What is the difference between incorporated society and charitable trust

Interested in pursuing a purpose or cause that benefits the community? The type of vehicle you use is critical in ensuring your efforts are effective and that any assets you hold are protected.

Charitable Trusts and Incorporated Societies are two common vehicles used in New Zealand that often cause much confusion. We provide a short summary outlining the benefits and drawbacks of each option below:. There are some stories of members ousting officers but in our experience this would be very rare. All society activities should fall within this purpose.

Complying with your society's rules. An incorporated society can raise money to help achieve its 'objects', as set out in its rules. It cannot, however, make money to distribute to its members. For example, a society can raise money to send a sports team to a tournament if that type of activity is allowed by its rules , but it cannot raise money and give it to its members to use as if it were their own.

An incorporated society can employ people, including society members, and pay them for the work they do. Restrictions on money-making activities. Both individuals and corporate bodies can make up this number. If some members of your group are corporate bodies, then each of these bodies counts as three people for the purpose of making up the minimum number of 15 members, required to add their names to the application for incorporation. These include sports and social clubs, and cultural, special interest, church and activist groups.

A society does not have to be incorporated in order to operate. So, before you decide whether to incorporate, you should consider the following issues of not doing so:. Find out about incorporated societies and the Incorporated Societies Register, and what's needed to register and maintain an incorporated society in New Zealand. About the author Peter understands the true meaning of great client relationships.

Peter's Recent Articles How should I structure my new business? Why have a family trust? When is it time to start bankruptcy proceedings against a debtor? Changes to regulations around Incorporated Societies are being considered see a separate post. Our consultant will be pleased to discuss this with you on a no-obligation basis. A number of the essays espouse principles related to non-profit management and government.