Charities review too limited – but an opportunity to raise governance standards

New Zealand has significantly more charities per capita than other Commonwealth countries such as Australia and Canada, and the sector is characterised by intense competition for limited funding, increasing workload obligations and difficulty in attracting and retaining board members and staff.

There are over 27,000 charities in New Zealand with total assets of $58 billion that spend about $17 billion annually and are supported by 230,000 volunteers and 180,000 paid staff.

The Department of Internal Affairs is undertaking a review of the Charities Act 2005 and Institute of Directors Chief Executive Kirsten Patterson says the IoD would like to see a more comprehensive review undertaken by the Law Commission, which other stakeholders in the sector have also called for.

“We don’t think the current review goes far enough.”

The Institute of Directors (IoD) has called for a voluntary governance code for charities in its submission this week to Internal Affairs.

Kirsten Patterson says the review is an opportunity to help raise standards of governance in charities.

“It will be important to get the balance right so that people are not deterred from leading charities, and charities are not over-burdened with compliance.

Unlike many countries including Australia, South Africa, Ireland, Scotland, England and Wales, New Zealand doesn’t have a specific code or governance standards for charities.

Kirsten Patterson says a voluntary governance code would provide flexibility and guidance.

“Charities that adhere to the code would benefit from improved governance and recognition from stakeholders, including funders.”

A new code could provide guidance for board leadership, culture, risk management and stakeholder engagement.

The IoD has highlighted in its submission that modernising the Act should also take into account the wider not-for-profit reforms in New Zealand, including the incorporated societies and education reforms, to ensure there is cohesion across the not-for-profit sector.

About 51% of IoD members are involved in the governance of not-for-profits.

Read the IoD’s full submission to the Department of Internal Affairs.

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