Entrepreneurs who wish to open a foundation in New Zealand will follow the general rules for incorporating an organization.
The scope of the foundation in NZ is a charitable one, and a private foundation is set up as a legal entity for particular purposes and, in most cases, solely for philanthropic purposes.
In this article, our New Zealand company formation agents discuss the main features of the private foundation, however, these organizations for charitable purposes can also be public ones.
If you are interested in other matters, such as how to set up a company in New Zealand, you can reach out to our team. We answer questions about all business forms in New Zealand, taxation compliance, management and control, as well as special licensing and permits for companies. Reach out to us if you have questions about company registration in New Zealand.
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How to open a foundation in NZ
A foundation can be incorporated under the Companies Act 1993, the Charitable Trusts Act 1957 or the Incorporated Societies Act 1908.
Irrespective of the manner of incorporation, the goal of the organization needs to be specifically indicated in its constitutive documents or deed of incorporation.
The following issues are important to keep into account:
- the purpose of the foundation in New Zealand will be one that fall into the four categories listed above. The purpose needs to clearly be a charitable one;
- a special clause will include information about the activities or powers the organization has in order to achieve its purposes (such as purchase, borrow or invest, lease, etc.);
- when incorporated as a company, the foundation will include a special clause that will prevent the distribution of dividends to shareholders;
- the incorporation documents will also provide information on the winging-up of the foundation in NZ;
- a governance clause is relevant and included in the incorporation documents; it stipulates the manner in which the foundation is governed (for example, through a management committee); other clauses can be set for the procedure of changing the applicable rules.
Philanthropists who wish to open a company in New Zealand and structure it as a foundation can reach out to our team for easy company formation.
Charitable foundation in New Zealand
The goal of a foundation set for charitable purposes is one that will be beneficial to the community.
The Charities Act 2005 defines four types of charitable purposes:
- Relieving poverty: provide relief to individuals who are poor, aged, or in genuine hardship;
- Advancing education: offering solutions for education (formal education or training in different areas of study);
- Advancing religion: pass on religious beliefs to others, advance a set of beliefs that are considered a religion;
- Other purposes: these are purposes that are also beneficial to the community, such as advancing health, environmental protection or preventing/easing the suffering of animals.
When setting up a foundation in NZ, it is useful to point out that some purposes are not considered charitable ones, and that the not-for-profit foundation can still have a worthy, helpful purpose, without it falling under the scope of charitable, as it is recognized by law in New Zealand.
Some examples of non-charitable but still worthy purposes include providing support to a community that has no need for regeneration, offering assistance to high performance athletes, offering support to a closed group of members who are not in poverty.
Entrepreneurs who are ready to set up an organization for charitable purposes and wish to do so by using a foundation can reach out to our agents specializing in company formation in New Zealand.
You can find more information from our team about activities that are considered charitable, as well as other activities that are generally specific to a foundation.
For those interested in reducing the cost associated with the upkeep of their organization, we can offer services for a virtual office in NZ.
A foundation in New Zealand that is set up for charitable purposes is registered with the Charities Service.
A report on non-profit institutions issued by Statistics New Zealand reveals the following:
- volunteering within these types of institutions was estimated at $4 billion in 2018;
- the number of paid employees in the not-for-profit sector increased was 150,630 in 2018;
- 29% of the income of these institutions comes from donations, membership and grants.
Our team can give you more information about the registration process, the rules for registration and the documents that are provided for this purpose.
Our team assists investors who wish to open a business in New Zealand, not just those interested in the creation of a foundation. For corporate creation purposes, we help with the registration of the company (including checking and reserving the company name), preparing the needed documents, and making the submissions with the Companies Office. We also assist with post-registration steps.
Contact us if you need more information on how to set up a foundation in NZ.