The Wright Family Foundation made a tax-free operating profit of $32 million last year. NZ Herald Reporter Matt Nippert goes deeper into the story. This article was published on nzherald.co.nz on 21 October 2024. You can read the original article here. 

Giant childcare charity Best Start made a tax-free operating profit of $32 million last year, while also increasing payments to its rich-list founders to $37m.

Best Start – the country’s largest childcare provider, with more than 260 facilities nationally – was controversially converted into a charity in 2015 when owners the Wright Family Trust sold the business to the Wright Family Foundation for $332m.

The purchase price was settled with a vendor-financed loan to be repaid to the private family trust out of spare – and now tax-free – cashflow.

Earlier annual reports for the foundation filed to the Charities Register said the loan due to the family trust was repayable at a minimum of $20m a year, and interest could be levied if demanded by the trust. Previous years have seen the trust pay down the related-party loan by $20m annually, but accounts for the year to March 31, 2024, show this increased to $37.2m.

The Wright family – Wayne and Chloe (Chloe Wright died late last year) and their children – comprise the majority of trustees of both the foundation and their family trust.

The family is assessed as being worth $400m by the National Business Review, with the majority of their wealth derived from the Best Start sale.

Wayne Wright told the Herald last week the increased loan repayment was largely down to a spike in cashflows from property sales. He noted the foundation’s available cash, even with the increased loan repayment, stood at $29m up from $10m the year prior. He also said interest had not been demanded by thefamily trust.

Questioned about how and why the loan repayments exceeded operating profits, Wright said the bump was irregular and Best Start and the wider foundation remained solvent.

“I don’t see this happening on a regular basis,” he said.

“Current and forward projections indicate more than adequate cashflow currently and for the foreseeable future.”

The 2024 accounts show a 16% increase in year-on-year revenues to $370m, of which $262m was government-provided subsidies for early childcare education. Other significant contributors to its bumper 2024 cashflow include the sale of properties which netted $25m, up from $10m the year prior.

Best Start, then Kidicorp, was founded by Wayne and Chloe Wright in 1996. The couple floated the company on the NZX in a 2004 backdoor listing, but took it private again in 2007 after the firm hit choppy waters.

Its 2015 charitable conversion raised eyebrows among tax specialists when publicised in 2020. Experts said while the structuring was novel it appeared allowed by current tax and charity laws.

The Government has signalled it was taking a look at whether charities that run commercial operations should keep their tax-free status.

Wayne Wright said the clearing of the $332m loan to his family trust, the balance of which the 2024 accounts records was now $111.2m, would see the freed-up future cashflow available to be distributed to “worthy charitable organisations”.

This development could see the foundation become one of New Zealand’s largest charitable donors.

The 2024 accounts record the foundation made $4.7m in donations over the year, including continuing long-term funding support for Spelling Bee New Zealand, Plunket and the Graeme Dingle Foundation.

The Wright family have made historical donations to the National Party, and backed Sean Plunket’s “anti-woke” internet radio station The Platform with a 75% stake.

Matt Nippert is an Auckland-based investigations reporter covering white-collar and transnational crimes and the intersection of politics and business. He has won more than a dozen awards for his journalism – including twice being named Reporter of the Year – and joined the Herald in 2014 after having spent the decade prior reporting from business newspapers and national magazines.

Photo / Norrie Montgomery