Did you know Greenpeace fought the Charitable Registration Board for more than 8 years
to be able to register as a charity? 8 whole years of legal fees. They only just got the OK in August 2020, but not before the case bounced between the Charities Registration Board, the High Court (twice), the Court of Appeal and the Supreme Court.
It all boiled down to whether protecting the environment is a public good worthy of being considered a charitable purpose. To us, it seems obvious that it should be.
For a small nonprofit running on the smell of an oily rag (and literally fighting the emissions from oily rags), we just don't have the capacity to trudge through an uncertain legal framework. So we want to be upfront with our community - we are a nonprofit, but we are not a registered charity.
How is Co-Benefits structured?
We are a company with a charitable constitution.
We are registered as a company on the Companies Register, but unlike normal companies, we are legally bound to operate as a charity under our constitution (which you can read here
This type of structure goes further than the concept of a ‘social enterprise’, something you may have heard about before. Our constitution strictly binds us to:
- Operate only to further our mission to encourage and empower New Zealanders to reduce global greenhouse gas emissions.
- Use 100% of the profits to further the mission.
- Not distribute any income to our members other than to pay for any expenses/goods/services provided for the company to further the mission.
- Regularly report with full transparency.
Because of this, we call ourselves a nonprofit because we are 100% not for profit.
Why isn’t Co-Benefits a charity?
1. We don’t strictly fit with what the Charities Act 2005 (the Act) considers to be a ‘charitable purpose’.
To be covered by the Act and considered a charity, an organisation needs to meet one of four very outdated and specific purposes. These are the relief of poverty, the advancement of education, the advancement of religion, and other purposes beneficial to the community. Purposes like addressing the pandemic risk, human rights violations, gender inequality, animal rights and climate change aren’t expressly considered charitable - which we think is mad!
That being said, this is where Greenpeace New Zealand has paved the way. In the 2020 ruling, the High Court decided that ‘environmental protection is a charitable purpose’. With a glimmer of hope, this could potentially apply to us too (provided we can also meet the test in 2 below).
2. We send our donations overseas.
To be a charity under the Act, we need to apply our funds predominantly within New Zealand.
Unfortunately for us, while we're helping Kiwis take action, 96.2%
of the funding we receive is sent overseas to fund low carbon projects in frontline communities where we can have the greatest impact (the remainder is used to keep our lights on).
The atmosphere and our emissions crisis are truly global. The climate doesn’t care if we act to reduce emissions within New Zealand, or whether we do so in another part of the world. It just happens to be 64%
cheaper to reduce a tonne of emissions overseas, plus, we can have a vast socio-economic impact (aka co-benefits) over and above the reduction of emissions if we act in parts of the world vulnerable to the effects of climate change.
There is one other option, favoured by massive charities like the Red Cross, where we can apply to be specifically listed as an overseas charity in the Act. To do so is expensive, super complicated
, and our application would need to be put to Cabinet. We just don't have the resources to go through this right now, but we might one day. Again, we'll keep you posted.
Why can’t I get my tax back on my donations?
Tax-exempt or donee status applies to charities and businesses with charitable constitutions (such as ours) who can apply for a special exemption. However, the exemption only applies to business income used for charitable purposes within New Zealand. Any income used overseas is taxed.
We spend 96.2% of our income overseas. So, even if we obtained a tax exemption, there wouldn’t be much income to claim it on. Going through the process of applying for a special exemption for such a small part of the pie doesn't seem worth it for us at this early stage in our journey. So we’re sorry, but you won’t be able to get your tax back on any of your donations to us this year.
What can I do?
In our most recent survey, 4.3% of the Co-Benefits community noted that getting their tax back was important. So it's not something we want to ignore. However, with our lean way of operating, we just don't have the resources to jump through the legal hoops for an uncertain outcome.
All that being said, if it's important to you, please let us know. If you have any questions, please fire them our way. And, if you're a superstar charity lawyer with some time up your sleeve and the desire to help, please get in touch!