympic and Commonwealth Games.
Brendon started work with the Commission on Monday 13 February.
Pitsch Leiser – regional advisor, Capability - Education
Pitsch has been appointed to the position of regional advisor, Capability, in the Commission’s Education team, and will start with us on 2 April 2012.
Pitsch is currently a multicultural project worker for Migrant Services in Cairns, and before that was an ethnic affairs advisor at the Office of Ethnic Affairs.
Pitsch has had years of experience managing major festivals and community events for Auckland and Rotorua City Councils, and in Canberra. He was the director of Capital E, and successfully ran Auckland’s Pacifika festival, founded Music in the Park in Auckland, was entertainment manager for events such as Whitbread yacht races, dragon boating events, international busking festivals and founded the Living Room and Galaxy Theatre in Auckland.
He has also been a lecturer in event management at Auckland University.
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Register for your free place - inaugural XRB lecture: Towards global financial reporting comparability
The External Reporting Board, which is responsible for the development and issuing of accounting and auditing and assurance standards in New Zealand, has announced the introduction of its (free) XRB Occasional Lecture Series.
The lectures will occur on an occasional basis in various parts of the country and will cover developing topics relevant to accounting or auditing standards in New Zealand.
The Inaugural XRB Lecture, which is being organised in conjunction with the Centre for Accounting, Governance and Taxation Research, will be delivered by Professor Stephen Zeff. The topic is "Towards Global Financial Reporting Comparability".
Professor Zeff is a leading international academic, well known for his standard-setting research.
The Inaugural XRB Lecture will be held at 4.30pm, Tuesday 13 March 2012 at Victoria University of Wellington, Council Chamber, Hunter Building, Level 2, Kelburn Parade, Wellington.
It is free and open to anyone who is interested in attending, but places are limited.
Please RSVP (acceptances only) by Friday, 9 March 2012 to firstname.lastname@example.org or telephone 04 463 5550.
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“If a street ‘chugger’ persuades me to sign up to donate via direct debit to a charity, will I qualify for a donation tax credit?”
Inland Revenue (and the Commission) recently received an enquiry related to whether a tax credit can be claimed for donations made to “chuggers” collecting for a charity.
“Chuggers” are paid by commercial fundraising companies to sign up passers-by on the street, who commit to make regular donations via direct debit.
Commonly, such fundraising companies keep 80-90% or more of the first year’s donations (and a lesser proportion of donations made in subsequent years), but some charities report that this fundraising method has brought them new donors.
Whether or not a person who makes a “donation” via a fundraiser that employs chuggers would be entitled to a tax credit depends on the receipt provided to them.
If the receipt was in the name of the fundraising company (which is not registered as a donee organisation with Inland Revenue) then the donor would not be entitled to a tax credit.
However, if the fundraiser were acting as an agent for the particular charity and issued a receipt in the name of that charity, then the donor would be entitled to the tax credit (assuming that the charity is on Inland Revenue’s list of approved donee organisations).
The donor would be able to claim a tax credit for the whole of their payment, based on the receipt received, even though a significant portion of the donation might be kept by the fundraising company.
Remember though, that employees who make donations via payroll giving to charities that have donee status, are eligible for an immediate tax credit.
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Is your charity’s website address on the Charities Register? (and are you getting the most from it?)
If your charity’s website address is shown on its summary page on the Charities Register, do make sure it’s working hard for you, to get your message across and encourage the public’s trust and confidence in your charity’s work.
We recently checked, and found a number of charities whose website links from the Register were broken. That means that if a potential donor or funder was trying to access the charity’s website, they might have concluded it was no longer operating.
You might like to take a quick look at this blog, explaining how one potential donor used the Charities Register as the starting point in trying to choose a charity to support.
You might also like to take a look at some of the guidance published on this UK website, and see these helpful tips, and examples of some charity websites.
You can also see examples and best-practice advice for making the most of your website.
Remember to include your unique charities registration number on your website and other electronic communications, with a (working!) link to your summary page on the Charities Register.
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From time to time, the Commission emails special invitations to registered charities (for example, to attend forums or seminars), and important information that we believe charities should know. We also email you to remind you to file your Annual Return.
We generally use the “primary contact” email address provided by charities, and held in our database (although not published on the Register).
Just a gentle reminder – please log in and check your primary contact details from time to time, to be sure your charity receives invitations and information you need to know.
(While logged in, you might also like to check that your charity’s contact details, visible on the Register, are up to date, so the public can contact you).
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Help your favourite charity to get recognised – fundraising excellence
Entry is now open for the 2012 New Zealand Fundraising Excellence Awards.
The awards recognise outstanding fundraising practice in New Zealand. Entries are being accepted for the following fundraising awards:
- Annual/regular giving programmes
- Major gifts and capital campaigns
- Special events charity
- Corporate supporters charity
- Planned giving and bequest programmes
- Donor acquisition charity
- Online campaigns
The deadline for entries is 24 March 2012. Download an application form for the criteria.
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An advanced search of Charities Register data shows that – from the most recent Annual Returns filed by the 17,500 charities that have volunteers – they benefited from more than two million hours’ worth of volunteers’ time each week, contributed by an average of 445,655 volunteers. That’s the equivalent of around 50,000 full-time (unpaid) people working in the sector each week.
TVNZ6 has showcased some of the wonderful work being done by volunteers in the community.
If you ‘d like to see more about some of the ways volunteers are helping – and being celebrated – take a look at http://tvnz.co.nz/volunteer-power/episode-guide-3883140
(You’ll need broadband to see these video clips).
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Volunteers available on Tuesday 8 May
Up to 4,000 staff from a major corporate will be available to work for charities in most areas as a “volunteer for a day” on Tuesday 8 May.
They also intend to invite customers and members of the public to participate.
If your charity has a project in mind that would benefit the community, and you could use some volunteers on that day, take a look at http://www.closedforgood.org/.
You will need to be clear about what the project involves, how many people you need for the day’s work, and have a plan for how you will use the volunteers.
Submissions open on 17 February and close on 16 March.
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Volunteering website connecting charities, projects and volunteers
VolunteerNet (www.volunteernet.org.nz) is a website that connects volunteers with event-based volunteering opportunities. It was developed by New Zealand Major Events, a unit of the Ministry of Economic Development, and is also available for charities to use, to recruit volunteers for projects or events you’re running.
People can register as volunteers and search for event opportunities that match their skills and experience; and event organisers can register and search for volunteers who have the skills and experience they require.
VolunteerNet is a one stop shop bringing together volunteers and event organisers. If members of your charity want to volunteer at events or need volunteers for your event, this is the place to go – it’s a bit like an internet dating website for events - interested people can register as volunteers and then search for event opportunities that match their location, skills and experience.
Event organisers can search for volunteers who have the expertise they need and use other volunteering tools to help manage their volunteer programme.
VolunteerNet aims to build a network of experienced and enthusiastic volunteers across New Zealand for big and small events alike.
It’s a free service for all – both volunteers and event organisers. Listed events range from sporting, recreational, music, cultural, environmental, and fundraising and community focused events.
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Fraud still hurting non-profits
Accounting firm BDO has released its most recent not-for-profit (NFP) fraud survey, which shows that while overall reported fraud has decreased since the survey’s inception in 2006, down from 19% to 12%, it is likely some fraud is still going undetected.
The biennial survey involved 645 respondents from Australian and New Zealand’s NFP sectors (58% of respondents were from New Zealand).
Key findings from this year’s survey include:
- 12% of respondent organisations suffered fraud
- 25% of respondents who experienced fraud believe it is still undetected
- 40% of all fraud reported within the sector was cash theft
- Only 9% of frauds were committed by volunteers
- The average online payment fraud was $370,000
- The average duration of each fraud was 14.5 months
- A typical fraudster was a female aged in her forties, and was a paid employee in a non-accounting role
- Tip offs (34%) and internal controls (33%) were the most effective ways of discovering fraud.
The full report is available free of charge via BDO’s website (you’ll need to register your details, to access a copy).
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Professional development scholarships
The (Australian-based) ASI SMART Company Scholarship Fund offers financial assistance to people working in the not-for-profit sector to help with their professional development educational needs.
Its current (quarterly) funding round closes on Monday 12 March 2012.
Fully Funded Education Scholarships (Part A) are available for courses including Certified Association Executive (CAE®) Programme, FIA Certificate in Fundraising, Associations Forum Workshops as well as for American Society of Association Executives Web Based Courses and Association of Fundraising Professionals Web Conferences.
Education Subsidies (Part B) are also available for programmes including Associations Forum CEO Symposium, Diploma of Fundraising Management, Company Directors Course, QUT's Graduate Certificate in Business - Philanthropy and Nonprofit Studies and UQ's Leadership in the Not for Profit Sector course.
For more information go to www.advsol.com/ap/scholarship or contact ASI on +61 3 9869 7509. Please check the eligibility criteria on the website before applying.
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