Submissions

2nd June 2004

Submission to Charities Bill

Rural Women New Zealand oppose the imposition of the Charities Bill on Voluntary and Charitable organisations in relation to the following aspects of the bill:

• financial reporting requirements
• establishment of the Charities Commission as a monitoring body
• education
  

The Charities Bill represents increased compliance costs on organisations that generally do not receive any government funding and deliver services to the public that the government does not.

Financial Reporting Requirements
Imposing financial responsibility clauses mean that charities will need to become as financially apt at reporting and reporting standards as multi national corporations. This is impractical for a poorly equipped sector that ranges from sports clubs to larger health based organisations. Some health organisations are delivering essential services, such as Plunket and homebased care for accident and highneeds health clients. The charities are delivering services at low cost because of the voluntary and low cost nature of the charity. Private enterprise does not provide such services as there is no profit margin.

The ‘Tax and charities’ document released by Hon Dr Michael Cullen, Hon Paul Swain and John Wright MP appears to be the basis behind the imposition of the financial aspects of the Charities Bill. However, there is a series of misinformation in that document. For example on Page 31 paragraph 6.2 under Accounting there is a statement that ‘no accounting standards applies to the preparation of accounts’ in regards to charities. As a charitable organisation RWNZ has always complied with Financial Accounting Reporting Standards and is audited against the same each financial year.

As a charity that is a health provider for rural and an organisation lobbying for rural access to education, health and social services, there are no benefits to RWNZ in consolidation of accounts as per corporate accounts. The only benefits would be to accounting firms. RWNZ audit and accounting fees would cost in excess of $450,000, than that currently paid, to have full compliance to the Financial Reporting Act. Extra costs for which there is insufficient working capital to cover.
Currently the IRD monitor both the approval and registering process and have the expertise and records to substantiate an organisation’s charitable status. Why put the onus on the Charity to reprove the status through payments to private accounting firms who in turn have a profit motive.

Charities Commission
The Charities Commission under the Charities bill would simply be a monitoring body under the proposal to direct government policy. The overall function of the commission will not assist but impose compliance costs on the sector that provides essential services not met by government. Unless there is a proposal for the commission to be overtly supportive of Charities then the function to transfer processes from the IRD to the Charities Commission would seem unnecessary and a waste of charitable funds.
On the point of the Commission providing advice to government, RWNZ would submit that with a large number of diverse charities from sport to health providers, it is more appropriate to have direct contact between the charity and the relevant ministry. Isolating charities into contact with one body removes their ability to work with services that are provided from the private sector. For example Plunket working with private midwives through the relevant association. The resources of the average charity to be heard at industry level could be lost through another layer of bureaucracy and compliance costs.

Education
Whilst there is no government education program for charities RWNZ believes that there are adequate programmes run by the New Zealand Federation of Voluntary Workers Organisation and private training organisations to cater for the needs of charities. Charities do not have a profit motive and therefore the sector decides on the relevant education it deems as appropriate. There are many diverse NGO and Charities to meet the cultural, economic and social needs within New Zealand, therefore no one training organisation could accommodate all education needs. RWNZ would also maintain that the sector itself is more in touch with their needs than the Government, which has little interface with the sector.

Summary
Rural Women New Zealand would like to note that Charities and Non-government entities function with scarce resources and in many cases on a voluntary basis. To impose further legislative compliance would prevent the sector from functioning and therefore providing essential services to the New Zealand public.
The Ministry of Social Development implemented a unit to interface with the sector back in September 2003. Surely it is appropriate to establish a network and understand the sector before imposition of legislative requirements.