A Massey University professor says Gloriavale's application for funding from the Provincial Growth Fund is "inventive" but that he wouldn't personally give them the money because they are "too sectarian".
1 NEWS yesterday revealed the West Coast religious community, which has tax-free charitable status, has applied for millions in taxpayer funding to set up a health food business.
Speaking this morning to TVNZ 1's Breakfast programme, Professor Peter Lineham praised the church's novel approach to running their organisation, but also said he doesn't think they should receive a grant.
"They're nothing if not imaginative, because they seize opportunities," he said.
"This is a very creative way to draw on [Regional Development Minister] Shane Jones' Regional Growth Fund - and boy the Coast needs it."
Professor Lineham said while Gloriavale probably would do the work and establish a business if given the grant, there are questions as to who will benefit.
"The general theory of regional development funds is that if you inject money into a positive enterprise then there'll be quite a lot of trickle down effects .. .and so it will benefit the wider community," he said.
"All the money feeds back into the 500 or 600 people who are there within the [Gloriavale] community ... strictly everything is controlled by a very closed organisational force."
Gloriavale already do "pretty well out of the state", he said, with the tax-free religious charity status allowing them to keep tax on their business profits, as well as receive income through donations and other means.
"The law does say, at the moment, that if you're running a business for charitable purposes you're entitled to do that."
Personally, Professor Lineham said he would not choose to give Gloriavale the funding, "because its really just too sectarian".
Mr Jones said yesterday the government would evaluate Gloriavale's application in good faith but will also take into account Gloriavale's reputation with the public whose money it is now asking for.
"I wouldn't want to knock out any particular application till we had all the facts," Mr Jones said.
"We will get from time to time applications where we'll have to be very, very sensitive.
"But the reality is that particular organisation does represent something of a morality play."