The government has pulled back on its plans to collect people's data until it can assure them their privacy will be protected.
Its social investment approach had required NGOs such as Women's Refuge and Rape Crisis to hand over detailed information about their clients before funding for the financial year would be approved.
The plan was met with outrage by several groups and led to a scathing report from the Privacy Commissioner.
To compound matters, a gaping hole was found in the IT portal set up to collect the information, with an independent review finding the Ministry of Social Development (MSD) paid little more than lip-service to privacy before pushing go on the system.
Social Development Minister Anne Tolley said the Social Investment Agency would lead a working group alongside Statistics New Zealand and NGOs to agree on an approach to increase data use while maintaining trust and confidence.
"The working group will also include representatives from Iwi and Pasifika. Separate to the working group, there will also be opportunities for interviews, workshops and an online forum for key partners.
"An advisory group will provide oversight and lead the work to identify, evaluate and recommend a robust approach. It will bring together a number of agencies, as well as the government's chief information officer, the Office of the Privacy Commissioner, and independent data consultants."
NGOs would be advised their July 2017 contracts would not require the collection of data until a suitable system was in place, at which point they would be asked to agree to a contract variation by the end of the financial year.
Earlier this month Dame Diane Robertson, chair of the Data Futures Partnership, warned that public trust and buy-in was essential for the plan to work.