News & Insights

An additional change that comes out of the Charities Act 2005 review, but was not included in the Charities Amendment Act 2023, involves increasing the transparency on accumulated funds held by all but the smaller charities.

This will require charities with annual operating expenses over $140,000 to declare and explain any accumulated funds – whether in the form of cash, assets or other resources.

This additional reporting will capture all charities in the Tiers 1, 2, and 3 reporting categories that together represent over 96% of total assets in the sector, and 42% of all charities.

Our briefing note on the new requirement of charities to further disclose about their reserves and other accumulated funds in 2024 is available here 

There is a view that the accumulations by charities is somehow inconsistent with charitable purpose and public benefit. In this note we restate the case for charities to accumulate funds.

Key takeaways:

• Many charities will need to further report on the reason that they are holding reserves, under new changes to charities legislation and associated reporting. This will be through an enhanced Annual Return submitted to Charities Services.

• Consultation on the new form closed in November 2023, and Charities Services expects it to be released in mid-2024.

• We would encourage charities to further review their reserves policy, or if in absence of such a policy create one, to assist in articulating the rationale for accumulating and holding funds in reserve.

• The case for charities to accumulate funds to maintain financial stability, and to support delivery of their charitable purpose over the long term is well documented.

• The changes proposed do not extend to a mandatory distribution requirement (as is already required of certain kinds of charities in Australia and Canada).

Working with charitable and other for-purpose clients has been a key cornerstone of the growth and history of JBWere over its 181 years. 

To hear more about JBWere’s Philanthropic Services to private clients and purpose-led organisations to support them to have lasting positive impact, please contact John Morrow, Head of Philanthropic Services for JBWere NZ, on 021 441 087 or email him at John.Morrow@jbwere.co.nz.