Non-profit sector dissatisfaction
In the early 21st century there was a huge range of non-profit social service organisations, but their interests were often different. Some were complex and nationally organised, following business models of management and employing large numbers of staff. Others were small, often local in their operations, and solely reliant upon volunteers. Larger organisations with greater resources had a political voice and pressured the government for funds.
The government’s use of contracts to fund the non-profit sector caused relations with the sector to deteriorate during the 1990s. Contracts encouraged competition among agencies that had formerly cooperated. Many organisations resented having to constantly renegotiate contracts, and felt that their values and aims were being undermined by the tight specifications. Volunteers were sometimes sidelined because of the need for trained, professional delivery of services.
The Labour-led government elected in 1999 put in place a number of measures to review and improve the relationship with voluntary organisations. These included a new ministerial portfolio (the minister for the community and voluntary sector), a working party to investigate the relationship between the sector and the government, and the establishment of an Office for the Community and Voluntary Sector within the Ministry of Social Development. Te Wero (Action Group Māori) was set up in 2003 to examine engagement between government departments and Māori. Research into the non-profit sector was encouraged.
In the early 21st century there was much talk of ‘partnership’ between non-profit social services and government. However, government departments still had to be accountable for taxpayer funds when dealing with contracting agencies. Many agencies, on the other hand, felt that the relationship with the government was one-sided and shaped by government priorities rather than those identified by voluntary and community groups.
Defining a charity
From the 16th century, case law developed on the definition of a charity. One important criterion that was sometimes tested in the courts was ben–efit to the community. Under the Charities Act 2005, to be registered as a charity an organisation must have a charitable purpose. This can relate to ‘the relief of poverty, the advancement of education or religion, or any other matter beneficial to the community’.1
The Charities Act 2005
Because of the limited amount of private charity in 19th-century New Zealand, the colony did not develop an agency along the lines of the English Charities Commission established in 1853. There was consequently no body to register and oversee charities. Charities in New Zealand were exempt from income tax and gift duty. Concerns about the abuse of charitable status for tax purposes and charities’ accountability for funds received prompted the Charities Act 2005.
A Charities Commission was formed to register and monitor charities as a condition of their tax exemption. It also had a statutory role to support charities to improve their management and governance. In 2012 the commission was integrated into the Department of Internal Affairs. Charities Services – Nga Rātonga Kaupapa Atawhai was established to register charities and provide advice on their governance.
New reporting standards developed in 2015 require financial statements in a specific format. New audit and review requirements necessitate increased competence in accounting. In 2016, 27,955 charities were registered. Six per cent of them provided social services and 2.6% services for people with disabilities. Others were involved in areas such as emergency relief, arts, culture and heritage, sport and recreation, and religious activities. Not all non-profit organisations qualified or chose to register as charities.