Reviewing the 2026 Budget
Budget Day has been and gone. This was an election-year budget, but there were no big promises or surprises, no lolly scramble designed to woo voters.
Instead, National’s Finance Minister Nicola Willis has focused again on balancing the books and managing spending in what she called a “tough love” budget and a “grown-up” budget against a backdrop of slow economic recovery and ongoing global uncertainty.
Willis said she could have thrown a “sugar hit” for people, but that it would simply drive inflation higher and weaken the financial position. She is, instead, steering a path that leads to a return to surplus, founded on a Treasury forecast of 220,000 new jobs over the coming years, alongside wages rising faster than prices. Much of the investment is in infrastructure - long-term projects in health, education and transport rather than short-term fixes for the current situation.
That’s been praised by some as being good thinking that will set a good foundation for the future. But others, particularly organisations that work with those in lower socio-economic groups, have highlighted the need for support now as the cost of living continues to rise.
Here’s a quick rundown of the key parts that could affect the for-purpose and impact sector directly or indirectly
Tax changes may benefit charities and not-for-profits
One of the more interesting parts of Budget 2026 for charities and not-for-profits came in the details of a set of tax changes.
These changes follow a turbulent period, during which more substantial changes have been debated and open to public submissions. There were originally plans to tax the business income of charities, but that was shelved after significant backlash from sector groups during a review period that garnered 900 submissions.
Instead Budget 2026 outlined the following changes
Placing a cap on the level of donations which qualify for the donation tax credit. This is currently unlimited and will be restricted to $100,000 (an effective tax credit of $33,333).
Making it easier to claim donation tax credits by allowing these to be claimed throughout the year rather than waiting until year-end.
Allowing donors to gift their tax credit to the charity
Making it easier for not-for-profits to tax payments made to volunteers
Increasing the level of net income a not-for-profit can earn before needing to pay tax from $1000 to $10,000
The removal of the tax exemption for non-resident charities
Introducing integrity measures for trust income allocations to tax-exempt beneficiaries
Ensuring the member subscriptions for not-for-profits remain non-taxable (consistent with current practice, but in contrast to a recent Inland Revenue interpretation of the existing law)
Some of these changes, such as increasing the level of net income before tax for not-for-profits, have been welcomed, but others, such as the capping of the levels for donation tax credits, have been greeted with caution.
Also announced earlier this week, another move that could boost charity’s savings - a change to the Active Investor Plus Growth visa category.
Migrants applying under this investor category will soon be able to put some of their required investment towards charitable donations. From next month, up to 20% of the $5million investment required will be able to go towards eligible charities or specified Department of Conservation initiatives.
More public sector cuts
Perhaps the most widely broadcast news surrounding this year’s Budget was further cuts to the public sector, with most government agencies being asked to find more savings over the coming years. We have already seen this having a knock-on effect on charities and agencies that rely on government funding or contracts to help support their work.
Just last week, for example, we saw the closure of RespectEd Aotearoa, Wellington’s only specialist sexual violence prevention organisation, after it lost the funding from ACC and Corrections it relied on to deliver its programmes and was unable to source alternative funding.
These new cuts mean it’s likely there will be further difficulties to come.
Education changes will affect young people looking at further education options
In a move that was signalled pre-Budget, the Government confirmed that the fees-free tertiary education scheme is being scrapped. The Government had already moved the fees-free element from the first year to the last year of study, but is now scrapping the scheme entirely.
The money will be redirected towards more trades academy places for secondary school students. It will also help to fund 1000 additional Youth Guarantee places to support school leavers with no or low qualifications into free study through polytechnics and other tertiary providers.
The Government claims the scheme has had little impact on enrolment numbers or completion rates, but supporters of fees-free say scrapping the funding will make it even harder for students, especially those from minority groups, to consider a university education.
Welfare support
Funding for welfare support and packages includes:
$45 million to community food support and kids’ breakfasts
$8 million per year ongoing funding for a central hub which distributes food to local community food suppliers, including food banks.
$1.5 million per year ongoing funding for the Government’s contribution to the KickStart Breakfast programme, which provides food for schools to run their own breakfast programmes.
$7 million reprioritised in 2026/27 to fund food parcels for food banks and community-based initiatives that support local food security and resilience.
$93.3 million over two years to help 25,000 sole parents access more assistance to find work, providing opportunities for income and career growth
$22.4 million over two years to prevent households needing emergency housing, and facilitating sustainable exits that reduce recurring emergency housing need.
A temporary increase in mileage rates for support workers and people travelling for specialist treatment ($24 million)
A temporary extra $50 a week through a boost to the in-work tax credit for some families
There was also an announcement of $69 million to fund up to 2,250 additional social houses. But that’s been overshadowed by changes signalled earlier this week which will see more stringent criteria for getting a social house bought in and an increase in the Income Related Rent payment.
These funding announcements have been greeted cautiously, with some like the Salvation Army’s director of social policy, Dr Bonnie Robinson saying they do not go far enough to help families struggling with the rising cost of living.
No money for climate targets
No money has been allocated for New Zealand’s commitment to the Paris Agreement, an international agreement to reduce greenhouse gas emissions.
This is despite suggestions that the government will likely need to purchase offshore carbon credits to meet New Zealand’s 2030 target. While there is no penalty for not meeting the target, several groups such as Lawyers for Climate Action, have warned of damage to New Zealand’s reputation on the international stage if it doesn’t commit.
A boost for Maori culture
Budget 2026 sets aside $48million over the next four years to support Maori broadcasting and $10million to support international interest in Maori culture and storytelling and creating opportunities for Maori artists, creatives and businesses. This $10million has been repurposed from the wider Maori Development fund, leading to some questions about how it will impact other initiatives. There is also investment in the education budget to support Maori medium teaching.
This is Nicola Willis’ last Budget before the election. It remains to be seen whether she has done enough to convince voters that the Government is on the right track and that better times are coming.
What is more obvious is that it is likely to be another difficult period for the for-purpose and impact sector. We’d like to acknowledge the work done by organisations of all sizes to make a positive impact on New Zealand’s people, communities and environment.