Are you aware of the implications?
The Department of Social Development has announced its plan for NPO de-registrations. Nicole Copley from ngoLAW dives into everything you need to know and what steps to take.
If you need any assistance with Accounting Officer reports or preparing annual financial statements, in order to become compliant, please contact us at ziyo@ziyo.co.za
The requirement is that non-compliant organisations are notified before de-registration can occur and given an opportunity to catch up, but if the email address on record at DSD is out of date, these notices may be going astray. DSD has assured the NonProfit Working Group that they will also post on their website the names and NPO numbers of affected organisations, to try to deal this.
The filing of annual reports is a requirement of continued registration as an NPO so organisations which have not filed pre-2012 reports should really have been deregistered at least 12 years ago. However, past attempts to bring the NPO Register up to date (and restore its credibility with donors) have been halted, either because of claims by affected organisations that their non-compliance was due to some dysfunction or maladministration at DSD or because of political interference.
The fresh impetus to remove non-compliant organisations from the Register is driven by a perception that an ‘under regulated’ non-profit sector is one of the reasons for the grey-listing of South Africa by FATF (the Financial Action Task Force). The NPO Directorate is now attempting to comply with recommendations by FATF to get the NPO Register current so that it functions as an accurate database to allow money-laundering, terrorist financing and fraud to be detected and dealt with. Of course, it will take a lot more than an up-to-date NPO Register for effective detection to occur, but it will be a start.
NPO registration is an additional accreditation available to voluntary associations, charitable trusts and non-profit companies (previously Section 21s) who apply to be registered and meet the minimum requirements set out in the NPO Act and Regulations. Replacing the previous “Fund Raising Act” status (which was compulsory in order to solicit funding), NPO status was introduced as a voluntary status and is still, for most organisations, voluntary. Changes to the NPO Act in 2022 (as part of the unsuccessful attempt to avoid grey-listing) did introduce one compulsory category of registration: organisations which are registered in South Africa but who operate or provide funding in places outside of South Africa. These have been identified as creating the greatest risk in terms of money laundering and terrorist financing, and so are now required to register and to report to DSD in greater detail than other registered organisations.
NPO accreditation is, however, practically required for organisations which receive government funding and it is these organisations which would be worst affected by removal of the status.
The long-overdue clean-up is planned to take place in phases. The second phase will target organisations which have never filed reports and who were registered in the period 2013 to 2015 and the final phase will deal with the latest years. The dates of commencement of these phases are yet to be announced.
The main DSD portal to check registration status is https://www.npo.gov.za. Updates on any developments will be posted by Inyathelo on https://www.inyathelo.org.za/index.php/partner-websites/npo-working-group
Nicole Copley, lawyer and Chartered Tax Practitioner, is the founder of ngoLAW and has been providing legal services to non-profits for more than 30 years. She is part of the NonProfit Working Group which pools the expertise of activists and advisors in the sector to engage with government and support civil society. The ngoLAW team provide services of registering organisations as NPOs and also filing their reports on an annual basis. Contact them on https://ngolawsa.co.za/
