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Tuesday 13 October 2015

Comment: (Not Sweet At All) Charity

Posted in: Comment
By Politics and religion commentator Craig Young - 13th September 2014

As sometimes happens, the New Zealand Supreme Court has overturned a string of decisions at lower jurisdictions; in this case, related to Greenpeace and its exclusion from the Charities Act 2004, which governs access to registered charitable group status in New Zealand. As Family First was also excluded, what does this now mean?

When it initially deregistered Family First, the Charities Registration Board released Decision D 2013-1/CC42358 online. In it, the CRB noted that the role of providing specific points of view about family models was not a charitable purpose in itself, given that Family First’s declared objective is to procure particular government actions in ‘defence’ of its prescribed ‘preferable’ family structure.

Indeed, when it applied for initial charitable status on March 26, 2006, it was known as the Family First Lobby and switched to its current name, Family First New Zealand, in November 2006.

Family First is an explicitly conservative Christian organisation, as noted within its “statement of faith.” The Charities Registration Board conceded that Family First had been thorough and diligent with its financial statements (2008-2012), information about its activities when requested (2008-9) and provision of information related to its initial application for charitable status. Given that Bob McCoskrie has tertiary qualifications in taxation and accountancy, no wonder.

Nevertheless, on September 11 2012, the Board concluded that Family First did not meet the criteria for charitable status as specified within the Charities Act 2005 and Commonwealth charitable status case law from New Zealand, Canada and England. It met with it to discuss matters related to its pending deregistration on October 31, 2012. In its defence, Family First’s QC argued that its objectives are consonant with the United Nations Rights of the Child Convention and the establishment criteria of the Families Commission.

The Board then stated its prerogative under the Charities Act 2005 to examine the activities of particular registered charities (Section 50A) and conduct inquiries into their activities (Section 18(3)(a)(i),(ii)). It was within its statutory responsibilities to deregister such organisations if they did not meet the criteria established within the act for such organisations (Section 32(1)(a)) if it had determined that there was no public interest activity within the organisation’s activities (Section 35(1)(a)). Moreover, it could also act if it established that income was not exclusively used for charitable purposes as defined within the act (Section 13(1)(a).)

If an organisation is primarily engaged in service provision and has an advocacy role as its secondary or ancillary purpose, then that is permissible (Section 5(3).) However, activities should not be purposes in themselves, nor should an organisation have unstated charitable objectives. In Family First’s case, the objectives stated were advancement of “religion,”, “education”, “research”, publishing reports and debate, intended to provide a particular point of view about family structures and bioethical issues, and procure specific government policies. Thus, the CRB found that this political and non-charitable purpose was primary and not secondary. In reaching this decision, the CRB drew on past New Zealand, English and Canadian Commonwealth case law about the legitimate parameters of charitable status entitlements.

However, that has been the subject of continued controversy, based as it was on the earlier exclusion of Greenpeace from analogous charitable status coverage for identical reasons to those cited above in the Family First case. Greenpeace didn't accept that judgement and fought the decision up to the New Zealand Supreme Court. It was also repeatedly debeated within the New Zealand Law Journal, especially in its April 2013 and April 2014 'charity issues' which dealt with existing New Zealand law related to charitable organisations and the legislation that governs them.

It isn’t only Family First (and Exodus Ministries New Zealand earlier) that have fallen afoul of the Charities Regulation Board (formerly the Charities Commission before the Charities Amendment Act 2012). Other organisations, such as the venerable National Council of Women and environmental lobbyists Greenpeace have also faced deregistration over perceived regulatory clashes between a primary charitable focus and (illegitimate) primary focus on political activity and lobbying.

Happily, in the case of the National Council of Women, diligent work by lawyer Sue Barker undid its earlier deregistration in 2010, and its charitable status was recently restored. In its Circular newsletter, Barker noted that the Charities Commission/Regulation Board may have taken an overly “narrow” approach in this context, and argues that the current Charities Regulation Board procedures should be buttressed by a practical and effective reviewe process and an independent charities review tribunal to counter potentially “unjust” and onerous decisions. She also recommends test case and reference procedures and public good funding decisions. Moreover, the CRB should focus on charities that are doing things ‘wrong’ rather than deregistering charities through interpretative and technical points of law, as occurred with the National Council of Women.

In its April 2013 issue, the New Zealand Law Journal also approached this question. In an editorial, the journal referred to the importance of pluralism, active citizenship and social participation as well as the risk of muted dissent through regulation and litigation. As Matthew Gousmett notes in a further article, Section 38 of the Charities Act 2005 sets forth some broad parameters for legitimate charitable status, such as poverty relief, educational assistance, criminal rehabilitation and housing, religious and ethical education, library provision, sporting activity, fire insurance, rewards for virtuous civic conduct and building maintenance. Section 50 of the Charities Act 2005 enables the Chief Executives of the Department of Internal Affairs and Charities Regulation Board to examine and investigate charities for compliance with the act’s specified objectives.

One of the more controversial recent Charities Commission decisions has been the inapplicability of charitable status in the context of Greenpeace. Helen Dervan puts this in international and legal context through references to controversies about “politicisation” of charitable activity in the United Kingdom. These have included venerable organisations such as the Save the Children Fund and feminist Fawcett Society. In our own context, Greenpeace was declined charitable status, given that it is a campaigning environmental organisation, with a strongly encouraged focus on political activism on its website and other publications, constituting an independent non-charitable purpose, as well as possibly illegal conduct.

Greenpeace was dissatisfied with the Charities Commission and took the issue to the High Court and Court of Appeal, and had a Supreme Court hearing. Greenpeace maintained that the prohibition against ‘unrelated’ political activity is onerous and should be abolished. Despite recent Australian High Court case law to that effect, the New Zealand High Court and Court of Appeal refused to follow that case, and the New Zealand Court of Appeal noted that there was no abolition of barriers to advocacy as a primary ‘charitable’ activity within the current statute (or for that matter, within the Charities Amendment Act 2012 later). The Court of Appeal concluded that there was a valid distinction between advocacy that was contingent to a legitimate charity’s primary charitable activities, and non-charitable primary lobbying activity that was not. At present, unless the New Zealand Supreme Court finds otherwise, that is the current status of New Zealand charitable case law and what defines charitable activity in our own national context. It’ll be interesting to see what this means for Family First if they decide to appeal their deregistration to the High Court and further afield.

Earlier this year, the New Zealand Law Journal (April 2014) re-examined the issue in its annual charities issues. Charity law expert Sue Barker noted that since 2007, 3902 charities have been deregistered. Of these, nearly 2500 were deregistered for not filing an annual return, which may or may not indicate financial irregularities. According to Greenpeace of New Zealand v Charities Board [2013], Supreme Court Chief Justice Sian Elias provided a concise if perhaps overly narrow (?) definition of what constitutes a ‘charity’- to paraphrase her reference, it refers to an organisation that assumes responsibility and provision of services that might otherwise fall on the general public. Appropriate financial management is important, she acknowledges, but does it necessarily always imply good governance, and does overregulation of the charitable sector impair the Charities Registration Board from properly investigating outright fraud and criminality?

Charities were originally ‘supposed’ to ‘only’ be deregistered under only the most ‘extreme circumstances.’ As Sue Barker notes in her analysis of Charities Commission/CRB deregistrations, out of 3902 deregistered charities, 1410 didn’t meet registration requirements, didn’t produce evidence of charitable purposes or engaged in non-charitable purposes, which is supposedly why Family First was deregistered in 2013, although like Greenpeace, it is contesting that deregistration in court. Barker notes that (legitimate) charities often struggle to survive deregistration, challenge CRB decisions, secure alternative funding sources, issues of subsequent confidence and credibility related to their activities. Barker also argues that the CRB arguably expends financial resources on denial of registration to ‘good’ charities like the National Council of Women, which then waged a spirited campaign to overturn the then-Charities Commission initial decision in 2010 and then regained reregistration. Again, Barker accepts the propriety of deregistration of certain circumstances but is worried about alleged CRB excesses (such as the aforementioned National Council of Women deregistration), which provides little time for legitimate charities to find alternative funding or initiate legal proceedings. Is this an effective use of charitable resources, as noted in Section 3(b) of the Charities Act, she asks.

I will make no further comments about whether or not certain conservative Christian pressure groups do meet the criteria of “charitable organisation’ under the criteria that Barker and Chief Justice Elias have presented. Do many New Zealand Christian Right organisations actually still receive grassroots funds from everyday ‘concerned citizens’ (sic), or are they actually little more than local satrapies of malignant US Christian Right organisations, disgorging their cravenly and slavishly copied propaganda, tactics and strategies from their overseas parents? And if so, do these shadows and foils for interfering overseas far right pressure groups deserve the entitlements of charitable status? Some are obviously not financially struggling.

And there, the matter remained, until the New Zealand Supreme Court's recent about-face last week. On August 6, the Supreme Court has ruled charities can engage in political activities, allowing Greenpeace’s appeal. The incorporated society's application to be included on the Charities Register was declined in 2010. Following several lengthy judicial hearings, however, the Supreme Court has now ruled that Greenpeace can apply for reinstatement, which will bring financial benefits. (see the judgment and media statement link below) In a judgment released this afternoon, a Supreme Court majority comprising Chief Justice Sian Elias, Justice John McGrath and Justice Susan Glazebrook said the rule of exclusion for those with a political purpose should no longer be applied in New Zealand. However, a minority, Justice William Young and Justice Terence Arnold, said the court should not differ from the plain language used in the Charities Act. They said the rule that political advocacy is not charitable is defensible not only on the basis of the authorities but also as a matter of policy and practicality. Given their opposition to Greenpeace's environmental protest activities, many business commentators are unhappy about the new turn of events.

Sue Barker commented in the same publication that hundreds of trusts, foundations and lobby groups would be affected by the Supreme Court's decision. It may mean that the Sensible Sentencing Trust and Family First can reapply for charitable status as lobby groups as well. Family First has said that it has instructed its lawyers to apply to the Charities Registration Board to either drop the deregistration of Family First under the new interpretation of the Charities Act 2004, or else bring its own High Court hearing forward after the Greenpeace verdict in the Suprme Court. She supported the decision as she said it had had a 'chilling effect' on charitable freedom of expression and the context of their service provision within the current political environment.

Will the situation stay this way? On Radio New Zealand, current Internal Affairs Minister Peter Dunne said he had problems with the outcome and its unbracketing of political activity compared with charitable status and that perhaps the Charities Act 2004 needed to be 'revisited' and amended after the election.

Sue Barker: “National Council of Women wins back charitable status” Circular 562 (May/Haratua 2013): 1
“Editorial: Charity and Civil Society” New Zealand Law Journal (April 2013): 1
Helen Darven: “Charities Political Activity” New Zealand Law Journal (April 2013): 113-116.
Michael Gousmett: “Examinations and Inquiries into Charities” New Zealand Law Journal (April 2013): 97-100, 106.
Susan Barker: “Deregistered charities” New Zealand Law Journal: April 2014: 87-89
Cherie Yang, Rowena Sinclair and Keith Hooper: “Great Expectations” New Zealand Law Journal: April 2014: 103-105
Editorial: “Uncharitable attitudes to charity” New Zealand Law Journal: April 2014: 81.
Victoria Young: "Top court rules Greenpeace can register as a charity" National Business Review: 06.08.2014:
Victoria Young: "Hundreds affected by Supreme Court turn on Greenpeace-Lawyer" National Business Review: 06.08.2014:

Alex Ashton: "Lobbyists to seek charity status" Radio New Zealand: 07.08.2014:

Case Law:

Re: Greenpeace Inc [2011] 2 New Zealand Law Reports 815
Re: Greenpeace New Zealand Inc [2012] New Zealand Court of Appeal 533
Molloy v Commissioner of Inland Revenue [1981] 1 NZLR 688
Human Life International in Canada v Minister of National Revenue [1998] 3 FC 202

Aid/Watch v Federal Commissioner of Taxation [2010] High Court of Australia 42

Politics and religion commentator Craig Young - 13th September 2014

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