Non-Profit Organisations Explained

Non- Profit Organisations Explained

Non- Profit Organisation (NPO), a generic term for a non-profit or non-governmental entity in South Africa.  Your organisation can be an NPO regardless of whether you are constituted as a voluntary association, a trust, or a non-profit company.  Good governance is the foundation of a successful NPO. 

Here are some tips every board should know about your NPO:

What kind of NPO is your association/organisation? You can be one of three kinds of entities:

  • A voluntary Association
  • A Trust
  • A non-profit Company

What kind of founding document do you have?

  • Voluntary Association – Constitution
  • Trust – Trust Deed
  • Non-Profit or Company – Memorandum of Incorporation

Are you registered with the Department for Social Development’s NPO Directorate?

If you are, you will have a NPO registration certificate and an NPO registration number.

Are you registered as a Public Benefit Organisation with SARS?

Being awarded PBO status as a non-profit means that SARS considers you a tax-exempt organisation.  This means you don’t have to pay tax on your income. A tax or NPO finance specialist should be engaged to assist with this. Once registered SARS will issue you with a PBO number, in addition to your income tax number. Regular tax returns still need to be submitted.

What are the main laws governing your NPO

All NPO’s are subject to these Acts in South Africa: The Non-profit Organisations Act, the Income Tax Act and the Basic Conditions of Employment Act.

In addition to these, there may be others which relate to your industry i.e. health, education, food safety,  etc.

How many board members does you founding document specify you must have?

Most South African NPO boards have between 5 and 8 board members.

To whom does your NPO need to submit annual and/or other reports?

All NPO’s need to submit annual audited financials to the NPO Directorate, to maintain their registration.

All NPO’s with PBO status need to submit annual audited financials to SARS, to maintain their status.

All NPO’s must submit annual audited financials to the Companies and Intellectual Property Commission  (CIPC).

If your NPO received funding from government departments you may be required to submit monthly and annual reports to these departments.

When is your NPO’s financial year end?

31 March

Are you able to issue Section 18A tax deduction certificates to your donors?

Section 18A status, which allows an organisation to offer a tax benefit to its donors, must be specifically applied for, and is only granted to organisations working in areas of the public benefit activities specified by SARS.

When is your AGM?

While it is a matter of good governance practice to hold an AGM every year, it is not a requirement – unless it is specified in your founding document. While Voluntary Associations and Non Profit companies hold AGM’s, Trusts do not.

Have you signed up to the Independent Code of Good Governance for NPO’s in South Africa?

Visit their Website