As we have heard in the Charities Act modernisation meetings around the country, one of the consistent messages is that some Tier 3 and Tier 4 charities find it a challenge to complete the reporting requirements. Charities Services website has a range of resources to support you in completing both the performance report and the annual report for your charity. In addition, we have step-by-step guides for Tier 3 and Tier 4 charities, as well as video tutorials and guidance notes that take you through each section of the performance report. On our YouTube channel you can find a range of webinars for Tier 3 and Tier 4 charities that give an in-depth explanation of what information is needed to accurately complete your performance report.

We recently added a Microsoft Word template for the Tier 4 performance report that you can use in place of the Microsoft Excel form. We will continue to develop and refine our resources based on your feedback.

On a different note, earlier this month we participated in the ‘Future Prospects for Charity, Accounting and Regulation’ conference. It was an engaging and thought provoking two days that brought together academics, lawyers, accountants, charities and Charities Services for an open and frank discussion about the future of charities in Aotearoa New Zealand. We value the opportunity to learn and to take part in constructive debate about different aspects of the charitable sector. The conference was especially timely considering the modernisation of the Charities Act work that is underway. If you would like to learn more about the conference we have a great article about it below.

At the conference, the Minister for the Community and Voluntary Sector, Hon Peeni Henare, announced an extension for submissions on the modernisation until 31 May 2019. Although the roadshows are over, the Department of Internal Affairs' Policy Team are still available to answer any questions you might have, and I encourage you to provide a submission.

Ahead of the conference we had the pleasure of hosting our colleagues from the Australian Charities and Not-for-profits Commission (ACNC). It was a day for sharing ideas, learning from each other and seeing things from a different perspective. This included an in-depth discussion on the role that charities' regulators can play in providing support for governance in charities.

Before I sign off I wanted to personally reflect on the Christchurch terror attacks and acknowledge the support of the charitable sector in response to this tragedy.  While what happened was incredibly shocking, the outpouring of aroha reflects the unity and compassion of Aotearoa New Zealand.

Ko tātou, tātou.

We are one.  

Ngā mihi,

Natasha Weight
General Manager, Charities Services

Charities Services on the road

Andrew Phillips (Charities Services) and members of the Department of Internal Affairs Policy Team on the road for the modernising the Charities Act public consultations

Charities Services staff attended every one of the modernising the Charities Act consultation meetings around the country. For our staff who attended the meetings it was a busy and very rewarding six weeks.

There were some frustrations expressed to the team, particularly around the annual reporting requirements, but we were pleased to receive positive feedback about interactions with the Charities Services’ team.

Another topical matter discussed was advocacy carried out by charities. Generally speaking, advocacy that is a small part of what a registered charity does isn't an issue. However, when an organisation's main purpose is to advocate for a particular point of view the law around this can be tricky. It turns on the issue of what is a public benefit in a charitable sense. In the 2014 Greenpeace decision, the Supreme Court was split 3 to 2 on whether charities that advocate on a particular issue as a ‘main purpose’ could be charitable. This highlights the complex nature of this area of law. We are hoping the modernisation of the Charities Act will bring improved clarity to the law on advocacy.

For now, our focus remains on administering the Charities Act and applying the law as it stands. We take this responsibility seriously and each year have a random sample of our registration decisions reviewed by a specialist academic in charities law to ensure we are applying the right test.

We are also committed to promoting public trust and confidence in the charitable sector and the effective use of charitable resources. The Charities Act modernisation is a great opportunity for you to say whether you think these statutory purposes are right, and where we should be focussing our efforts.

All-in-all, it was a great to engage with people from the sector and we learnt about a range of things that we can do now to support charities to meet the requirements of the Act. And we’ll be doing just that.

Like many of you, we see the modernisation as an opportunity for the system to be improved. Or, as the Minister for the Community and Voluntary Sector said, making sure it’s fit for purpose.

If you have any concerns about how we currently administer the Act, or if you feel that our service has not met your expectations, please contact me directly on the Charities Services email: info@charities.govt.nz

Stephen Reilly, Manager Regulatory

Update on modernising the Charities Act

The Government is modernising the Charities Act 2005 to ensure the Act works effectively for charities, their staff and volunteers, and the public. Independently of Charities Services, the Department of Internal Affairs Policy Team is managing the process and conducted community meetings throughout the country in March and April. In all, a total of 27 meetings were held throughout the country, from Whangarei to Invercargill.

Thank you to everyone who was able to attend. It was invaluable to meet so many different people from the sector and listen to the wide range of views. If you weren't able to make it to a community meeting, you can watch the Department of Internal Affairs' online meeting presentation at www.dia.govt.nz/charitiesact. 

One thing we heard again and again at the community meetings was that people needed more time to have their say. In response to this feedback, the Minister has extended the submission deadline to 31 May 2019.

We are keen to hear from you and encourage you to make a submission. The discussion document and the submission form can be found on our website: www.dia.govt.nz/charitiesact.  

Submissions can also be emailed to charitiesact@dia.govt.nz or posted to the Policy Team at: Charities Act Team, Policy Team, Department of Internal Affairs, PO Box 805, Wellington 6140.

Charity Law, Accounting and Regulation Conference 2019

On 11 and 12 April, the Charity Law Association of Australia and New Zealand (CLAANZ) and Chartered Accountants Australia and New Zealand (CA ANZ), with the support of Charities Services, joined forces to present the Future Prospects for Charity Law, Accounting and Regulation conference at Te Papa in Wellington.

The impressive line-up included both local and international speakers from the legal, accounting, academic, regulatory and charitable sector. Panels covered a wide range of topics and perspectives and left attendees with a lot of ideas and views to ponder and debate.

The event built on the success of last year’s inaugural conference. The discussions had over the two days will help inform the issues that are being addressed in the Charities Act modernisation.

The day kicked off with a video address from the Minster of the Community and Voluntary Sector, the Hon Peeni Henare. Of particular note was his decision to extend the period for public submissions on modernising the Charities Act until the end of May. Your views are important and a key part of this process so if you haven’t already done so, you can make a submission here.

The first panel of the day posed the topical question of whether charities needed to be regulated. Attendees were given a (brief?!) history of 4000 years of regulation and the panellists both endorsed and queried whether and how the charities sector should be regulated. Australian academic, Myles McGregor-Lowndes’ comparison of the heavy-handed sumo wrestler versus the light touch of the jujitsu fighter proved a popular regulatory metaphor amongst panellists throughout the rest of the conference. Some likened regulation to a form of control while others saw it as a set of obligations that are publicly and socially agreed to.

An entertaining keynote address from Jennifer Batrouney QC highlighted the complexities of interpreting what constitutes public benefit through a number of different court cases. The rest of the first day's presentations covered a range of topics including the complex issue of advocacy, the future of tax in the charitable sector, accumulation, and good governance practice. Day One concluded with the Charity Reporting Awards which celebrated outstanding annual reporting across all four tiers of the charitable sector. You can learn more about the winners of the awards here.

Day Two began with a captivating speech from Justice Joe Williams who explained the meaning of the karakia “Whakataka te hau” and the waiata “Te Aroha” before delving into the origins of charities and charitable purpose. Justice Williams posed a challenge to those in attendance. He questioned whether it is time to rethink the idea of charitable purpose from its origins in Tudor England and spoke of the need to incorporate tikanga Māori into a modernised Charities Act, fit for the uniqueness of Aotearoa New Zealand.

The emerging arena of social enterprise was the topic at hand in the morning and highlighted some exciting organisations working alongside and supporting charities, such as Collaborate and Ākina Foundation. Later, the conference was temporarily transformed into a live podcast studio as Steven Moe, who produces the excellent Seeds podcast, sat down to interview Carolyn Cordery about the history of financial reporting as well as some of her own history.

Other topics of Day Two included an update and discussion on the modernisation of the Charities Act 2005 and the future of financial reporting. It ended with a wider group discussion around questions raised over the two days such as how to handle leadership issues and the process of reviewing the Charities Act.

It was an inspiring two days full of lively discussion and some challenging questions. It showed a positive future for the sector moving forward. The conference was videoed so you are able to access most of the presentations given by the speakers here.

Steven Moe interviewing Carolyn Cordery for his Seeds podcast

Governance survey results

One of our key roles as regulator is to educate charities about matters of good governance and management. We know governance is an issue for many charities because throughout our work we see many examples where poor governance has had a negative impact on a charity’s ability to operate effectively and meet their objectives. Last year we kicked off our governance project by interviewing a range of people.  This included those running charities, governance experts, funders, and others that support the sector. We are continuing to build on what we learned.

In February, we sent a survey out to every registered charity to get a greater understanding of the concerns related to governance. The survey sought feedback on the challenges charities face, the resources they use to support their charity’s capability and the ways Charities Services can assist in building greater governance across the sector. Of the responses we received, 94% were from registered charities and the remainder came from not-for-profits. The participants reported that sustainable funding, reporting and recruiting members with the right mix of skills and experience are the most common challenges.

Some common governance issues that entities face is in developing and achieving their strategic direction, attracting new members and volunteers and meeting the reporting requirements that were introduced in 2015. Respondents told us that go-to guides and simple resources that address these areas would be welcomed. Some respondents said that information was too complex and expressed a desire for “assistance that is easily accessible as soon as a charity is registered”.

We want to give charities the necessary support so that they can thrive. There are excellent websites and resources available for charities such as our website, CommunityNet, Sport New Zealand, and NZ Navigator, as the responses show that many are not accessing this information.

Keep visiting our website as we will respond to your feedback and develop resources and information on where to access governance, leadership and capability support for charities.

SECTOR SHOWCASE

Reporting–How to best tell your story

Guided tour at Zealandia 

In this month’s Sector Showcase, we wanted to put a spotlight on the all-important reporting. For some charities, we know it sparks joy. For others, it’s a challenge.

Since 2015 all registered charities have been required to file an Annual Return within six months of the end of their financial year.

Along with their Annual Return, registered charities also need to provide a performance report/financial statements that meet reporting standards.

Let’s start from the beginning – why is it important?

The public wanting to know more about a charity are able to access and read their financial statements/reports through the Charities Register. This information can help interested stakeholders including the governance board, charity members, volunteers, funders and donors make better decisions. Good reporting is able to accurately show the purpose of the charity and its activities.

Is it all spreadsheets and numbers? What does a good report look like? How can we make our reporting best tell our story?

Who better to answer these questions than the recent winners of this year’s Charity Reporting Awards. We’re sure you’ll find what they have to share very insightful.

What is the importance of good reporting to your charity?

Zealandia (Tier 2 winner)

Our report is a key opportunity to highlight to all of our stakeholders our impact and achievements during the year. We use integrated reporting to help communicate our contribution and value across our key capitals: social capital, environmental capital, human capital and financial capital.

Bellyful (Tier 3 winner)

It tells our story and by including photos, recipient stories and volunteer awards – makes the story come alive for readers.

Empowered Learning Trust (Tier 4 winner)

Good reporting is essential in tracking what we do in our organisation both in a financial sense and also with respect to client contacts and outcomes. It requires that our screening staff record accurate and meaningful data on any contacts they have with clients, and then this is used to analyse our performance and where we can make changes to improve our services in schools to best help our clients.

On the financial side, it is important that all transactions are clearly coded and that we have all the attending paperwork in place, for both audit purposes, reporting to our board, reporting to funding bodies and also so that we can accurately budget and plan for the future. With good data and reporting we can best tell our story to funders and stakeholders, and also to help make sure that the community understand the need we serve and how much it costs to support those with this need.

Melanie, Kym, Mhari, Shreya and Cherry at a Bellyful Central Auckland 'Cookathon'

How soon do you prepare?

Zealandia

Our annual report preparation is a continuous well-planned process throughout the year.We always aim to answer the following key questions in our annual report: What impact have we made? Why it matters? What benefits achieved? What are the next steps?

Bellyful

We collate photos, recipient feedback and stories, and sponsor details throughout the year. The financial statement is then prepared with the narrative written in the three months following the end of our financial year.

We have a small team of both volunteers and paid members who contribute to the report: one person each for design, finance, and narrative and a couple of eagle-eyed reviewers.

Empowered Learning Trust

We are preparing every day as we work and record our client contacts, prepare for monthly board meetings, and record minutes of all our decisions. Early in the year this information is collated as an "Update to Funders" document which is used to keep our funding supporters aware of where we are at, and also is used for accountability purposes with funders. This report is updated as we go through the year and becomes the core of the Annual Performance Report.

We work as a team to gather and report the most accurate information we can. Our board treasurer is responsible for gathering all the invoices each month and preparing a financial report for board meetings, while the Screening Project Manager is responsible for coding the transactions on Xero. Together with the Treasurer and the Screening Project Manager ensure the financial information in the Annual Performance Report is accurate and BDO Rotorua analyse and audit that information. Very much a team effort!

What are the main challenges you've encountered with reporting and how have you dealt with these?

Bellyful

We had some great action photos of our volunteers at 'Cookathons' and of families receiving meals – but we did not know if we had consent to use the photos. We now have a media consent form and aim to get this signed and saved before we use a photo.

Empowered Learning Trust

It takes time to record and report, and we are fortunate that we have some staff that are paid to carry out portions for these tasks. We are incredibly grateful for the time that volunteers give to help with the rest.

Student screening at Empowered Learning Trust

Are there any other tips/advice, not yet mentioned, that you have for other charities when it comes to good reporting practices?

Bellyful

The first report is the hardest – once you have a good template in place, then you can re-use the framework from year to year. We want to thank our partner One Percent Collective who helped us, and other partner charities, with our template the first year.

Empowered Learning Trust

If you ask for help from people in the accounting or law professions, they are often more than happy to help you set up good structures and procedures. Other charities are also happy to share their experiences too. Also, CommunityNet Aotearoa has some great resources on finances, governance and administration that are most helpful to adapt to your own situation. Shoulder tapping good people to work with you on your board is also really helpful.

Further resources

There are a range of resources on Charities Services website to help charities with their reporting including informative blogs; examples, templates and tutorials for Tier 3 and Tier 4 charities; and helpful webinars that walk you through the different types of reports.

NEWS OF INTEREST

Charity Reporting Awards 2019

The winners and highly commended in the 2019 New Zealand Charity Reporting Awards were recently presented with their awards at an event in Wellington.

Congratulations to all award winners: The Electrical Training Company Limited New Zealand and Red Cross Incorporated (Tier 1); Zealandia (Karori Sanctuary Trust) and Museum of Transport and Technology (Tier 2); Bellyful New Zealand Trust and Storytime Foundation Trust Board (Tier 3); and Empowered Learning Trust (Tier 4).

The awards, organised by Chartered Accountants Australia and New Zealand (CA ANZ), recognise best practice among registered charities in adopting financial reporting standards which give greater transparency and consistency among charities.

Entries are judged on the effectiveness of their communication, their innovation, compliance with standards and overall presentation. Julia Fink, Chartered Accountants Australia and New Zealand Regional Councillor praised the quality of award entries: “Overall, the winning charities stood out because they used their reporting as a means to communicate with their readers and laid out their activities in a compelling and easy to read fashion.”

The winner in each tier of the awards will receive $1000, and the highly commended will receive $500.

You can view the winning and commended reports on our website.

Streamlining registration: Common issues in applications

The majority of organisations that submit an application for registration are registered without Charities Services needing to contact the group. However some applications are delayed when organisations make small errors in their application.

Find out what these errors are and how to fix them in our March blog.

UPCOMING EVENTS

If you have other interesting events that you think will support or build capability in the sector, let us know and we might be able to include it in the next newsletter.

RESOURCES