Every year, plenty of new charities get started in Aotearoa New Zealand. Most start small, and many stay that way.
There are already some excellent detailed guides to registering a charity. This isn't intended to replace them.
Instead, this guide will walk you through some of the big decisions you'll need to make, point you towards useful resources, and help you think about how to set your organisation up well from the beginning.
In this guide:
Before you start writing rules and filling in registration forms, it's worth asking a more fundamental question:
Do you need your own organisation at all?
Starting your own organisation usually means creating rules, establishing a governing group, opening and maintaining a bank account, keeping financial records, filing annual returns and meeting ongoing legal obligations.
Sometimes that's absolutely the right thing to do. But there are alternatives. Charities Services itself recommends considering whether you could work with or join an existing charity doing similar work before starting a new one.
One increasingly useful option for small or emerging projects is fundholding.
Fundholding is essentially where another organisation holds money on your behalf for an agreed purpose.
Instead of establishing your own organisation immediately, an existing charity receives and manages the money for your project. Depending on the arrangement, you may be able to benefit from their charity status, financial systems and administrative processes.
That can give a new group a way to receive grants and manage money without immediately taking on all the administration and compliance that comes with its own entity.
Professional fundholders such as The Gift Trust's Gift Collective provide one option. You can also establish a fundholding relationship with another organisation whose kaupapa aligns with yours.
Read our guide: What is fundholding? A practical guide for community groups and charities
Fundholding isn't right for everyone. But it's worth considering before assuming that starting another organisation is the only way forward.
Great.
Once you've got some people together and you're clear about your kaupapa, one of your next decisions is what sort of organisation you want to create.
An important distinction here is that your legal structure and charity registration are two different things. A charitable trust, incorporated society or company can all potentially become registered charities. Charity registration sits on top of that.
For most small groups considering charity registration, the three structures you're most likely to encounter are:
There are other possibilities, but we'll stick to these three here.
You can get quite deep into the legal differences between these structures. If your situation is unusual, involves significant assets, or you aren't sure what is appropriate, getting expert advice is worthwhile.
But at a high level, we think there's one particularly useful question:
Who ultimately gets a say over the organisation?
An incorporated society is probably the structure many people will be most familiar with from clubs, associations and community organisations.
There is a membership, and those members elect a committee to govern the organisation on their behalf.
The committee makes many of the day-to-day governance decisions, but ultimately remains accountable to the membership.
Members have rights under the society's constitution and the Incorporated Societies Act, including participating in important decisions and electing the people who govern the organisation.
This structure can make sense where you genuinely want the organisation to belong to a wider group of members.
Think: Members → elect → Committee
A charitable trust works differently. There isn't a wider membership sitting behind the organisation. Instead, the trustees themselves control and govern the trust in accordance with its trust deed.
The trust deed sets out things such as how trustees are appointed and removed, how decisions are made and what the trust exists to do. In that sense, the trustees perform some of the functions that would be divided between members and committee members in an incorporated society.
The trustees don't have to personally do all the work of the organisation. Like any governing body, they can employ staff, hire contractors, establish committees and delegate work while retaining responsibility for governing the organisation.
This structure can work well where you want stewardship of the organisation to remain with a relatively small group of people committed to its kaupapa or the assets it was established to protect.
Think: Trustees → govern the Trust
The word company can feel a little strange in the non-profit world because we normally associate companies with businesses making profits for their owners. But a company can also be structured for charitable purposes and registered as a charity.
A company has two distinct roles: Shareholders → appoint → Directors
The directors govern the company.
The shareholders hold certain underlying control rights, most importantly the ability to appoint or remove directors according to the company's constitution and the Companies Act. Shareholders can also have non-equal voting say - for example, Person A's vote is 50% of the total, while Person B and C have 25% each.
For a charitable company, its constitution also needs to ensure its income and assets are applied towards its charitable purposes rather than providing private benefit to shareholders. Charities Services specifically looks for appropriate charitable-purpose, private-benefit and winding-up provisions when assessing an organisation's rules.
One reason a company structure can occasionally be useful is that it creates a clearer separation between the people holding those underlying control rights and the people currently governing the organisation.
For example, an organisation might want particular people or organisations to retain a role in appointing directors without requiring those same people to sit on the governing board themselves. Shareholders generally control who else can become a shareholder.
For a straightforward small community organisation, however, a society or charitable trust will often be easier to understand.
Incorporated society: a wider membership elects the governing committee.
Charitable trust: the trustees are the governing body, with new trustees appointed by current trustees according to the trust deed.
Company: shareholders appoint directors, and directors govern the organisation.
Community Law have a toolkit to help explore and understand the different legal structures, and which one might be right for you: Community Law - Choosing the right legal structure for your group.
None is automatically better than the others. The important thing is choosing a structure that reflects how you actually want power, participation and succession to work in your organisation.
Once you've chosen a structure, you'll need a governing document. Depending on your structure this might be called your:
You don't need to start from a blank page. Good guidance and templates are available online:
Starting with one of these is usually much safer than trying to invent your own rules from scratch.
Your governing document needs to deal with practical governance matters, but if you're seeking charity registration it also needs to clearly establish your charitable purposes and contain the provisions Charities Services requires.
Read: Charities Services has more information on what is needed if you want to become a registered charity.
Not necessarily. There is no general requirement that a lawyer write or approve your constitution or trust deed before you apply. For a straightforward small organisation, you can certainly do much of the work yourself using the available templates.
However, having a lawyer or someone experienced with charitable organisations look over your rules can save considerable time if there are complications.
Charities Services assesses whether your purposes are actually charitable and whether your rules meet the requirements of the Charities Act. Poorly drafted or overly generic rules can hold up an application. Charities Services has recently reported an increase in low-quality applications, including generic AI-generated applications.
AI tools such as ChatGPT can still be useful here, but we'd use them as a reviewer rather than your starting point.
A good process might be:
Your rules are meant to describe how your organisation actually works. A beautifully written document isn't much help if nobody understands or follows it.
If you've decided to incorporate your organisation, registration will normally happen in two stages.
Depending on the structure you've chosen, this will be through the:
Once your organisation has been established, you can apply to Charities Services for registration under the Charities Act.
Head to: Charities Services - apply for registration
It's worth allowing plenty of time. Charity applications can take some time to work through, particularly if Charities Services needs more information from you.
Once your organisation legally exists, you can start tackling some of the practical jobs — including opening a bank account.
Unfortunately, opening a charity or incorporated-society bank account, and then keeping access up to date as trustees, committee members and signatories change, can be one of the more frustrating administrative jobs for a small non-profit.
We've written a separate guide covering the process and some of the bank-account options available.
Read: How to open a bank account for your charity or non-profit
Once you've got a bank account, you can get on with the kaupapa you created the organisation for.
But spending a little time setting up good money practices now can save an enormous amount of work later. You can also join one of our free Being a Good Treasurer sessions for a practical introduction to looking after the money in a small charity, club or community group.
See: Courses and Learning
Good Numbers is primarily interested in the money side of running a small non-profit, so here are a few places we'd start.
You need a consistent way to record what money has come in, what has gone out and what it was for.
For most small charities, a cash book is a perfectly good place to start.
We've got a guide explaining what a cash book is, along with free spreadsheet templates, information about the Good Numbers app and some other paid options.
Read: What is a cash book? And how to use one.
Don't wait until year end before telling the rest of the governing body what's happening with the money.
A simple treasurer's report each month or at each meeting helps everyone understand where the organisation stands and means responsibility for the finances doesn't sit with the treasurer alone.
Read: Simple Treasurer Report Template for Small Charities and Community Groups
If you're applying for grants, you'll quickly accumulate dates to remember: applications opening, decisions being made, grants being paid and accountability reports becoming due.
Community Think has a useful guide to setting up a funding calendar so you can keep track of both applications and reporting deadlines.
Watch: 10 minutes at 10: Funding Calendar (scroll down for the link to the template)
Taking on your first employee introduces a whole new set of responsibilities.
Don't try to manage payroll manually unless you really know what you're doing.
For very small charities, Thankyou Payroll is one option designed specifically for the community sector.
Link: Thankyou Payroll
Eventually you'll reach your first financial year end.
This is where the work you did setting up your money systems at the beginning really pays off.
If you've kept your cash book up to date throughout the year, preparing your annual financial information should be considerably easier than reconstructing everything twelve months later.
All registered charities need to file an annual return and financial information with Charities Services using reporting standards issued by the External Reporting Board (XRB). For the smallest charities, this will usually be the Tier 4 Standard.
Tier 4 is available to most non-profits with spending less than $140,000 per year. It uses cash-based reporting, making it particularly suitable for many small charities.
Read our guide: What is Tier 4 Reporting, Why Is It Required, and How Do I Do It?
Incorporated societies that aren't registered charities can also use the Tier 4 Standard to meet their reporting requirements where they qualify.
If you're operating through another type of entity and aren't a registered charity, your reporting requirements may be different. You can still choose to use a similar framework if it is useful, but check what actually applies to your organisation.
If your organisation has donee status and receives qualifying donations, you'll also want a reliable process for issuing donation receipts to donors.
Donation receipts need to contain particular information so donors can use them when claiming donation tax credits.
Doing these throughout the year is easiest, but year end is a good opportunity to check that everyone who should have received one has.
That's certainly not everything you'll ever need to know about running a charity.
And that's okay.
You don't need to learn the entire Charities Act, become an accountant and memorise every governance rule before you get started.
Get the important foundations right. Keep reasonable records. Build good habits. And learn the next thing when you need it.
As new situations arise, come back to the Good Numbers Guides and search for what you're dealing with. We've put together plain-language resources on banking, grants, treasurer responsibilities, annual reporting and plenty more.
And when you run into something where the consequences matter — particularly a legal, tax, employment or accounting question — don't be afraid to ask someone who knows the area.
Starting a small charity involves a bit of administration.
But the administration isn't the point.
The point is creating a structure that makes it easier to get on with your kaupapa.
Ask Duncan anything — big or small. He’ll get back to you ASAP, and your questions will help improve the information here for everyone.
