Capping generosity is a signal New Zealand cannot afford to send

Eleanor Cater
CEO
3 June 2026

Budget 2026 introduced a $100,000 annual cap on generosity – or more specifically a cap on donations eligible for the 33% donation tax credit. The government frames this as fiscally responsible and a safeguard against tax planning risks, but that framing misses some very important points.

The donation tax credit has never just been a tax concession. It's a public-private partnership - the government contributing a third, the donor two-thirds, working together to fund the things that make this country worth living in. There is something genuinely cohesive about that, and alongside financial capital, it builds social capital and trust.

The logic of keeping the credit uncapped works like this: Under a 33% credit[1], a donor giving $1 million puts in $670,000 of their own money. The government co-invests $330,000 in foregone revenue and achieves a full dollar of social good for every 33 cents it contributes. The donor carries two-thirds of the cost. The government leverages private capital two to one – which seems an exceptionally good deal for ‘New Zealand Inc’.

I think it’s worth considering what is actually at stake, because it speaks to the heart of what makes communities thrive. Public facilities such as Destination Kāwaroa in New Plymouth, and BNZ Theatre in Hamilton would not have been established without significantly large - $100k+ - donations. Food rescue, ambulance services, hospices, social housing providers, youth programmes, environmental projects – these are the very things that build and hold communities together when the state cannot reach far enough or move fast enough; the tax credit on donations goes a very long way to encouraging the big donations that make this kind of work possible at all.

If there is a genuine concern about a few donor-controlled charities being used to avoid tax, surely that’s a compliance problem. It requires identifying the bad actors and tightening the rules around them. Capping the entire system to catch a small number of abusers is overreach - it’s the definition of taking a sledgehammer to crack a nut.

Further, what can happen when donors are signaled that their giving is viewed with suspicion? The answer, almost certainly, is that they give less. Professor Beth Breeze in In Defence of Philanthropy calls this ‘the populist critique’ of philanthropy, which may dampen the philanthropic impulse itself. And when costs increase, making donating more expensive in after tax terms, research also tells us that donors give less.

In the context of New Zealand generosity is not a tax avoidance activity, it is most often a deeply personal act - good people deciding to create a better world with their own private resources. Every dollar given voluntarily to a cause beyond the donor's self-interest represents a human decision to care, to invest in community, to take responsibility for something bigger than themselves.

When politicians and media frame that impulse as a loophole, it tells generous people their motives are under scrutiny. It invites suspicion into one of the few spaces where people act from intrinsic values and it erodes, slowly and invisibly, the civic trust that makes large-scale and voluntary giving happen at all.

The conditions for a generous society take a long time to build and can take a short time to erode. At a time when the challenges of society are immense, capping generosity seems the wrong signal for New Zealand to be sending out.

The CAF World Giving Report, released this week, also shares fascinating findings around the role of governments in creating conditions for a culture of philanthropy to thrive. Of particular interest is the finding that, in this part of the world, tax incentives are the most widely recognised mechanism through which governments are enablers of giving. This puts New Zealand's policy direction in an even more uncomfortable light.

In summary, people who said their government encourages giving were more likely to donate to charity, more generous, more likely to have 'high trust' in charities and more likely to support more causes - see further details here >>

[1] In the current New Zealand context, up to the level of income tax paid