Small-scale charities struggle to keep status

  • 02/09/2015
Small-scale charities struggle to keep status

By Heather du Plessis-Allan

Last week Story investigated a Putaruru charity making loads of money from dairy farming. But it's not the only big money-making enterprise that says it's a charity so doesn't pay tax.

There are two sides to the story – the big guys you probably don't even know are a charity, then the little guys being told they're not charitable enough.

Community Housing Aotearoa (CHA) is building houses for people who couldn't otherwise afford to buy their own homes.

"Tens of thousands of people who might be renting, who might live in something that's old, cold and mouldy and charging them a lot – look, they really want to have their own place," says CHA director Scott Figenshow.

It sounds laudable, but one of the charities paying for the project might not be a charity for much longer. Its status is under review. It's not looking good; a similar housing charity in Queenstown has already been deregistered.

Apparently providing a home for a family isn't work a charity should be doing.

But the housing charities aren't alone.

"There was a charity in Palmerston North that was operating a food bank," says lawyer Susan Barker. "Their registration was challenged because they couldn't prove that the people who were coming to the food bank were poor."

Ms Barker says the people regulating charities are being too harsh. They're deciding some of these organisations aren't doing enough or any public good.

She reckons of 27,000 registered charities, 5100 have been stripped of their status in the past three years. The most famous examples are Greenpeace and Family First – both of whom argued their way back.

"One in five charities are being deregistered. That is enormous because deregistration is supposed to be used only in the most extreme circumstances; it's the most extreme sanction for a charity."

Contrast that to this – the land under Huntly Power Station, the land under Waikato University, it's all owned by charity Waikato-Tainui, the iwi.

All of it has grown from a Treaty settlement 20 years ago. None of the money it makes pays tax, and that's fair according to Waikato-Tainui.

"Waikato settled for about 2 percent of the value of the loss of the tribe, and so this is one of the ways in which the credit is being repaid," says chair Rahui Papa.

Waikato-Tainui got $170 million from the Government in their Treaty settlement. The iwi has turned that into $1.2 billion-worth of assets.

Expanding is easier to do when you don't have to pay tax, and getting the charitable tax exemption was part of the Treaty settlement too.

Waikato-Tainui gives back, helping people get tertiary scholarships, hearing aids and money for the marae.

"In almost every year we distribute more than what we would've paid in tax," says Mr Papa.

If it were a tax-paying business, last year it would have stumped up $5 million. It spent $22 million on charity. The year before, tax would have been $6.3 million.

Waikato-Tainui says it will stay a charity until its people don't need help.

"It is fair, I think, until the charitable purposes for Waikato-Tainui expire, then it is fair for Waikato-Tainui to be a charity," says Mr Papa.

Both are charities, both are doing good work. So why is one not charitable enough and the other allowed to just keep on growing?