In February 2025, the Department of Social Development (DSD) deregistered more than 6 000 nonprofits for noncompliance, with a further 41 000 put on notice. The DSD claimed this as a victory for accountability – but for thousands of grassroots organisations serving South Africa’s most vulnerable communities, it was an extinction-level event. Dr Lesley Ann van Selm, Managing Director of Khulisa Social Solutions, reflects on whether compliance has been weaponised and how we might reimagine a regulatory system that safeguards both financial integrity and frontline service delivery.
With 6 221 nonprofits deregistered (and over 41 780 issued notices), how does the DSD balance the need to cleanse the registry with the risk of undermining service delivery in vulnerable communities?
Deregistering 6 221 nonprofits in a single administrative sweep hardly reflects nuanced governance. It seems less like targeted regulation and more like a bureaucratic axe swinging at the heart of community care. At Khulisa, we have worked alongside informal community organisations for decades – many led by gogos (grandmothers) or reformed offenders – most of which operate without salaries, WiFi, or accounting software. These groups are not avoiding compliance; they are simply overwhelmed by the realities of survival. Accountability is essential, but punishing poverty with paperwork erodes the very networks we depend on.
How has the Financial Action Task Force (FATF) greylisting in February 2023 influenced DSD’s approach, particularly regarding the prevention of money laundering and terrorist financing?
The FATF’s concerns about nonprofits serving as potential channels for money laundering and terrorist financing are valid. However, in Khulisa’s experience, the only things our partner organisations are ‘laundering’ are school uniforms and community dignity. International compliance standards should be tailored to South Africa’s context, where formality and practicality do not always coincide. Fulfilling FATF requirements should not undermine local support networks.
How accessible and fair is the appeal process for deregistered nonprofits?
Appealing a deregistration without access to data, legal counsel, or a reliable internet connection is, for many, an impossible task. The process is steeped in jargon, inaccessible forms and tight deadlines, built on the false assumption that all nonprofits operate on equal footing. At Khulisa, we assist organisations through this maze, but time is limited and many are unaware that the race has even begun.
Many smaller nonprofits struggle with annual narrative and financial reporting. What strategies can be used to support them?
A one-off workshop will not transform a dedicated community leader into a compliance expert. Support must be layered, offering mentorship, access to technology, plain-language templates and ongoing accompaniment. Our social enterprise partners in Limpopo and the Eastern Cape benefit from WhatsApp check-ins and real-time guidance. Compliance is not a tick-box exercise; it is a journey.
How effective have outreach tools – such as workshops, mobile helpdesks and walk-in assistance – been in helping smaller and volunteer-based nonprofits comply?
Mobile helpdesks and walk-in centres have potential, but their implementation is inconsistent and often goes unnoticed by rural organisations. While provinces such as the Western Cape have demonstrated promise, in many other regions these services remain underused. Without targeted, scaled and well-communicated outreach, such efforts risk becoming mere tick-box exercises.
With deregistration resulting in a loss of tax benefits and funding, how significantly does this impact frontline service delivery?
Each deregistered nonprofit signifies more than just an administrative figure – it is a community lacking psychosocial support, a child without after-school care, a gender-based violence survivor without a safe space. Losing tax status, donor access and formal legitimacy is not merely a financial loss; it is a breakdown of trust and capacity. For Khulisa’s partners, who provide food, education and mediation services, deregistration threatens entire ecosystems.
Does the drive for compliance risk shrinking the space for civil society turning nonprofits into service providers instead of independent agents of social change?
There is a growing and concerning trend towards viewing nonprofits solely as service contractors. When compliance is used as a blunt instrument, it risks silencing advocacy – the very mechanism through which civil society challenges injustice. Khulisa’s work is rooted in speaking uncomfortable truths and we believe civil society must remain a vital voice, not just an implementer of state contracts.
What recommendations do you have for nonprofits that have been deregistered or received notices?
Get your administrative house in order but also seek solidarity. Join provincial networks, request clear reinstatement guidance and connect with intermediaries who can help navigate the process. Khulisa has developed a rapid-response toolkit and peer-to-peer support hubs for exactly this purpose. One deregistration is a tragedy; thousands signal a dangerous pattern.
How should companies and philanthropists respond?
Compliance must be considered in every funding cycle – budgeting for audits, training and administrative capacity. However, funders must also advocate for systemic reform, supporting tiered regulation and fair treatment across the sector. Ignoring deregistration red flags is not neutrality; it is complicity. We need a hybrid compliance model that distinguishes between neglect and systemic exclusion – one that values integrity as much as administrative skill. At Khulisa, we believe in a sector that strikes a balance between compassion and credibility. We cannot afford to lose either to the blade of bureaucracy.
Dr Lesley Ann van Selm | Founder and Managing Director, Khulisa Social Solutions | lesleyann@khulisa.org.za | www.khulisa.org.za
