Community Foundations of NZ
11 January 2021
Our funding landscape is rather complex in New Zealand. Much of it is very locally based and we have lots of little – and not so little – local Trusts; pockets of money invested for a specified local benefit and working - and sometimes lazing about - in communities. While these pockets of invested money are certainly set up with good intentions many are languishing under inefficient structures and not returning back to community as much as they could, sometimes also with structures that will be difficult to endure on in perpetuity.
In many cases, community funds could certainly be put to better use and could be delivering more money back to the community.
Changes to the Trusts Act, which come into effect in January 2021, have highlighted further how hard it is for local trusts to manage assets well. Kimberly Lawrence of Greg Kelly Law (specialists in Trust law) advises, “it’s getting harder to be at Trustee; risks are increasing, compliance costs and obligations are increasing, and it is expected to be easier to hold trustees to account when they aren’t doing their job. It’s certainly time to consider that there could be another way”.
Local Community Foundations
Local Community Foundations (17 across New Zealand), run a lean not-for-profit structure, pooling a variety of community investments. They enable both individuals and a local Trust to establish a fund for a specific purpose, retaining the ability to direct distributions, with the local Community Foundation managing all governance, compliance and investment responsibilities.
To date, Community Foundations across New Zealand have resettled over $30 million in local trust funds, with discussions ongoing in communities about future resettlements.
The winner is certainly the community. One example of a recent trust resettlement is Trust Porirua, which in 2018 resettled its $5.5m in trust funds with Nikau Foundation (Wellington’s Community Foundation). The resulting Nikau Porirua District Fund is now returning over 3 times as much to community under the robust investment and grantmaking structure of Nikau Foundation. And, crucially, the Porirua community still retains control over how these funds will be allocated locally.
And, with the past year we have had, and with community needs increasing, don’t we need funds to be maximized and working to their best effect for community right now?
Charities Services outlines options for Trusts which are struggling and looking for options to wind up or resettle, which today is a growing consideration for Trustees who are coming to terms with the realities of changes to the Trusts Act. You can see more on the Charities Services website.
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