The Law Around NGOs and NPOs
Nozipho Mvulane
The Law Around NGOs and NPOs
In South Africa, there is a distinction between NGOs (Non-Governmental Organizations) and NPOs (Non-Profit Organizations), although the two terms are often used interchangeably. NGOs are registered at the Department of Social Development and NPOs are registered and regulated with the Companies and Intellectual Property Commission (CIPC). NPOs are also regulated by the Companies Act 71 of 2008. NGOs in South Africa are governed by the Non-Profit Organizations Act of 1997.
Non-Governmental Organizations
An NGO in South Africa refers to an organization that is independent of the government and operates on a non-profit basis. NGOs are typically involved in activities that aim to address social, environmental, or developmental issues. These organizations may focus on areas such as human rights, healthcare, education, poverty alleviation, or environmental conservation.
Non-Profit Organizations
On the other hand, an NPO in South Africa is a broader term that encompasses a wide range of non-profit organizations. It includes NGOs but also includes organizations such as community-based organizations, religious organizations, and other entities that operate on a non-profit basis. NPOs are governed by the Nonprofit Organizations Act of 1997, which sets out the legal framework for their registration, governance, and operations.
Differences
The key difference between NGOs and NPOs lies in the scope of their activities. While NGOs specifically focus on addressing social, environmental, or developmental issues, NPOs can include a wider range of organizations that operate on a non-profit basis.
Similarities
Both NGOs and NPOs in South Africa play a crucial role in addressing societal needs, promoting social welfare, and contributing to the overall development of the country. They rely on donations, grants, and funding from various sources to sustain their operations and fulfill their missions.
Legal Requirements
In South Africa, there is a distinction between NGOs (Non-Governmental Organizations) and NPOs (Non-Profit Organizations), although the two terms are often used interchangeably. Here are some key legal requirements for both types of organizations appear below.
Registration
Both NGOs and NPOs need to register with the Department of Social Development (DSD) in South Africa to obtain legal recognition and operate as non-profit entities. The registration process involves submitting an application form, along with supporting documents such as the organization’s constitution, founding documents, and a list of office bearers.
Governing Document
NGOs and NPOs must have a governing document, such as a constitution or memorandum of incorporation, which outlines the organization’s objectives, governance structure, and operational procedures. The governing document should comply with the requirements set out in the Non-Profit Organizations Act.
Board of Directors/Trustees
Both NGOs and NPOs must have a board of directors or trustees responsible for the organization’s governance and decision-making. The board should consist of individuals who are not disqualified from being directors or trustees under South African law. The board members have fiduciary duties and should act in the best interest of the organization.
Financial Reporting
NGOs and NPOs are required to maintain proper financial records, including accounting books and records of income and expenditure. Annual financial statements should be prepared and audited by a registered auditor or an independent reviewer, depending on the organization’s size and funding levels. Financial statements should be submitted to the DSD within six months after the organization’s financial year-end.
Compliance
NGOs and NPOs must comply with relevant laws and regulations, including tax laws, labour laws, and any specific regulations that may apply to their activities. They should also comply with reporting obligations, such as submitting annual reports to the DSD.
It’s important to note that the specific legal requirements may vary depending on the size, structure, and funding of the organization. It is advisable to consult with legal professionals or the Department of Social Development for detailed guidance on compliance and legal obligations for NGOs and NPOs in South Africa.
Article Disclaimer
This article is not intended to provide legal advice. This article is a general information sheet and should not be used or relied on as legal or other professional advice. This article is based on research regarding laws and may be subject to change. No liability can be accepted for any errors or omissions nor any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).