With submissions on the proposed Charities Amendment Bill closing a couple of days ago, Denis O’Reilly argues against the changing attitude towards charities and what he sees as the move away from a pragmatic, community-friendly and whānau-centred model of philanthropy.
Philanthropy isn’t operating in the way it used to over the years. I chair three charitable trusts, all on a pro-bono basis — and I’ve seen the increasingly strident communications from officials in the Department of Internal Affairs (DIA) when one trust was late in submitting its annual accounts.
The delay was no mystery and no sin. It came from the impact of Covid on the organisation’s accountants who, in the circumstances, couldn’t process the trust’s documentation for audit.
The DIA was threatening to take the trust off the Charities Register. I thought: “Hold up. That’s not fair.”
The administration of charities is due to be reviewed by a select committee. In fact, submissions on the proposed bill closed just a couple of days ago.
I saw how useless the select committee was when it disestablished the Office of the Children’s Commissioner, and I thought that, this time, I’d try to do a better job on my submissions.
So, for this submission, I put my CART hat on and laid out this argument.
CART? Well, it’s the Consultancy Advocacy and Research Trust, and it’s a small, Māori, not-for-profit organisation working nationally with hard-to-reach and difficult-to-deal-with communities.
Our core constituency are the long-term unemployed, prisoners and former prisoners, the mentally ill, alienated, disaffected, ostracised, impoverished, homeless and disenfranchised. It includes our gang communities.
In recent years, compared to the 1980s, our whānau and community profile has changed as successive generations have become more skilled and qualified.
CART serves about 10,000 people within whānau across Aotearoa. Most of our community are Māori. Our mission is to deliver fresh hope to them and enable change where it’s most needed. We’re imperfect in what we do, but we do our best — and we try to make ourselves available whenever we’re asked.
CART was founded as a charitable trust in 1989. It arose out of the work co-operative movement of the time. Around 1985, it was estimated that some 3,000 mainly young New Zealanders were part of a work co-operative.
From the mid-1970s, charitable trusts were the popular structure for work co-operatives over and above incorporated societies or co-operative societies. Hence, in New Zealand’s social science literature, work co-operatives are generally referred to as work trusts.
Their trustees were usually members of the co-operative group and were employed by the trust. It was more akin to a union, where the decision-makers were elected by popular vote.
Primary among the “charitable outcomes” of most of the work trusts was creating jobs. So the trust itself needed to be run pretty much as a business.
In those years, the DIA had a funding stream to support the work trusts. And the DIA staff (based generally in the Recreation Arts and Youth division), worked closely with community groups to choose the best structure.
Back then, DIA staff were able to meet with groups in person, kanohi ki te kanohi. They saw, first-hand, the extraordinary work that these groups undertook. Where problems arose around financial management, conflicts of interest, governance, or management issues, DIA field officers were on hand to assist.
The usual tactic was to introduce the group to a local accountant and establish a relationship. Often, DIA would partly fund the service provided by the accountant and, frequently, the accountancy firm would do work pro bono or at a community rate.
In many instances, a wonderful thing would come out of this. The accountancy firm would generally have partners or practitioners within the local business network and be part of service clubs such as the Jaycees or Rotary.
The work trust members might be seen by many members of the community as outsiders because of their political beliefs or status as unemployed, or hippies, or gang members, or simply because they were Māori.
The professional relationship gave members of the mainstream community a window into the lives and activities of these “outsiders”. They were able to see the hard work and pro-social attitudes of people they may well have previously feared or been suspicious about.
After the 1981 Committee on Gangs, the Department of Labour had a similar programme. It was a fund run by the Group Employment Liaison Service. Both these funding streams favoured a “hands on”, or “all crew, no passengers” approach to mobilising communities and building resilience.
The 1987 Roper Report (which came from the Ministerial Committee of Inquiry into Violence) endorsed these approaches to resolving some issues of violence and anti-social behaviour.
However, this pragmatic approach to running a responsive and effective community entity doesn’t easily fit with the current Charities Commission model, nor with current NGO “best practice” conventions.
The shift from the 1970s attitude to what, in 2022, is considered to constitute a charity, has been driven by the changed view of philanthropy and by the establishment of the Charities Commission.
The prevailing attitude now envisages a low corporate tax economy where entities and individuals accrue wealth, sometimes huge wealth, then give some of it back through charities to do good works — and to lessen the impacts of an inequitable society, among the “deserving” poor.
The preferred model is that the charity has a board of governors. The board sets the agenda and employs a manager to deliver the outcomes desired by the board. The manager secures funding from donors and/or wins government service contracts as a social enterprise.
This model may be easier to monitor and more appealing to bureaucrats, but it’s not the model that best serves hard-to-reach communities.
On the other hand, the social action model that CART is based on, has an organisation driven by community leaders who believe in the potential of their people to succeed on their own terms and, in turn, are trusted by those communities.
There’s not a great distinction between what constitutes governance, and what represents management.
The community action model engenders trust among people who otherwise are inclined to distrust institutions and government.
CART is virtual in that it doesn’t have an office. When there’s a need, the trustees and kaimahi use the facilities of our accountants who handle all the money and take care of the accounts.
CART trustees are volunteers. They, generally, are drawn from the communities that the trust serves. It’d be fair to pay the trustees, but the funding streams are so lean this isn’t possible. Not yet anyway.
Trustees often have specialist knowledge that isn’t obtainable in the market, yet there could be a perception of self-benefit if a trustee were to provide services to the trust at market or even below market rates.
CART’s management of money is robust and transparent. A partner from the accountancy firm and the chairperson both sign off on all payments. Where there’s potential for conflict of interest on the part of the chair, an independent trustee signs off on the payment on behalf of the chair. The accounts are independently audited.
These arrangements give confidence to funders and they limit political risk at a time where there’s great suspicion about organised crime. Because CART deals with gangs, and gangs are incorrectly treated as being synonymous with organised crime, clean hands are critical.
It’s cold comfort to recognise that the major organised crime in New Zealand is white-collar crime, corporate fraud, and tax evasion. These criminal behaviours hide in full sight within our economy, yet the focus is on the blue-collar communities: poor, brown, and marginalised.
We don’t begrudge transparency. Yet it comes at a high cost — perhaps 20 percent of our income is treated as an across-the-board allowance we make to cater for administration, accountancy, and auditing. We balance on the cusp of doing stuff for ourselves (at say $28 an hour) but also paying a highly qualified accountant, say, $150 per hour.
If we administer ourselves, we’ll have to employ, train, supervise, and support staff in their mahi by providing space, travel, hardware and software. Even then we couldn’t be sure the job would meet audit standards.
The supervising partner from our accountants effectively gifts his time and, as pro-bono executive chairman, I’m effectively covering for what is otherwise an around $100,000 per annum role.
Without this philanthropy on our part, the CART service might not be viable. That can’t be a good outcome for our community of service or for the community at large.
I agree that transparency is crucial, and that deployment of taxpayer money needs to be the best spend for the best outcome. Evidence-based assessments are required.
We’re now hearing a crescendo of voices seeking vindictive criminal justice policies — counter to the available evidence — as how best to respond to youth crime or other criminal behaviour.
It is a charged political environment and, in such thunderous circumstances, an organisation such as CART, which is offering an alternative option, better mind its charitable entity p’s and q’s.
As I say, this comes at a necessary cost. The ultimate beneficiary of well-targeted (doing the right thing) and soundly-run (doing the thing right) community action is the community itself.
And, where negative spend is reduced and human potential enabled, then the taxpayer gets a good return on investment. If CART spends, say $50,000 per annum on a community activist, and that effort keeps just one person out of prison for a year, then, in criminal justice terms alone, that’s a $3 return on a $1 taxpayer investment.
So it would make good sense to fund this community skill and effort and foster these pro-social initiatives.
It would make great sense if DIA helped fund the governance arrangements and, in doing so, helped relieve the trustee governors of some of the heavy burden of accountability and liability.
Rather than catching people doing things wrong, how about catching them doing things right? And helping them do more of that? Feed the positive, starve the negative.
When the government invests big bucks into sporting events for the relatively rich and privileged, the spending is justified based on an economic multiplier, an increase of wealth.
I argue that when community members choose to do the right thing and contribute their discretionary effort, then they trigger a “social multiplier” — an outcome well beyond the value of any taxpayer funds.
The significant economics of the moment in our communities are behavioural economics. Just like the angry police spokesman from the National Party, we are powered by emotions and beliefs rather than the logic of facts and digits.
Faced by what looks to be a difficult year ahead, we need to rally at a community level. Emotions and beliefs. If we think we can, or we think we can’t, we are probably right.
At CART we think we can. To deliver on our mission, CART consults with pro-social leaders, people who are out there working in the community and are intent on making Aotearoa a more equitable society. We evaluate what we’ve done to identify what works and what doesn’t.
We apply enlightened policies and strategies. We advocate for the underprivileged and marginalised. We support whānau-defined initiatives.
By doing these things, we strengthen the whānau and put the power in their hands, so they can do things themselves. A hand up rather than a hand out.
Denis O’Reilly is the chairman of CART. He is a writer, social activist and consultant, and has a master’s degree in social practice.
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