In this episode of Family Matters, Simon talks with Steven Moe about how we can make a greater impact through our charitable investments. Steven is a leading New Zealand lawyer specialising in the charity space and he shares insights into how charities operate and how creative investing can impact change. Steven talks about the importance of aligning investments with the purpose of organisations, and how governance should reflect the latest best practices. Steven also emphasises the role of storytelling in highlighting the work done by charities. He also covers the recent government consultations on taxing the business income of unrelated charitable activities and offers practical advice for incorporated societies regarding the new regulations.
Show script auto-generated by Descript app:
Simon O’Connor: Hi everyone. Welcome back to Family Matters and welcome back, if you will, to New Zealand. As you know, I’ve been speaking to guests all around the world, , but I’m delighted to come back to New Zealand and join. We’ll be joined by a leading lawyer, one of New Zealand’s leading lawyers in the charity space. His name is Steven Moe, and first and foremost, Steven, welcome to the show.
Steven Moe: Thank you. I’m really looking forward to being here,
Simon O’Connor: Steven. I mean, you know who you are, but a lot of our listeners will, hopefully they’ve come across you, but you are a partner at Perry Field Lawyers, and is that is based out of Christchurch, isn’t it?
Steven Moe: That’s right, although we just opened an Auckland office, so we’re actually now have more of a national focus as well. And that’s partly because of the conversation we’re about to have. We have a real focus on what we call for purpose clients, so that’s charity clients, but it’s also businesses, people who want to do things in the right way.
So we have about a hundred people in our firm. We have the, this is now our fifth office that we’re opening in Auckland. And yeah, a real focus on how we can empower people to have positive impact within what they do and society.
Simon O’Connor: Which, by the way, I was thinking, one of my friends, actually, Alex, who’s a name you will know, I had noted, is working for you.
So you’re choosing good people, but I think this is one of the key things we’re going to delve into because, you know, how do you do things well? How do you bring about impact and empowerment is obviously within a legal framework, hence tapping your legal mind. But there are those wider structures too that actually bring deeper meaning, if I might, without being presumptuous, then simply making a profit.
As I said, clearly you are involved in the law, but you’re also an author. You’ve written many books and I noted too, in particular, the most recent is that ‘The Circle: Careers with Impact’ and you’ve also written a charities handbook, which I’d have to say, even though I’m involved with charities, that sounds like a lot of hard work.
Steven Moe: Well, I really enjoy writing, just to mention, Alex, who you mentioned, he’s literally two doors down for me right now, he has more of a focus on disputes, so he’ll help people who need support if they’re going to court. And as you’ll know, sometimes that happens. So he’s got a real speciality within that area.
I’m really lucky to work with him and the one other thing to mention, whenever people hear my accent, they wonder, how long has this person been here? So just to have addressed that elephant in the room, I actually moved to Aotearoa way back in 1983, so it’s not that I’m 95 years old now, it’s just that I was seven when we arrived.
So I actually grew up here in Christchurch and then I worked in Wellington for a while, but I’ve also worked in Sydney, London, Tokyo. So I had quite an international background. That’s the, the lead up to how I’ve been based at Perry Field Lawyers. So yeah, the latest book is that one, the Circle – it’s a free download. So that’s a pretty good price and it’s all my reflections on my own working life. I’ve been doing this job for 25 years and I meet lots of people who wonder how do I integrate in meaning and purpose within my nine to five. So that’s really what that book is about. And then also the Charities Handbook, that’s a free download on our website, trying to empower people with resources and information so that they can make good decisions.
We’ll probably get onto this, but we have another one specific for churches, faith-based groups, and we have community governance type materials as well. So yeah, happy to talk about any of those topics.
Simon O’Connor: Well, amongst many, there’s so many threads there immediately, but if I might say is observation, the fact that you’re making these resources and what you’ve written free or easily available says a lot in itself because I think most of us know, we’ll come across a resource and go, oh, this is great, and then find, you have to pay some sort of fee, which, you know, is not unreasonable but I think it shows that symbolic depth that you are trying to get to, to share experiences.
But then jumping back, from what I can hear for seven years, was it North America? Would that be right? Originally for you and family?
Steven Moe: Yep, that’s right. Yep. From the north. So my parents are, well my mother’s actually Panamanian just to complicate things. So she grew up speaking Spanish and my father was from America, but they both met in something called the Peace Corps, which was set up by John F. Kennedy back in the 1960s. So they were out in South America, and that’s where they got met. They got married and then when, yeah, when I was seven, my dad was a marine biologist and got a job raising salmon in New Zealand. So the start of a new industry, and he was brought in to help cultivate fisheries as, you know, out in boats and releasing them into the ocean.
So a bit of a quirky background, but there you go.
Simon O’Connor: Says me to you, there’s another book – I mean, that’s a life story in itself to share that, that journey. But obviously New Zealand is home now. You have established yourself here.
If I could start then slightly personally, because you’ve talked about impact and purpose and values and some people go, well that’s interesting that he then headed into the law.
You know, which to people at times stereotypically can look quite, quite rigid, black and white , just get the processes right. But what I know of you, I’ve listened to some of your podcasts. In fact, I better quickly mention that at the start too. You do at least two podcasts your own called The Seeds, www.theseeds.nz if people want to access that.
And you also do a lot of the boardroom for the Institute of Directors. So actually podcast to podcast. Tell us about The Seeds. I assume it is you sharing your journeys, but tell us about those before I start grilling you.
Steven Moe: Well, so I keep meeting, given the nature, lots of people come to me to learn about legal structures and I get to meet these amazing people who are doing amazing things.
And I thought, what’s a way that I could help amplify their stories? And this is now about eight years ago. So podcasting was relatively new, is starting to become a little bit trendy, but every week for the last eight years, I’ve talked with an inspiring individual about their life story. So they go for one hour and I’ve spoken with mayors and people you’d have heard of, and I’ve also spoken with people that you’ve never heard of. Because my theory is that every person has a story and we can learn from each other. So my opening question is, what was life like when you were five years old? So go right back to the beginning and then we trace up to what you’re doing today and often make these links between.
Childhood and now what do you do? Or your grandparents or your parents. So I find it’s really empowering. I’ve spoken with charity founders, entrepreneurs. I’ve spoken with nuns, I’ve spoken with many, many different groups of people. So that’s Seeds 451 episodes now, which as a fellow, person doing these sorts of things, you’ll, you’ll appreciate.
That’s a lot of content. And then the other podcast is called Board Matters, and that’s for the Institute of Directors. That one’s about governance and I’ve done about 25 interviews shorter, 10 to 15 minutes, about what is good practice when it comes to governance because I think it’s important that we get that right within our community groups as well as at the big end of, you know, the Fonterras and the large entities.
Simon O’Connor: You have far more experience than me, but I’d agree on that. I think some people feel that, you know, good governance, any governance is only for large commercial enterprises, when in fact there are so many more – I was going say skills – I suppose it’s drawing the skills of people who are on your board to then inform what you are doing on the, on the ground.
Yeah, I mean maybe riffing from that at the start, it’s very high level because because I do want to delve into a little bit more of the practical elements, which you’ve kindly agreed to share. But when you do think of the charity sector in New Zealand, I know it’s very broad, very wide church groups, secular groups and others.
How would you describe the state of the sector? Is it going wonderfully well? Is it full of excellent, enthusiastic people, or is it, you know, a whole wide range of dynamics?
Steven Moe: Well, there’s many possible answers to this question, but maybe I’ll start by framing it a little bit because some people might be curious to know how many charities are there?
So right now in New Zealand, there’s about 29,000 registered charities. So registering as a charity means that you get the tax status. In other words, you don’t pay tax, and you can give donation receipts to the people who donate money to you.
I’m sure people who are listening or watching have seen that happen where you give some money and then you get one third back. So there’s 29,000 of those. If you look across other sort of Commonwealth or similar type of places, that is a per capita, quite a high number, if you were to go based on the population, say compared to Canada or the UK or the US or Australia, it’s relatively high number.
Some people would say it’s too many, there’s too many charities. And the way that I would agree with that is I think there is quite a lot of duplication and replication, and sometimes I fear that people aren’t looking around and saying, oh, you want to solve this? Problem of this particular cancer and instead of getting behind the existing charity, they go and set up a new one.
So I’m not in favour of that, but also people do have good ideas and I think I like to take it as the class half full, which is people in New Zealand are really generous and they want to support others and therefore they want to set up a charity. So I kind of view it as a, this is a positive thing that we want to help others.
As for the current status, it’s really hard right now. There’s been a lot of funding cuts, there’s been a lot of economic downturn. And unfortunately one of the things that gets put to the side if you don’t have enough money is the, the discretionary spending of giving to others or giving to charities.
So I’d say that right now charities are doing a little bit of scrambling around looking for income sources and income streams that might not be within the traditional way that you would do that. And I’m really happy to talk about that, because I call it impact investing. In other words, looking for alternative sources of funding rather than the traditional Oliver Twist model, which is ‘please can I have some more’, trying to think a bit more creatively about what’s our purpose and how do we make sure that we’re getting income for that?
And then we can talk about this too, but charities and tax, that’s been a hot topic recently, so I can download to you where we’re at to with that in a bit.
Simon O’Connor: Well let’s before we get into the tax side and everyone in the government side of things gets excitable, tuning in to talk about that impactful investment side because what you said resonate, a lot with me, with charities I’ve been involved with or social groups over the years.
Without going too much on a tangent, Steve, I remember meeting a whole lot of women outside of networking meeting. This sounds very suspicious, but outside of networking meeting in a church, and long and short, of the four women, three were involved with supporting young pregnant women, which in itself is amazing, but none of them knew each other and they were all operating in the same area, doing the same work.
And, you know, judgmental me went well, it’s great, but boy, imagine if the three of you were working together and not trying to divide that pie. But it’s a very New Zealand quality. We like to run things ourselves.
Steven Moe: I have a theory as well. I’m curious what you think about this, Simon, because there’s a cultural mindset which talks about the number eight wire and the number eight wire being we get in, we fix it, we make do with what we have.
And unfortunately, I think that is actually can be, can be really positive. I’m not going to say it’s not positive, but it can be negative as well because you see a problem. How can I fix it? I’ve got to fix it. Instead of thinking who else is involved? Like your example, there’s two other people within the same community doing the same thing.
Wouldn’t it be better if we knew each other and if we supported each other, and maybe we didn’t, all three of us apply to the same funding source, but we went either one of us or altogether. So yeah, I, I think there is a bit of a cultural thing here where it’s like, oh, there’s a problem. Let’s get the number eight wire, let’s fix it.
Rather than stepping back and thinking structurally, how are we addressing this big wicked problem, whatever it happens to be.
Simon O’Connor: I tend to agree, although again, I defer to your expertise. For me, it’s only, I suppose anecdotal, I think you’re right on the number eight wire side. I think New Zealanders just like, right, let’s just muck in and get this sorted. But where I find there’s a contradiction of sorts is we also have this tall poppy syndrome in New Zealand. We don’t like to stand out and yet, often not in every case, but often people with the idea or the desire feel that they need to lead. And I’ve certainly seen in the social sector that I’ve worked in, I’ve certainly seen it in the political sector trying to get people to say, well, how about, you know, you’ve got this great idea, but work together.
Not everyone has to be the leader. And I call it paradoxical because I think New Zealanders we are generally quite quiet, but in this sort of space, everyone wants to lead. And so you enter with this fracturin -, be it political, cultural, social. I mean that’s just my observation.
Steven Moe: Yeah, no, and this is going be a conversation where we agree and then add to what the other person said.
I can tell because I agree with you. I see it a lot in charities or, or startups where the entrepreneur, the person who begins it is leading it, but then it becomes a problem because they become the block to the success of that organization. Because if that person’s not there, it’s going fall over. So actually realizing that part of the job of leadership is succession planning, so that you’re not going, as soon as you’re not there, who’s going give to it?
Who’s going to, want to, support it Much better is to say, this is the servant leadership model I’m here to serve. It’s not about me, it’s about the movement. And actually, would you support this? And already be thinking, who can step into my shoes when I’m not going be here?
Simon O’Connor: It’s pretty more of a pastoral question than a legal one. I mean, have you found a lot of these founders, be it even corporate, charitable, it, it becomes so much part of their identity. I mean, I used to do contract management for the Crown into the social sector years ago when I was young and had brown hair. Those were good days, but some amazing people doing amazing work.
But part of my role is, look, if we’re going be funding you millions, we need to know that succession plan. But so many of these, to use that term, founders, it’s their identity. So it’s not even that they’re threatened by someone coming through the network, it’s just that they, they just can’t let it.
They can’t let it go. It’s who they are.
Steven Moe: I totally agree, and that’s why I wrote that book, because that’s what I’m talking about the end of chapter one. This is what I say, ‘your identity should not be defined by what you do, but who you are’. So we fall into this trap of, look at my job title, look at how important I am.
Actually we need to frame our identity around more solid foundations. And particularly if any of your listeners or people watching come from a faith perspective, then that identity needs to be grounded in something that’s very strong in, for example, your beliefs. Rather than, look at my job title, I’m a senior associate, or whatever it happens to be.
Simon O’Connor: So we will hit impactful investment. This is very me, I’m all over the place. You wouldn’t think I actually trained in philosophy and theology, sort of ordered thinking, believe it or not. But I think about the barbecue conversations in New Zealand apart from hello, if you have an accent that’s slightly unusual, we’ll instantly ask where you’re from. But question number three will be what do you do? What do you do? Yeah, it’s quintessential New Zealand. What do you do? What is your job title? And we do define ourselves quite clearly by that, but as I, you know, as you’ve said, it’s something much deeper than that.
It’s who you are. So, yeah.
Steven Moe: Well, you’re going enjoy this book. Please have a look at it. I think you’ll actually, and your listeners, I think they would enjoy it because that’s the topic I want to get to the heart of within that. I define, I called it The Circle because a circle is a unified shape and in my mind, who we are today and who we are becoming are connected.
So we need to be proactive and make decisions about what we do in our work, based on our values and the contribution that we want to have in the world. So we need to spend a bit more time thinking about this. Unfortunately, our society at you finish high school. Great. What are you studying? Get on with it.
We don’t give time for people to reflect when they’re younger. My daughter’s 17, she’s going turn 18 soon, and we’re encouraging her to take a gap year just to just, you know, sense. Where you are, who you are, what would be the thing that you want to do next with your life. Instead, we kind of rush people on, go to a degree or get a trade or do whatever it is, rather than take a bit of time reflect on who you are.
Simon O’Connor: Yeah. Well, one of the axioms I try to live by, I want to stress the operative word, is try, is very much the Socratic – ‘the unreflected life is not worth having’. A even at the end of every day where I can, I’ll often just turn the lights out and ponder even just for five minutes what happened today.
Because for me personally, if I haven’t reflected on what’s happened, I don’t mean deep zen-like reflection, but just like, well, who did I talk to? How was I feeling? What happened? If one doesn’t do that, I don’t think we, we grow. I mean that’s just again, my perspective on things. But I, I like what you’re saying.
Think of our younger ones. Take the time to reflect the, the rat race of life goes on for a long time.
Steven Moe: Yeah, totally. When I was 21, I got the chance to move to Japan. I didn’t speak Japanese and I had some people say, finish your degree, get a job, start paying off your mortgage. And that’s good advice, right?
But I had other people, including my father, who I was out on a hike in into Lake Daniels, in Lewis Pass, if anybody knows that beautiful, beautiful place. And these people were saying, actually, when you’re 95 years old, will you look back and regret that you did not go to Japan for a year? And I thought, yeah, I probably will look back with regret.
So that’s how when I come to a big decision, I try to frame it around my future self. My. I guess end of life self, you know, like looking back, will I regret not doing that scary thing? And usually the answer would be, yeah, I should, I should do it. So hopefully that’s encouraging for people.
Simon O’Connor: I like, look, I think it’s a great way to, to actually look at life.
I try to do similar myself. I was actually debating with someone the other day. They were I don’t know what’s the word – a prolific social media commentator. And I said, look, I’ve been in many a deathbed in hospitals in my chaplaincy days, and, and no one ever said to me, Simon, I wish I had spent more time arguing on Facebook with random strangers.
No ever says that. Yeah, there’s so much more to, to life. I’ve taken you down a whopping rabbit hole. Very typical of me. We’re off on a wild tangent, but I’d love to, we’ll come back to impactful investing, as you say, just tease that out a little bit for, for people by what you mean by that from your life and experience.
Steven Moe: So traditionally we’ve thought about if you want to do good, set up a charity. If you want make money, set up a company and impact investing. Some people might call it social enterprise, what this is getting at is that you can have impact through business, you can have impact through investments. And actually we have two limited a mindset when it comes to positive impact because we’re so caught up in charities.
And charities generally are that Oliver Twist, please give me more rather than invest. So impact investing is basically going out to the people who care about our purpose. And instead, instead of saying, please give me a million dollars, it might be, please loan me a million dollars, or please invest. A million dollars, then we will build this centre for children, or we will create this preschool, or we will start this mental health counselling.
Whatever it is, we need money to do it. Don’t give it to us. Instead, we will repay it because what we’re going to be doing will generate an income stream. So it’s a shift in our mindset to say, if we have purpose at the core of what we’re doing, then we don’t have to just go down the traditional charity road.
We could actually do it in a way that has meaningful impact. So examples that I’ve seen just to make this real, is I’ve seen some church groups who have next door to their facility, a beautiful green grass area, and they’re mowing it and mowing it every week. So what they’re saying is, well, what’s a need in our community?
We have a massive social housing need. What if we subdivided this land? We borrowed money. So there’s some financial investment. We built 25 units and we had the community actually living on this land so that we’re meeting the needs of the community, we’re getting stable income, and also the housing that we’re building is clean, green, affordable education outcomes are better for the children.
So it’s just a different mindset. It’s a shift of thinking, and that’s just one example. I’ve got many, many examples. Another would be a group that used to work with ex-prisoners. So, coming out of prison, it’s quite hard to get your first job. You can imagine your CV. Where have you been the last three years?
So what they did was set up businesses, which employ those people so that they’re able to have a bridge between. I’ve been in prison too, I’ve now worked for a year and had a stable income. So that’s an example there. It’s not a. It’s not a donation type charity, but it is doing good through a business lens.
And then the final bit on this is that whatever charity you’re involved in, whether it’s a church group or another type of charity, there will be supporters who are within that community who are wealthy. And if you were to go talk to them, and they might say, well, we have $10 million in the Bank of New Zealand on a term deposit, and we’ve got 5 million over here.
Like maybe not that much. Maybe it’s a million, maybe it’s $500,000 but there are people with assets who right now it’s sitting in term deposits with Australian owned banks. So coming to people like that and saying, we have a renewed vision of our community, but we need your support, would you take that say $500,000 that’s on term deposit and put it into our new initiative, you’ll get repaid, but you’ll also know that we’re helping a hundred children, you know, in this particular preschool, just in as an example. And then the final one, because you might have a question about this, is, I’m a director of a company called Christian Savings. So Christian Savings is an example of a model like this where people are actually putting money in on term deposits.
The money then gets loaned to churches to be able to build buildings. Financial return, you get repaid. But that church now has a building. So it’s a different mindset, but I think people need to open their eyes to what’s possible and have a bit of blue skies thinking, what’s our purpose? How else could we achieve our purpose, rather than the traditional path
Simon O’Connor: To start with, slightly to phrase in the negative and then get to the positive.
Do you think there is still too much of a black and white binary approach. Like you said at the start, people go, right, if I want make money, I need to invest in a corporate sphere or set up a business. In that sense, I want be kind and altruistic. I have to set up a charity or give money. You’ve clearly said we can blend them somewhat.
Not totally says me, but we can blend them to a degree. But are you still finding that black and white or binary thinking is quite dominant, or is it really quite a, a social change out there? It.
Steven Moe: I think it has been dominant. I think people like me are speaking up about that term binary. It shouldn’t be so this or this.
Why not have a combination? So I’m not saying take all the money you’ve got in a traditional funding place and put it all into a new charity initiative. That’s not prudent. But I am saying, what if you took 5% or 10%? So for some trusts and for some large community trusts or church led trusts, they literally have $80 million in the bank.
Right. They know because I know them. Some of them are my clients and they have a lot of funds, which if they had this mindset of, okay, we have a hundred million dollars, let’s get 10% of it and let’s invest it for impact. I think it would’ve a transformational effect on our society if we could get more groups doing that, because there are billions of dollars locked up in these sort of safe investments.
And the rationale that people often use is, I have a fiduciary duty to keep it safe waiting for the rainy day. But my logic is it’s raining now and we need to think more broadly about how we use the funds that we have to have impact. So I’m giving you both sides of the story here, both the person who needs the money, but also the person who’s sitting on the money.
And there might be some people listening or watching who are in that camp. And my challenge is, next time you’re at your trust meeting or whatever it is. You’re looking at your portfolio, do you need to ask a question? What would it look like? You know, we were set up to help people with disabilities. What if we took 10% of our 10 million that we’ve got squirreled away for the rainy day and we invested it into a startup which has a new app that helps people with disabilities.
We’re achieving our purpose and we’re getting financial return. Tick, tick it. Logical. Right?
Simon O’Connor: Well, it, it’s sort of, everybody wins. I, I’m quite sympathetic to this. In fact, you mentioned Christian Savings , you are on the Board. In fact you’ve hired my friend as the chief executive, or he is been there for a while now. So James has chewed my hair off a lot. I think it’s an amazing model. And what struck me is a number of people, as you say, and again, I’m playing into a stereotype for simplicity here, but generally quite wealthy. They’re very smart with their investments, but they are open to purpose. So, yep, I might be able to get more by putting on, I don’t, Hatch or Sharsies or doing something, but actually by investing into something like Christian Savings or into, as you said, disability app, I certainly have seen some of the banks going down, even though they’re Australian owned, into environmental climate change sides of things. People, well, it probably comes back to what you’ve written about in the, the book. People see value in purpose, and they’re attracted by that.
Steven Moe: And I think as we’re seeing an intergenerational wealth transfer happening right now, bceause the boomer generation, you know, had lots of businesses, lots of success.
They bought a house for whatever it costs back in 1965 and now it’s worth millions of dollars. So I think it’s incumbent on all of those people to be looking at their assets. And in a way I view it as asking a fundamental question, which is, I’ve been given some talents, how will I use them? Talent’s not just meaning, what do I do with my skills, but also my monetary amount?
So you’re right, James Palmer is who I think you’re referring to. So he has been the CEO at Christian Savings. He’s actually now at Community Finance and Community Finance is where, what we’re doing there. So I’m the chair of the Board of Community Finance and what we’re doing there is social housing.
So it’s another echo of what I’m already describing, and we’re tapping into what I call philanthropic investors. So KiwiSaver funds like Simplicity, Generate, Pathfinder, amazingly broad vision of our society and the role that they can play, as well as other investors who are coming in and saying, we want to be part of the solution for social housing. So in the last four or five years, we’ve raised $265 million for social housing. So it’s not just a $10,000 thing here. You know, we, we funded Salvation Army. We’ve funded a wide variety of community housing providers to be able to build housing, so it’s a great example of what I’m talking about.
Impact investing, not a traditional charity, it’s a for-profit thing, but through the profit, you’re having impact on society,
Simon O’Connor: which I think is inspiring. You can see Steven, why I would never make a good lawyer, because you’re right. Knowing James, he’s moved from Christian Savings to Community Housing, and yet I stuffed that up.
So, yeah, I’m not going to be touting for any legal work. It’d be an absolute disaster, get the detail wrong. But again, there’s clearly enough people who are, are willing to, to do this. I mean, again, to, to phrase it in the challenging way, we we’re told. A lot of people now become quite utilitarian, quite self-focused.
The idea of using your talents to help others as a, an older mindset, particularly people out of a faith perspective, I mean, are you seeing that in general or is that really just a false stereotype from your experience?
Steven Moe: Well, I am seeing intergenerational change and I’m really encouraged by it because I think that the next generation is demanding more than maybe you and I are probably of a similar vintage.
I think that the next generation is asking questions about, well, if I buy this product. What will the impact on the planet be? And I’m really encouraged by that. And I see them asking questions about how can I use my money? Well, how can I use my time? Well, where should I work? And so that I think is a shift which is happening, which is really encouraging.
So Christian Savings is an example. Dan Mazengarb is our amazing CEO now. So he’s the one who’s pushing this more forward, but we’re seeing real traction from church groups and others who are involved in, you know, business who are now thinking, how could I use what I’ve made? How can I use some of my profits to actually give back into sort of community kingdom type initiatives. So I think it’s an intergenerational shift. The next generation is going demand more, but also I think there is an awareness, bigger awareness now about this idea of impact investing, which is why I talk about it to everybody I can because logically, if you did happen to have a, a couple million dollars in a bank account, wouldn’t you rather support your local community with that rather than all the profits are going offshore ultimately.
So, yeah, it’s kind of a logical thing to me.
Simon O’Connor: Well, I think it is, I mean, I’m biased in this with my perspectives on sort of faith and, and service and how you actually, I wouldn’t have used the terms impactful, but actually how you use your mind, your money, your time to help, which I was, why I think it’s so important to have these conversations, Steven because I, through my political life in particular, things that I might have known, and I suspect you would’ve known in your legal work that a lot of people just on the ground don’t know about. They wouldn’t know that there are ways to actually invest impactfully. They think just as you started the conversation, they’ve got to wait for the letter to come from charity X and they fill it out with their bank account or their credit card number, or they go down to the local hospice shop where actually they go, hey, take a percentage, could be 1%, 10%, whatever it is.
Because you’ve also seen I think the Australians do this in the housing space where you can choose to leave, I think, 1 to 3% of the value to then be donated into the, in this case, the state housing system. But again saying, look, I don’t need all the money from the sale. I can actually push this forward into social housing or through the state housing system.
And it seems a lot of people responding to that. It.
Steven Moe: Yeah. And I think increasingly people are looking at their will because, in a way what you’re talking about is bequests. So people are looking and saying, I’ve done well in my life. I’m providing for my children. I’m not leaving them with nothing, but actually I could support this charity, or I could support this other group.
And I think increasingly charities are looking for that type of support as well. Like, would you, is it better to spend 20 hours trying to get a hundred dollars from 20 people or is it better to spend two hours with one person who might leave you $20,000? So there’s a bit, I think there can be a shifting in the focus on, fundraising in terms of put us in your will.
It’s going have a massive difference.
Simon O’Connor: Oh, I think so. And just for completeness, I think it’s called Home 4 Homes in Australia. Literally, you know, if you and I sold our home now, fortunately not having to push ourselves off the mortal coil, a percentage goes and you can nominate where again, it’s these new mechanisms to say, let’s, let’s participate in society.
And I think we know it. You know, the more you give, and I know it’s a bit trite, but I’ve certainly found it in my life. The more I give often when I’m not really in the best of positions, I found it Christ grace-filled. If I had to put some theological language around it. Yeah, there’s a lot of grace actually.
And more often than not, those times, I don’t have the money, but okay, I’m going keep my commitments to this charity. It’s funny how doors and opportunities open.
Steven Moe: Mm-hmm. Yep. I totally agree. And I think it is about mindset. It’s about, you know, we’re, we’re fish in the goldfish bowl. We know what we’ve known.
And if nobody tells you about this idea of impact investing, then how are you going know about it? So that’s why I talk about it a lot. I’ve also written a legal opinion just in case anybody’s interested and you think, well my board isn’t going be that interested in this. I’ve written a legal opinion on the reason why I think trustees have a duty to consider their purpose when they come to investing.
Not just with giving money away, but actually how they use the money that they can invest.
Simon O’Connor: So you are arguing, because I haven’t read that yet – you’re arguing from a legal and fiduciary side that that’s actually something, not that they just have to, I’m not going find the right legal language, this is not just a nice to have, there’s actually a legal responsibility here.
Steven Moe: That’s what I argue. Yeah. The Trust Act 2019 reformed this area of law and it’s introduced duties of trustees, but one of the, some of the phrasing – I’ll send you the paper and I’m happy for it to be a free download. Okay, it’s all about what was the purpose for which you were originally given the money, and then are you fulfilling that purpose through how you invest it?
And my theory is that actually you need to think about your purpose when you come to invest that money. So it, it’s not good enough just to say we’re putting it in this mutuals fund, we don’t know what it’s invested in. It could be Facebook, it could be Amazon, it could be, you know, gambling and alcohol production. That’s not for us to think about. We’re only concerned with how we use the interest or the profits from it and how we give that away to deserving causes.
I think it’s a fundamental flaw and I think those trustees need to also consider how they invest it, at the very least, asking their fund managers to put it in, , positive funds rather than.
You know, the potentially gambling or alcohol or, you know, pick your other vice. Yeah,
Simon O’Connor: I’ve certainly come across that with some that I’ve worked with formally or informally very much. What I would describe as ‘the end justifies the means’. So it’s like, it’s not part of our purpose, but look, we’ve invested $300,000 in this and it’s going earn us a lot of money that’s going help the homeless or help the, the druggies. And you go, yeah, but you’re investing in war materials, it’s something that deeply needs to be thought of, which keeps coming back to your primary point, isn’t it? What, what is your purpose? And for these charities, be it the founders, those and the team, certainly on the board to keep, keep reflecting.
So before we get onto the sort of the tax side of things, and you know, a lot of people then sort of fall off their chairs, you talked earlier about the, the place of good board members or having a board around even small charities or the like, I mean. Yeah, delve in, delve into that. I was, I was going to try and define it, but actually you are the expert.
Steven Moe: No, I’m happy to, happy to do that. I do a lot of facilitating for the institute of Directors, so that’s the premier, essentially governance body within New Zealand for business. So there’s about 10,000 members. So I’m presenting all the time about governance, and I think there’s well there’s two things to tell you.
The first one is that people have a really, a misunderstanding about what governance is. So let me explain it by a brief picture. Imagine a ship on the ocean and it’s sailing along and somebody is on the ship and they’re saying, somebody go fix the sail. There’s a leak that’s just sprung quick. Go fix the leak. Hey, we need to paint that part over there. It’s looking a bit shabby. That’s management, that’s the running of the ship, making it go every day by day.
Governance is the people who are in a helicopter and they’re flying high above the ship. Can they see the leak? Nope. Can they see the rip in the sail? Nope.
Can they see the touch up of the paint job? Nope. But what can they see from that high? They can see the iceberg, which is dead ahead, and they can tell, Hey, move the ship now, otherwise you’ll be crashing and sinking. So governance is not involved in the day-to-day operation of an organisation. Governance is the long-term vision and planning into the future.
So it’s about having the 20 year vision, the a hundred year vision that’s challenging. It’s about not getting involved in the detail of the organisation as it runs. In the day-to-day type of operations. So that’s the first thing is if you’re in governance, you’re being called to the higher level to be looking out, thinking of the dangers that are coming.
Also, maybe look at that nice tropical island. We should head in that direction. Not only the negative, like there’s an iceberg coming, so that’s the first thing. The second thing is my challenge is what is your purpose? When you’re appointed to a board, have you gone back and looked at the founding docents for your organization and they will say what your purpose is.
So you need to be clear on your purpose. You need to be certain of what your purpose is because that’s how you know that you’re fulfilling your job, which is to advance the purposes of the organiszation. Now, some of some people might say, well, that’s a good point. I’ve never actually seen the rules. And this is a fundamental change because the Charities Act just got altered about nine months ago.
So there’s now a new section called 42G and 42G says that governance needs to confirm that the rules and policies and procedures are fit for purpose for that entity. So there’s actually a legal requirement that every three years you’re meant to be saying yes. Our rules are fit for purpose and by rules.
I think it’s more than just the trust deed and the constitution. I think it’s policies like child protection policy, privacy policy, you know, staff, employee policies. So it’s actually a requirement. That’s what you’re meant to be doing. And the final bit here is when you open your trust deed or whatever document, was it written on a typewriter, because I can guarantee you that it could be upgraded to reflect latest developments in the law and protect you as the trustees or those in governance, because you’re now allowed to modify what your duties are in your trust deed.
So it’s important for those who are listening or watching if your trust deed was dated 2015, 2020, you know, even 1985, 1945, there are those out there like that. It probably needs an upgrade so that it’s reflecting best practice today rather than when it was drafted.
Simon O’Connor: Which makes a lot of sense. And it’s, I don’t if there’s crossover here and I know the incorporated societies people are scrambling to sort – is it October this year or next year?
Steven Moe: No, so it’s April next year and we’ve helped hundreds of them. We have a information hub for incorporated societies and we have dozens of articles, videos, a download of a guide. It’s, it’s the most complete resource. Toolkit that I know of …
Simon O’Connor: Tell us where to find it then, if we wanted to let them go there.
Steven Moe: It’s on the Paerry Field website, so if you go to www.parry field.com, so P-A-R-R-Y-F-I-E-L-D.com. And then you go Services, and then under the charities part, there’s an incorporated societies information hub. I can send you a link and maybe we can add it to a show note or something.
Simon O’Connor: Was thinking that from your books to everything, I’m more than more than happy to add them.
Steven Moe: We can provide it all so that, incorporated societies, yeah, if you don’t re-register and there’s 24,000 of them, only 6,000 have re-registered so far. So that’s about 18,000, which have not re-registered.
If they don’t re-register by April, 2026, they will be de-registered and no longer exist. So it’s pretty fundamental and I don’t think this was the policy intention, but I am really worried that. Come April, there’s going be thousands of entities that didn’t realise that they, they don’t own what’s in that bank account, that property that they thought they owned.
It’s not theirs anymore, so it’s going cause a mass chaos. So I try to let people know, if you’re an in corporate society, please prepare now. Don’t wait till the last minute.
Simon O’Connor: Exceptionally important warning and thank you for sharing the real practical sides of things, such as you no longer own that clubhouse or that piece of land.
Who would, I mean, sorry, not to get too technical legally, but who would then, does that just fall to the Crown or something?
Steven Moe: Well, that’s a great question. It’s one I’ve been asking the Companies Offfice. I think they’re hoping that it goes away as a problem and everybody does reregister, but it strictly speaking, I think it probably would go to the Crown or it would need to be, at least you’d probably, what would happen practically is that you would apply to Companies Office and say, we made a mistake. We didn’t reregister in time. Would you please reinstate us with our new rules? But it would be complicated and difficult. And let’s say there’s some salary which needs to go out to your staff members and the bank account is run low and you all of a sudden the bank is saying, well, you don’t exist anymore.
So we need to have different authorisations. So we’ve actually written an article on this topic as well. I’ll make sure that we send you the link to that so people can click it and they can find out more. But to summarise it, what you need to do is, number one, adopt new rules for your incorporated society.
That’s a definite, because the new Act had different provisions and requirements, so you have to adopt new rules. Number two, you have to approve them at a meeting of your members. And number three, you have to click some buttons on Companies Office and re-register, upload the document. That’s it. It’s not like, you know, you have to go to the moon and back.
It’s, it’s not actually that complicated, but it there is process involved. I encourage people to say, this is a glass half full moment. Let’s refresh our rules to reflect how we actually operate. Because in the vast majority of cases, no one has looked at those rules for 25 years and they say things that people are shocked to find.
So this is a chance to refresh, to really understand what we want our rules to say and then to adopt those.
Simon O’Connor: Look first and foremost. Thank you. I think that’s actually great advice for our people to hear because I know across the, the many listeners, there’ll be those running charities, incorporated societies and I have to say, ‘ve helped a few re-register over the years. It’s not actually that difficult says me. It’s a process, but actually it’s not that difficult, but that wider element of the trust deeds, I know particularly in the days of contracting the organisations, I would often go and look at what their trust deed said versus what they’re doing today. And it’s like, gosh, you’ve moved a long way from that original value and purpose.
Steven Moe: And actually there, there actually becomes a legal question of, is this even valid anymore? Because sometimes people were set up, I’ve used this example before, but we were set up to run a preschool. We are going help three and four year olds with their education. Oh look, there’s some funding over there that’s for high school students.
Well, that’s kind of similar to what we wanted to do. And oh wow, there’s a real big funding contract from the government for suicide prevention of university students. Let’s get into that. And you look, you know, 10 years, 20 years later, and you’re like, your purposes are not. Suicide prevention of university students.
Your purposes are three and four year olds and running a preschool, you are so far removed from your original purposes that you have to question if it’s even legally able to do what it’s doing. Yeah. So the other thing on incorporated societies just briefly is sometimes those legal entity types are no longer as appropriate because they were really common in the sixties and seventies when there was lots of member led volunteer models.
But these days it’s hard to get people to show up and to volunteer. So some groups are saying. When we started, there was 300 members. Today, there’s seven people left. We still want do the good work, but we just don’t have the membership. The other thing that people say is we’re worried that it might be subject of a takeover because it’s a very political type of entity.
You have elections for officers, so sometimes those entities end up with two million of property or ten million of property, and you go to the AGM and wow, we’ve got 75 new members. That’s amazing. Everyone must love our club. Oh, wait a minute. They just voted out everybody and voted in their friends and they’re taking over.
So there are dangers with the incorporated society model that people need to reflect on. Is it the right model for us? Again, we’ve done a lot of videos and guidance on this. If anybody wants to know,
Simon O’Connor: Well I, I’ll definitely add the link to anything you send through, but also to the website because I mean, amongst many reasons to get you on Steven, beyond obviously your depth and experience and the fact that you speak so eloquently into this space. There are a number of things happening in the sector, which, which people need to be aware of. And certainly in, in my work and across, say, family first, amongst other clients, I don’t hear a lot of chatter about this, be it that social impact and investing.
Obviously the changes, the incorporated societies coming through and, and people need to be aware. Probably the, the last thought, and I’ve kept the driest topic to last, which is the government’s been talking a lot around tax, and around charities in particular. And I’ve certainly done a few podcasts with people now, I’m not even sure where to go into it because it’s a huge topic in itself, but I mean, is this something appropriate for government to be looking at?
I mean, governments can do whatever they want, but charities tend to have sat to the side of governments, I would argue. What, what do you see is going on? Let’s just go broad again, leave you to run with it.
Steven Moe: So I’ll, I’ll give you the brief background. So I’m on the charity services sector group. They’re the regulator of charities.
So I’ve been kind of seeing things from, different perspectives, but what happened is that there was some papers that we knew were being discussed in government in about November, December last year. And so a guy named Craig Fisher, who I have huge amount of respect for, he is an accountant and has done lots of auditing work over the years, so he and I wrote a paper called ‘Charities and Tax What and Why We Provide Tax Benefits for Charities’ again, that’s a free paper. And we had a webinar that had about 650 people attend because it was obviously a very hot topic. So the government came out in February and said, we are looking into the taxing of business income of charities, so that was the spark of this paper that came out. All of March was open to consultation and a large number of people submitted, there was 900 submissions on this topic. So it wasn’t, it wasn’t broad like we’re going tax all charities. It was focusing in on business income of charities where it’s unrelated business income.
So this would be, for example, a charity that is focused on children and education sets up a website hosting company and it makes money from that. It’s not really related to our purpose. So the government was saying, well, should we be taxing that? Because right now it wouldn’t be taxed because it’s owned by a hundred percent by a charity.
So that was the, the thesis. And what happened was that all these submissions came back. We rallied the sector. There was a lot of different people inputting and essentially, the government stood back and said, we are not proceeding at this time, with furthering this partly because we looked into it and even if we did do this, it would probably only yield about $50 million a year.
And that sounds like a lot of money. Right? But if I put it in a government’s budget, which is in the billions and billions of dollars, $50 million becomes not a substantial source of revenue. So where we’re up to is that the IRD has now been tasked with looking at a more narrow remit, and I think they’re finishing a paper which will go internally to the Revenue Minister.
And then before the end of the year, I think there’ll be a consultation, further consultation, very specific on this charities and tax point. But to your thing is very relevant. I think it’s been missing the broader picture, which is why do we give charities tax concessions? Why do we not charge them tax?
Why do we allow them to have donation receipts so that their donors get one third back? And the answer is that charities are fulfilling societal needs. If charities weren’t there, then the government would need to be stepping in in a lot of. Probably more expensive ways. So you and I know, like if we take for example, religious charities, think of the good that’s done not just on a Sunday morning, but also during the week.
There’s youth programs, there’s mental health programs, there’s counselling, there’s elder care, there’s so much which is going on that if you were to take away the tax concessions, there wouldn’t be as much available for those charities to get on with doing the good work.
So I want to take away the stress that my people might think like, oh no, they’re going to tax all charities. It’s only ever been at, for now, about taxing the business income of unrelated business income for charities. But it still is important because if you allow that door to open, well, why not open – what about taxing where we’ve got money invested in a fund? Like why not tax that too? That’s not our purpose, you know?
So once you open the door, I think it becomes easier for more things to become subject to change. And then the final bit is, just so you know, when I was in Australia, I remember going to the treasurer of the local church that we went to in Sydney, and it was the end of the financial year. And I said, “hey, you know, when do I get that donation, income receipt thing, you know, like so I can claim back money from the Australian government.”
And this person was laughing at me saying, what are you talking about? We don’t have donation receipts for people who give to a church. They have them for some other things, but not for mainstream church type situations. So the point of that story is the church has continued, like it’s not, it’s not the death knell for the church.
Somehow we survive. And so that’s important to remember. Whenever there’s change, there’s always bigger things going on. Multi-generational decades, long thousand year long movements. So don’t get too scared about it.
Simon O’Connor: Look, really appreciate that. As I’d say something I’m following quite closely for various reasons, I suppose part of the line of work that I do, not that Family First is a charity anymore, or other clients, some are, but yeah, it seems to have been quite a concern to, to many.
Part of what I’ve heard is obviously the government trying to find money, you know, talking to some of my former colleagues are looking for money anywhere they can. And if I might, I resonate with what you are saying – once you do open the door, it becomes very tempting – and I can say it from experience for politicians to go – well, let’s just push that a little bit wider, shall we?
And speaking very personally, I do watch with alarm the push to remove religion as a charitable purpose. I’m, you know, I’m a conservative, so I see the historical element to this. It’s been around for what, 400 plus years. There is a strong push from some to say, ah, religion is no charitable purpose to it whatsoever.
Steven Moe: Yeah, and I would be on the same lines. There was actually a great paper last year, I don’t know if you saw it, this one here – ‘Looking at Faith in Action, the state of Christian charities in New Zealand’. So that’s worth a free download, and that’s got some great resources and statistics and lots of information just looking at, hey, objectively there’s a lot of good which is done in society.
And it might be that from time to time there’s a church or a group of churches that get in the headlines for the wrong reasons. But that doesn’t mean that the 3000 plus other groups aren’t doing good every day. And I think once people start thinking about it, or at least are aware of it, then it changes.
But I do think we do a bad job at storytelling, so. Mm-hmm. I think part of this comes from the idea of we have to be humble. The right hand doesn’t know what the left hand is doing. That’s all good. But we also can tell people about the good we’re doing in the communities because if they don’t know that we have a Wednesday morning, you know, group for the elderly to meet and connect and we have a youth group on a Friday night and we have this mental health support group meeting here and we have this other group that meets there and like, there’s so much good that’s done.
But if nobody tells that story, then you might fall into a trap and say, oh, it’s just a small handful of people that get together for an hour on a Sunday morning.
Simon O’Connor: I think that’s actually a, a marvellous bookend because I’m exceptionally conscious of how much time and I’m actually incredibly grateful for the generosity of time that you’ve given and also some incredibly good tips. I am worried for Parry Field of how you guys make any money seeing that you seem to do all this work and put it out for free.
Steven Moe: Well, people appreciate it. And my, our theory honestly is they may not come to use us as their lawyers, although they could and we’d welcome it, but we’ve still contributed to their journeys.
And so the fact is that if you need to learn some topic, we have it on almost every legal topic that you can imagine. And that’s part of our remit is to serve the community, not just here in Christchurch, but across the country because, you know, a small town maybe don’t have a specialist in this area. So come and have a look at our resources.
And the final offer for me is I do have a commute every day. I would rather talk to somebody doing something interesting and who has a question that I can answer rather than listening to the radio, you know, or some mindless looking at the sky. So that’s an offer I’ve made many times. Nobody believes me, but it’s actually true that a lawyer would talk at no cost for the commute I have.
So it’s there. I’m easy to find. My name is pretty simple.
Simon O’Connor: Well, it also, if I might, it’s a good illustration of that servant leadership. It’s actually walking the talk and not only have you written books, you’re doing your podcast, talking here today and all the advocacy work, but actually you are, as you just said, you’re prepared to, to talk to people and, and guide them through in real practical ways.
So Steven, again, exceptionally grateful. To our viewers and listeners, you will find in the descriptions of this podcast or the links that you need and just to wrap it up, Steven, it’s where you started – you talked about reflection and you talked about storytelling, and that’s sort of where you’ve landed it here as well to tell your story.
So thanks for being part of the show. It’s been great to have you. Great to have you on.
Steven Moe: Thank you.
