Nonprofit Organisations Directorate

1. Nonprofit Organisations Directorate Uganda, Kenya & Tanzania Delegations WELCOME 08 July 2008

2. Content • Introduction & Profile of sector • The legal Framework • Nonprofit Organisations Act • Registration process • Monitoring & Compliance • Access to Information • Capacity Building • Research Projects • Impact Assessment on the NPO Act • Conclusion

3. A Profile of South African NPO Sector

4. Defining an Nonprofit Organisation Encompasses trusts, companies and other associations that are “established for public purpose” and that “the income and property of which are not distributable to its members or office-bearers except as reasonable compensation for services rendered” (sec 1 of the NPO Act) ………in other words, community based organisations (CBOs) Nongovernmental Organisations (NGOs) faith based organisations (FBOs) civil society organisations (CSOs) all collectively known as NPOs.

5. NPO Sector Profile: Size

6. NPO Sector Profile: Income Total income R14 billion Government provides R5.8 billion (42%) R500 million from overseas development assistance Self generation (fees, sales, membership dues) 29% Private sector donations (25%)

7. NPO Sector Profile: Location 87% based in communities 8.7% provincially based 4.5% national

8. NPO Sector Profile: Financial 11% no financial resources 77% had revenues of less an R250 K 8% had revenues between R250 K - R1m 4% revenue exceeding R1m

9. Nonprofit Organisations Act

10. The Purpose of the Act • The NPO Act was enacted in 1997, it aims to (section 2)- • creating an enabling environment within which NPOs can flourish. • establish an administrative and regulatory framework within which NPOs can conduct their affairs. • encourage NPOs to maintain adequate standards of governance, transparency and accountability and to improve those standards.

11. Cont… Purpose • Repeals the Fund- raising Act of 1978 • Regulated and control the funding of organisations- • Particularly to ones that were considered potentially subversive to then apartheid regime.

12. Cont… Background to the Act • South African Civil Society were highly involved in drafting the current legislation. • Culminated from the September 1996 conference on- “An enabling framework for civil society in Southern Africa.” • There were also other different interactive mechanisms and forums with the sector.

13. Cont…Background to the Act • The Legislation is rooted in the fundamental principles of human rights culture as reflected our country’s constitution- • Right of freedom of- • Expression and of association; • Religions, belief and opinion; • The legislation serves mainly- • To provide a Registration Facility for organisations that are nonprofit in orientation and are not organs of the state; • Enables an organisation to establish itself as body corporate. • Regulates how this entity operates and account broadly to its community and the public.

14. Regulatory Framework on NPOs Sec 21 Companies (Companies Act of 1973) NGO Large, sophisticated predominately urban based with conventional Organisational Development Systems. Mostly have all relevant skills & capacity Trusts (Trust Property Control Act of 1988) CBO Traditionally informal organisations rooted in communities. Often lack capacity & access to resources Voluntary Associations (Common Law) Nonprofit Organisations Act 71 of 1997 (All have to meet the same compliance requirements) Public Benefit Organisations (Tax Exemption Status incl. skills development levies)

15. Functions of Directorate • The Department has established a Directorate in terms of section 4 of the Act. • Main functions of this Directorate is to (sec 5)- • Facilitate the process for developing and implementing policy; • Determining and implementing programs, incl programs- • To support nonprofit organisations in their endeavour to register; and • To ensure that the standard of governance within nonprofit organisations is maintained and improved. • Liaising with other organs of state and interested parties; and • Facilitating the development and implementation of multi-sectoral and multi-disciplinary programs

16. Organogram of Directorate DIRECTORATE: NONPROFIT ORGANISATIONS DIRECTORATE PURPOSE: To encourage and support non profit organisations in their contribution to meet the diverse needs of the population needs of the country FUNCTIONS: Develop Institutional Capacity Building Programmes. Administer an efficient registration facility. Database management and stakeholder liaison. Total number of 29 Staff members Three Staff members 18 Staff member Five Staff members SUB-DIRECTORATE: DATABASE MANAGEMENT & STAKEHOLDERS LIAISON PURPOSE: To create an environment within which the public access information on registered organisations. . FUNCTIONS: Manage and maintain an efficient database of all registered organisations. Preserve documentations of registered organisations. Facilitate public access to records of organisations. Maintain an interfaced online public platform. Manage a call centre. SUB-DIRECTORATE: REGISTRATION FACILITY PURPOSE: To maintain an efficient administrative facility for registration. FUNCTIONS: Register Organisations in terms of the NPO Act.. Monitor registered organisations in terms of the Act. Liaison with Law enforcement agencies for criminal investigations on non compliance offences. SUB-DIRECTORATE: NPO CAPACITY BUILDING PURPOSE: To develop capacity building programme. FUNCTIONS: Institutional capacity strengthening. Improvement standards of governance. Benchmark good practices. Assist provinces and local government to support NPOs.

17. Conti…Organogram NPO Directorate NPO Registration & Compliance NPO Capacity Building NPO Database Management Contact Centre New Applications Monitoring & Compliance Institutional Strengthening Bench-marking Online Database

18. Registration Process

19. Requirements for Registration S.13 of NPO Act state that…. (1) A non profit organisation may apply for registration by – (a) Filling in a prescribed form; (b) Two copies of founding document; (c) Any information to assist in determining whether the organisation meets the requirements.

20. Requirements for registration of NPOs (S12) • Any organisation that is not an organ of states may register. • Unless the laws in terms of which an NPO is established make provision for the matters in subsection 12(2), the founding document of the NPO that intends to register must have all required provisions as stipulated. • Written document (founding document) establishing an organisation. For example: - founding document (for voluntary association of persons) - memorandum and articles of association (for a Sec 21 company) - trust deed (for a Trust)

21. Registration Requirements (section 12(2)) New Applications are scrunitised: the application form • the name of the organisation • the physical address of the organisation • the financial year end on the application form • the particulars of the office bearers • the details of the contact person including his/her signature New Applications are scrunitised: the founding document • Consistency with objects • Composition of office bearers • Dissolution undertakings • Amendment Clause • Legal Persona • Property and Income Clause • Financial Year End • Decision making process • Other relate conditions as stipulate in section 12 of the Act

22. Registration Business Process Recording of receipt of Application Assessment of Application Section 12 Data Captured Quality Control Registration of Application Section 15 Key Actions • The organisation is registered by issuing of the certificate of registration. The name of the organisation is added to the register of registered organisations. A certified copy of the founding document is also returned to the organisation. Once all the information of the organisation has been captured on the database, the information is checked and the organisations status is changed to approved and send for the issuing of a certificate of registration. • Application is assessed against the requirements of section 12. • Applications declined are referred to back to the applicants & advising how to meet the requirements. • Those that meets the requirements are processed to the next level. • The information of organisations who have met the requirements are captured on the database. This include the list of the office bearers, the physical address of the organisation, the financial year end and the contact details of thecontact person • The application is record on central data by capturing the name of organisation and date on which it was received within the Department. Activities

23. Cont… Assessment of Applications

24. Cont… Assessment of Applications

25. Data capturing

26. Data on New Applications Of the Applications Assessed 80% (or 3097) were Accepted & 20% (or 997) were Rejected Statistics are for the six month period September 2008 to February 2009

27. MONITORING & COMPLIANCE

28. Compliance with the legislation • NPO Act Sections 17 & 18 prescribes that: - all registered organisations must supply the NPO Directorate with an annual report within 9 months of the end of its financial year.

29. Accounting Records & Reports (s17) Prescribes that: • organisations must keep accounting records to the standard of GAAP: • Income and Expenditure (statements) • Assets and liabilities (balance sheet) • Arrange written report compiled by an accounting officer. • Preserve each of its books of accounts, supporting vouchers, records of subscription. Department of Social Development

30. Duty to provide Reports and info (s18) Prescribes that: • organisations must; in writing provide: • Narrative report of its activities • Financial statement 2.1 Accounting Officer’s report Department of Social Development

31. Duty to provide Reports and info 1. Narrative: • Office bearers • Contact details • Id numbers • Telephone numbers • Number of meetings • Annual General meetings 2. Financial: • Assets and Liabilities – balanced • Closing balance correspond with opening balance • Income and expenditure statement 3. Accounting Officer: • Expressed opinion on record keeping • Professional registration status Department of Social Development

32. Monitoring & Compliance Monitoring Non-Compliance Section 30 De-Registration Appeal against De-registration Sec 22 Execute Arbitration Decision Key Actions • Reinstated • Appeal denial. • Organisation is advice on corrective measures it ought to take. • An organisation may refer the decision to be considered by arbitration Tribunal • Tribunal consider within 3 months and send a written notice of its decision. • Tribunal may uphold the appeal • Letters of Non-compliance. • Notice allow for 30 months to compliance • Cancel the certificate. • Send-out cancellation letter and informing the organisation of its rights to appeal. • Database shows organisations due to send reports • If the reports are not submitted within the 30 days. • the organization is deregistered and • a deregistration letter is sent to the organisation. Activities

33. Data on Monitoring & Compliance 82% of NPO’s that are Required to Submit Compliance Reports have Not Submitted their Reports That mean only 18% of NPO’s have Submitted their Compliance Reports Of the 2954 Reports Scrutinised Only 1179 (or 40%) of NPO’s Were Deemed Compliant Statistics are for the six month period September 2008 to February 2009

34. Voluntary Deregistration (s23) • An organisation may voluntarily deregister by sending • a written notice • A report from previous financial year

35. Access to Information

36. Access to information • Section 24 of this Act obligates the directorate to keep a register of: • all nonprofit organisations that have been registered; • all nonprofit organisations whose registrations have been cancelled; and • all nonprofit organisations that have voluntarily deregistered or have been wound up or dissolved.

37. NPO DBASE • Information on registered organisations is captured on the dbase of NPOs. • Used as part of the business processes to registered and monitor compliance to the Act. • Dbase runs on a SQL server, housed within the Department and accessible via a centralized network server.

38. Indexed Front Page

39. Classification of NPO’s

40. Steady Increase in NPO Registration

41. UN Classification of the Registered NPO’s

42. Chart of Classification

43. Registered NPO’s per Province

44. Chart of provincial registration

45. Future Plans • Intention is to upgrade current dbase into online accessible dbase for- • Registered organisations; • The broader public; • Government regulators; and • Other agencies. • Digitize current records of all organisations. • As part of this initiative more than 1.8 million pages of registered organisations records have been scanned and digitized. • We are currently having a trial run on www.npo.gov.za

46. Capacity Building

47. Institutional Capacity Building • Section 5 (b) of the Act mandates determine and implement programs- • Support organisations in their endeavour to register; and • To ensure that the standard of governance within NPOs is maintained and improved.

48. Objectives of the training The objective of the training is to strengthen and support organisations in the development of viable and appropriate governance and accountability structures through: - • Supporting organisations to access the NPO registration facility • Enabling organisations to comply with their obligations under the Act • Ensuring that the standard of governance within NPOs is improved • Capacitating CDPs to be able to support organisations

49. Target groups for the training The training is targeted at: • Networking structures - so as to maximise impact e.g. SANGOCO, CORN-SA, FAMSA etc • Community Development Practitioners (CDPs): to enable them to interact effectively when supporting organisations

50. Aspects covered in the Training Training workshops conducted for NPOs cover issues including:- • Understanding the NPO sector (what is an NPO and how it operates) • Legislative framework on NPOs (options for the legal structures of NPOs) • Other pieces of legislation and international treaties affecting the NPOs and to which they must comply • Process and procedure to register organisations