Legislation that would make people collecting donations, signatures or other support disclose whether they are being paid will be withdrawn - despite cross-party support.
Waimakariri MP Matt Doocey's member's bill passed its first reading in August, with support from every party in Parliament.
Mr Doocey previously spoke of his motivation for a law change - including increasing reports of people intimidated into donating by aggressive sales tactics used by commission-based staff.
But the first term National MP has now recommended his Bill be withdrawn. It would have required anybody collecting or soliciting donations, subscriptions, signatures or other support to disclose whether they are being paid for their services.
The person would have to say who was paying them before any collection took place, or face a fine of up to $1000.
Those collecting for a registered charity would be excluded from the requirement to make a disclosure.
A report from the social services committee - which is considering the legislation - has now recommended that the Bill not be passed, having received a report from Mr Doocey that its passage would compete with work being done by the Ministry of Business, Innovation and Employment (Mbie).
The ministry is currently considering submissions it received on whether new regulations are needed under section 28A of the Fair Trading Act.
That section would enable regulations to be made about the information professional fundraisers needed to disclose, although no such regulations have been made to date.
"The member in charge of the Bill has welcomed the consultation process that is occurring under section 28A...he recognises that proceeding with the Bill would compete with that process, whether or not regulations are made under section 28A. For this reason, he does not believe that this Bill should pass," a report from the committee states.
In his speech during the Bill's first reading, Mr Doocey said New Zealanders needed to know donations were going to legitimate charities, and how much of their donation reaches those it is intended to help.
"Kiwis have a true spirit of voluntarism, but in recent years there appear to be more people who are paid for collecting, whether it be for signatures or donations. This is a change in culture for us. I believe that the public has a right to be informed about where donations are going."
Mr Doocey said he had received an email of support from the Heart Foundation, that reported hearing more regularly that donors are intimidated into donating by some of the aggressive sales tactics being employed by commission-based sales staff employed by other organisations.
Labour supported the Bill to select committee, but questioned what effect it would ultimately have, given registered charities would be exempt from the disclosure rules.
In its submission on the changes, the Fred Hollows Foundation sought clarification as to whether third-party businesses used by charities to sign-up donations would be exempt.
It said that more than 70 per cent of face-to-face fundraising donation collected by members of the Public Fundraising Regulatory Association came after charities used third-party businesses.
A submission by The Fundraising People - a company that says it specialises in "passionate and professional" fundraising on behalf of charities - revealed it had raised a projected income of more than $6.5 million since May 2014 for Save the Children, Fred Hollows and ChildFund.
People collecting signatures, money and "chuggers" - a mix of "charity" and "muggers" who often try to sign people up to payment plans - are an increasingly common sight on city streets.
Last year, Wellington City councillor Iona Pannett criticised the practice as one of mild harassment.
Auckland Council controls how many charity groups are out at any one time in the city and regularly grants around 24 licences throughout the year.