Social Enterprise alive and well in New Zealand

Recent research from Peter Dixon at the New Zealand Charities Commission reveals a wopping 38% of all income generated from registered charities comes from service and trade. So when is a charity a business and when can a business act like a charity?

People sometimes seem to be a little wary of the Charities Commission - and in some cases they may be right to be.

In particular, some have expressed concern that registration with the Commission may in some way limit the development of their social enterprise in New Zealand.
There’s no hard and fast rule to relieve these fears. However, we can share some facts and figures that may give you greater confidence as you drive your particular social innovation.

Question - “From a Charities Commission perspective, when would a registered charity become a social enterprise and what is the likely impact of that on maintaining charitable status?”

The Commission isn’t concerned with classifying entities into categories such as “social enterprises”, “economic development organisations” or anything else. The Commission merely assesses whether applicant entities and registered charities meet all the requirements for registration and continue to maintain these as part of their day to day operations.

This means that if an entity becomes a “social enterprise”, it will have no impact on that entity’s charitable status, unless this change also affects the entity’s charitable purposes and activities.

In fact, of the 21,607 currently-registered charities, who between them have a total income of $14.5 billion, 8,552 charities declared income from service provision / trading operations. That’s 39% of all charities - and between them, these registered charities drew an income of $5.4 billion from this income stream.

It’s important to bear in mind that this income is separate from donations, government grants/contracts, grants and sponsorship, bequests or membership fees – some of the sources commonly associated with income for ‘charities’.

As such, it would be fair to conclude that registered charities engaging in social enterprise are alive and well in New Zealand.

For more information please refer to www.charities.govt.nz or if you have specific questions, please call the Commission’s free information line on 0508 242 748.