Good Intentions Only The Start For Forming A Charity

Good Intentions Only The Start For Forming A Charity


As Freddy enjoyed his favourite morning tea of pikelets with jam and cream, Pebbles (his lawyer daughter) arrived and noticed that Freddy was looking particularly cheerful. 

“Pebbles, I’m so pleased to see you,” said Freddy.  “Do you remember last autumn we talked about Bill and I setting up a charity to help underprivileged young people from the city attend agricultural training courses and get work on farms”. 

“Yes,” said Pebbles. “We talked about the risks and responsibilities of being a trustee for a charity”. 

“Bill and I have decided we can handle being trustees so long as we get good legal and accounting advice and some governance training.  We are ready to register the charity but we want to be sure that it’ll be successful and really be able to help these youngsters,” said Freddy.    

“To be successful, firstly, the charity needs to have clear purpose and direction,” said Pebbles.  “Effective charities are clear about the characteristics and needs of their beneficiaries and their charitable purposes and vision.  This is information that should be included in the charity’s formal rules document and used to guide decision-making and the charity’s activities”. 

“Secondly, strong governance is essential.  Effective charities are run by a clearly identifiable group (depending on the form of entity, they may be called trustees, a management committee or directors) who make all the significant decisions for the charity.  They must have the right balance of skills and expertise, and understand their own and the charity’s responsibilities and obligations.  This group is responsible for ensuring that the charity carries out its work to achieve its charitable purposes”. 

“Thirdly, a successful charity will have the right people for its activities.  An effective charity ensures that its people have the right qualities and competence to manage and support the delivery of its services.  You will need people who understand the practical and the business sides to farming, education and how to motivate young people to be high achievers”. 

“Fourthly, a successful charity makes sound and prudent decisions.  An effective charity clearly operates in line with its rules document and can identify the financial and other resources needed to achieve its purposes.  It can obtain, control and manage those resources to achieve the best possible value from those resources,” said Pebbles. 

“That makes sense,” said Freddy.  “Bill and I are clear on the purpose and direction for our charity but I’m a bit worried that Bill and I don’t have the skills to write the rules ourselves”.    

“That’s where a specialist governance lawyer can help you Dad,” said Pebbles.  “It is essential that your charity has clear and easily understood rules that give good guidance for decision-making”. 

“You should also be aware that new reporting standards come into effect on 1 April 2015 for all registered charities,” said Pebbles.  “These new standards will provide greater consistency and transparency across the charitable sector and bring New Zealand registered charities in line with international standards. 

“Charity Services is running seminars about the new reporting standards,” said Pebbles.  “I suggest that you and Bill attend.  If you go to https://www.charities.govt.nz/news-and-events/events/view/new-reporting-standards-seminars-14th-to-23rd-october-nationwide you can find out when a seminar is running in New Plymouth.  If you can’t make it to the live seminar, there is a webinar that you can watch.”

“Gee Pebbles,” said Freddy.  “Bill and I thought we had everything sorted to register our charity but, as always, you have given us food for more thought.  I’ll just have some more pikelets and then register Bill and I for the seminar”.  

The content of this document is necessarily general and readers should seek specific advice on particular matters and not rely solely on this document. 

If you would like more information on any of the topics in this document, please contact your usual Auld Brewer Mazengarb & McEwen adviser. 

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Marie Callander