Charitable trusts in New Zealand are governed by a combination of trust law, the Charities Act 2005, and the trust's own governing document (the trust deed). For trustees — particularly those who serve voluntarily — understanding governance obligations is essential for protecting both themselves and the organisation they steward.
Poor governance is one of the most common causes of charitable trust failure: conflicts of interest that undermine public trust, financial decisions made without proper process, trustee disputes that paralyse organisations, and regulatory breaches that affect charitable registration. Good governance prevents all of these.
The Trusts Act 2019
The Trusts Act 2019 reformed New Zealand trust law and applies to charitable trusts. It codifies trustee duties — both mandatory duties (that cannot be overridden by the trust deed) and default duties (that can be modified by the trust deed).
Mandatory trustee duties (cannot be excluded):
- Know the terms of the trust
- Act in accordance with the terms of the trust
- Act honestly and in good faith
- Act for the benefit of beneficiaries (or charitable purposes)
- Exercise trustee powers for proper purposes
Default duties (apply unless trust deed says otherwise):
- Exercise reasonable care, diligence, and skill
- Not exercise power for trustee's own benefit
- Invest prudently
- Not bind trustees to future exercise of discretion
- Avoid conflicts of interest
- Act unanimously (unless deed provides otherwise)
- Keep trust property separate from personal property
- Keep accurate accounts and records
- Act without payment (unless deed provides otherwise)
The Charities Act 2005
Registered charities in New Zealand must comply with the Charities Act 2005 — including annual reporting requirements, officer officer disclosure, and the obligation to operate for charitable purposes. Charities Services (part of the Department of Internal Affairs) registers and monitors charities.
A charitable trust's trust deed is its constitutional document. It specifies:
- The trust's charitable purposes
- Who can be a trustee and how they are appointed and removed
- How decisions are made (quorum, voting, written resolutions)
- How the trust can be amended
- What happens to trust property if the trust winds up
Understanding the trust deed is a basic governance requirement. Trustees who don't know what their deed says can't govern well.
Acting in the charitable purpose
Trustees' primary duty is to advance the trust's charitable purpose — not to advance trustees' personal interests, the interests of donors, or external political agendas. Every significant decision should be assessed against: does this advance our charitable purpose?
The duty of care
Trustees must exercise the care, diligence, and skill that a reasonable person with the same responsibilities would exercise. For trustees with specific expertise (financial, legal, governance), a higher standard may apply in their area of expertise.
Conflicts of interest
A conflict of interest arises when a trustee has a personal interest that might influence — or appear to influence — their decision on trust business. Common conflicts:
- A trustee's employer applies for a grant
- A trustee is related to a grant applicant
- A trustee has a financial interest in a service provider
- A trustee serves on the board of an organisation that would benefit from a trust decision
The governance response to conflicts of interest is: declare the conflict, don't participate in the discussion or vote, and document the declaration and recusal in the minutes.
Undisclosed conflicts of interest are among the most damaging governance failures. Public trust in charitable organisations depends on trustees acting independently of personal interests.
Prudent investment
Charitable trusts with invested endowments must invest prudently — with proper diversification, appropriate risk for the trust's time horizon and purpose, and in line with the trust deed's investment provisions. Many trusts adopt a formal investment policy to guide these decisions.
Financial oversight
Trustees are collectively responsible for the trust's financial health. This means:
- Approving annual budgets
- Receiving and understanding financial reports
- Ensuring adequate reserves
- Overseeing the audit or review process
- Approving significant financial decisions
Trustees who don't understand financial reports should ask for plain-language explanations until they do. "I don't understand finance" is not a defence to financial governance failure.
Meetings and quorum
Most trust deeds require decisions to be made at trustee meetings with a quorum present. Know your deed's quorum requirements — decisions made without quorum may be invalid.
Minutes
Minutes of trustee meetings are the legal record of governance. Good minutes record: who attended, what was decided, and any conflicts of interest declared. Minutes don't need to record every word of discussion — they need to record decisions and the key reasons for significant decisions.
Written resolutions
Many trust deeds allow written resolutions (circular resolutions) for routine decisions between meetings. These must typically be signed by all (or a specified number of) trustees.
Trustee skills
A well-functioning charitable trust board has a mix of skills: governance, finance, the relevant sector (health, environment, arts, etc.), legal, and networks relevant to the trust's purposes. Systematic skills assessment helps identify gaps.
Trustee tenure
Many trusts have fixed trustee terms (e.g., three-year terms, renewable twice) to ensure fresh perspectives and prevent entrenchment. Rotation — where trustees retire in sequence rather than all at once — maintains continuity.
Succession planning
Proactive trustee succession — identifying, approaching, and onboarding potential new trustees before current trustees retire — is better than scrambling to fill vacancies. Trustee recruitment should be systematic, not just who's at hand.
Registered New Zealand charities must file an annual return with Charities Services, including:
- Financial statements (for larger charities, these must be audited or reviewed)
- Officer disclosure (names of current officers/trustees)
- Activity reporting (what the charity did during the year)
Filing deadlines are tied to the charity's balance date. Late filing is a compliance breach and can result in deregistration.
Tahua's grants management platform supports charitable trusts with governance tracking, meeting and decision documentation, conflict-of-interest registers, and the workflow tools that help trustee boards govern well.