De-registration of NPOs in South Africa – What You Need to Know
In the past few weeks many NGOs have discovered that their “NPO registration status” with the NPO Directorate has changed to 'de-registered' or 'non-compliant'
According to well-known consultant to the sector, Ann Bown, 36 513 organisations have been de-registered, 35 217 are on a warning (non-compliant) while only 29 019 are in good standing (registered), out of the approximately 85 000 registered on the NPO Directorate database.
Whatever the reasons for these changes - non-compliance by NPOs or administrative incompetence by the NPO Directorate - NPOs need to understand the implications of these changes and take the necessary steps to rectify this situation.
# Why is it important to be registered by the NPO Directorate
Registration in terms of the Nonprofit Organisations Act of 1997 (the NPO Act) is voluntary. However, for some organisations it has become practically compulsory. For example, those setting up a voluntary association must be registered in terms of the NPO Act if they have any hope of opening a bank account. Banks are now insisting on the NPO certificate for voluntary associations.
Government departments and some donors (e.g. National Development Agency and the National Lottery Distribution Trust Fund) also require registration in terms of the NPO Act as a condition for funding, while others believe it contributes to increased NPO transparency and credibility.
# How to check your status
If your organisation is registered with the NPO Directorate and has been issued an NPO number, refer to www.npo.gov.za to check your status.
The status will reflect - Registered, De-Registered or Non-compliant.
# Reasons for de-registration
If your organisation has been de-registered, it is important to establish the reason/s for the change in your status. The NPO Directorate’s website would usually indicate the reason, and it should be reflected in the notice of non-compliance that the Director for NPOs issued to your organisation before de-registration.
De-registration is usually linked to the failure by NPOs to submit financial and narrative reports as required in terms of the Act.
The Director for NPOs can de-register NPOs that are registered in terms of the Act if such NPOs have not complied with:
- a material provision of its founding document;
- a condition or term of any benefit or allowance conferred on it by the Minister of Social Development in terms of the Act; or
- its obligations in terms of sections 17, 18 and 19 and any other provision of the Act.
It is important to understand that Section 20(1)(a) of the Act requires that the Director for NPOs must send a compliance notice in the prescribed form to a registered NPO if the organisation has not complied with its obligations in terms of sections 17, 18 and 19 and any other provision of the Act.
This notice must, first, be in writing, second, notify the NPO of the compliance steps required and, third, inform the NPO that it has one month from the date of the notice to comply.
# Is re-registration possible?
Section 22 of the NPO Act allows a de-registered NPO to dispute its de-registration by referring the matter for arbitration to an Arbitration Tribunal. This Tribunal must within three months, after having received an appeal, consider the arbitration. Unfortunately, the Tribunal has not been appointed as required in terms of the Act.
It seems that an organisation will be re-registered if it submits its outstanding narrative and financial reports - if it has been de-registered for failing to submit those reports. The NPO Directorate’s system is now automated and you can submit your financial and narrative reports online.
Otherwise, if your deregistration or non-compliant status is due to an administrative mistake by the NPO Directorate, then submit proof to the NPO Directorate that your reports were submitted on time.
# Other steps to be taken
As expected, the change in “registration” status has upset many NPOs because they claim their information is up-to-date. Others feel this is part of a sinister move by government to regulate the work of the sector as it cannot be the case that so many organisations have not fulfilled their responsibilities in terms of the NPO Act.
CAF Southern Africa is collecting information about organisations that have been de-registered due to administrative error on the part of the NPO Directorate.
Click here for more information.
NPOs should visit the NPO Database to establish their current status or contact the NPO Directorate at firstname.lastname@example.org for questions in this regard.
Also comment on this blog by sharing information about your experiences with the NPO Directorate, the NPO registration process or efforts required in restoring your registration status.
(I would like to thank Ricardo Wyngaard for the inputs provided in support of this blog. He has prepared A Basic Guide to the NPO Act which provides detailed information in support of many of the issues highlighted above. He has also produced a training DVD on compliance with the NPO Act, which includes an interview with the NPO Directorate. The training took place in September 2012. A limited number of DVDs is available free of charge from Ricardo Wyngaard Attorneys.)
Joint media statement by Minister Bathabile Dlamini and the Ministerial Task Team on Non-Profit Organisations (NPOs) (31 January 2013)