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Introduction
On the other side of the coin, the media also pays attention to the lack of tax paid by wealthy individuals. Last week the Sunday Star-Times reported that Inland Revenue found less than half of wealthy individuals worth more than $50m are paying the top personal tax rate. When rich lister, successful businessman and philanthropist Owen Glenn told Kim Hill on National Radio in July that he lived in Monaco to avoid capital gains tax so he would have more money to help the less fortunate, he asked her “there’s nothing wrong with avoiding tax, is there?” He went on to explain that he doesn’t think the government is spending its taxes wisely when government organisations like NASA can spend $60,000 on a toilet seat. Many listeners of that interview may have been left wondering whether philanthropists really deserve the public adoration they court if their wealth is founded on principles of tax avoidance and distrust of government.
So what insight into wealth and philanthropy can the charities register provide?
It is useful to bear two points in mind when reviewing the charitable activities of high wealth individuals. Firstly, many rich listers are publicity shy and keep their philanthropy outside the public view. They may donate directly to charities or support charities without having a personal ownership interest. In these cases the charities register will provide no window on their generous philanthropic behaviour. Secondly, NZ has no specific laws for charities controlled by high wealth individuals. This makes us different to countries like Australia
Notwithstanding these limitations, a search across the charities register for the top 50 2012 NBR rich listers brings a number of issues into focus.
Summary
Approximately one third (15) of the top 50 NBR rich listers have a registered charity that they directly control. The accumulated funds for 12 of these 15 charities total $346m. The remaining three charities have not filed a return yet so the total amount of accumulated funds could be substantially higher.
A further eight rich listers are recorded as officers of registered charities which they do not control. This brings the total proportion of rich listers directly involved with registered charities to 23 - just under half of the rich listers reviewed.
Eight of the 23 rich listers involved with registered charities have some charitable purposes conducted overseas. The Jasmine Charitable Trust, controlled by Sam Morgan, has recorded the highest overseas percentage (92%).
Six of the 12 charities directly controlled by the rich listers (which have filed returns) distributed less than 5% of their net assets in the most recent return. 5% is the minimum annual distribution required for the Australian Private Ancillary Funds.
At least one rich lister controls charities with significant related party transactions.
Eleven rich lister controlled charities had their financial statements published. They were prepared in a variety of ways and only three were audited: Six were unaudited special purpose financial statements that did not comply with generally accepted accounting practice; Two were unaudited but prepared in accordance with generally accepted accounting practice that adopted differential reporting exemptions; Two were audited special purpose financial statements that did not comply with generally accepted accounting practice; One was audited and prepared in accordance with generally accepted accounting practice that adopted differential reporting exemptions.
Two rich listers control charities which have yachts and maritime vessels in their balance sheet.
Four rich listers did not have their charity financial accounts available on the register in the most recent year. The register does not clearly state whether the financial accounts had been deliberately withheld by the regulator or whether they simply were not filed. One rich lister provided financial accounts that contained scarcely more information that the summary financial data captured in the return. On the positive side, all five did have their summary financial data included in question 25 of the return so it was at least available for analysis at this summarised level.
Conclusion
So what is the overall conclusion? With half of NZ’s top 50 wealthy individuals directly involved with charities and probably more of them supporting charity in non-public ways, the overall message about their philanthropy is a good one. The $346m accumulated funds in just 13 charities is impressive.
Transparency is generally good, although it would be helpful to know if absent financial accounts are formally withheld by the regulator or a sign of a non-compliant charity.
Unfortunately there are some examples of behaviour which the Australian rules for Private Ancillary Funds have been created to prevent – seven out of 13 charities had low distributions, at least one had significant related party transactions and eight out of 11 supplied financial statements that were unaudited.
And are the high wealth philanthropic individuals tax avoiders? That is not a question that can be answered by information contained on the charities register, unfortunately…
The Details
Charities controlled by rich listers
The directly controlled charities that were identified for this analysis (along with their most recent accumulated funds) are:
1. $120m – The Tindall Foundation
2. $81m – The Douglas Goodfellow Charitable Trust (The 2904 Charitable Trust)
$4m – The Goodfellow Foundation
3. $36m – Friedlander Foundation
4. $32m – Hugh Green Foundation
5. $21m – The Jasmine Charitable Trust (Sam Morgan)
6. $18m - The Todd Foundation
7. $15m – PH Masfen Charitable Trust
8. $13m – David Levene Foundation
9. $2m – Robert Horton Memorial Trust
10. $1m – Eamon Cleary Charitable Trust
11. $0.2m – The Ben Gough Trust
12. $0.2m – Michael Hill International Violin Competition Charitable Trust
13. Unknown – The NZ Russia Foundation (Stephen Jennings – return not filed)
14. Unknown – The Glenn Family Foundation Charitable Trust (Owen Glenn – return not filed)
15. Unknown – The Bill Richardson Truck Museum Richardson
Charities supported by rich listers
The following rich listers are recorded on the charities register but the charities do not appear to be directly under their control:
1. Goodman family – The Suter 2000 Appeal Trust
2. Peter Cooper – The Britomart Arts Foundation; Mountain Landing Trust
3. Alan Gibbs / Jennifer Gibbs – The University of Auckland Auckland Auckland Art Gallery
4. Anne and David Norman – The Lukemia and Blood Foundation of New Zealand (supporters only, not listed as officers)
5. Fulton
6. Sir Colin Giltrap – The Starship Foundation; The Bruce Mclaren Trust
7. The Talley family – Friends of Motueka Hospital Trust
8. Adrian Burr – Auckland City
Some rich listers control smaller charities and/or are recorded on the charities register for charities that are not directly under their control:
· Michael Friedlander – The Britomart Arts Foundation; Auckland
· Goodfellow family – Auea Charitable Trust; NZ Sailing Trust Board; Tino Rawa Charitable Trust Board; Ipipiri Bay of Islands Restoration & Kiwi Conservation Charitable Trust Board; Bruce and Marion Goodfellow Charitable Trust; Auckland Medical Research Foundation; St Kentigern Trust
· Peter Masfen: NZ Olympic Foundation; Woolf Fisher Trust; The Kings College Trustees; Pahi Tere Charitable Trust
· Sam Morgan: The Jasmine Charitable Trust No.2
· Gough family: The Halberg Trust
· Sir David Levene: Sunderland Foundation
· The Horton family: NZ Breast Cancer Foundation; The Starship Foundation; Athlae Lyon Starship Research Trust; The World Child Cancer Charitable Trust
Offshore Activities
Most rich lister charities have 100% of their charitable purposes conducted in NZ. The exceptions are:
· The NZ Russia Foundation (Stephen Jennings) indicated that its charitable activities are carried out in NZ, Asia and Europe
· The Glenn Family Foundation Charitable Trust indicated that 50% of its charitable activities will be carried out in Asia
· The Auea Charitable Trust (William Goodfellow) indicated that it operates in NZ, Europe , Oceania and North America
· The Woolf Fisher Trust (Peter Masfen) has 80% of its activity carried out in Europe and North America
· The Jasmine Charitable Trust (Sam Morgan) has 92% of its activity carried out in Oceania , Asia and South America
· The David Levene Foundation indicated that 1% of its activities are carried on overseas
· The Sir Michael Hill International Violin Competition charitable Trust indicated that 25% of its activity is carried out in Asia , Europe , North America and Oceania .
· The Tindall Foundation indicated that 1% of its activities are carried on overseas.
Proportion of grant distributions / net assets
The charities which are directly under the control of rich listers distributed the following proportion of their net assets in the most recent year
1. 26% - The Todd Foundation
2. 12% – The Jasmine Charitable Trust (Sam Morgan)
3. 10% – David Levene Foundation
4. 9% – Friedlander Foundation
5. 9% – Eamon Cleary Charitable Trust
6. 6% – The Tindall Foundation
7. 4% – The Goodfellow Foundation
4% - The Douglas Goodfellow Charitable Trust (The 2904 Charitable Trust)
8. 3% – Robert Horton Memorial Trust
9. 2% – Hugh Green Foundation
10. 1% – PH Masfen Charitable Trust
11. 0% – The Ben Gough Trust
12. 0% – Michael Hill International Violin Competition Charitable Trust
Related Party Transactions
The only notable related party transactions appear to involve the two David Levene charities – the David Levene Foundation and the Sunderland Foundation. The former recorded a $12,222,000 advance to Lewis Holdings Ltd. The latter recorded related party advances from Lewis Holdings Ltd of $960k, School Properties Ltd of $663k and SCP 2009 Ltd of $943k. The Sunderland Foundation accounts filed with the regulator were not audited and had an unusual goodwill asset of $1,652,225 in the December 2009 year which was not mentioned in the December 2010 year.
Unusual Investments
The only curious assets identified in this brief review were the yachts owned by the Goodfellow family charities and a Peter Masfen charity. The Goodfellows have an interest in The NZ Sailing Trust Board which owns a maritime vessel and the Tino Rawa Charitable Trust Board which restored eight yachts. The Peter Masfen charity Pahi Tere Charitable Trust accounts referred to the Royal Akarana Yacht Club (building feasibility report and architect plans).
Limited Transparency
A number of rich lister charities have been withheld from the public in the past, although it appears the regulator has changed its view over time and more accounts are published today than they were three years ago. In all cases the financial data in question 25 of the return has been published and it is only the financial accounts which have been limited in their transparency. For example:
· The Goodfellow Foundation did not attach its accounts in 2012. There is no indicator on the register to suggest they have been withheld by the regulator.
· The Douglas Goodfellow Charitable Trust did have its 2011 financial accounts published. However it is noteworthy because it was particularly difficult to identify. The official name is “The 2904 Charitable Trust” on the Charities Register and it is only on the Annual Return Summary webpage for 2011 where Douglas Goodfellow is mentioned. Financial accounts were withheld for the two previous years and the March 2000 trust deed has had all names deleted including the name of the charity. The only officer listed on the register is the NZ Guardian Trust Ltd.
· Anne and David Norman are reported to be associated with the The Lukemia and Blood Foundation of NZ, although they are not recorded as officers. This charity did not attach its financial accounts in 2011 (though in the last week it filed its 2012 return with accounts attached).
· The Hugh Green Foundation accounts were restricted in 2009 and 2010. They were attached in 2011 although they provided very little detail, scarcely more than the data supplied in question 25 of the return.
· The PH Masfen accounts were also restricted in 2009 and 2010. They did not attach their accounts in 2011. There is no indicator on the register to suggest they have been withheld by the regulator.
· The Tindall Foundation accounts were not attached in 2012, 2010 and 2009 although a limited financial summary was provided in 2011. There is no indicator on the register to suggest they have been withheld by the regulator.
Financial Reporting
Twelve rich listers directly controlled 14 charities which have filed returns. Three had their accounts withheld, leaving 11 with financial statements available for public view. Their accounts were prepared on the following basis. Note that Special Purpose Financial Statements are not prepared in accordance with generally accepted accounting practice and are for management purposes only.
1. The Tindall Foundation: Financial statements withheld
2. The Douglas Goodfellow Charitable Trust (The 2904 Charitable Trust): Special Purpose Financial Statements: Unaudited
The Goodfellow Foundation: Financial statements withheld
3. Friedlander Foundation: Special Purpose Financial Statements: Unaudited
4. Hugh Green Foundation: Special Purpose Financial Statements: Unaudited
5. The Jasmine Charitable Trust (Sam Morgan): Special Purpose Financial Statements: Unaudited
6. The Todd Foundation: Special Purpose Financial Statements: Audited
7. PH Masfen Charitable Trust: Financial statements withheld
8. David Levene Foundation: Accounts prepared in accordance with generally accepted accounting practice. Adopted differential reporting exemptions. Audited.
9. Robert Horton Memorial Trust: Special Purpose Financial Statements. Unaudited
10. Eamon Cleary Charitable Trust: Special Purpose Financial Statements. Unaudited
11. The Ben Gough Trust: Accounts prepared in accordance with generally accepted accounting practice. Adopted differential reporting exemptions. Unaudited
12. Michael Hill International Violin Competition Charitable Trust: Special purpose financial statements: Audited.
<Disclaimer: In preparing this analysis I have taken reasonable steps to verify whether the officers listed on the charities register are in fact the high wealth individuals on the NBR rich-list. However because the identity detail on the charities register is often limited, it is possible that charities controlled by some individuals have been omitted or they have been incorrectly attributed.>
1 comment:
Very well done. Absolutely brilliant information. I'm in love with this blog. they always provide such a great information. charity organizations
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