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First Reading
AMY ADAMS (National—Selwyn) : I move, That the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill be now read a first time. At the appropriate time, I intend to move that the bill be referred to the Commerce Committee for its consideration. New Zealanders are generous people. We all recognise the important work that so many charitable organisations do to help the vulnerable in our communities.
I am sure that, like me, many members of this House have spent countless hours standing on busy street corners collecting money or helping out at fund-raising events. We do this willingly, and we are happy to play a small part in contributing to the wonderful work that our charities do. Charities Commission data indicates that there are more than 23,000 registered charities in New Zealand, and in the last year the sector had an estimated total income of around $10.4 billion, $2.4 billion of which came from donations.
If there is a threat to this sector, it is that New Zealanders have increasingly begun to show concerns about how much of the money they give gets to those it is intended for. Recent media reports have highlighted that it is not uncommon for professional telemarketing and street-collecting firms, which are used by many charities, to retain 75 percent of what they collect, and even up to 90 percent. Although there is unquestionably a cost to raising funds, the rights of consumers to be given accurate information must not be forgotten.
Just yesterday in the Press, the “cynical marketing” award for the year was given by one commentator to the Epilepsy Foundation for reportedly raising $2.8 million in donations, of which only $70,000 went to people with epilepsy. Whilst shocking, that story is by no means an isolated event. Stories like that have, in my view, damaged the fund-raising industry and severely shaken confidence in charitable giving. Many people have spoken to me of the reluctance they now have to respond to various forms of fund-raising as they feel they cannot tell the ethical from the disreputable.
It is my hope that this bill and the debate and discussion that will come from it will help to draw a clear line between worthwhile and ethical charitable collection and the insidious practice of using the name of a charity to make a significant personal profit while passing on only a tiny portion of the donation, and all the while leaving the generous consumer completely in the dark.
I am aware that part of the issue of consumer confidence in this regard involves charities’ internal use of funds, and some of the public debate has certainly focused on that. This bill deliberately does not seek to address that matter. Charitable organisations are regulated under the Charities Act and are subject to full financial disclosure rules, meaning that there is already a process for public scrutiny of how their money it spent. On that point, I wish to say that we must recognise that charities will, quite appropriately, have administration and fund-raising costs as part of providing services, and those costs will vary depending on the scale and work of each charity. No one should be put off donating for that reason alone when the costs are at an appropriate level.
Where fund-raising is carried out by the charity directly, all costs associated with that fund-raising will be disclosed as part of the charity’s financial statements. However, if a third-party business is engaged to do that work, then no record of the amount retained by that company will be available for public scrutiny.
I was moved to create this bill out of a fundamental belief that to ask for a donation to a charity without mentioning that one is not part of that charity but comes from a private company, and without mentioning that the vast majority of what is donated will never make it to that charity, is simply deceptive and wrong. Of course companies can charge for services they provide, and I have no issue with the existence of a professional fund-raising sector, but it is my view that their activities must be carried out ethically to ensure that consumers are not misled.
It is not OK to withhold information simply because providing that information would mean that someone does not get the outcome he or she wanted. So I am unmoved by arguments that a disclosure requirement would mean that less money is raised. This sector must consider the rights of hard-working New Zealanders who are parting with their cash. Donors have the right to know how much of their money will go to the charity they are being asked to donate to.
In creating this bill, I have sought to highlight an issue that I believe needs to be addressed. Since the bill has been announced, everyone I have spoken with about it, including many, many donors and a number of charities, have, without exception, agreed that the problem exists and that it must be addressed.
Where there have been reservations—and there have been only a few—they are focused solely on the issue of what the best method of dealing with it is. The Fundraising Institute of New Zealand, which represents this sector, has expressed to me a view that the answer should come from industry self-regulation, and I believe it is appropriate for me to acknowledge that the Minister for the Community and Voluntary Sector, the Hon Tariana Turia, has let me know that her view is that although she supports the bill’s objectives, she believes that the industry should be given time to see whether self-regulation can be effective.
At this stage, I would also like to acknowledge and thank the Minister of Consumer Affairs, the Hon Heather Roy, who has been very supportive of the goals of the bill from the outset and who has, along with her officials, assisted me greatly in this process. I would also like to acknowledge my colleague Aaron Gilmore, with whom I had some helpful initial discussions around the formation of the bill.
As I have already noted, because the use of all funds within charities is already controlled under the Charities Act, this bill seeks to address only that portion of the process from the time the funds are solicited to the time the funds pass into the charity. That is the domain of professional fund-raising firms that carry out this work as a profit-making enterprise. At this stage I should make it very clear that the bill will impose no restrictions on any fund-raising activities that a charity carries out directly through the use of its own employees or volunteers.
Through this bill I am particularly seeking to target professional telemarketing firms and the so-called “chuggers”, or “charity muggers”, who approach and sometimes hassle passers-by on a busy street to donate regularly to a charity. I think few people realise that in fact those “chuggers” do not come from the charity but are paid on a commission basis of up to 90 percent of the funds collected in the first year.
As the bill stands, it has been drafted to provide a two-tier threshold of disclosure on third-party collectors who solicit funds in the course of trade, so that if they are to retain more than 20 percent of any donation, there will be a positive requirement to disclose that a portion is to be retained by way of fees. If the retention is to be greater than 50 percent, then the actual percentage to be retained must be stated before a donation can be accepted. Donations of less than $20 made in person and by way of cash will be exempt in order to minimise confusion in small-scale street collections. I acknowledge that the obligation on those seeking to keep more than half the funds is onerous, but I believe it is also appropriate and right that consumers should be made aware of that circumstance before parting with their hard-earned cash.
I look forward to a comprehensive discussion at the select committee on the mechanics of the bill, and an exploration of any and all other suggested ways to control the reprehensible aspects of the sector. I would like to make it clear at this stage that I am quite open as to the form that the actual requirements should take, where any thresholds are set, and how various activities should be defined. The fundamental issue for me, and the test I will use to assess any proposals that come before the select committee, is: “Is that fair on those who are donating?”.
May I say at this point that one of the central motivations for me in this process has been to restore and protect confidence in those charities and fund-raisers that run highly ethical and appropriate campaigns. As we often see, cowboys in an industry ruin the reputation of the whole industry. Through forcing disclosure of improper practices, it is my hope that the many excellent and worthwhile fund-raising campaigns will not suffer from being tarred with the brush of disreputability. It seems to me that there is also the role of educating the public that direct giving is always preferable and that there is, in particular, the ability to take advantage of some of the initiatives this House has created this year, such as payroll giving—and just last night we saw the exemption from gift duty that will be created for charitable giving.
In essence this bill is about protecting consumers and restoring confidence in the sector of charitable giving through enhanced transparency, and I hope to see full engagement of the sector in the select committee process. I look forward to hearing the remainder of the debate this afternoon, and I ask other parties in the House for their support at this first reading stage so that this important issue can be examined in full at the select committee. Thank you.
CAROL BEAUMONT (Labour) : I rise to speak in support of the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill 2009—a member’s bill in the name of Amy Adams. As Labour’s consumer affairs spokesperson it gives me pleasure to support this bill. We agree very much with the aims of the bill, which are to provide increased transparency and public accountability for professional third-party collectors who are in the business of collecting funds on behalf of registered charities. Like Ms Adams I recognise the very important contribution that those charities make to our country and overseas, and I recognise the very hard environment that they operate in, particularly in tough economic times like those we face now.
As I have said, Labour supports this bill’s referral to select committee, and will look forward to discussing the mechanics of it and perhaps some of its definitions. It is a good bill and it addresses an area of concern for the public, and that is why we are supporting it. Currently, damage is being done to the non-profitable and charitable sector by what have been referred to as the “charity cowboys”. That is what the Fundraising Institute of New Zealand has called some of the third-party professional collectors. We do not want to see the very many reputable organisations that are providing the overwhelming amount of what is collected to the people they are aiming to help being damaged by these cowboys.
It begs the question of why this is not a Government bill, because there is widespread concern about this issue. I note that all the Government is prepared to do in this space is direct “the Office for the Community and Voluntary Sector to offer support to the Fundraising Institute of New Zealand as it develops its fundraising Standards”. Those are the words of Tariana Turia in a speech made to the Charities Commission just recently. The bill recognises the right of people to know where their hard-earned money will go, whether it is going to the charity of their choice or to the profit-making third-party collectors, and that is important.
The bill is consistent with very sound consumer principles such as transparency and informed choice. People will be able to decide whether they want to give to charities where a significant portion of what they are giving is being retained by third-party collectors. We also need to see a Minister of Consumer Affairs who is addressing matters that are important to consumers. There are many important matters on which consumers need to see action, and, frankly, they are not. Such areas include improving consumer knowledge and protection, especially given that the consequences of bad decisions and rip-offs are more significant in tough economic times, when people are already struggling to make ends meet.
We also need to recognise the needs of vulnerable consumers, those who are poor or have low literacy or low levels of English, and our elderly and our young people. We need to improve services and information that targets them, including, I believe, access to advocacy. We need to see action on targeting exploitation. Here I am thinking particularly of loan sharks and truck shops. As Labour’s consumer affairs spokesperson, members will be seeing action from me in these areas, because these people are specifically and systematically targeting low-income people who cannot afford the sorts of rip-offs that they are promoting.
We need to see continuing updating of our consumer law to take account of changing relationships: for example, online selling. We certainly need to recognise, and this is where I think Ms Adams’ bill is so important, that an increasing number of consumers desire to spend their money or invest in things in an ethical and sustainable way, and to use their consumer choices effectively. I think this bill is part of that. We want to see more action in the area of consumer affairs, and at the moment we are not seeing a great deal from the Minister of Consumer Affairs.
As to the specifics of the bill, as I said at the start of my speech, it aims to improve transparency and disclosure to the public. Currently there are no rules on what has to be disclosed, except that no misleading or deceptive statements may be made, as is clearly outlined under the Fair Trading Act. The bill will require professional third-party collectors to disclose to potential donors that a portion of the donation will be retained by the collector, and that will apply only, as Ms Adams has outlined, if the proportion retained is more than 20 percent. This does not apply if the donation is less than $20 and made by cash only.
I think it interesting that a distinction has been made between the proportion retained between 20 and 50 percent, which will mean that the collectors have to simply disclose that a portion is being retained and withheld by them, but not the amount, and, where the proportion retained is more than 50 percent, the collectors will have to disclose, to the nearest percentage point, what percentage is being retained. I think that is a matter that should be discussed in the select committee. I do not quite know what the reasoning is behind that distinction, and I think that in lots of ways 20 percent is a pretty significant amount to be retaining. Perhaps the answer is to make it a requirement to disclose for any amount over 20 percent what proportion is being retained.
Public accountability is really important in the credibility of our charity and voluntary sector. It is important to give people the confidence to donate. We need people to donate to support organisations. As has already been mentioned, many of the MPs in this Chamber take part in collecting for charity, and we want to know that these are reputable organisations and that the money is going where the need is.
There are a few examples I want to raise. The one that Ms Adams raised concerned Epilepsy New Zealand. Again, I think it is pretty appalling so I will put that on the record as well: $2.82 million was gathered in donations, through telemarketing, and approximately $2.1 million of that went straight back to the telemarketers. In other words, $70,000 went to Epilepsy New Zealand. That was described by the Fundraising Institute of New Zealand as absolutely scandalous, and I agree; 2.5 percent of what was collected actually went to where people thought they were giving the money. The recent telethon on TV3, for the benefit of KidsCan Charitable Trust, was also in the spotlight for claims that less than 20 percent of the money raised was being passed through to the disadvantaged children that KidsCan Charitable Trust was actually collecting for. The trust has recently announced that, in fact, 80 percent was passed through to the disadvantaged children but I think a bill like this one would make sure that there was not that uncertainty and that there was not any room for people arguing that the money was not going where it should be.
The show on Television New Zealand (TVNZ) that I think is going to be canned, and it is a shame that Mr Hide is not in the Chamber because we all recollect his performance on it—
The ASSISTANT SPEAKER (Eric Roy): Order!
CAROL BEAUMONT: I am sorry; excuse me. I know I cannot comment on the fact. I was merely reflecting on how we enjoyed his performance.
The ASSISTANT SPEAKER (Eric Roy): The member cannot refer to the absence of any member from the Chamber, and the member should not be trying to relitigate after I have already cautioned her.
CAROL BEAUMONT: I am very sorry. As I was saying, TVNZ’s show Dancing with the Stars was also caught up in controversy not just because Rodney Hide was dancing on it but also because only 60 percent of the money raised by it actually made it to the recipients. So probably hundreds of thousands of New Zealanders donated to that show, but only 60 percent of the money raised actually went to the recipients that people were fund-raising for.
These examples show the need for this bill. As I have already mentioned, there are probably some areas we could debate in the select committee. Again, on behalf of Labour I congratulate Amy Adams on this bill. I will finish by saying that the important thing here is that this bill means we support those genuine organisations that are doing the right thing and are supporting the people who need that support. We do not want to see the reputations of those organisations undermined by some of the examples I have just given. Thank you.
The ASSISTANT SPEAKER (Eric Roy): The next speaker will be Katrina Shanks. Before she begins, I say to members that we are having 5-minute calls, with a 1-minute bell.
KATRINA SHANKS (National) : It is my pleasure to take a call on the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. First of all, I acknowledge the hard work that Amy Adams, the MP for Selwyn, has put into this bill. It takes a fair bit of effort to get a member’s bill into the House, so I congratulate her on the effort she has put in for such a worthy cause. There are no greater causes than charities and the work that they do to support the most vulnerable and needy people in our society. I found it interesting when I was listening to Amy Adams give her speech, because I did not realise that there are over 23,000 registered charities in New Zealand and that an estimated total income of about $10.4 billion goes into those charities, which is very, very significant. Of that, $2.4 billion comes from donations. That is fairly significant. We are talking about a big amount of money—$2.4 billion—that comes from donations. That is huge.
Many of us in this House do a lot of work for charities. Not only do we fund-raise in terms of the Parliamentary Rugby Team and the netball team, which I coach with Moana Mackey, but also we do a lot of work for charities by going around New Zealand, raising money, and donating it to a good cause. Many of us in the House also stand with buckets on the corners of busy streets for long periods of time to raise money for causes and to raise their profiles. We do that to give those charities a bit more visibility than they would normally have, especially when we advertise where we will be, what we will do, and what we are supporting that week. It raises their profile just a little bit more. I think that every member in this House does a fair bit towards charities. It is good to see that this bill will not affect the work we do in terms of going out there to hold our buckets, because the volunteers in the street give a heart to communities as well. This bill will not affect the heart with which that money is given. When people walking by put their $10 in the bucket, they will not be affected either.
When we talk about charities, it is important that charities have transparency and public accountability about how they raise their money, because people give out of the goodness of their hearts. Transparency and public accountability is especially important for those charities that do not use employees or direct-marketing but use a third party to raise money. Telemarketers do a lot of good work for those charities, but, unfortunately, they also come at a cost. This legislation, which will go to a select committee, will add some transparency and accountability into that process. In doing that, we hope it will restore confidence to the public when they donate money, so that they know how much money is going to the charity and how much money is going to the third party that is helping to raise that money.
When we look at some of the specifics in the bill, it is interesting to note that a third party collector means someone who is not an employee and who acts in the course of professional trade on behalf of a charitable entity. That is important, because we do not want to catch the real employees and the charities within this provision but just the third parties, in order to get transparency in this process. There have been many sad stories of big charities raising money and not a lot of it actually going to those charities. This bill will help that situation. Hopefully, it will encourage more people to give money to charities, and they will not be as sceptical about whether the money will actually go to the charity.
Many of us do the Relay for Life. We run around, and when we ask people for money, we hear them saying that not much of the money collected goes to people with cancer. But, actually, it does, so it is good that we will get some transparency in this area. It is my pleasure to support this bill’s referral to a select committee, where members can have a very good, robust debate on some of the clauses in this bill. Thank you.
Dr RAJEN PRASAD (Labour) : I am also pleased to take a call in support of the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. In doing that, I acknowledge Miss Adams’ work on this and also her good fortune in having it pulled out of the ballot—and that is to her credit.
It is a shame that it is not a Government bill, because the issue is important. But, having said that, it is important that the bill is here, and it is important that it will be going on its way to a select committee, where the really important questions will be raised. The select committee hearings will be an opportunity to acknowledge the work of the voluntary sector and the many people who, day in and day out, do this work for us. I do not think our social welfare system, our child welfare system, our alms-giving system, and our system of community support could function without these agencies, which simply front up to do a great job in our communities. Our communities would not survive, and I do not even think that much of our welfare system would survive without them, because there is a very close and important relationship between these agencies and Government services.
The range of these agencies is very broad. There are services for children, services for families, and support services for the disability sector. There are people out there who rely on the small amounts of money they get from other people’s giving. Many of those who give are poor people, as well. There are services for the aged. A number of agencies are out there doing work with this particular sector, and they do it with love and affection, in a very selfless way.
I will also mention the refugee settlement sector and the voluntary agencies out there doing this work, funded by charitable trusts, which do a great job. These agencies are the really tireless workers for us and for our community, and they give so generously. They really rely on something that is ingrained, if you like, in the New Zealand personality, and that is this notion of giving. The resources they get, by and large, to do their work come from the generous giving of New Zealanders.
I regret, though, if I may say, that these groups rely too much on contributions from voluntary funds and that the State sector does not fund them enough. But that is a debate for a different forum. There can be another discussion about the balance between what the State provides and what voluntary agencies do. In my days as a practitioner, when these agencies were really having difficulty, I remember that they would often say “Let’s have cake stalls to buy our Skyhawks!”. We all remember seeing those signs, yet these people do not do that. The people who stand on street corners with buckets, and those who call for funds, are the ones who bring in the funds to support this sector. Those people call on a very important aspect of the New Zealand psyche, and that is in giving. I think we do it well.
Therefore, it is totally heartbreaking to receive the reports that we have seen in the recent period about the very small percentage of the funds gathered that actually get through to this sector. It is heartbreaking. I must admit that I was amazed when I read some of the figures and I read the amount that telemarketers and others were taking. It is important, therefore, that we regulate the sector to the extent that is possible, without killing off both the collecting as well as the giving behaviour of New Zealanders. That is important.
There are cases that other members have mentioned, so I will not mention them. I turn to the bill itself. Amy Adams is right in focusing on transparency and disclosure, and that has an important value. But I do have some difficulties about the percentages, and I hope the select committee will visit that issue. I agree with my colleague Ms Beaumont that 20 percent is still a lot of money. If someone collects $10,000, then a big chunk of that is gone, with people not knowing that that will happen. I think we should have a general culture of disclosure, without stopping those who collect in small ways, like the collectors on the street who collect the smaller amounts of 10c or a dollar. Thank you very much.
DAVID CLENDON (Green) : I am very pleased to continue the generally very agreeable nature of the debate that has been occurring on these last couple of bills, and the Greens will be supporting the progress of the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill to the Commerce Committee. We have some minor reservations but, overall, it seems to be a very, very timely measure, for at least two reasons. The first is that we indeed need to protect charities against falling victim to unscrupulous commission agents and, perhaps more important, we need to maintain public confidence that the money they donate will be substantially committed to the charitable purpose for which it is intended, with only a modest and clearly indicated percentage being retained to meet the reasonable costs of collection, or the commission. We have already heard some examples of the untenable rates of retention, and I think “extortionate” would not be too hard a word to use about some of those examples.
It is clear that charities of all sorts have not escaped the effects of the global recession. It has become much harder for organisations to raise funds for whatever purpose, and competition for that diminishing resource can become intense. There are now over 23,000 charities registered with the Charities Commission, both small and large, and according to the Fundraising Institute of New Zealand larger charities with very strong brands are tending to become larger while smaller charities are tending to move in the opposite direction, getting squeezed out. Indeed, they are struggling to survive, making them much more vulnerable to the depredations of some of these much less scrupulous organisations that might offer them service.
I was fortunate recently to be invited to the celebration of the reopening of a Plunket room in Sandringham, after the group had lost its building to an arson attack some 2 years earlier. The local community did an extraordinarily good job of, first, extracting some $200,000 from the local council, and, second, raising a similar amount in both cash and kind through their own efforts, all the while project managing the construction of what is now a superb facility that will serve that community for many years. The success of that particular venture was testimony not only to the hard work and perseverance of that community but also to the fact that they were part of a national organisation, and that they counted among their number people with high-level professional and other expertise. This sort of expert professionalism is not always available to charity groups. Although they may have a deep and broad knowledge of the sector they are serving, they may not be astute in contracting or managing professional or other assistance. So they, along with donors, are the most at risk from unreasonably high retention rates from organisations that can be fairly described as little more than rip-off artists.
This bill proposes to amend the Fair Trading Act to require professional third-party collectors to disclose to potential donors that a proportion of the donation will be retained, and this will apply if the proportion retained is more than 20 percent. It goes on to suggest that if the proportion retained is between 20 and 50 percent of the total donation, then the collector must simply disclose that a portion has been withheld by them but does not have to disclose the amount. If the proportion retained is more than 50 percent, then the collector must disclose the percentage being retained. In common with an earlier speaker the Greens are somewhat sceptical—we question whether those threshold levels are appropriate—but we are very happy to wait and see what submissions come to the select committee and what evidence there is to suggest that those thresholds are appropriate, or, indeed, to set some other level.
So with that aside, we do look forward to this bill progressing. We compliment the member who has presented it. Kia ora.
Hon HEATHER ROY (Minister of Consumer Affairs) : I rise on behalf of the ACT Party to speak to the first reading of the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. ACT is very pleased to support this excellent bill.
It is always of great concern when consumers are being misled, and this can be the case when a charity uses a third party to solicit donations on its behalf. According to recent media reports, most individuals who donate money believe that most of their donation will be used to fund the activities of the charity concerned. What they do not realise, often, is that a proportion of their donation can be used to pay for the third party’s services. Although the use of third-party collectors or agencies to solicit donations is neither illegal nor dishonest, it can be misleading. Amy Adams’ bill attempts to improve the transparency of these transactions and ensure that people are aware of what happens to their donation. Mrs Adams should certainly be congratulated on this initiative.
As others have said, the legislation that is currently in place to ensure that consumers are not misled is the Fair Trading Act. Mrs Adams’ bill will add provisions to the Fair Trading Act’s unfair practices section that will require charities to disclose the portion of the donation to be kept by the collector when that portion is over 20 percent. Other speakers have already mentioned the thresholds.
As Minister of Consumer Affairs I have initiated a project called One Law—One Door, which is a simplification programme for consumer law with a goal of principle-based consumer supplier legislation that will see rationalisation of the 12 consumer laws that currently exist. Carol Beaumont might think this is nothing but, in fact, I spoke to a group of stakeholders last week and they signalled that this programme was the most significant thing that had happened in consumer law for quite some time—indeed, for many years. Clearly, Labour members do not think that regulatory form and having legislation that is clear, enforced, and enforceable is important at all, but I assure them that it is.
The Fair Trading Act, of course, is the pivotal legislation in my One Law—One Door project. For this reason the introduction of Mrs Adams’ amendment bill is very timely. The long-term view is for an enhanced Fair Trading Act that incorporates as many of the aspects of other consumer legislation as possible, as well as additional enforcement tools that have been identified. That is something, it seems to me, that the Labour Party talks about quite often.
Together with Mrs Adams we have discussed the interface between One Law—One Door and this amendment bill. Our conclusion is that there is merit in the proposed bill being absorbed into the One Law—One Door project and considered within the new approach to consumer law. So that should satisfy Mr Prasad’s concern that this bill is not a Government bill. In fact, it is a very good initiative from Mrs Adams and will be incorporated by the Government.
ACT supports the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill to progress to the Commerce Committee with a view to it becoming part of the One Law—One Door review, after the public submission process is complete. The ACT Party not only supports this bill but commends Amy Adams for her work in ensuring that consumers are well informed and that charitable giving is transparent. Thank you.
TE URUROA FLAVELL (Māori Party—Waiariki) : Kia ora tātou e te Whare. Tēnā koe, Mr Speaker. I am pleased to take a call on the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. I congratulate Amy Adams on putting the bill forward; ka nui te mihi. There is an old saying by a great Te Arawa person that goes something like this: charity begins at home.
Hon Darren Hughes: I thought it was Hone Harawira.
TE URUROA FLAVELL: That one is: charity stays at home. I absolutely agree that it is along the lines of recognising that famous saying from that famous Te Arawa person that, ultimately, charity, manaakitanga, demonstrated through the expression of aroha, hospitality, generosity, and mutual respect, is an important part of the New Zealand culture. It is also about whanaungatanga: understanding our interdependence with each other, and recognising that people are our wealth. It is about kotahitanga: doing our bit to contribute to the collective well-being.
The acts of charity that this bill addresses are, however, outside of the home. We are instead talking about the small to medium sized organisations that tend to employ third-party fund-raising professionals. We are talking about Barnardos New Zealand, with a total income of $53 million coming in from general donations and another $53 million from parental contributions. We are talking about Plunket, with an income for core child health services close to $39 million. We are talking about St John Ambulance, with revenue of up to $150 million from the rendering of services, with an additional $19 million from donations, bequests, and grants. These are just three of over 23,000 charities registered with the Charities Commission. These are sizable amounts of funding that we are talking about, and, as such, we believe it is essential that the public has confidence in the transparency and the accountability of the charitable organisations they support.
Other speakers have already mentioned that the bill is a response to the recent media interest in charities where a significant amount of fund-raised income has been spent on the fund-raisers. Basically, the bill requires professional third-party collectors to disclose to potential donors that a proportion of the donation will be retained by the collector. This, as other speakers have said, applies only if the proportion retained is more than 20 percent.
The hub of the issue for the Māori Party is that although the proposed amendment to the Fair Trading Act may be helpful and would provide some transparency, it does not assist donors to distinguish between different types of fund-raising and the associated costs or require disclosure from charities that employ fund-raisers. Most important, we in the Māori Party believe that the bill is premature. We have of course had the privilege of being able to consult the very fine Minister for the Community and Voluntary Sector—
Amy Adams: Excellent Minister.
TE URUROA FLAVELL: —an excellent Minister, from an excellent party—about this bill. We have become aware of the capability—
Hon Darren Hughes: She’s not Labour.
TE URUROA FLAVELL: Thank goodness! We have become aware of the capability and awareness within the fund-raising sector itself and that there are some legitimate issues about the regulation of the sector from within. As I said, we have been fortunate to have input from a fine Minister.
We know, too, that the Fundraising Institute of New Zealand is currently drafting industry standards for its members, to supplement its existing codes of ethics and conduct, and these are very positive steps. Having standards in place will help to set firm guidelines for fund-raisers and the public about what is acceptable practice. We hope that as a result of such a move we are likely to see improved practice and the restoration of donor confidence.
There is, however, a risk that although the cost of compliance might be minor, some fund-raisers might not be prepared to continue to fund-raise for charities, and that is a big concern for us. The groups I referred to before, and the 23,000 other groups, do not deserve to be punished by one bad apple in the bag. Quite to the contrary, we should all be doing what we can to support those vital services that are in many respects the heart-line of our communities.
The Māori Party is prepared to let this bill go to the Commerce Committee to hear what the community and the voluntary sector have to say about it. But we do so, I have to say, with some reluctance. The last thing we want is to pile even more work on to a sector that is already flooded with more than enough paperwork to deal with. We have confidence in both the Minister for the Community and Voluntary Sector and in the sector itself that financial reporting requirements are seriously under review. However, consistent with our commitment to letting the public have a say, we will vote for the bill today.
JONATHAN YOUNG (National—New Plymouth) : I firstly congratulate my colleague Amy Adams on what is not only her first member’s bill but, I believe, a very excellent one, the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill.
I spent 20 years working in the sector that she—
Mr DEPUTY SPEAKER: I accidentally rang the bell. My apologies.
JONATHAN YOUNG: I think, Mr Deputy Speaker, you owe me another minute.
Mr DEPUTY SPEAKER: It was the enthusiasm of the speech. My apologies.
JONATHAN YOUNG: Exactly, Mr Deputy Speaker. That bell means that I get to congratulate Amy Adams again, and her name gets written in Hansard as presenting a very excellent bill.
As I was saying, for 20 years I worked in the sector. I believe that this is a very important area, because everything to do with giving in our country has to be based upon integrity and credibility. New Zealanders like to give people a fair go. It is our nature, and it is why we give to charities and to charity collectors. New Zealanders have a giving spirit, with 77 percent planning to make a donation to charity in the next year, according to MasterCard’s September survey of 14 countries. In fact, we are second in the Asia-Pacific region for our generosity, beaten only by Indonesia; I must say that Australia is 11 points behind us. So we need to protect this attitude of generosity and giving. It is part of the Kiwi way of life, where we like to help out each other. It only takes somebody to rip off somebody else to bring some disappointment and cynicism that stops that fantastic sense of community spirit and contribution. So I thank Mrs Adams for putting this bill together. I think it is timely. I think it is needful. Some issues regarding the financial reporting of it need to be worked through, and I am sure that they will be. I think that those percentage figures are pretty close to the mark. I look forward to a select committee working on this bill.
Over recent years the Charities Commission has been established as a central place of registration and financial reporting for charities. That serves to create not only necessary transparency and accountability but, equally important, credibility amongst our charities, because those who register and those who are financially accountable are shown to be bona fide. That is very, very important. There has been a big increase in charities seeking donors’ dollars. It is described as the “alms race” in New Zealand. Generally, the scrutiny of the public has been focused on what proportion of donated funds ends up being spent on the purpose of the charity as compared with being consumed by administration, wages, and salaries of the charity. Like Government, efficiency and productivity are required by charities. I implore and encourage charities to continue to work on this.
I am extremely pleased to support this bill, which Amy Adams has brought to the House, because I believe that it brings the necessity of transparency and accountability to a new level regarding the use and the practice of professional third-party collectors. It requires them to step up to a level of transparency regarding the commission they receive from the proceeds of donated funds. I think there is an acceptance that any organisation will need to spend money to get money. That happens in the field of commerce. We need to understand it, as people do it. It is unrealistic to expect a nil proportion to go towards the sustenance of an organisation and 100 percent to go to the purpose of the organisation. But there comes a percentage threshold that is unacceptable. This bill is working to find that threshold, to find that level, and to bring that accountability. I say to charities that employ the services of those third-party collectors to have care that they do not select people who will take such high percentages of commission, because people are looking at the credibility and accountability of the charities in all of this. Please do not create self-injury by those things.
As I close I say once again congratulations on what I believe is a well-balanced, well-prepared bill. I believe it will help New Zealanders continue to be generous and will help charities function effectively in our country. I am very pleased to commend this bill to the House.
AARON GILMORE (National) : I will just take a quick call on the Fair Trading (Soliciting on Behalf of Charities) Amendment Bill. I am sorry to interrupt proceedings a little, but the reason I want to do so is to say, firstly, it is a pleasure to stand and support my colleague from Canterbury, Amy Adams, on this bill. Mrs Adams is blessed both by her beauty and her brains, or that is what her husband tells me. She has brought a wonderful bill to the House, and I will touch on two aspects that I think have not quite been touched on but are important.
It is important that some charities have the ability to contract out their fund-raising, and hence can use different percentages of administration costs. It is important that those percentages are quite variable, and there is a good question mark over whether the percentages are set correctly now in the bill. I think that this bill has wide-ranging support around this House, and it is excellent to be able to split out some of the minimum disclosure arrangements. I congratulate Amy on having this bill pulled out of the ballot, and I look forward to seeing many more such bills. I look forward, too, to this bill being passed through to the select committee, and to it coming back to the House later on. Thank you.
AMY ADAMS (National—Selwyn) : I thank the House for its support this afternoon, and thank members for their useful and well-thought-through contributions. I will not take a lot more of the House’s time, but I will use this opportunity of the right of reply to address a couple of the things that have come up in the debate. I will start, though, by thanking all party members for their support, particularly Minister Roy, who has been very supportive as the Minister involved. I also say that I deliberately chose the Fair Trading Act for this amendment bill, because that Act is a central piece of consumer protection legislation. As a lawyer I have always enjoyed the width and support it gives consumers, and I am very pleased to see this bill going forward as an amendment to that Act.
I will address, firstly, the issues raised by the Māori Party about industry self-regulation, and Minister Turia’s view that the bill is premature and we should let self-regulation do its thing. As I said in my opening contribution, I am very open to looking at that, and at everything else, in the Commerce Committee. My concern, I have to say, about self-regulation is that I have yet to be convinced about the way industry will ensure that all fund-raisers will buy into that. Certainly, self-regulation works well in professions like law and medicine, where people have to have a licence to practise, but I am not sure how we can force every business that fund-raises to become a member of the Fundraising Institute of New Zealand, and to comply with its rules. If in fact it can be shown that that can be done effectively, then obviously I am more than open to that.
Similarly, Carol Beaumont and David Clendon, in their speeches, touched on the concern about where the thresholds would be placed in the legislation. I am certainly very open to that. I indicated in my first contribution that I like to think I am not one of those politicians who think they know everything. For me, I recognised there was an issue that I wanted to see addressed, and it was a matter of putting a stake in the ground in order to begin the debate. I certainly want to flag, again, that I will certainly be very open to a good discussion in the select committee about where those thresholds should be placed. It may well be that an amendment is necessary. So I want to make that quite clear to the House.
In closing, I say to members how much of a privilege it is, as a member, to bring a bill before this House to address something that I think needs to be addressed, and to have this House work so well across party lines to address the issue on its merits. I thank the House for its support.
- Bill read a first time.
- Bill referred to the Commerce Committee.