If you’re setting up a professional organisation or running a not-for-profit, the first big question is often, should we register as a charity? Many groups assume that’s the gold standard but in reality, registering as a charity doesn’t suit every organisation.
There are real differences between incorporated societies and registered charities. Understanding how each one works can help you decide what’s right for your group, both now and in the long run.
What is an incorporated society?
An incorporated society is a legal structure designed for membership-based groups that operate for a purpose other than personal gain. That includes sporting clubs, cultural groups, professional associations and community organisations.
To be an incorporated society in New Zealand, you need:
- At least 10 members
- A constitution that meets the Incorporated Societies Act requirements
- A not-for-profit purpose (but not necessarily charitable)
- To file annual financial statements and updates with the Companies Office.
Incorporation gives your group legal status. It can enter contracts, employ staff and own property in its own name. Members are generally not personally liable for its debts or obligations.
What is a registered charity?
A registered charity is a not-for-profit that’s approved by Charities Services and must operate exclusively for charitable purposes. These can include:
- Advancing education
- Relieving poverty
- Promoting religion
- Benefiting the community.
You can be both an incorporated society and a registered charity. But charity registration adds extra requirements and not all groups are eligible.
Why register as a charity?
The main drawcard is tax. Registered charities don’t pay income tax and can issue donation receipts that qualify for tax credits.
Other benefits include:
- A stronger reputation or public perception
- Eligibility for more funding or grant opportunities
- Confidence for donors and supporters.
However, charity status also comes with ongoing compliance:
- You must submit an annual return and financial statements to Charities Services
- Your governing documents and activities must remain fully aligned with your charitable purpose
- You’re subject to stricter reporting and governance expectations
- You can’t distribute surplus funds to members under any circumstances.
When an incorporated society without charity registration might be better
If your group is set up to support members (like a professional industry body), rather than the public, you may not meet the strict definition of a charity, and that’s OK.
Incorporated societies are often the better fit when:
- Your primary purpose is supporting members rather than the wider public
- You need flexibility around governance, rule changes, or working groups
- You’re not reliant on public donations or charitable grants
- You want a lower compliance burden.
For example, a professional association that runs events, provides member resources, and advocates for an industry is often best kept as an incorporated society only. Trying to fit within the charity framework can lead to friction especially if your activities don’t clearly benefit the general public.
What’s changing under the new Incorporated Societies Act?
The updated Incorporated Societies Act 2022 comes into full effect by April 2026. All existing societies will need to re-register under the new rules.
Key changes include:
- Clearer rules for officer duties and conflicts of interest
- New requirements for constitutions and dispute resolution
- Greater accountability and transparency obligations.
For many groups, this is a good time to reassess their structure. If you’re currently unregistered or thinking of registering as a charity, you’ll want to weigh up your options in light of the new Act.
More about changes to Incorporated Societies
A quick recap
Charity registration sounds appealing, but it’s not the best choice for every not-for-profit. What matters is that your legal structure reflects your actual purpose and operations.
If your organisation exists to benefit the wider public and relies on donations or grant funding, then registering as a charity could be worth it. But if your focus is member support, advocacy or professional development, staying as an incorporated society, without registering as a charity, may be the better fit.
We work with a number of professional bodies, clubs and associations. If you’re not sure where your group fits, or you’re thinking about re-registering under the new Act, we’re happy to help you think it through.