National Library of New Zealand
Harvested by the National Library of New Zealand on: Jul 3 2006 at 4:42:47 GMT
Search boxes and external links may not function. Having trouble viewing this page? Click here
Close Minimize Help
Wayback Machine

New Zealand Department of Internal Affairs : Resource material : SECTION B1: Setting Up A Community Group - 
Introduction Skip to Access Key assignments for this site
Skip to the content of this page
Skip to other pages in this section
Skip to site wide navigation
Skip to links for help with this site
Logo of the New Zealand Department of Internal Affairs

Home

Services

About us

What's new

Legal

Forms

Resources

Other pages in this section

Community Development Resource Kit

SECTION A: Community Development Practice

SECTION B1: Setting Up A Community Group - Introduction

SECTION B2: Setting Up A Community Group - Legal Structures

SECTION B3: Setting Up a Community Group - Incorporated Societies

SECTION B4: Setting Up a Community Group - Charitable Trusts

SECTION C: Planning and Managing

SECTION D1: Employment Matters - Agreements

SECTION D3: Employment Matters - Support

SECTION D2: Employment Matters - Recruitment

SECTION E: Running Meetings

SECTION F: Project Management

SECTION G: Financial Management

SECTION H: Funding

SECTION I: Keeping Good Records

SECTION J: Technology - The Internet

SECTION K: Political Processes and Submissions

SECTION L: Legislation

Return to top of page Content area

SECTION B1: Setting Up A Community Group - Introduction




Getting Started

Most projects start off as someone’s (or a group’s) bright idea for dealing with a particular issue in the community. The individual or group sees a need, or finds out that something they want is not available, or discovers that resources are available that could be used by the community.


Consulting and Researching

The first step is to consult.
  • Check out the idea with friends and relations; people in the community, anyone who might be affected by a project arising from the idea
  • ask them whether there is really a need; whether the idea will work; whether there is a better way of filling the need, and how to get started
  • listen to, and take into account, differing and opposing views.
If you decide to go ahead with the idea, decide on the size of the group, and bring together people who:
  • think the idea is a good one
  • are prepared to make a commitment to the project by putting in time and energy
  • know something about getting the proposed project underway
  • could contribute in a useful way to the project
  • might be affected in some way by the project
  • are willing to be part of a planning group

Consult and research some more: further clarify the need for the project with likely participants, helpers, people with knowledge and skills and people who may be affected by it. Explore questions such as:
  • How easy is it to understand the project?
  • Is it an ongoing commitment, or is it one-off, with a beginning, a middle and an end?
  • Who is the target group? Those in need? Those at risk? Those who will make an effort to use and benefit from the project?
  • How much time and effort will it need?
  • How many volunteers will be needed? How many paid workers?
  • How much money will be needed? Where could it come from?
  • Is the project confined to one space, or spread over a wide area?
  • Does it involve one group of people (such as a youth club), lots of different groups (a community centre), or is the whole community likely to be involved (a CAB).
  • Has something been done like this before? (Could information and advice be obtained from those who were involved?) Or is this a first for this kind of project? If a similar project has been carried out before, what has worked and what has not worked?

Researching

At this time it will also be important to collect some statistics: for example,

  • how great the need is (as measured by e.g. the number of enquiries in a month)
  • whether there has there been any recent change in the number of enquiries, e.g. between six months ago and now
  • information on the people who may use the service (demographic information), e.g. age-range, gender, ethnicity.

Outlining the Work

Once the research is completed then it is important to get the details of the project down on paper.
Write statements outlining:
  • the purpose of the group (state the overall aim or goal of the group and what the group wants to do about any need or opportunity it sees);
  • the objectives the group wants to achieve (these are specific statements about what it intends to do, the changes it wants to make, and the opportunities it wants to provide). Each objective should include a way of measuring how well it has met the objective;
  • how the project will be organised and the programme activities that it will offer;
  • how the group will be managed (e.g. collective or board, paid staff or volunteers?);
  • what policies and systems will need to be put in place (Will it need a legal entity?);
  • where it will it based (What physical resources will it need?) and
  • how much money will be needed, and for what. (What publicity will be needed?)

Making Plans

Once you have identified the need and set up an organisation or programme to meet it, you should begin your longer-term planning (setting goals), and also further develop the shorter-term plans (objectives). Planning can be divided into sections depending on the service the group is offering (refer to Section C: Planning).

You may include:
  • an operations plan (this will set out what is needed to get going e.g. equipment, people, funding);
  • a management plan: who will do what and by when;
  • a marketing plan: how the group will reach its market (i.e. its participants and users);
  • a financial plan: how much money is needed and where it will come from; and
  • an administration plan: how the service will work and how records will be kept.

Remember: whatever the size of your group, it is important that you plan: failing to plan is planning to fail.

Monitoring and Evaluation

It is important to monitor the work being done. Monitoring involves setting up regular checks in the plans that are made so you know where the group is going with such things as income and spending, client numbers, and time spent in each part of its work. It can also include measures by which you determine how well it is meeting its objectives. Monitoring uses information already at hand or easily obtainable. It takes a minimal amount of time, helps you learn from experience and tells you where the fine-tuning should be (e.g. objectives might have to be modified, or resources spread slightly differently).

You should also evaluate your operation on a regular basis. Evaluation looks at
  • who has done what
  • to, for or with whom
  • with what result
  • at what cost
It examines the goals and the objectives of the group, and offers a comprehensive assessment of its performance. Evaluation can be carried out internally or by an external evaluator.

The Need For Written Rules

Your rules, trust deed, letter of agreement or constitution is the founding document of your group and outlines the boundaries within which the group will work. This helps ensure everyone knows how things should operate and there are no surprises. Well-written rules are working tools that groups can use to clarify what should happen in the group. They will specify membership, meetings, the role of members, and the range of work the group can undertake.

Members can refer to the rules if they are unclear about an aspect of what the group does or the processes it uses to carry out its work. For example, the group can go back to the rules when it wants to clarify:
  • when financial statements should be circulated and to whom
  • who should be able to attend the meetings and who can vote at them
  • rules about confidentiality
  • the boundaries within which people are required to operate on behalf of the group.

They can also ensure that the group is accountable to its clients, partners and funders.

Written rules that meet the needs of the group do not have to be complicated. A group can write them itself to ensure members can understand the documents and relate to them in a practical way. If the sample rules in sections B3 and B4 seem to be too long for your group and you are not sure how you can shorten them, obtain advice from a law centre, or someone with experience in drafting rules.

Generally, it is advisable to ensure that your constitution or deed only deals with issues of governance – who has the fundamental power to do what. There will also be numerous matters of policy, how you will operate, and procedural rules however these can be best dealt with in a separate document, which could be a policy digest, procedural manual, or standing orders etc.

Tax Status

Regardless of whether your group adopts a formal legal structure, you may have tax obligations for any income received or expenses paid. Inland Revenue has a number of publications that provide comprehensive information about these issues. IR254 outlines the various tax exemptions available to groups and explains how various income and expenditure should be dealt with for tax purposes. IR 255 is a comprehensive guide to the tax issues for charities. IR 255 and IR 254 can be obtained by phoning 0800 377774 and IR255 can also be downloaded from http://www.ird.govt.nz/library/publications/geninfo/ir255.pdf. Inland Revenue can also be contacted on this number for assistance for groups needing to set up their financial systems.

The main tax exemptions available are as follows:

1. Charitable

  • Organisation will be exempt from all income tax but will still have to register for GST and PAYE where applicable
  • Will normally get donee status (see below)
  • Charitable objects need to be of benefit to the wider community
  • Where a group’s objects include political aims it is unlikely to obtain charitable status.
  • An object is charitable if falls within one or more of the following categories:
A. Relief of poverty: this is generally about meeting some sort of necessity of life. This would include care for the aged, the sick, the infirm, and those lacking access to housing or other basic necessities of life.

B. Advancement of religion: any activity based on a genuinely held religious belief should qualify under this provided some benefit is provided to the wider community.

C. Advancement of education: this has been broadly interpreted to include all situations involving the improvement of human knowledge and the human character through activities recognised as being specifically beneficial in those respects. This would generally include scholarship funds, programmes to educate adults in a wide range of matters as well as workbased skills training. Research activities will also be considered charitable if they improve human knowledge in the wider sense.

D. Other purposes beneficial to the community: this is not as broad as it sounds but generally includes things seen as being charitable and beneficial to trust as a whole. There are a number of specific categories that come under this including:
  • the promotion of industry and commerce;
  • promotion of safety and protection in a community;
  • things which benefit a particular geographical area such as a public park or hall;
  • relief for refugees;
  • advancement of the armed forces; and
  • environmental matters generally.

Limitations on charitable status
While all the group’s objects and activities need not be exclusively charitable, all of its primary objects must be charitable. Determining what are the primary objects is not always straightforward, however they can generally be thought of as the main reasons for which the group was established.
While these will normally be the objects outlined in the groups rules, what the group does in practice will also be important.

2. Sports promoter
  • any society for the promotion of any amateur game or sport
  • organisation will be exempt from all income tax. Will still have to register for GST and PAYE where applicable.
  • cannot get donee status

3. Other full exemptions
  • includes district improvement societies, herd and livestock promoters
  • organisation will be exempt from all income tax. Will still have to register for GST and PAYE where applicable
  • may be able to get donee status (see below)

4. Non profit
  • for any organisation unable to get one of the above exemptions provided not set up for personal benefit or profit
  • first $1,000 of taxable income tax deductible (much of income will not be taxable). Will still have to register for GST and PAYE where applicable.
  • may get donee status eg cultural group
Donee Status
  • if granted to an organisation means individuals and companies can get rebates on donations to that organisations
available if organisation has charitable benevolent, philanthropic or cultural purposes.
Legal Structures

Many small groups can operate for months or even years without having to consider the need for a formal structure and written rules. If however, your group is carrying out activites that might involve some risk or require significant levels of funding you will need to consider the different options for legal structures.

Before doing this you should have completed your planning process and be clear about your role in the community, the nature of your project and how you intend to operate. It is better to fit the legal structure around the group's activities than to fit the group's activities around the legal structure.

Choosing a Legal Structure

Your choice of legal structure will be influenced by the type of project and the role played in the community, e.g. the group may want to act as a facilitator and develop local projects; it may support other groups and projects, or it may undertake trading activities, either for itself or for the community.

A group considering becoming a legal entity should be clear about:
  • flexibility - how much flexibility it will need as its project or role develops
  • size - whether limits should be imposed on the size
  • what structure and culture of operation are desired
  • membership - who will be members and what involvement in the running of the group they will have
  • what activities the group proposes to undertake (different kinds of legal entity have different restrictions on their activities)
  • control - whether management, ownership and control should be separated. Whether there should be "outside" controls
  • funding - how much is needed (and what for)
  • accountability - how the group’s financial performance will be monitored
  • liability - who will be liable if things go wrong
  • responsibilities - e.g. staff, operating a bank account.

The main features of a formalised legal structure:
  • It has its own name.
  • It will continue, even if members change, until it is wound up.
  • It can sue or be sued in its own name.
  • It can hold assets and take out loans in its own name.
  • It creates some reporting obligations.
  • It can enter into contracts in its own name.
Some advantages of a formalised legal structure:
  • It provides a formal document setting out what the group does and how it will do it.
  • It is an advantage when you are applying for loans, grants or contracts.
  • Reduced risk of personal liability for debts, contracts and other obligations the group has agreed to.

Some disadvantages:
  • It takes time and effort to set up - time that could be spent exploring opportunities and developing projects.
  • It creates more administrative work.
  • There is an ongoing obligation to service the legal body

Collaborating With Other Groups

For some groups where the project is relatively small or short term, or where there is little time to set up a separate legal structure, collaborating with existing groups allows you to get on with projects without having to take on the costs and responsibilities.

Ideally the group you work with will have an existing legal structure and will be able to provide the sort of support your group needs. This support might include:
  • Assistance with planning and evaluating the project.
  • Handling of all monies and administration.
  • Employing staff or giving guidance and support for their employment.
  • Helping create working relationships with others in the community interested in the project including funders.
It is important to ensure both groups are clear about what each is committing to. You therefore need to have a written agreement between the groups clarifying who is responsible for what. This needs to cover:
  • An outline of what the project is to achieve and how
  • Finances and administration
  • Employment responsiblilities
  • Ownership of any assets
  • Liability for any losses and whether anyone is expected to provide a personal guarantee

Where to Find More Information

Links:
www.societies.govt.nz Click on ‘Library Information’.

Published Resources:

Risk Management: Managing Legal Risks for Voluntary Agencies
NZFVWO 175 Victoria Street PO Box 9517 Wellington
Ph 04-385-0981 Fx 04-385-3248 nzfvwo@xtra.co.nz

Law of Societies in New Zealand
2000, by Mark von Dadelszen
Published by Butterworths, PO Box 472, Wellington
ISBN 0408715545

Managing Clubs and Societies in New Zealand
1990, by Kerr Inkson
Published by David Bateman Limited, ‘Golden Heights’, 32-34 View Road, Glenfield, Auckland 10, New Zealand.
ISBN 1-86953-010-1.

Seizing the Moment II: turning community ideas into action (2nd ed, 1994)
ed. Colin Gunn
Community Work Training Advisory Board
PO Box 1149
Nelson

North Shore Council of Social Resources produce a range of written resources for community groups for further information contact: NSCSSC, PO Box 33284, Takapuna, North Shore City.NSCSS@xtra.co.nz.

Return to top of page
Links for help with this site

Site map

Search

Help

Contact us

Email us

Govt.nz

Return to top of page

Last updated: 24/06/2005