Posted on 18 June 2026
9 June 2026
Hon Nicola Willis, Minister of Finance
Rt Hon Winston Peters, Minister of Foreign Affairs
Hon Simon Watts, Minister of Revenue
Parliament Buildings
Wellington
Re: Proposed Cap of $100,000 on Eligible Donations for the Donation Tax Credit
Dear Ministers,
We, the Council for International Development, along with members and sector organisations, write to express our significant concern regarding the Government’s proposal to cap the annual amount of charitable donations eligible for the donation tax credit at $100,000 per individual.
We appreciate the Government’s desire to ensure fiscal sustainability and maintain confidence in the charitable sector. However, we believe the proposed cap will undermine donor giving rates – a situation that will negatively affect charitable organisations across New Zealand and their work.
The proposed change will ultimately reduce the public and social good that organisations deliver and undermine New Zealand’s international development and diplomatic goals. This will create gaps the Government can neither afford nor has the reach to fill.
We share the Government’s desire to protect the integrity of the charitable system but believe more targeted policy and enforcement would better achieve this, while also improving revenue levels.
Set out below, in more detail, are key areas of concern. We welcome the opportunity to engage further on this matter.
The Council for International Development
The Council for International Development is New Zealand’s peak body and national umbrella agency for international development and humanitarian organisations. We represent organisations working across the Pacific, Asia and beyond, implementing programmes that span economic development, health, education and much more. Our organisations are regularly at the forefront of New Zealand’s efforts to respond to humanitarian disasters.
A Disincentive to Philanthropy
The donation tax credit has long been an important mechanism encouraging New Zealanders to support charitable causes. While we welcome signals that the Government values and wishes to encourage private philanthropy, introducing a cap sends the opposite message.
Inland Revenue’s own data suggests that the small number of donors, who give above $100,000 per annum, contribute a disproportionately high value of all donations (0.1% of donors contribute 10% of all 2 donations). For organisations facing significant inflationary cost pressures and that are already operationally lean and effective – a key reason we are regularly contracted by Government – any reductions in giving will impact service levels.
The proposed cap effectively places a ceiling on the amount of charitable giving that the Government is willing to incentivise, potentially discouraging some of the country’s most generous donors from maintaining their current levels of support.
The Cost-Benefit Question
According to the Government’s announcement, the cap is expected to save approximately $19 million annually. While fiscal prudence is important, this amount appears modest when weighed against the potential reduction in charitable giving and, therefore, service levels.
The charitable and community sector delivers billions of dollars of social value every year.
The Government relies heavily on charities and not-for-profit organisations to help support vulnerable families, provide community services, strengthen social cohesion, advance health and education outcomes, respond to emergencies, and extend New Zealand’s contribution to international development, humanitarian and diplomatic causes.
Any policy that risks reducing private giving may ultimately create greater demand for public
expenditure in the future.
Impact on International Development and Foreign Aid
The proposal also has particular implications for New Zealand’s international development and diplomatic goals.
Many New Zealand-based international aid organisations partner with the Ministry of Foreign Affairs and Trade (MFAT) through co-investment funding arrangements. These arrangements deliver good value for money and ensure a strong New Zealand brand. They, also, commonly require charities to contribute approximately 25 - 50 percent of the total project value from their own fundraising efforts.
This model leverages Government investment, enabling New Zealand’s aid budget to achieve significantly greater impact than public funding alone could deliver.
The proposed cap will reduce philanthropic giving, meaning international development organisations may struggle to raise the required co-investment funds. As a result:
- fewer development programmes may proceed,
- fewer communities in the Pacific and other partner countries may receive support,
- New Zealand’s international development outcomes may be reduced.
The proposal risks undermining an existing partnership model that has successfully multiplied the impact of taxpayer funding for many years, as well as New Zealand’s broader international development and diplomatic goals.
Impact on Support for Multiple Charities
Many philanthropic donors support several charities each year and there is a high risk the proposed cap will trigger changes in giving levels, the distribution of donations across multiple organisations, and even the timing of donations.
It is common for wealthy donors to make significant gifts across a range of causes including health, education, social services, community development, environmental protection, arts and culture, international development, and humanitarian aid.
A donor, for example, who currently gives $40,000 each to four organisations spanning international development and local social, health and community services will easily exceed the proposed $100,000 threshold in aggregate. Faced with the loss of tax credits above the threshold, donors may choose to reduce their overall annual giving. The result is likely to be a reduction in giving across multiple charities. Donors may also choose to focus on giving by way of bequest, meaning that charitable funding may not be available for some years.
Charitable organisations that have relied on these generous supporters for some time could experience substantial decreases in funding despite delivering services that align closely with Government priorities.
International Comparisons
The proposed cap would place New Zealand out of step with many comparable countries.
Australia does not impose a fixed dollar cap on deductible charitable donations. Instead, donations are generally deductible up to the amount of an individual’s taxable income, with provisions allowing excess deductions to be carried forward into future years.
The United Kingdom operates the Gift Aid scheme, which allows charities to reclaim tax on donations without imposing a fixed monetary cap on an individual’s giving. Additional relief is available to higher-rate taxpayers.
Canada allows charitable donation tax credits based on a percentage of net income rather than a fixed dollar threshold, enabling major philanthropy while maintaining safeguards.
The United States similarly permits charitable deductions subject primarily to adjusted gross income limitations rather than fixed annual caps, reflecting a policy approach that encourages large-scale philanthropic giving.
These jurisdictions recognise that philanthropy is a valuable complement to public expenditure and that major gifts often fund activities that governments cannot or do not directly provide.
Alternative Approaches
We support the idea of greater sector integrity. In fact, we operate our own Code of Conduct that sets best practice standards of international development finance and philanthropic practice.
If the Government’s concern is primarily about tax planning practices by donor-controlled charities, we encourage consideration of more targeted measures addressing those specific arrangements rather than a broad cap that affects all charitable organisations and all major donors. This could include clearer rules and monitoring on appropriate structures and transactions or strengthening the powers and operations of the regulator.
A surgical approach would preserve incentives for genuine philanthropy while addressing the integrity concerns identified by Inland Revenue.
Conclusion
New Zealand benefits enormously from a strong culture of philanthropy. The proposed $100,000 cap risks weakening that culture. It will discourage major donors, reduce support across multiple charities, and create challenges for organisations that partner with Government to deliver essential services and international development outcomes.
We respectfully urge the Government to reconsider this proposal and engage closely with the charitable sector to identify alternative solutions that protect the integrity of the tax system without diminishing charitable giving.
We are very willing to engage further on this matter.
