NPOs Under the Cosh – Again

Here we go again. Every time that this country’s nonprofit part of civil society imagines that its independence is secured and respected by politics, out they come to have another crack at subverting that independence.
Our Constitution, often mistakenly called ‘the most liberal in the world’, guarantees freedom of association and therefore also of disassociation. Try telling that to nonprofit organisations (NPOs).
In the mid-nineties there was a serious attempt by ‘development experts’ to push for law that would have forced NPOs to submit to state oversight, including government being able to fire governing boards and appoint their own. It was defeated after rigorous NPO opposition.
In its place came the liberalising 1997 NPO Act, making registration of NPOs with the-then Department of Welfare (now Social Development - DSD) voluntary, reporting requirements less onerous, and removing the need for NPO fundraising numbers. All anyway work under common and other law, and NPOs that do not register are excluded from state, lottery and most corporate funding.

But in January 2013, the department claimed that only 29 percent of registered NPOs were fully compliant with reporting requirements, and deregistered 36 000 organisations. This has since been reversed, with NPOs having until end-March 2014 to get their affairs in order. Since then there has been a government proposal to set up a monitoring South African NPOs Authority, and a related tribunal, to hunt for undefined ‘unscrupulous practices’ in the sector.
Now, the Gauteng Department of Social Development has issued ‘guidelines’ for the selection of NPO boards, guidelines that give it an overriding say in who should sit on these boards and how they should be selected. Confusingly referring to ‘boards of management’ where boards are usually about oversight, the department wants NPOs to submit to board candidate screening committees that involve itself, municipalities, other NPOs doing similar work, undefined community representatives, and elected politicians. Acceptable candidates will helpfully be issued with government developmental policy guidelines.
Although given the opportunity, the department has not provided reasons for this intervention; nor said why a provincial department is involving itself in NPO oversight that is normally a national function; nor on what legal basis does it proceed. It is silent on whether it plans any sanctions against NPOs that ignore its grab for governance control. Would NPOs involved in, say, childcare work, lose state subsidies if they insist on independent governance?
Gauteng’s move follows the passing of a new Lotteries Bill that allows for funding of NPOs aligned to government priorities, even for NPOs that do not apply.
Expect an NPO fight-back of a sort currently happening in Kenya, where proposed law would restrict foreign support of civil society.
Advocacy coordinator of Johannesburg Child Welfare, Jackie Loffell is unequivocal: “It is unacceptable for the DSD to be seeking to control the appointment of NPO boards”. Inyathelo executive director, Shelagh Gastrow describes the Gauteng DSD guidelines as “Mind-blowing”… “It is clear they are trying to create a civil society in their own image.”

She wonders if government has entered the business of setting up its own NPOs that would get state moneys but that could also then receive corporate and lottery support. “These are clearly not civil society organisations but state-created structures. This is a way for the government to side-line independent organisations and replace them with the party faithful, or to marginalise independent thought”.   
Quick Facts

NPO Register status (January 2013)

  • Registered NPOs (good standing): 29 286 (29 percent)
  • Non-compliant NPOs (medium risk): 35 190 (35 percent)
  • Deregistered NPOs (high risk): 36 429 (36 percent)

Reporting duties with voluntary registration

  • Narrative reports listing office bearers, contact details, meetings list;
  • Basic financial reporting with audited reports not compulsory;
  • Report of the accounting officer.

Types of NPO legal status (with different forms, or combinations of these, for different types of NPO):

  • Voluntary Department of Social Development - DSD - registration (the “NPO number”, Nonprofit Organisations Act of 1997);
  •  Public benefit organisations (receiving tax exemption and SETA-payment exemptions from the SA Revenue Service);
  • NonProfit Companies (replaces the old section 21 companies; Companies Act of 2008)
  • Trusts (Trust Property Control Act of 1988). 

Common terms for NPOs:

  • NonProfit Companies (NPCs)
  • Non-Governmental Organisations (NGOs)
  • Community-Based Organisations (CBOs)
  • Civil Society Organisations (CSOs)
  • Public Benefit Organisations (PBOs)
  • Faith-Based Organisations (FBOs)

NPO growth in voluntary DSD registration

  • 2008/09: 55 341
  • 2009/10: 65 633
  • 2010/11: 76 175
  • 2011/12: 85 248
  • 2012/13: 102 297              

DSD-registered NPOs

There were 102 297 NPOs on the voluntary DSD Register at end-September 2013.

  • Social services       

40 078: 39.2 percent

  • Development and housing                                         

20 964: 20.5 percent

  • Religion  

11 791: 11.5 percent

  • Health

10 582: 10.3 percent

  • Education                   

8 039: 7.9 percent

  • Culture and recreation              

5 570: 5.4 percent

  • Law, advocacy and politics                    

2 229: 5.6 percent

  • Environment  

1 228: 1.2 percent

  • Philanthropic intermediaries  

1 089: 1.1 percent

  • Business, professional bodies, unions                     

662: 0.6 percent

  • International activities              

65: 0.1 percent   
Sources: Trialogue; NPO Chief Directorate (Department of Social Development – DSD); Gauteng DSD; Inyathelo; Jo’burg Child Welfare; DevEx; SANGONeT’s NGO Pulse; NPO Act 71 of 1997

- Paul Pereira owner at WHAM! Media. First published in The Citizen.

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