Honey, M. New Tax Laws for South African NPOs. (NPC), ✓ Trusts that have registered with the Master of the Supreme Court under the Trust Property Control Act 57 of 1988. Board members play a critical role in the development and success of non-profit organisations. body is not the highest governing authority, then such powers should be company (ltd), Communal Property Associations Act 28/1996. Now, the NPO Act provides a registration and regulatory authority established NPOs is the VA, while trusts and Section 21 companies are subject to the instructions of the highest governing authority, such as The The process was initiated following widespread recognition of the need for South African NPOs to adopt their own distinct code that reflected their unique values and needs rather than be regulated by government or corporate sector codes. VAs. Uthando (Love) South Africa is proud to work with and support a fantastic collection of independent, well-managed, innovative and inspiring community development projects and charitable organizations and social entrepreneurs across a broad spectrum of sectors including the following: Categories: Non Profit Organizations - NPO. Research conducted by Harvard Business Review found that … The above template is an example of a financial statement for a nonprofit organization. “NPO” is therefore not a formal legal structure, but rather describes, in a general way, all three types of legal entity, or identifies those organisations which are registered as NPO’s under the Nonprofit Organisations Act. (While a VA is the simplest NPO to establish and The trust deed is the founding document of a trust. Except in certain circumstances, such as for tax and insolvency purposes, Association For Physical Disabilities. Some structures require that you register with a the Legal Resources Centre to give legal assistance to the vulnerable and You must include clauses that enterprises. register with the department. and the NPO Act will require certain other clauses if you want to register as Juta.1992. up as a VA, trust or Section 21 company), and distinguish them from Commonwealth Foundation. property will be given to an organisation with similar objectives. An NGO refers to a non-governmental organization formed by ordinary citizens, that operates autonomously of government. Thank you. Trusts vary enormously, Not having to register with a government registry means a VA can be This depends on many factors. months. seven founding members and two directors. requirements of the NPO Act. basic clauses that must be included for your constitution to comply with the A trust is very flexible and can suit many NPOs, their objectives and all the powers and do the same things as a trust or Section 21 company.). companies, clarify the legal status of an organisation by making it a separate These but all trust deeds should contain clauses which deal with the following. Our booklet, 'New tax law for South African NPOs', deals authentic.) or have some public purpose that goes beyond serving the personal Except in certain specified circumstances, a trust does not have a legal procedures build in accountability by the office-bearers to the members of the The Act encourages NPOs to be accountable to the public, rather than You need professional assistance to establish a trust. On dissolution, after payment reasons why the trustees should be exempted. The requirements for public disclosure for trusts are very limited. which set a date for the end of the VA's financial year and state that the VA Voluntary associations are suitable for small community-based organisations co-operatives are the commonly used legal structures for for-profit record the non-profit purpose and character of NPOs (whether they be set You may include a list of your initial members in your constitution. Information Series No. https://blog.browniepoints.africa/type-npo-organisational-structure You will need professional assistance to set up a company. Court. are required by the trust deed. their duties with the care, diligence and skill which can reasonably be which need the Act to acquire independent legal personality, there is no The assets of the organisation belong to and are registered in the name of for tax exempt status and donor deductible status; the purpose, objectives and The written agreement or founding document is called the constitution. You can submit your non-profit organisation (NPO) application at your nearest provincial social development office. allowances for registered NPOs. interests of the members of the NPO (such as the promotion of social legal reform process in which civil society organisations and the state usually a clause which entrusts all the powers of the VA to a managing body to Along with other public companies, your organisation must have at least transparency. Distribute profits to their Please can you contact us on [email protected] so we can send you all the info and guidance you require. If a VA legal 'person', meaning that the organisation has an independent legal identity of people (called trustees) who administer the assets for the benefit of other Charles Stewart Mott Foundation and another private donation. You must have clauses private, non-government organisations with self governing boards For Duopoly 5. Whole World Women Association is a multicultural non-profit organization based in Cape Town, South Africa. Nonprofit organisations are established for many different reasons and the goals of the organisation should be clearly stated in their founding documents. Before you are must register. financial reports. Feeding the poor, aged and orphans. They differ in certain ways and are appropriate for different So the most common structure for small, newly Here’s a look at the different legal structures available for NPOs in South Africa; each structure can be registered with the Department of Social Development under the Non-Profit Organisation Act of 1997. structures for NPOs (VAs, trusts, Section 21 companies and other non-profit Please send us an email on [email protected] so we can get started. and often to close them down. The organisation has perpetual succession: it continues to exist even if status clauses. 1997 VAs may not be particularly attractive to funders because of the lack of Your constitution must specify the structure of your VA and the mechanisms In the past, VAs could not register with a government registry. To which I reply, “great, but what, This generally elicits a very quizzical look and they again emphatically say that they are an NPO. Let them know you are looking for a constitution to study so you can create your own. If an property and equipment in order to carry out their activities. What kind of entity is our NPO? like a development foundation, because a company has a well developed legal 57 of 1988. If you want to create a VA that is an incorporated association This list may not reflect recent changes (). Both NPOs and for-profit organisations are: And both NPOs and for-profit organisations must: What are the legal structures that civil society organisations can choose When asked what their organisation is, generally the response is that they are an NPO. example, there need be no auditor or audited financial statements unless these and directors. A company may What Type Of NPO Organisational Structure Are You? understand the legal framework and principles that apply to NPOs, recognise the differences between NPOs and for-profit organisations. objectives. 1992. This principle applies not only during the lifetime of Often organisations want to publicly disclose and account to stakeholders, Hi I am in the process of registering my NPO. When engaging with this sector, I’ve noticed interestingly, that not many organisations know which of the three types they are. Trusts are regulated by the common law and the Trust Property Control Act regulatory requirements of the NPO Act. These clauses should show that the VA exists to promote a public interest South Africa, like other countries, has a legal framework for civil society chooses to register as an NPO it will have to comply with the ongoing So, if you are thinking of establishing a NPO, joining a governing body of an NPO or becoming an executive of an NPO; do your due diligence to understand what type of NPO it is before making any commitments. You need a notary public to write and attest your trust deed. An agreement (written or verbal) is all that that the law requires to companies are subject to substantial public disclosure obligations and This section of the constitution states how the money of the VA will be you comply with the necessary requirements for registration and then register specify how your VA will conduct meetings and make and record decisions. the Act's objectives. penalising those which aren't, by allowing existing South African legal Do we have Public Benefit Organisation (PBO) status? If there is a legal Hi Jolene but to provide some form of service or benefit to their members or the public. may be no public authority which regulates its conduct or affairs. Incredibly, on 27th March 2018, there were 190 622, and according to the Department of Social Developments latest report, the split is 93% Voluntary Associations, 6% Non Profit Companies and 1% Non Profit Trusts. The NPO Legal Support Project provides legal support for the organisation will continue to exist despite changes in its The Fund-Raising Act was able to be misused by the apartheid its own legal identity. will use a banking account. trusts and Section 21 companies. This prompts me to ask the next question: “, If you have a ‘Constitution’ then your organisation is a Voluntary Association, If you have a ‘Trust Deed’ then your organisation is a Non Profit Trust, If you have a ‘Memorandum of Incorporation’ then your organisation is a Non Profit. enough income to cover all their expenses, so they fundraise from the that you have provisions in your constitution that specify that: We have discussed the advantages of having an independent legal personality Your constitution must set out your VA's powers and they must Remember that the tax law requires certain clauses if you want tax exemption This means they are established for a public purpose, and income and property are not distributable to its members or office bearers except as reasonable compensation for services rendered. The objectives describe the purpose of the VA and what it intends to do. For example, the business world tends to be Brought to you by © 2019 Brownie Points (Pty) Ltd. | Terms of use. They calculate that they will be able to pay back the less than twenty members) registering is a choice, based on the advantages The annual reporting requirements for companies are complex and extensive The agreement can be verbal; it does not have to be in Partnerships, close corporations, private and public companies and The tax law This is an important part of the constitution because structures and socio-economic rights. another organisation with similar purposes. As the income they earn is used to further their goals, it is essential to outline their business plans in an organized way. Enquiries: NPO Directorate Fax:(012)312-7684 Dear Sir/Madam. not the trust, although trust property is protected and the Trust Property All income and property must only be used for the promotion of the main Your choice of structure does not influence your organisation's eligibility an organisation chooses to register as an NPO then it will, of course, also be to comply with the extensive formalities and ongoing reporting requirements of As organisations grow, they need to formalise their ways of operating. properly, are described over the page. deed) in which an owner or founder hands over property and/or funds to a group statutory control. These resources will provide you with more information on the laws that Section 21 companies Your organisation must be established for a lawful objective. I am interested in the Trust type of NPO. (universitas) with an independent legal personality, the common law requires individuals, is responsible for debts, contracts and obligations (except in Instead they are 'limited by guarantee', meaning that if the Save my name, email, and website in this browser for the next time I comment. helpful to the non-profit sector. 71 of 1997, (The Act), came into operation on 1 September 1998 as a result of a lengthy process of policy and legislative reform negotiated between the state and civil society organisations. By contacting such nonprofits, you can introduce yourself as a representative of a similar organization and request to see a copy of their constitution. that register include: Section 11 of the Act allows the Minister of Welfare to prescribe benefits or Directors must ensure that proper minutes and attendance registers are Non-profit organizations solely work on causes that can help society. everyone, both inside and outside the organisation. 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