Updated 31 May 2024
Q: We are a church which is a Registered NZ Charity. Some members have suggested that we should, in addition to registration with DIA Charities Services, ‘Incorporate’ with the Companies Office (Registrar of Incorporated Societies).
Is this step necessary or advisable? What are the pros and cons?
A: Provided they meet the charities test, an organisation can indeed register its rules* with DIA Charities Services without first incorporating (for example as an Incorporated Society or Charitable Trust) with the Companies Office.
However, successful registration would give the organisation the status of a registered charity with the associated tax benefits, but the organisation would not have its own legal identity – separate to its members/trustees – if not incorporated.
In the same vein the Board/committee/trustees would NOT get the same legal protection (if acting legally and in accordance with the rules* ) – “limited liability” – as if the organisation was indeed incorporated.
We asked Susan Barker of SUE BARKER CHARITIES LAW to comment. She responded: “the Charities Act is agnostic as to legal structure (see the definitions of entity and charitable entity in section 4). In order to gain the legal benefits of incorporated status, a charity would have to incorporate (it is generally advisable to do this, as the risks and uncertainties inherent in unincorporated status can be significant, but it is always important to consider all the various factors in any particular case) .
*rules, constitution, deed etc i.e. its founding document
We are grateful to Mark von Dadelszen <mark@nfplaw.co.nz> who has provided this detailed and easily read article “Why Incorporate?“
Also see this Community Toolkit post