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Options when ending a charity
Published 20 February 2020
[ 5 minutes to read]
We previously published a blog(external link) which explained what registered charities should consider when they are coming to the end of their life. After receiving a number of comments and questions, we thought it would be worth explaining some practical tips for charities when winding up. This includes some options for charities when they want to wind up, but they still have funds left over.
Winding up can be a stressful time for charitable groups. The following steps may help:
When you are removed from the Charities Register, you have 12 months to decide what to do with the charity’s funds – or there may be tax consequences(external link).
As explained in the previous blog, your first stop is your rules: your rules will explain how you can distribute your funds and what limitations there are.
Sometimes a specific organisation is named. If that is the case you should distribute to that organisation. If the rules say the funds must go to “charitable purposes” or “similar charitable purposes”, then you have the power to decide. Here are some options for you to consider:
Community foundations are independent registered charities that manage funds in communities across New Zealand. They are “donor advised funds”, which means that you can give to the fund and still guide where you want the interest from your funds to go. This is helpful as you don’t have to set up a separate charity, manage reporting with Charities Services or deal with any of the ongoing administration of running your own charity and if you decide to wind up your trust it can mean your original purpose can continue on.
There are 17 community foundations across New Zealand, and more information is available on is available on the New Zealand Community Foundation’s website(external link).
We recommend when making decisions on donating or giving surplus funds to a specific charity, you look at the charity’s performance reports on the Charities Register(external link) to see if you agree with how they are spending their money (and charities are usually happy to discuss if you want to know more information).
If you read anything on our website, or our blogs and you have more questions, don’t hesitate to contact us. We may be able to answer, or address the issue in a future blog, or amend the website materials.
 As discussed in the previous blog, MBIE (The Ministry of Business, Innovation and Employment) look after the Companies Register, the Register of Incorporated Societies(external link) and the Register of Charitable Trusts(external link). If your charity is listed on any of these registers as well as the Charities Register held at Department of Internal Affairs, you will need to be removed from both registers.
 Please note that the Department does not endorse any particular fund, you will need to do your own due diligence to ensure that the service is right for your charity.