When the Government announced in its recent Budget that it would cap the donation tax credit at $100,000 per year, it may have looked, on paper, like a modest fiscal tidy-up.
But what the Government may not realise is the very real impact this cap will have on not-for-profits already operating under significant financial pressure.
From where I sit, this decision is flawed and stands to cost New Zealand far more than it saves.
As chair of Hawke’s Bay Foundation, my role is to oversee a community fund that connects people who care very much about this region with the causes that need them most. We have seen, time and again, what happens when a significant gift lands in the right place at the right time. It might be a sum large enough to kick off a capital campaign to build a community facility, or an endowment that funds youth development now, and for generations to come. Or, as we saw in 2023 in the wake of Cyclone Gabrielle, large donations that help communities respond when government systems lag.
We’re not talking about routine donations here – rather, these are rare, carefully considered and consequential acts of generosity directly benefitting our region.
As laid out in Budget 2026, and subsequently enacted, the cap affects donors giving more than $100,000 per year to registered charities. Some might hear that figure and think of large, faceless corporations looking to minimise their tax commitments. But that would be a misrepresentation of the current scenario.
There are countless individuals, families and trusts grounded in community values and making important decisions about how to distribute their resources for good. These are people who commit sometimes very substantial portions of their wealth to causes they care about. Removing or reducing the tax rebate on that level of commitment comes with consequences – and frankly, I’m concerned.
And my concern extends beyond the potential loss of financial support for the community organisations of Hawke’s Bay. For many years, the donation tax credit has been confirmation from Government that it values private giving toward public good. Capping it reinforces a perception that charitable acts (and charitable organisations) should be viewed with suspicion – that the Government is trying to close some sort of tax loophole that New Zealand’s wealthy give to take advantage of.
Across our region, charities do work that the Government cannot, will not, or should not try to. They support mental health, youth development, environmental restoration, arts and culture, emergency response, and social connection and they are only able to continue this work with the backing of a community who cares enough to fund it. When you take away some of that funding, you shrink the ability to service need, not the need itself. And when needs are unmet, they become the Government’s problem.
The Government says it’s projecting $51.8 million in savings as a result of the donation tax credit cap, but this assumes that donor behaviour is unchanged – that those making large charitable gifts won’t care about the new restriction and continue to give freely.
We anticipate that this will not be the case and that when the rules change, so will patterns. The $51.8m tax pot for Government will not be realised and at the same time, the reduction in giving will have an effect on New Zealand’s community sector that is significant and long-lasting.
While I understand the need for fiscal discipline, it is important the Government consider the broader economic and social implications of this change and the principle it undermines – that New Zealand is a place in which Government, business and community work together to support wellbeing. Philanthropy is a critical component of this unspoken contract. Policy that discourages generous individuals and entities from making large donations damages the contract and more importantly, the community.
We are asking the Government to reconsider. Hawke’s Bay Foundation believes this particular measure will create costs and increase Government dependency, and that the projected savings do not stand up to scrutiny.
As a result, we have written to our local MPs, Katie Nimon, Catherine Wedd and Mike Butterick, outlining our concerns. We will be urging the Government to repeal Section 6 of the Taxation (Budget Measures) Act 2026 which came into law on 5 June 2026 and which implements the cap with effect from 1 April 2027.
Hawke’s Bay is a region of great generosity – we need policy that supports giving, rather than undermines it. Let’s not put more barriers in the way of the community organisations our people rely on.
Kevin Callinicos, Chair, Hawke’s Bay Foundation
