New Zealand First produced evidence today that the Cystic Fibrosis Association asked for a donation and gave an assurance it would be accepted.
The party gave it $10,000, part of the $158,000 of taxpayers' money that Auditor-General Kevin Brady decided was wrongly spent during the last election campaign.
But last night the association's chief executive, Kate Russell, announced it was giving the money back because it wasn't clear whether it was right for the money to be given to charities.
Party leader Winston Peters said on Sunday all the $158,000 had been distributed to "worthy causes" but he didn't identify them.
The party initially wanted to give all of it to Starship Hospital, but the board turned it down for the same reason cited by Ms Russell.
NZ First today released a letter from Ms Russell, dated December 15 last year.
In it she said she had been watching with interest the media reports about the party's attempt to give the money to Starship.
"Can I please urge you, when considering which charity to give this money to, to consider those charities, like mine, that do not receive any government funding," she said.
"Believe me, when I say that if the donation came to my charity -- we would NOT turn it down."
Ms Russell is out the country at present.
Mr Brady ruled that all the parties in Parliament except the Progressive Party had wrongly spent taxpayer money during the 2005 election campaign.
The others repaid their amounts to Parliamentary Services but NZ First insisted it had been given clearance for its spending and said it would donate it to charities.
Critics argue it has no right do give away taxpayers' money.
