Follow New Zealand’s lead on charities commission

Around the same time Australia was creating a brand new federal regulator for charities, New Zealand was getting rid of theirs. Just six months before the Australian Charities and Not-for-Profits Commission (ACNC) was launched by the Gillard government in December 2012, the Key government abolished the New Zealand Charities Commission and gave its regulatory responsibilities to the Department of Internal Affairs.

The New Zealand commission had been established in 2005 with essentially the same mission and the same bureaucratic powers as the ACNC – in fact, it was one of the models used in designing the ACNC. The commission's main task was creating and policing a national register of charities, to ensure that all listed groups qualified for charitable status and to catch any groups engaged in fraud or wrongdoing.

But after seven years, there was no evidence that the not-for-profit sector was better regulated under the Charities Commission than it had been under Inland Revenue, and in the year since Internal Affairs has assumed responsibility for regulating charities, there has been no evidence that the sector has gotten any worse. The only difference is that, with the commission abolished, New Zealand taxpayers will save more than $2 million over four years.

During the Charities Commission's existence, fewer than 30 organisations were removed from the charities register after investigation by the commission. Of these, only three were removed for serious fraud or wrongdoing – less than one organisation per year.

The other 90 per cent of these deregistrations were based on subtle disputes over whether a group's mission truly fell under the legal definition of 'charitable.' Among the groups deregistered in this way were such venerable organisations as the New Zealand National Council for Women, Business Mentors NZ (the country's largest not-for-profit mentoring organisation), and even a district branch of the Rotary Club.

None of these groups had engaged in any misbehaviour, but they were nevertheless forced to wage costly and protracted legal battles to regain their charitable status by persuading the courts to overturn the commission's decision. When the National Council for Women won its court case earlier in 2013, three years after being deregistered, their attorney commented: 'The limited resources of the charities regulator would be better directed to monitoring charities that are doing things "wrong" than on deregistering good charities like NCWNZ on fine, technical, and interpretive points of law that, as we have seen, can quite easily be decided the other way.'

The New Zealand Charities Commission proved to be superfluous at best and a nuisance at worst, and it is unlikely that its cousin the ACNC will improve on this record.

As the new Coalition government considers whether to follow through on its election promise to abolish the ACNC, it should keep in mind New Zealand's discovery that a federal charity regulator does not provide value for money. Having already repeated New Zealand's mistake, we should be just as quick to follow them in correcting it.

Helen Rittelmeyer is an intern at The Centre for Independent Studies.