Charities' obligations under the law
Charities have legal duties under a range of legislation, as well as under the Charities Act 2005(external link). Which law applies to your charity will depend on your legal structure, the size of your charity and the activities you do. It is critical to understand your legal duties as an officer of a charity.
This page gives you a range of examples and connects you to further information to help. Your charity may have other obligations that are not listed here.
If you need more help understanding your legal duties you can also look at CommunityNet Aotearoa’s Community Resource Kit(external link). It’s a practical legal resource designed to support organisations working in the community sector.
This page is separated into duties related to:
- your legal structure
- being registered as a charity
- money and tax
- selling or giving away goods and services
- employing people and volunteers
- care of children and vulnerable people
- being online
- your activities
- managing buildings.
Your legal structure
Charities come in all shapes and sizes. You will have different duties depending on your structure and the rules of your charity.
What structure is my charity?
Most charities in Aotearoa are trusts, societies or companies, but there are other forms charities can take. There’s more information on the different types of structures a charity can have on CommunityNet Aotearoa’s page: Introduction to organisational structures(external link). We wrote a blog which outlines several different structures, and hosted a webinar: Societies, trusts, companies – which structure is right for your charity?
If you aren’t sure of your charity’s structure, there are a few places you can find out. If you want to check whether you’re an incorporated society, an incorporated charitable trust or a company, you can:
- check your rules document on the Charities Register(external link)
- search the Incorporated Societies Register(external link)
- search the Charitable Trusts Register(external link)
- search the Companies Register(external link).
If your charity is a marae, it is usually a Māori Reservation established under Te Ture Whenua Māori Act 1993(external link). Information about your marae and details of your trustees are available on Māori Land Online(external link). Te Puni Kōkiri have more information about Māori Reservations on their website(external link). A few marae are incorporated societies or incorporated charitable trusts.
Some charities are unincorporated groups(external link) or trusts, others are formed from a gift in a will, and some are formed from legislation. There is no specific register in New Zealand for these types of structures. But if they are registered with Charities Services, you can find them on the Charities Register(external link).
For more specific duties related to your charity structure please see the links below.
- Incorporated societies can read about their legal obligations here.(external link)
- Charitable trusts can find out more here(external link).
- Māori land trusts can read about their trustee’s obligations here(external link).
Duties for trusts
If your charity is a trust, the Trusts Act 2019(external link), which came into force on 30 January 2021, has a number of specific mandatory duties that trustees are required to follow. There are other default duties that trustees must follow, unless your rules have changed these duties. These reflect the general law for trusts. It is a good idea to review your trust deed to make sure it complies with the requirements of the Trusts Act 2019.
The Ministry of Justice looks after the Trusts Act, and you can find more information about Trust Law Reform(external link) on their website.
Being a registered charity
As an officer you need to be familiar with your duties under the Charities Act 2005(external link) (the Act). An officer’s most important duty is to act in the best interest of their charity, making sure it remains focused on its purpose and the benefit it provides to the public. You have a duty to look after your charity's money. You must also make sure that there is no private financial benefit or profit to an individual. You can read more about preventing private pecuniary profit (financial benefits) on our website.
You must ensure that your charity files an annual return and keeps relevant details up to date. For more information on your role as an officer, take a look at our Governance information for new officers. (external link)
Money and tax
Inland Revenue oversees charitable tax benefits like an exemption on income tax and donee status (which allows people to claim tax credits on donations). Most charities qualify for these benefits, but some do not. Inland Revenue's website has more information about their rules for charities.(external link) Your charity’s financial records are related to tax, so you must keep them for seven years. All charities need an IRD number and you can find more information on how to apply for an IRD number here(external link).
If your charity operates overseas different tax rules may apply. If you want to learn more about tax obligations when your charity is operating overseas, watch our webinar: Know your tax obligations(external link).
We tell Inland Revenue whenever a charity is registered or deregistered. You can find out more about deregistration on our website.(external link) If your charity is deregistered, you may have tax obligations with Inland Revenue. You can read more about the tax obligations of deregistering on Inland Revenue’s website.(external link)
All charities need to report annually to Charities Services using the reporting standards(external link) set by the External Reporting Board (XRB). Charities with over $500,000 operating expenditure must have their accounts audited or reviewed, and charities with over $1 million must have their accounts audited. You can find more information about the audit and review requirements on our website.(external link)
Fraud and theft
Just like any other organisation or person, charities and their officers should watch out for fraud and theft. Good financial planning, policies and processes are the best way to ensure this doesn’t occur. You can find examples of these on CommunityNet Aotearoa(external link). You can find more information about good financial planning in the Community Resource Kit.
Fraud, or failure to address fraud, can be evidence of serious wrongdoing, and result in criminal sanctions and removal from the Charities Register. If you suspect theft or fraud within your charity, report it to the Police(external link) and Charities Services(external link).
Anti-money laundering and countering financing of terrorism
Money laundering is how criminals disguise the illegal origins of their money. If your charity provides financial services, you will need to comply with anti-money laundering laws.
People who fund terrorism use similar techniques to money launderers to avoid detection and to protect the identity of those providing and receiving the funds. Find out more about preventing money laundering and terrorist financing here.(external link)
Selling or giving away goods and services
The Commerce Commission(external link) is responsible for enforcing laws relating to competition, fair trading and consumer credit contracts. Many charities operate businesses and sell goods and services to raise funds to carry out their charitable purpose. If your charity sells goods or provides services, you should know your obligations(external link).
Employing people and volunteers
Almost five percent of the New Zealand workforce is employed by a charity. Charities need to know their obligations when they employ people, and when they use volunteers.
If your charity employs people, you will need to think about health and safety, contract law, workplace policies and tax responsibilities. You can find detailed information about these topics on the Employment New Zealand website.(external link) If you need help developing your employment agreements and policies, the Ministry of Business, Innovation & Employment (MBIE) provide an employment agreement builder(external link) and a workplace policy builder(external link).
You can find more information for employers below:
- Inland Revenue's guidance for employers(external link)
- Employment New Zealand’s website(external link) for a range of legislation relevant to employment relationships
- ACC guidance on workplace health and safety(external link) and the Accident Compensation Act 2001(external link).
As an officer of a charity it is important that you know what kind of volunteer payments and expenses are ok. Under the reporting standards you are required to record related party transactions(external link). You may also want to look at Volunteering New Zealand's volunteering best practice toolkit(external link).
Health and Safety
You are likely to have responsibilities under the Health and Safety at Work Act 2015(external link) (HSWA).
As a “Person Conducting a Business or an Undertaking” (PCBU), you have a duty of care to ensuring the health and safety of your workers and others. The term PCBU is a broad concept used throughout the HSWA to describe all types of modern working arrangements which they commonly refer to as businesses (which will include some charities). You can find out more about PCBUs here(external link).
The HSWA applies to charities, with some exceptions. For more information, you can visit Worksafe’s website hub on managing health and safety(external link).
Worksafe have published lots of information about what the HSWA means for your group. Visit their website for:
- A HSWA quick reference guide(external link)
- Guidance and information for volunteers hub(external link)
- FAQs about volunteers(external link)
Care of children and vulnerable people
If your charity works with children or vulnerable people you have a range of obligations to ensure the safety of your clients. Under the Children’s Act 2014(external link), all paid employees and contractors who work with children for state-funded organisations must be safety checked. New Zealand Police offer vetting for a children's worker safety check.(external link) The Community Toolkit also has more information about the care of children.(external link)
It is an offence to send unsolicited messages as a charity, even if it’s for a good cause. These messages are commonly known as spam. Spam is the generic term for the email, fax, and mobile phone text and image messages people receive without having asked for them. You can find more information about spam here(external link). You can also read our Blog - What charities need to know about spam(external link).
Many charities receive government funding or grants from community or philanthropic organisations to carry out their work. Most funders will have conditions you need to comply with. Your obligations will depend on the type of funder and how much money you received.
Make sure you know what you need to do to account for your grant or contract, so you remain eligible for funding in the future. We have more information about funding your charity on our website.(external link)
The Department of Internal Affairs regulates gambling in New Zealand. For some charities, an important part of fundraising is running raffles, bingo or housie, casino nights, or sweepstakes. If you do run these kinds of activities, it’s important you are aware of your duties under the Gambling Act 2003(external link). You can find more information about gambling here(external link).
The Sale and Supply of Alcohol Act 2012(external link) controls the sale and supply of alcohol. Under the Act, a licence is necessary in most cases where alcohol is “sold and supplied”. If you hold a community event where alcohol will be sold or supplied, then contact your local council to see if you need to apply for a liquor licence. The Community Toolkit has contact details for local councils and more information about liquor licensing(external link).
If you own land, either residential or commercial, you have a range of obligations. The Community Toolkit has more information on managing a venue(external link). If you rent land or a building for your charity, you will also have a range of obligations. For more information visit the Tenancy Services website(external link).