What is the Non-Profit Organisations (NPO) Directorate? Is it an NGO or is it part of Government?

The Non Profit Organisations Directorate is not an NGO. It is in fact a government body created through the NPO Act and part of the Department of Social Welfare.

What are its main functions?

The main functions of the NPO Directorate are to:

• Register Non Profit Organisations and to receive their reports
• Help develop NPO policy and put that policy into action
• Develop standards of how organisations must conduct themselves
• Plan and develop programmes and put them into action
• Work with other government departments, people and organisations that are interested in the work of the NPO sector.

Who should register NPO Directorate?

Only organisations in which there is no profit distribution among its members and is not part of government may become non- profit organisations. 

What is required from an organisation that would like to register with the NPO Directorate?

• Two copies of its constitution
• The NPO Directorate’s application form

What are the benefits of registering with the NPO Directorate?

• Organisations registered with the NPO Directorate are issued with a certificate bearing the organisation’s registration number. This registration number confirms the following:

-          The organisation complies with certain minimum standards of governance
-         The general public, stakeholders and interested parties, can access some of the organisation’s information.

• Donors are more willing to provide funding to organisations that are registered with a public body, as this assures that the organisation can and will be held accountable for its activities by stakeholders.
• Registration promotes better governance in organisations, and thus promotes the good image of the sector
• Registration with a central registration body helps the sector to better mobilize itself, as communication with registered organisations is made easier.

How much does it cost to register with the NPO Directorate?

Registering with the NPO Directorate does not cost anything. However if an organisation uses professional services in order to register, it will have to pay for those services

Does an organisation need permission from the NPO Directorate to raise funds?

No.

If our organisation has a fundraising number, must we still register with the NPO Directorate?

Fundraising numbers are no longer valid. If an organisation wants the benefits of Registration with a formal body, then it has to register with the NPO Directorate.

Once registered with the NPO Directorate, what conditions must the organisation comply with?

The registered organisation must:

• Keep detailed records and proper financial records as well as record of all financial transactions and comply with all the financial requirements set out in the NPO Act
• Provide the NPO Directorate with reports of its activities in compliance with the requirements of the NPO Act
• Provide the NPO Directorate with the information of all office –bearers
• Provide the NPO Directorate with the physical address of the organisation as well as any changes to the address
• Provide the NPO Directorate with any changes to the organisation's constitution.

Can I earn a salary if I work in a Non-Profit Organisation?

Yes, as long as it is a reasonable salary for the work done for the organisation

What must the organisation do if it wants to close down, or no longer want to be registered with the NPO Directorate?

• If a registered organisation wants to deregister, it has to send the NPO Directorate written notice to this effect, along with reasons for deregistration
•  If the organisation wishes to close, it must notify the directorate within one month of closure
• The organisation must also send the Directorate all reporting documents to date of closure or deregistration
• The director will cancel the organisation’s registration and notify the organisation in writing.

If we register our organisation with the NPO Directorate, is all our information public?
Regarding the reports that are submitted to the NPO Directorate, the information of a registered NPO is publicly available. This aids the transparency and the accountability of the organisation and ultimately the NPO sector.

Are there any offences in terms of the NPO Act?
It is an offence to:

• Claim to be registered with the NPO Directorate when an organisation is not 
• Use another organisation’s registration number and details
•  Give the Directorate false information about the affairs of the organisation

People found guilty of the above offenses will be fined and/or imprisoned.

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Why must an organisation have a legal structure?

Legal structures help to provide clarity and formality in that there are legally binding rules that apply to each structure. There is also greater certainty about whether benefits or liabilities accrue to the organisation or to the individual members within the organisation. Legal structures also enhance public accountability 

What kinds of legal structures are there?

The NPO act recognises three types of Legal Structures, viz. the Voluntary Association, the Trust and the Section 21 Company.

How do we decide what Legal Structure is most appropriate for our organisation?

When deciding on a legal structure, the organisation must take into consideration its size, capacity, complexity as well as external factors such as funder’s requirements.

Is one legal structure better than the other?

While the voluntary association is the simplest NPO to establish and manage in terms of ongoing regulatory requirements, and the Section 21 Company being the most complex, the voluntary association may nevertheless exercise all the powers and do the same things as the Section 21 Company. Once again, the organisation should be guided by its size, capacity and complexity of activities when selecting an appropriate legal structure.

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Do all organisations have to pay income tax?

Only those organisations that generate taxable income are obliged to pay income tax. ( Taxable income is the net profit from income generating activities). Grants and donations are capital and organisations are not required to pay tax on them. However, all organisations are required by law to register with the South African Revenue Services.

Can an organisation avoid paying income tax?

Organisations that generate profits through their income generating projects may be able to avoid paying income tax by obtaining income tax exemptiion status in terms of Section 30 of the Income Tax Act.

What is tax exemption?

Income tax exemption is a benefit granted to non-profit organisations, which meet requirements specified by the income tax act. The act provides that such organisations do not have to pay tax on the profits that they make.

What must an organisation do to become tax exempt?

It must become registered as a public benefit organisation in terms of Section 30 of the Income Tax Act.

What is a public benefit organisation?

Any organisation whose activities are listed in Part 1 of the Ninth Schedule of the Income Tax Act, and which complies with the requirements of Section 30 of the Income Tax Act may become a Public Benefit Organisation.

If an organisation is tax exempt, must its employees still pay tax?

Yes, tax exemption refers to the organisations’ status and not to that of the individual employees.

If an organisation is a registered NPO, is it tax exempt?

No, It has to register as a public benefit organisation in terms of Section 30 of the Income Tax Act.

What is donor deductible status?

When an organisation has donor deductible status, donors may, to a limited extent, deduct the amount of the donations it had made to that organisation from the donor’s taxable income for the tax year of the donation. This deduction will only be allowed against the presentation of a receipt in terms of Section 18(a) of the Income Tax Act.

How does an organisation become donor deductible?

It first has to be registered as a public benefit Organisation. If its activities are included in Part II of the Ninth Schedule of the Income Tax Act, it may apply for donor deductible status.

Are all NPO’s donor deductible?

No. Only those organisations whose activities are found on Part II of the Ninth Schedule of the Income Tax Act, it may apply for donor deductible status.

Are all PBO’s donor deductible?

No. Only those organisations whose activities are found on Part II of the Ninth Schedule of the Income Tax Act, it may apply for donor deductible status.

Once an organisation is tax exempt, does it stay that way?

If it complies with all the requirements of Section 30 of the Income Tax Act it will remain Tax Exempt.

What must an organisation do if it no longer wants to be tax exempt?

It has to notify South African Revenue Services in this regard.

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