In a country where government is unable to provide all the services required by communities, non-profit organisations (NPOs) have stepped up and filled a necessary gap. They have become integral to our society and the communities within which we live. However, forced deregistration, the result of non-compliance, will decrease their ability to effectively raise the funds on which they depend.
The plight of many communities has been aggravated by the COVID-19 pandemic. This has led to a greater demand by them for the services of NPOs. Unfortunately, the pandemic has also resulted in some companies providing less funding to non-profits, as cash reserves are being used to keep their businesses afloat.
The decrease in available funds and the increase in communities’ needs has resulted in NPOs having to be more competitive when applying for funding or even changing their strategic focus on how to ensure funding is received to continue the good work that has, and is, currently being done. This has increased the importance of well governed and impactful NPOs. Their compliance status, measurable effect on the community and the projects that they are involved with need to set them apart from the others.
NPOs help cater for the needs of so many South Africans, from providing food and education to up-skilling the communities at large and creating recreational activities for South Africa’s youth. The impact of an NPO can uplift and strengthen a community.
The terms non-profit organisation (NPO) and non-profit company (NPC) are often used interchangeably in South Africa. However, they are not exchangeable. While their purpose is the same, their structures may differ. An NPC is a company and is required to adhere to the Companies Act. An NPO may be a company, trust or an association of people registered in terms of the Nonprofit Organisations Act. An NPC may register as an NPO in addition to the NPC registration, which would enhance their credibility. This would also increase their ability to raise funds as many donors require evidence of a potential beneficiary’s NPO status before providing them with funding.
During a media briefing in November 2020 Minister Lindiwe Zulu noted that as of September 2020 there were 233 180 NPOs registered with the Department of Social Development (DSD). The DSD provides a total of R7.6 billion to registered NPOs that fulfill their social responsibilities.
This contribution is a major source of income for NPOs which allows them to continue serving their communities. However, only 30% of NPOs are compliant with the requirements of the Nonprofit Organisations Act.
The main areas of non-compliance relate to registered NPOs not providing the Director of NPOs with a narrative report describing their activities and the required annual financial statements within the prescribed timeframes. Other smaller areas of non-compliance relate to the organisation not updating their details or ensuring the activities carried out are in line with their constitution.
Many NPOs are started by like-minded people who want to contribute to society and allocate all their available funds to their purpose-driven activities. They often do not have sufficient financial backing and in most cases do not have sufficient skilled members to ensure that the organisation is compliant with laws and regulations.
Although many NPOs continue to operate while non-compliant and some non-compliance issues may appear to be trivial, the threat of de-registration due to non-compliance has become real in 2021.
The DSD announced the
Know Your NPO Status campaign in November 2020 and one of its aims is to deregister all non-compliant NPOs in four stages. This was set to start in April 2021 and end in April 2022.
De-registrations will have a significant impact on the communities serviced by NPOs. Obtaining funding from the likes of the DSD, the National Lottery, MTN and Vodacom would cease and ultimately the communities at large would suffer.
The current socio-economic state of the country requires support from the NPOs now more than ever. It is imperative to ensure the survival of the majority of the country’s NPOs. One of the key drivers in ensuring this is through maintaining compliance and swiftly remedying non-compliance.
The compliance status of an NPO may be checked on the DSD’s website:
http://www.npo.gov.za/