Understandability and Transparency of the Financial Statements of ...

needs to ensure that charities are not registered with similar names, to limit confusion
between similar sounding charities. This may not be easily achieved as the Charities
Commission‟s focus when registering charity is on whether the proposed charity meets
their charitable purpose, rather than whether there are already charities that have similar
names. The issue of the profusion of charities with similar causes will be addressed in
Chapter Eight (section 8.4.5).
The narrow focus of New Zealand‟s definition of charitable purpose needs to be
reconsidered, particularly the explicit exclusion of „advocacy‟. Some interviewees have
argued that advocacy is an essential part of charity‟s role in society. This has been
acknowledged in England and Wales by the inclusion in their Charities Act 2006
definition of charitable purpose, of advocacy, in section 2(h) “The advancement of
human rights, conflict resolution or reconciliation or the promotion of religious or
racial harmony or equality and diversity.” Trevor Garrett, the Chief Executive Office of
the Charities Commission, has advised charities to consider splitting their organisations
into two and putting the „non-charitable‟ advocacy work into a separate unregistered
organisation (Collins, 2010a). This does not address the crux of the problem, i.e. that
advocacy should be part of the charitable purpose, not excluded.
Another issue identified in this research was the registering of charities with very
similar names. This issue needs to be considered by the New Zealand Charities
Commission when they next review the registration of charities. Another aspect of
charities registration, that of too many charities for the same causes, will be addressed
later in Chapter Eight (section 8.4.5). Another legal aspect of charities is its legal
structure, which will be examined next.
7.2.2 Legal structure
As detailed in Chapter Two, New Zealand has no prescribed legal structure for charities.
Thus a variety of structures is seen. As shown in Chapter Two charitable trusts
constitute 45% of registered charities as at February 2010 compared with limited
liability companies (30%) and incorporated societies (25%). The reason behind
choosing a particular legal structure is not always understood, especially with regards to
a limited liability company, as can be seen by the following case.
On the face of it a company with shareholders, rather than beneficiaries, does not appear
to be an appropriate vehicle for a charity. To determine who shareholders are an
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