Tauranga Art Gallery Trust is encountering resistance from councillors in trying to set up an endowment foundation with $500,000 with the trust's own money.

The money, originally donated to the Art Gallery Trust by the public to build the gallery, is in the trust account, but cannot be transferred to a foundation account without council permission.

Tauranga Art Gallery.

It's been agreed by the gallery trust and the Tauranga City Council that establishing an independent fundraising foundation is the way forward for the gallery trust.

The money was given to the trust before 2006 when it was made a Council Controlled Organisation.

The trust raised $7million of the $8.7million required to buy and convert the former bank site on Willow Street. When the art gallery was completed with the aid of $2million from the city council, the remainder of the publically donated money was banked.

As at June 30, 2013 the amount is $570,472. The trust believes the funds are better held by the new foundation, as the intent of the foundation is more in line with the wishes of the original donors, than is the day to day nature of the art gallery activities. Ratepayers fund gallery operations at $850,000 a year, with inflation adjusted.

This week councillors balked at endorsing the staff recommendation, and requested more information.

Council strategic planner Jeremy Boase told councillors in reply to questions that the $500,000 is required to provide the foundation with ‘critical mass', to encourage others to contribute.

People don't contribute while council is holding the money because there is a perception it may be diverted away from the gallery into the council.

The motion was lost. Councillor John Robson's amended motion that the council give the gallery $100,000 to start the fund, and require chief executive officer Garry Poole to inspect and approve the foundation paperwork.

Once he's satisfied an appropriate independent fund raising foundation has been established and has in place the appropriate systems and processes to manage the funds, the rest of the money can be passed over.

The council approval is required because the trust's Statement of Intent states the trust will not undertake any activity of a nature or scope not provided for in the SOI without prior approval of the council. The establishment of an independent endowment fund or foundation is provided for in the SOI and approved by council. The transfer of $500,000 to such a foundation is not.

Art gallery trust chairperson Phillida Perry says the trust is encouraged the newly elected council members for Tauranga City Council continue to support the Gallery by agreeing to transfer $100,000 from the trust to the proposed Tauranga Art Gallery Foundation.

'We anticipate that once we have obtained council members confidence in the foundation, they will continue to support the gallery and the foundation by agreeing to transfer the remaining $400,000 surplus to the foundation,” says Phillida.