KEY POINTS:
Many Kiwis want to be an anonymous face in the crowd when it comes to charity. The Government wants big donors to own up
Wealthy people with charitable trusts may soon be forced to defend their right to anonymity, says the Charities Commission.
Commission chief executive Peter Garrett
said while it would be sympathetic to people's desires to privacy, it could not guarantee withholding names from a new public register.
Any request for secrecy would be judged on a case by case basis.
All charitable trusts, public and private, must join the register by July next year if they want to remain tax exempt and provide the commission with details on their constitution. The body wants to make sure the trust is doing what it was set up to do.
"There are two sides to this: the people... want the information withheld and others saying we want good information from these organisations," said Garrett.
"You might have people who give the charity $10,000 but they are only declaring income of $5000. The registry will be a good way of making sure your charity is staying honest."
"We will certainly try and be as fair and as transparent as we can be but people should not expect an automatic decision. They will have to give us their reasons [for wanting to stay anonymous] and we will consider them," said Garrett.
This move by the commission, launched in 2005 to bolster confidence in the charitable sector, is endangering future philanthropists, said trustees.
Any uncertainty like this is bad news, said Michael Dunn, corporation tax manager at Guardian Trust, a trustee company which manages several hundred charitable trusts.
"Privacy should be automatic for private philanthropic trusts," he said.
The commission has failed to realise just how much charitable donors shrink from any kind of public attention, said Dunn. His fear is that this step could lead to a reduction in the $200 million private trusts contribute to the charitable sector every year.
"This makes it harder. It's putting barriers in the way of giving at a time when we want to encourage people to be more generous," said Jennifer Gill, chair of Philanthropy NZ and a trustee for a number of family trusts.
"There are a large number of people who have accumulated wealth... who live humble, quite unassuming lives and give away a lot of money. To these people anonymity is a huge thing. They are not like Gareth Morgan. They don't have the capacity or the will for their philanthropy to be public. It is a huge issue which will compromise people's willingness to give," she added.
"Charities that are run as private philanthropic trusts are not raising, and therefore not risking, money from the public, so there should be no concern about restricting public access to information," said Dunn.
John Key, leader of the National Party, last week pledged tax rebates for charitable donations under a National Government while Minister of Finance Michael Cullen said he was already looking at tax rebates with the United Party.
Speaking to the Herald on Sunday, Key said he would abolish the Charities Commission register if National won the next election and that it was simply "nosey-parkerish behaviour" by the government.
"We would get rid of this kind of thing unless there was demonstrably some mischief here. If not we would not be interested in snooping into their private lives," he said.
"It does not make sense to put road blocks in front of people who want to give," he added.
"Providing we can reach a level of comfort and check the trusts are bona fide, they are fully entitled to stay private."
As it seems private charitable trusts will have no choice but to reveal more about themselves, the professional industry is gearing up for a large round of trust restructuring.
"They could engage lawyers and accountants to develop innovative structures in an effort to retain anonymity, the cost of which would probably reduce the amount dedicated to charity. Or, they might stop giving altogether, which would definitely not be in the public interest," said Guardian Trust's Dunn.
Kay Caverhill, senior solicitor at Callaghan & Co, said she would be advising people to change the the person who initially set up the fund and switching to a nominal settlor like a lawyer. In that way the name of the donor would not have to be out in the public domain.
Philanthropy NZ executive director Robyn Scott said some of her members were considering making donat-ions without the tax exemption just to stay private.
The director of the umbrella organisation for 120 philanthropic trusts and foundations in New Zealand said: "We know philanthropic people who are giving away money, who are so scared about losing their anonymity that they are looking at not registering.
"We have people giving away money that their family members don't know about," she added. And once they know, their philanthropy could cause a family rift.
"People will pay the tax and give less money and we think that's a real shame. I think that's misguided," she said. Scott said she thinks most of her trusts will gain privacy who ask for it and she is urging them to register.
Speaking to the Herald on Sunday, commission chief Garrett said he didn't think many trusts would avoid registering in the end because the tax exemption was too substantial a saving. They will be paying 33 per cent tax on their donations versus zero.
But one charity expert commented: "I don't think he understands the sector . There's an enormous amount of wealthy people driving around in Toyota Corollas giving away a lot of money.
"And they want anonymity above all else."
Dunn suggested the charitable trusts giving all the required information to the commission but then that it not be made public.
Garrett told the Herald on Sunday, said the commission had listened to submissions from companies such as Guardian Trust and was sympathetic but would not make hard and fast decisions. The commission is expecting thousands of queries from the 35,000 charitable organisations in New Zealand. It will be a big task, he said. Around 24 charitable trusts have registered so far.
"We are saying to organisations, rather than wait until the last minute, get into it now, if your constitution is up to date. It's not as if you are putting off going to the dentist."
Of course not all private philanthropists are worried about a bit of publicity but they are in the minority.
"New money is a bit more inclined to have that philanthropy recognised. A lot of it has to do with how in the public eye their rise to fortune has been. If it is Gareth Morgan's case, everybody knows and it's all over bar the shouting," said tax specialist Mark Withers from chartered accountants Withers Tsang. Then there are those who have had low profile corporate careers. There are many extraordinarily wealthy people who never show up on the rich lists, and they will be less inclined to have their philanthropy made public, said Withers.
If this were the US, home of philanthropist Ted Turner who donated US$1 billion to the UN, people would be singing it from the rooftops, said Scott but it was not the Kiwi culture. Forcing people to do this, making people disclose so that their neighbours know what they are doing, is nothing short of torture for many.
Charities Act requirements spelled out
The Charities Act requires the country's estimated 35,000 charities to be registered with the Charities Commission by July 1, 2008 in order to retain their tax-exempt status.
* There is no public access to documents held by the Inland Revenue Department, which is the administrator of charities. Under the new legislation, all information about each charitable entity registered with the commission will be available to the public.
* Under current law, financial and administrative information cannot be made public without charities' consent. On the new register, more information will become publicly available, including the name and address of the charity; names of the officers and all officers since the charity was first registered; the application for registration as a charity (with all required accompanying information and documents); a copy of the rules and each annual return.
