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The Starship Foundation has changed its mind and rejected a $158,000 donation delivered by New Zealand First leader Winston Peters this week, saying it "wasn't proper philanthropy".
On Thursday, the charity organisation that supports the Starship children's hospital said the donation would not be returned unless it was illegal.
But last night, its chairman, businessman Bryan Mogridge, said that after returning from Sydney and studying the matter, he had decided that although the donation was legal, it was "not appropriate".
Mr Peters gave the money to the foundation on Wednesday for paediatric research instead of repaying it to the Parliamentary Service.
It was the amount Auditor-General Kevin Brady found New Zealand First spent unlawfully in the 2005 election.
Last night, Mr Peters said he expected the party would now give the money to another cause. "There are a lot of other deserving charities."
He said his party was not obliged to return the money to the Parliamentary Service.
The Starship Foundation had caved in to newspaper editorials opposing the donation, and children in hospital would miss out as a result.
Mr Mogridge said it was unfortunate that the money was not given in the spirit of genuine philanthropy, "but rather, it appears, to gain political capital and media leverage".
