The various types of nonprofits in New Zealand are known to complement government services. Hence, community funding is majorly carried out through grants from states and subsidies.
Social and workplace reform in New Zealand began in the late 1930s to the early 1980s. Also during this period, there was an expansion of the nation’s social security system. The 1980s and 1990s reformation of the public sector impacted the relationship between nonprofits and the government. This largely resulted in an increase in government funding to the sector.
We will examine the various types of nonprofits in New Zealand and their roles in society.
- New Zealand has over 114,000 NGOs in the country
- The country has one of the largest nonprofit sectors globally with a $20 billion annual revenue
- 45% of these nonprofits undertake arts, sporting and cultural activities
What are the types of nonprofits in New Zealand?
The forms of nonprofits recognized in New Zealand comprise;
1. Registered Charitable Trusts: these types of nonprofits are incorporated under the Charitable Trusts Act. Charitable trusts provide a group of people with a single identity. Hence, the trust board has the right to hold property as well as sue and be sued. The board also possess a common seal to be used for important contracts.
For a charitable trust to be incorporated, it must exist to promote religion, education, poverty relief, or other beneficial purposes to the community.
2. Unincorporated groups: these types of nonprofits are not separate legal entities. Hence, members may be mandated to take responsibility for the group’s debts. Unincorporated groups are not suitable for organizations that employ staff or obtain external funding. This is largely due to its informal structure as well as its limited rules and restrictions.
3. Incorporated societies: these types of nonprofits are membership-based organizations registered under the Incorporated Societies Act. These organizations are established to undertake lawful objectives other than making profits.
To become an incorporated body, an organization must register under the Act. This gives the society a legal identity distinct from its member’s identity. For incorporated societies, members do not take responsibility for the organization’s debts.
4. Provident Societies: these organizations are registered under the Industrial and Provident Societies Act. A provident society is established to carry on a trade, business or industry. These types of nonprofits are established for groups who intend to work together to make profits for their members. Providential societies largely constitute owners of small businesses that also operate independently. They however come together as a corporate entity to satisfy mutual benefits.
These organizations are also required to provide some form of benefit to the community.
What legal framework governs nonprofits in New Zealand?
NGOs in New Zealand can also be referred to as non-profit, not-for-profit or registered charities. However, the nation’s law only specifies the objectives of a registered charity.
Likewise, New Zealand has no national association that regulates the various nonprofits. Requirements for NGO registration will largely be based on the legal form decided upon by the organizations. Afterwards, a unique number is assigned to the association upon registration.
Also, an incorporated charitable trust board, company or society must register with the Companies Office. Upon registration, nonprofits are required to pay tax at the company rate. Unincorporated entities on the other hand can pay tax at the individual tax rate.
Individuals or organizations who intend to keep business income tax exemptions are mandated to be registered with Charities Services. The tax exemption status is only for business income employed for charitable objectives in the country.
How many nonprofits are in New Zealand?
According to the Institute of Directors, New Zealand has over 114,000 NGOs in the country. 45% of these nonprofits undertake arts, sporting and cultural activities. This is followed by social service organizations with over 12 per cent.
About 15% of NGOs are incorporated as charitable trusts and 22% comprise incorporated societies.
Several nonprofits in New Zealand largely rely on volunteer labour. Volunteers in 2018 contributed 159 million hours of voluntary work. Salary and wage earners on the other hand comprise 150,630 staff.
New Zealand has one of the largest nonprofit sectors globally with a $20 billion annual revenue.
Conclusion
New Zealand’s economic growth can be attributed to the contribution of the various types of nonprofits. This also includes voluntary contributions by citizens. NGOs in the country are also known for their close links with communities making them a critical part of society. Their partnership with the government has also helped in providing funding to meet the needs of societies as well as the nation at large.
However, the absence of a national association poses a challenge in determining the development of each nonprofit in the country. This must be addressed for the sector to accurately account for the activities of NGOs and their national impact.
If you enjoyed reading this article, please share your comments and suggestions with us at the bottom of the posts.