If you’ve ever sat in a committee meeting arguing over whether your group should be a trust or a society, you’re in good company. In our conversations with people setting up not-for-profit organisations, it’s clear there’s still a good deal of confusion around terms like ‘non-profit’ and ‘not for profit’ — largely because they’re used loosely and interchangeably across the sector. This article walks through the main legal structures available in New Zealand, what sets them apart, and where the law currently stands.
Choosing a legal structure for a charitable purpose
New Zealand groups pursuing a charitable or not-for-profit purpose generally choose from five structural options: an unincorporated society, an incorporated society, a charitable trust, an incorporated charitable trust board, or a limited liability company. It’s worth being clear from the outset that ‘charity’ isn’t itself a legal structure. An organisation first has to form as one of these entities, and only then can it apply to Charities Services (Department of Internal Affairs) for registration under the Charities Act 2005, provided it meets the charitable purpose and public benefit tests.
Incorporated society vs charitable trust
The comparison that comes up most often is between an incorporated society and a charitable trust (or its close cousin, the incorporated charitable trust board). It helps to think of an incorporated society as a membership organisation — much like a sports club or a residents’ association — governed democratically by an elected committee on behalf of its members. A charitable trust, by contrast, is usually run by a small group of trustees acting on behalf of a stated charitable purpose, typically without any wider membership base at all. An incorporated society can register as a charity too, so long as its purposes meet the charity test, while a trust doesn’t need to be a registered charity to have legal standing in its own right.
| Feature | Charitable Trust | Incorporated Society |
| Governing legislation | Charitable Trusts Act 1957 and Trusts Act 2019 | Incorporated Societies Act 2022 (existing societies were required to re-register by 5 April 2026) |
| Minimum people | One or more trustees (three or more is recommended, to avoid conflicts of interest) | At least 10 members (previously 15 under the 1908 Act) |
| Decision making | Trustees, in line with the trust deed | Members and committee, in line with the constitution |
| Members | None — trustees run the trust | Yes, as defined by the constitution |
| Legal identity | A basic charitable trust has no separate legal identity from its trustees; an incorporated charitable trust board does | Separate legal entity from its members |
| Liability | Trustees are generally not personally liable unless they breach the trust deed or the Trusts Act 2019 (most deeds indemnify trustees from trust assets) | Limited liability for members, unless the society operates for members’ private profit |
| Winding up | Assets must go to other charitable purposes, as set out in the trust deed | Assets are distributed according to the constitution and the Act |
| Best suited to | Groups with a small number of trustees who don’t need a broad public membership or wide funding access | Membership-based groups (clubs, associations) wanting funding access and democratic governance |
There’s also a third, incorporated option worth knowing about: the charitable trust board. This combines the trustee-led governance of a trust with a separate legal identity, meaning it survives a change of trustees and can hold property and enter contracts in its own name. And some organisations — particularly those running a trading or commercial arm — opt instead for a limited liability company, with constitutional restrictions preventing any profit distribution to shareholders. This route suits groups that want a governance model funders and commercial partners recognise, or that need directors able to offer stronger personal guarantees when borrowing.
A critical update: the Incorporated Societies re-registration deadline has passed
The Incorporated Societies Act 2022 set a firm transition deadline of 5 April 2026 for societies registered under the old 1908 Act to re-register. That deadline has now passed. Societies that didn’t complete re-registration in time were removed from the Incorporated Societies Register on 5 April 2026 and ceased to exist as incorporated societies, with any surplus assets required to be distributed to other not-for-profit entities once debts were settled. A limited grace period applied only to societies that had lodged an application before the deadline but were still awaiting a decision from the Registrar. If a society missed the deadline and hasn’t since applied for restoration, it remains legally non-existent — which, in practice, can leave committee members personally exposed for any pre-dissolution debts and obligations.
If your organisation is still working on the assumption that re-registration is something to get to later, it’s worth checking its status on the Incorporated Societies Register right away, and seeking urgent legal advice on restoration options if the window has already closed.
Defining ‘not for profit’ and ‘charitable’
New Zealand doesn’t have a single legally defined term for the nonprofit sector. Words like ‘nonprofit’, ‘not-for-profit’, ‘voluntary’, ‘community’, ‘NGO’ and ‘third sector’ are all used interchangeably — and not always consistently — across government agencies and organisations themselves. What does carry legal weight is the term ‘Registered Charity’, which may only be used by an organisation actually registered with Charities Services; using it without registration can attract legal penalties.
Charity law scholar Dr Donald Poirier offers a widely cited definition: a not-for-profit is any organisation that is not a household, government body, or for-profit business, and one that reinvests its surplus funds into its own purposes rather than distributing them to owners. Charitable organisations, he notes, are simply one subset of this broader category. [See Charity Law in New Zealand, Dr Donald Poirier]
To register as a charity in New Zealand, an organisation’s governing document must set out purposes falling within one or more of the four categories codified in section 5 of the Charities Act 2005: relieving poverty, advancing education, advancing religion, or other purposes beneficial to the community.
These four heads trace back to an 1891 House of Lords case, and each purpose must also satisfy a ‘public benefit’ test — it has to be objectively beneficial and directed at the public, or at least a sufficient section of it, rather than serving a private group. Charities Services looks closely at an organisation’s actual and planned activities too, not just its stated objects, to confirm the activities genuinely support the charitable purpose. Non-charitable activities such as advocacy are only permitted where they’re ancillary — secondary or incidental — to the organisation’s main charitable purpose.
Where to get authoritative guidance
Charities Services (part of the Department of Internal Affairs) and the Registrar of Incorporated Societies (Companies Office) remain the two primary regulators, and both publish current guidance, webinars and application forms for each structure. The Community Toolkit (formerly Community Net Aotearoa) also publishes a handy comparative table of legal entities — covering unincorporated groups, incorporated societies, trusts, charitable trust boards, companies and industrial and provident societies — as a useful starting point for groups weighing up their options. Given the scale of change brought about by the 2022 Act, any group already registered as an incorporated society, or considering incorporation now, should treat legal or Companies Office advice as essential rather than optional — particularly when it comes to updating constitutions to meet the new Act’s requirements.
Resources
What to be or not to be — Incorporated Societies and Charitable Trusts
Charities Services | Charitable purpose
Choosing the right legal structure for your group — Community Toolkit