The Independent Communications Authority of South Africa (ICASA) proposed a cut of up to 75 percent over the next three years in the fees mobile phone companies can charge competitors to use their network.
ICASA has released its draft call termination regulations, significantly reducing the cellphone rates of some networks.
In addition, ICASA introduced an asymmetric rates system for smaller operators with a market share of less than 20 percent, which is aimed at promoting investment, encouraging competition and fostering small, medium and micro enterprises.
To read the article titled ‘Icasa proposes slashing call rates’, click here.Source:Fin 24
- If your organisation is a NonProfit Company (NPC) - formerly known as a Section 21 company, you need to check whether you or your auditors have been making and are up-to-date with ‘annual returns’ to Companies and Intellectual Property Commission (CIPC).
According to the annual report recently tabled by CIPC they were planning a ‘bulk de-registration’ of non-compliant entities in the ‘foreseeable future’.
There is a notice on the CIPC website that the annual return system would be down from 7h00 - 9h00 am on 1 October 2013, for re-activation of late filing and penalty fees for company and close corporation annual returns. So, by the time you read this, it may already be too late.
The effect of de-registration will be that your organisation will no longer have legal status as a registered NPC, and your members / directors may be personally liable for the debts and obligations of the organisation.
Prior to the implementation of the new Companies Act, Section 21 companies were exempted from the requirement to file annual returns with CIPC. Under the new Act, however, this obligation now falls on NPCs as well as private companies (Pty Ltds).
You may find that your auditors, who will be used to filing these returns for all of their Ptys, will automatically have taken on the role of doing so for their NPC clients. It is worth making the call to them to check.
Please note that, although the process is referred to by CIPC as making an ‘annual return’, it is more like paying an annual fee to CIPC to remain registered. The CIPC system will, when you make the return, prompt you to input updated details on the NPC, but the crux of the exercise is paying the fee.
You therefore cannot complete the exercise yourself, unless you are registered as a CIPC customer and have money in your CIPC account.
The following is extracted from the CIPC website, and shows how to calculate your annual return amount:
Annual return fees
Annual Turnover Filing within 30 business days after anniversary Filing more than 30 business days after anniversary Less than R1 million R100 R150 R1 million but less than R10 million R450 R600 R10 million but less than R25 million R2 000 R2 500 R25 million or more R3 000 R4 000
Therefore, for example, if your NPC / Section 21 was registered on 28 August of any given year, your annual return should be paid, especially if you want the early payment discount, by 28 September each year.
Of course, your turnover will not be calculated with reference to your anniversary date but your financial year-end. What one simply does, is use the turnover figure for your last completed financial year, whenever that may be.
- Nicole Copley (BA LLB LLM-tax) is non-practising attorney at NS Copley Consultancy.
Zambia’s government has warned that non-governmental organisations (NGOs) that fail to register under the current NGO Act risk being deregistered and will not be allowed to operate.
Community Development Mother and Child Health Minister, Joseph Katema, says that all NGOs should register under the current Act even if they had other licenses for them to be allowed to operate.
Responding to the threats by NGOs that they will not register under the Act in its current form as it was ill intended, Dr Katema said most NGOs had already registered in accordance with the Act and that his office would soon compile a list of those that have not done so.
To read the article titled, “Government threatens NGOs with deregistration if they don’t register under NGO Act,” click here.Source:Lusaka Times
- On 20 June 2013, the New York State Senate passed the NonProfit Revitalisation Act, which overhauled the laws governing nonprofit organisations (NPOs) for the first time in 40 years. The last Act was passed in 1969.
New York State is heavily dependent on NPOs to offer community assistance, provide healthcare and respond in times of emergency. The law applies to five archival foundations, alumni associations, historical societies, agricultural societies, trade organisations, charities and NPOs. Many of these organisations are also regulated by other departments, including health and education departments and the Attorney General’s Office. Over 103 000 nonprofits are registered in the State. They employ over 1.25 million workers, one in every seven jobs in the state, and contribute billions of dollars in annual revenue.
The motivation for these amendments was that over the years, piecemeal changes created an antiquated and weakened regulatory environment, which was cumbersome, filled with fraud and financial abuse, slow economic recovery, as well as recent weather related disasters such as Cyclone Sandy. The aim was to cut the red tape, increase accountability and work for an enabling environment for these organisations.
Some of the key provisions of the Act provide for:
Reducing Unnecessary and Outdated Burdens
The Act has sought to make it easy to form and operate nonprofits in the state to deliver important social services to the people. The Act creates an enabling environment for nonprofits.
Eliminating Barriers to Forming Nonprofits
- Eliminating corporate types of nonprofits: The Act eliminates the four historic 1970 categories and makes provision for two new categories - charitable corporations and non-charitable corporations;
- Eliminating unnecessary pre-approvals: Historically, schools, colleges, universities, technikons, industrial schools and museums had to obtain pre-registration approval from the State’s Education Department. This amendment will now end the red tape and will ensure that public interest is protected; and
- Reducing Red Tape: Previously, nonprofits registered their corporate purposes first and later stated the specific activities they intended to undertake. Now the law allows them to state their corporate purposes and be registered. The Act also allows nonprofits to correct / amend language errors without having to resubmit original applications.
- Encouraging Electronic Communications: In keeping with international practice (including South Africa), the amendment allows for electronic communications and meetings;
- Increasing Thresholds for Financial Reporting: Presently, nonprofits receiving over US$250 000 have to provide an auditor’s report. The amendment raises the threshold to US$250 000 for an independent Certified Public Accountant report, and progressively increases the threshold to US$1 million by 2021, for an auditor’s report;
- Expediting Mergers and Property Transactions: This amended Act allows for nonprofits to obtain only the Attorney General’s approval, rather than the previous ‘two-steps’ approach, which required the Attorney General and the Courts’ approval. The Attorney General retains the right to ask for a judicial review if deemed appropriate;
- Simplifying Dissolution: The process of dissolving nonprofits is also simplified, so that assets can be quickly redistributed to other charitable organisations; and
- Facilitating e-Filing: Financial and other mandatory filings can now be completed in electronic form.
Enhancing Governance and Oversight
The amendment provides oversight for external audits, executive compensation and related party transactions. It provides boards with a roadmap for oversight and accountability.
- Audit Oversight: The amendments make provision for the board to retain auditors and review the findings of the external audit. For organisations with a revenue of over US$1 million, additional oversight measures have been put in place;
Related Party Transactions: The amendments require boards to actively assess and approve transactions between the nonprofit and its directors, officers and key employers, as well as their relatives and other entities to which they are affiliated:
- Material disclosure is sought from the interested person. The boards are required to make an affirmative determination that the transaction is fair, reasonable and in the best interest of the nonprofit. They should also be able to show that alternate transactions have been considered. The Auditor General will be able to bring an action to enjoin or rescind decisions and seek double damages in cases of wilful misconduct;
- Conflict of Interest: The Act will require written conflict of interest policies where these policies do not exist. These policies should govern boards, officers and staff;
- Whistle-blower Policies: While smaller organisations are exempt, larger nonprofits are required to adopt whistle-blower policies to create systems, in order to report illegality and prohibit retaliation against persons who make such reports;
- Board Leadership and Independence: The amendments also prevent the chief executive officer and other employees of a NPO from serving as a chair of its board;
- Board Leadership and Independence: To promote integrity and curb self-dealing, the Auditor General is provided with powers to challenge and void interested party transaction, if the Auditor General has reason to believe they are unreasonable and not in the best interest of the nonprofit; and
- Enhancing Board Capacity to correct wrongdoing: To identify and correct abuses, the Act now permits directors and managers to seek court approval to inspect a nonprofits books and records if they suspect wrongdoing. Previously, only creditors and members could petition court.
- An on-going review of our legislation to keep up with local and international best practice is essential;
- Measurement of the nonprofit sector’s contribution to the local, provincial and national economy must be undertaken as a priority by Statistics South Africa;
- Allowing for easy registration, simplified reporting and fast-tracking mergers, dissolution and closures assisted by electronic processes will keep the registration data current and accessible;
- Simplified financial reporting and auditing, based on total revenue, is a notion for which the time has come;
- Similarly, board functioning has to be improved, and if legislated for in the NPOs Act will give immense comfort to those board members and staff who wish and desire to act ethically; and
- South African civil society also needs introspection and a voice on conflicts of interest, whistle-blowing provisions and board capacity building. While provisions exist in other legislations, it may be of considerable value to entrench such provisions in the NPO Act to emphasise the centrality of these issues.
South African MPs say that communications regulator - the Independent Communications Authority of South Africa- has been failing to perform and allowing mobile service companies to ‘rip off’ the poor.
Members of Parliament's labour and public enterprises select committee were briefed by ICASA on the high cost of broadband and cellphone calls.
According to the African National Congress, MP Livhuhani Mabija, says that the committee has been experiencing "a lot of problems with ICASA.
To read the article titled, “ICASA berated over high cellphone charges,” click here.Source:Mail and Guardian
The Zambian government has extended the period for registration of non-governmental organisations (NGOs) for another 90 days.
Community Development Mother and Child Health Minister, Joseph Katema, says that all NGOs that will not register at the end of the 90 days shall cease to operate in Zambia.
Katema says those wishing to register a new NGO can proceed to do so starting from 15 July 2013 as registration forms can be obtained from the Ministry’s department of registrar for NGOs.
To read the article titled, “NGOs registration extended,” click here.Source:Zambia National Broadcasting Corporation
The NGO sector loves a crisis, and fresh out of the mass nonprofit organisations (NPOs) deregistration and re-registration calamity, panic is spreading again, this time about the supposed ‘deadline’ of 30 April 2013 for former section 21 companies (now called Non Profit Companies) to adopt new Memoranda of Incorporation (what the new Companies Act now calls the founding documents of all companies).
It is not true that NPCs (or any companies) have to adopt a new MOI, and it is also not true that it has to be done by 30 April.
A bit of background, first:
The Companies Act 2008 was finally, after much debate and controversy, made law on 1 May 2011. This is the Act which we refer to as the ‘new Act’, though the gloss of newness is long gone.
The Act created a new category of company, the Non Profit Company (NPC) and provided that all companies which had been registered as associations not for gain under section 21 of the previous Companies Act, as well as those registered under similar sections of prior acts, automatically became NPCs, and the end of their names were automatically changed to ‘NPC’ instead of the previous ‘Association Incorporated under section 21’.
NPCs are no longer (as section 21 companies were) public companies, but are in a category of their own.
The new Act introduces a couple of new options for NPCs, and if your NPC does want to take the opportunity to adopt these changes, or if it needs to amend its MOI for any other reason (satisfying SARS’ requirements is a common reason) then it would be appropriate and necessary to adopt a new MOI.
It is not true, though, that it is absolutely necessary for all NPCs (or all companies, for that matter) to adopt a new MOI.
The new Act defines ‘Memorandum of Incorporation’ as:
“… the document, as amended from time to time that sets out rights, duties and responsibilities of … directors and others within and in relation to a company, and other matters … by which the company was incorporated in terms of this Act… (or) a pre-existing company was structured and governed before the …effective date…”
This means that the existing Memorandum and Articles of a company which was formed before 1 May 2011 automatically becomes and is referred to by the new Act as a ‘Memorandum of Incorporation’. It is therefore not necessary to adopt new documents to have an MOI - your existing set of documents is now an MOI.
Schedule 5 to the new Companies Act, which deals with transition from old to new Act states that:
“2)At any time within two years immediately following the general effective date, a pre-existing company may file, without charge…an amendment to its Memorandum of Incorporation to bring it in harmony with this Act”;
Note, though, that section 16(1) of the new Act says that:
“A company’s Memorandum of Incorporation may be amended… c) at any other time if a special resolution to amend it i)is proposed by aa)the board of the company; or bb)shareholders entitled to exercise at least 10 percent of the voting rights that may be exercised on such a resolution; and ii)is adopted at a shareholders meeting, or in accordance with section 60, subject to subsection (3).So, you may amend your founding document at any time, but if you do so by 30 April 2013, CIPC waives its R250 registration fee.
Schedule 5 to the Act goes on to say that:
“4) During the period of two years immediately following the general effective date.. if there is a conﬂict between … a provision of this Act, and a provision of a pre-existing company’s Memorandum of Incorporation, the latter provision prevails, except to the extent that this Schedule provides otherwise…”So:
- During the period up until 1 May 2013 if any part of your memorandum and articles contradicts the new Act, your memo and articles win.
- From 1 May 2013, if your memorandum and articles contradicts the mandatory provisions of the new Act, the new Act wins.
An example of where this might occur is if your memorandum and articles (now called an MOI, remember?) provide for a higher than 50 percent majority requirement for members to vote to remove directors. Many organisations have stipulated a two thirds vote. Up until 30 April, whatever was required by your memorandum and articles would be the ruling provision. From 1 May, however, the provisions of section 71(1) of the new Act, which states that a director may be removed by ordinary (50 percent) resolution of voting members, will apply.
Naturally, it will be inconvenient to keep cross-checking with the Act, and I do think that it will simplify things to adopt a document which ‘harmonises’ with the new Act, but my view is that this potential inconvenience, and the R250 fee, are not enough to merit rushing the process of agreeing on and adopting a new MOI.
Your MOI is an important, indeed, fundamental document, and your organisation needs time for its directors and members to apply their minds to any proposed new document, to ensure that it is appropriate, useful and complies with all of the other requirements needed for raising funds and practising good governance.
- Nicole Copley (BA LLB LLM-tax) (Non practising attorney)
Specialist legal consultant to NGOs, Tel: 031 266 9427, Fax: 086 627 9420, Mobile: 083 922 0648, E-mail: firstname.lastname@example.org, Website: www.NgoLawSA.co.za.
- More than 85 000 nonprofit organisations were registered in terms of the Nonprofit Organisations Act (NPO Act) at the end of March 2012. From October 2012 until January 2013 more than 23 000 organisations were de-registered by the Directorate for Nonprofit Organisations which falls under the auspices of the Department of Social Development. In addition, more than 35 000 organisations were marked as ‘non-compliant’.(2) In contrast, during the 2011 financial year only 468 organisations were de-registered. All organisations were, in the wake of a public outcry, reinstated and reflected as re-registered during February 2013. Organisations have been given a six-month period to become compliant.(3)
Registration in terms of the NPO Act is, although voluntary, usually a requirement to access donor funding, including state funding. The implication is that ‘de-registered’ or ‘non-compliant’ organisations risked losing their donor funding. Many non-profit organisations in South Africa are dependent on donor funding. This posed a significant risk for many of the vulnerable beneficiaries being served by these organisations.
The South African Nonprofit Sector
The South African nonprofit sector plays a significant role helping the South African government to fulfill its constitutional mandate. The South African Constitution has entrenched a number of socio-economic rights in its Bill of Rights. These rights are aimed, as stated in the preamble, at improving the quality of life of all citizens and free the potential of each person. The socio-economic rights would be out of reach for most South Africans without the presence of a vibrant nonprofit sector. The South African government has, in its National Development Plan, conceded that: “All provinces rely heavily on not-for-profit organisations to deliver services.” (4) The National Development Plan further states that: “In social welfare services, the state has adopted a partnership model of service provision and relies mainly on nongovernmental welfare organisations to provide professional social services.”
This partnership model is taken on in the context that the South African nonprofit sector consists mainly of smaller informal/voluntary organisations. Voluntary associations represented 95 percent of the organisations registered in terms of the NPO Act during the 2011 financial year.(5) The Department of Social Development concludes in its 2011 report that: “For the community based organisations, registration not only adds to their credibility in the eyes of donors and community, but also sets a basis for the way in which they are run. The NPO registration therefore sets a much-needed basis for organisations to run their affairs effectively and accountably.”(6)
The above context gave rise to the promulgation of the NPO Act.
Brief context to the NPO Act
The NPO Act came into operation on 1 September 1998. The Act was aimed at providing a supportive regulatory system for (predominantly) smaller emerging organisations. According to its preamble, the NPO Act should provide for an environment in which nonprofit organisations can flourish. Section 2 of the NPO Act provides that its objects are: “To encourage and support nonprofit organisations in their contribution to meeting the diverse needs of the population of the Republic by, amongst other, creating an environment in which nonprofit organisations can flourish.” [emphasis added]
The NPO Act has five chapters. Two chapters are important for purposes of this article, namely:Chapter 2 which is entitled Creation of Enabling Environment and Chapter 3, entitled;Registration of Nonprofit Organisations. Section 3 which falls under Chapter 2 is, in my view,one of the most significant sections in the NPO Act and reads:
3. State’s responsibility to nonprofit organisations. Within the limits prescribed by law, every organ of state must determine and co-ordinate the implementation of its policies and measures in a manner designed to promote, support and enhance the capacity of nonprofit organisations to perform their functions.
This section is unprecedented within the international context and captures the state’s commitment to promote, support and enhance the capacity of nonprofit organisations to perform their functions.
The NPO Act also makes provision for the establishment of a Directorate for Nonprofit Organisations which is responsible for, among other; facilitating the process for developing and implementing policy and determining and implementing programs, including programmes to ensure that the standard of governance within nonprofit organisations is maintained and improved. The Directorate is also responsible for facilitating the development and implementation of multisectoral and multi-disciplinary programmes.
The NPO Directorate has, with limited resources, embarked on a number of initiatives to support and encourage nonprofit organisations. It has, for example, conducted a number of research studies, implemented capacity-building initiatives and provided an online registration and reporting facility for registered organisations. More recently the Directorate partnered with Ricardo Wyngaard Attorneys and others, with the financial support of ICNL, to produce a training video on how to register and report in terms of the NPO Act.(7)
Chapter 3 of the NPO Act deals mainly with the registration and reporting requirements and cancellations of registration. Section 22 of the NPO Act provides for appeals against the cancellation of registrations. The process of registering organisations has seemingly taken up much of the NPO Directorate’s time and energy.
The need for the NPO Act is perhaps best summarised in a quotation from a conference held in Johannesburg in September 1996 entitled: Enabling frameworks for civil society in southern and eastern Africa. On the issue of self-regulation the report concluded: “Finally, and emanating more from a South African point of view, self-regulation could be seen as a bit of a luxury. In other words, there are empowered NGOs – what one could call progressive organisations – which have the ability, capacity and willingness to regulate themselves. But one should consider whether, in terms of the history of South African civil society, this was not just a luxury for a certain small grouping, and whether there should have been a supportive regulatory system for smaller emerging organisations.”(8)
The NPO Act has been enacted to provide a supportive regulatory system for smaller organisations. If this is so, it begs the question why so many organisations (including the smaller ones) got either de-registered or deemed non-compliant.
Registration and De-registration in Terms of the NPO Act
Registration in terms of the NPO Act has become increasingly important for voluntary associations which are established in terms of common law. Without a registration certificate a voluntary association in South Africa would find it virtually impossible to open a bank account. Other nonprofit legal entities do not require registration in terms of the NPO Act to open a bank account as they are able to offer other forms of incorporation certificates. Registration in terms of the NPO Act is therefore essential for voluntary associations. The process to register in terms of the NPO Act is usually met with delays.
Once registered, 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 reporting obligations in terms of the Act.
The Department of Social Development released a media statement dated 31 January 2013 (9) in which it stated, amongst other, that:
- The de-registration are linked to the failure by NPOs to submit financial and narrative reports; and
- The Department has complied with the provisions of the NPO Act and issued non compliance notices before having de-registered organisations.
Compliance with the NPO Act is a prerequisite for continued registration. However, the requirement to comply with the NPO Act does not stop with registered NPOs.
The Other Side of Non-compliance
Registered NPOs are not the only ones that have supposedly been non-compliant in terms of theNPO Act. Both the Minister for Social Development and the Directorate for Nonprofit Organisations have failed to comply with the provisions of the NPO Act. Examples of noncompliance include failure by:
- The NPO Directorate to register new organisations within a two-month period, as required in terms of the Act;
- The Minister of Social Development to appoint the Arbitration Panel as required in terms ofthe Act. This is particularly concerning given the magnitude of de-registrations;
- The state to properly resource the NPO Directorate to implement its mandate in terms of the NPO Act;
- The NPO Director, as alleged by some organisations, to issue a notice of non-compliance before de-registration - at least in some instances; and
- The Department of Social Development to warn organisations through a public campaign of the imminent de-registration. This is not a legal requirement, but should have been donegiven the large-scale de-registrations.
The Department of Social Development has since been advised by a ministerial task team, consisting of key stakeholders, appointed by the Minister of Social Development. As a result, in a media statement dated 31 January 2013 (10) the Department of Social Development committed, among other, to:
- Appoint the Panel of Arbitrators;
- Improve communication with registered organisations to ensure that organisations on the NPO database are aware of their registration status and compliance requirements;
- Work together with stakeholders to improve communication between the department and the sector; and
- Strengthen its own internal capacity to respond more adequately and effectively to needs of the NPO sector as a key development partner.
The Policy Framework on Nonprofit Organisations Law
The Department of Social Development hosted the South African Nonprofit Organisation Summit (the Summit) during 15-17 August 2012 in Johannesburg. At the Summit theDepartment circulated a document entitled: Policy Framework on Nonprofit Organisations Law (the Policy).
The Policy further states that; “The objective of the review is to ensure that the new regulatory framework is appropriate to the legal and socio-economy contexts of South Africa as aconstitutional democracy and an open society.” The aim of the review is “to enhance the existing enabling environment for the nonprofit organisations to flourish and protect the sector from abuse as well as minimise undue disruptions to many of the positive contributions.”
The Policy proposes, amongst other; the establishment of a new entity to be called The SouthAfrican Nonprofit Organisations Regulatory Authority (SANPORA). It is envisaged that SANPORA will fulfil a different role to that which the NPO Directorate is currently fulfilling.
SANPORA would, according to the Policy, be responsible for:
- Registering organisations - It will register NPOs and will introduce an electronic registration process;
- Examining organisations - It will “have at least the right to examine books, records and activities of nonprofit organisations. To further ensure compliance, all reporting organisations must be subjected to random and selective audit by the supervisory organ;”
- Issuing sanctions - It will be responsible to issue sanctions against noncompliant organisations and the Policy states that: “it is appropriate to have special sanctions for violations peculiar to nonprofit organisations;”
- Promoting compliance and enforcing punitive measures - SANPORA should; “act swiftly and effectively to ensure compliance, prevent wrong doing and enforce punitive measures;”
- Providing guidance - SANPORA will also provide advice and guidance to non-compliant organisations and educate office-bearers about their duties and facilitate access to accredited training programmes on governance;
- Enabling blacklisting of organisations: - It will, through the provision of public access toinformation; “enable the ‘blacklisting’ of organisations that have been involved inunscrupulous practices to be known and to be dealt with accordingly so as to protect the sector and avoid prejudicial generalisation of the sector.”
The underlying theme of the Policy is in stark contrast to that of the NPO Act. The need for enforcement has seemingly overshadowed the need to encourage and support nonprofit organisations. The Department’s conduct has also been more consistent with its policy proposal.It acted more swiftly to ensure compliance as opposed to providing advice and guidance to ‘noncompliant’organisations.
The Policy and the subsequent large-scale de-registrations do not speak of a supportive regulatory system for smaller organisations. Having a database of registered nonprofit organisations that are non-compliant is also not appropriate and would cause a breakdown in public confidence. From the media reports I gather that the increased attention by the NPO Directorate on non-compliance is because of the concerns raised by the Auditor-General which isresponsible for auditing state departments.
Compliance is no doubt necessary. However, regulation and support must go hand in hand within the South African context. Focusing only on compliance and regulation without providing the required support to smaller organisations would simply result in the alienation of the largest section of South Africa’s non-profit sector.
This does not only hold true for the state. Sadly, South African civil society organisations have, with the recent introduction of governance codes, increased the burden of regulation on smaller organisations without offering the required supporting framework.
Civil Society Governance Codes
The plight of smaller organisations does not stop with the Department of Social Development. The non-profit sector itself has to play a more supportive role with regards to smaller nonprofit organisations. A number of membership and intermediary organisations are in existence in SouthAfrica which are providing capacity building support for smaller organisations. However, more needs to be done.
The introduction of two governance codes in South Africa, namely the King III Code of Corporate Governance, initiated by the Institute of Directors of Southern Africa (the IOD), and the Independent Code, initiated by the Working Group, have become increasingly important for the South African nonprofit sector. Both the IOD and the Working Group have contested the space to offer a solution to improve governance standards for non-profit organisations. Both their codes set governance standards that organisations should adhere and both claim suitability for all South African non-profit organisations. The Institute of Directors subsequently released Practice Notes as a guide to the application of King III for nonprofit organisations.
Regrettably, both these codes will remain largely irrelevant for most of the smaller organisations. Policies and processes suggested by these codes that should supposedly be in place for nonprofits include:
- Conflicts of interest policies;
- Induction programmes;
- Formal succession plans;
- Annual evaluations;
- Remuneration policies;
- Risk policies and plans;
- Disaster recovery plans;
- Information security management systems; and
- Integrated reports.
The to-do lists that culminate from the both the King III practice notes and the Independent Codes could perhaps be implemented by bigger more sophisticated organisations. Smaller organisations will require more than to-do lists. A more active intervention is required to appropriately contribute towards capacitating smaller organisations on various governance aspects. The non-profit sector also has its role to play in this regard.
The South African Nonprofit Organisations Act is extraordinary in capturing the state’s commitment to and support for nonprofit organisations. The implementation has however not been consistent with the noble objectives contained in the NPO Act. The current controversy presents the country with another opportunity to deal meaningfully with the key challenges facing the South African nonprofit sector.
The government simply cannot deal with these challenges on its own. This has been foreseen by the legislator when it inserted as one of the objectives of the NPO Act to promote a spirit of cooperation and shared responsibility within government, donors and amongst other interested persons in their dealings with nonprofit organisations.
Steps the government should consider within the next six months include:
- Withdrawing (or at least seriously reviewing) its Policy Framework on Nonprofit Organisations Law. The Policy does not set the tone for a spirit of co-operation and shared responsibility. It will simply cast a cloud of suspicion over the actions of the South African government;
- Increasing resources to the Directorate for Nonprofit Organisations to effectively execute its responsibilities. This recommendation is not new and an Assessment of the NPO Act, as commissioned by the Department of Social Development, found in 2005 that the resources and capacity for the NPO Act is severely lacking.(11) The Assessment found that: “The financial resources allocated for the implementation of the Act are insignificant when compared to the size, scope and vibrancy of the NPO sector on the one hand, and the complexity of the NPO Act on the other.”(12) Changes that were introduced since then have not been sufficient as the Department still needs to strengthen its own internal capacity to respond to the needs of the non-profit sector;
- Collaborating more effectively with other state departments and key civil society stakeholders to extend the reach and impact of the Department. In its 2012 Annual Report (13) the Department states that a total of 32 capacity building workshops were held for 1323 NPOs and 144 provincial officials. It further states that a total of 210 community-based organisations and 152 community development practitioners were trained. I have no doubt that more organisations can be reached through collaborations with other Departments and civil society organisations;
- Reviewing the reporting requirements for registered nonprofit organisations. Currently all nonprofit organisations are subjected to the same reporting requirements. For smaller organisations the reporting requirements may be onerous and intimidating. This recommendation is also not new as the Impact Assessment also made the following comments: “The reporting requirements as stipulated in S17, S18 and S19 of the Act are particularly difficult for many (especially the smaller, less capacitated organisations) NPOs to comply with. The Act expects NPOs to cover the cost of financial reporting, whether it relates to proper auditing of statements or merely certification by an accounting officer. This requirement does not take into account that many organisations operate with little or no money resources.”(14)
- Appointing an advisory or technical committee as provided in terms of the NPO Act. The Minster of Social Development is given the discretion in terms of section 10 of the NPO Act to appoint any advisory or technical committee in order to achieve the objects of the Act. The presence of sound advisory or technical committees could perhaps have avoided the controversy around the large-scale de-registrations. It would also provide a platform for more interactive engagement between the state and civil society.
It is imperative for the South African government and civil society organisations to join hands and make a concerted effort to attend to the needs of the smaller organisations. In the absence of this, the implementation of the National Development Plan would be in jeopardy. Both roleplayers will have to act swiftly and effectively to ensure that appropriate attention and support are given to community-based organisations.
1. Ricardo G. Wyngaard has provided legal advice, training, and assistance to the nonprofit sector since 2000. He has participated in a number of legislative reform and research initiatives on nonprofit legislation and is currently running a solo law practice focusing on nonprofit law and governance. For more information please visit: www.nonprofitlawyer.co.za.
2. The State of South African Registered Nonprofit Organisations issued in terms of the Nonprofit Organisations Act 71of 1997 – April 2011 – published by the Department of Social Development, Report from the National NPO Database – Page 6.
3. Joint media statement by Minister Bathabile Dlamini and the Ministerial Task Team on Non-Profit Organisations (NPOs) 31 Jan 2013, available at: www.dsd.gov.za
4. Page 334 of National Development Plan
5. The State of South African Registered Nonprofit Organisations – Page 6.
7. This video is available at: www.youtube.com/watch?v=yX3YK6MiLcw&feature=youtu.be
8. Circle of Power - An enabling framework for civil society in Southern Africa, edited by Owen Stuurman and Riaan de Villiers, p. 152.
9. Available at: www.dsd.gov.za
10. Available at: www.dsd.gov.za
11. Available at: www.dsd.gov.za/NPO (on page 109 of Assessment)
13. Available at: www.dsd.gov.za/NPO (on page 98 of Annual Report)
14. Available at: www.dsd.gov.za/NPO (on page 73 of Assessment)
- Ricardo Wyngaard, Ricardo Wyngaard Attorneys www.nonprofitlawyer.co.za, E-mail: email@example.com.
- Social Development Minister Bathabile Dlamini must wonder what has just hit her. There she is, happily de-registering nonprofit organisations (NPOs) by the tens of thousands, and suggesting innocuous amendments to laws governing their work - and all hell breaks loose. She will find answers in our history, her department’s incompetence, and a view of charity held by many South Africans. Then there is NPO suspicion of politicians even when real danger is coming not from them, but from the private sector.
Ours are a generous people. A 2010 Barclays Wealth report ranks South Africans as second only to Americans in philanthropy. Statistics South Africa counts 1.4 million people volunteering time in anything from community policing to feeding schemes. Despite straightened times, corporate social investment jumped to almost R7 billion in 2012, up from just over R5 billion three years ago, reckons analytical group Trialogue. Dlamini’s own department gets 71 new NPO registration requests a day, and this rises 14 percent a year.
Legally, it is dead easy to start an NPO, but authority has not always been supportive. The 1972 Schlebusch commission harassed anti-apartheid NPOs and prescribed their foreign funding. A Fundraising Act made collecting money dependant on a state-issued fundraising number; and criticism of government was chilled.
Come 1995, and an NPO with strong ‘struggle’ ties campaigned for even tighter controls. A state tribunal would assess NPOs at will, close down those it did not like, and even appoint members of NPO governing bodies. This writer was part of the resultant outcry, and served on a ministerially-appointed committee to propose changes to the Fundraising Act. The NPO Act of 1997 followed, scrapping altogether the need for fundraising numbers, and even of registration at all.
NPOs can register with minimal reporting requirements, but are not bound to. If they want special tax advantage and Seta payment exemptions, they follow the route of getting the required tax status from South Africans Revenues Services. They are naturally also bound by common law and relevant legislation depending on their being trusts, or nonprofit companies or just voluntary groupings.
Now two things have caused some, such as the formidable head of prominent NPO Inyathelo – The South African Institute for Advancement, Shelagh Gastrow, to imagine we are back to 1995: the recent ‘deregistration’ of perhaps 50 000 NPOs by the state, and government proposals for a mild tightening of NPO law. If the first has occurred to compliant NPOs, then it may be more incompetence than malice, given that those affected include the Jacob Zuma Foundation and the Nelson Mandela Foundation.
The second involves fairly timid proposals to introduce especially governance advisory services, and to establish a tribunal to mediate NPO-government disputes. It does not take us back to the past, and Gastrow, brave and alert though she is, surely gilds the lily in saying that NPO freedoms are under their greatest threat since apartheid.
A far graver danger lurks in unthinking ‘good governance’ proposals (part of ‘King III’) that all-out and complicated reporting be required of ‘all entities’, right down to community-based voluntary groups – a move beloved of bean counters but that could strangle community innovation and severely restrict free association. Against this, it must be said, Gastrow has also led an increasingly successful fight to stop us going down a private sector-designed road, paved with good intention, straight to compliance hell.
- By Paul Pereira, owner at WHAM! Media. This article was first published in The Citizen. It is republished here with the permission of the author.
Masvingo Resident Minister and Governor, Titus Maluleke, has summoned over 45 non-governmental organisations to a meeting at his offices during which he announced wide-ranging restrictions on their work.
In a press statement, Crisis in Zimbabwe Coalition, says that, “NGO leaders who attended the meeting were reportedly subjected to a roll call where they were called one after another and coerced to reveal their work plans and partners.”
CiCZ says the NGO representatives were also told to work with government departments and the security sector in all their projects.
To read the article titled, “Governor puts restrictions on 45 NGOs in Masvingo,” click here.Source:The Zimbabwean