Non-profits agree it is time to improve regulation in the sector, but as Feryal Domingo, acting executive director, Inyathelo: The South African Institute for Advancement, argues, the draft NPO Amendment Bill raises concerns about consultation, clarity and capacity.
Please provide an overview of the Bill and some of the contentious provisions within it?
The Bill, which was released in October 2021 for comment, indicates that it will change the current Nonprofit
Organisations Directorate within the Department of Social Development (DSD), to an Office of the Registrar. This will provide for registration of non-profit organisations (NPOs) and compulsory registration of foreign organisations. An arbitration tribunal will also be established to resolve disputes.
While there is no doubt of the need for improved systems, no explanatory memorandum is available to explain the thinking behind the Bill’s provisions. For example, regarding the Directorate’s name change to Registrar, there is no clarity whether the Registrar will be independent and move out of the DSD.
In addition, many NPOs are currently registered with identical names and there is a drive to deregister NPOs that do not meet legislative requirements. Other NPOs currently skip DSD registration altogether and
register directly with SARS to receive Section 18A status.
There are concerns that lack of capacity and resources within the department will undermine implementation of the Bill. Regarding registering international NPOs, the DSD says this provision has been included to prevent NPOs getting caught up in money laundering and terrorist financing.
While there is agreement on the need to counter corruption, there are concerns the sector will be over-regulated with draconian controls.
What governance changes does the Bill propose and what are your views on them?
We certainly welcome amendments in the Bill relating to organisational structure and governance. The Bill proposes that, at a minimum, a non-profit should include the designations of chairperson, secretary and treasurer with their deputies. Building board capacity has been part of Inyathelo’s governance training and we are happy to see this proposal. We believe the inclusion of deputies, however, is excessive and unattainable for many.
The Bill requires NPOs to “disclose whether a member or office bearer has previously been found guilty of an offence relating to the embezzlement of money of any non-profit organisations and the status of the conviction”. It is difficult to understand why this is restricted to embezzlement in the non-profit sector. This clause should be rewritten to cover anyone found guilty of embezzlement.
Tell us more about the stakeholder working group formed in response to the Bill.
Following calls for comment on the Bill, a sector-wide meeting was called. A working group made up of independent organisations was asked to coordinate comment and liaise with the DSD.
At the first meeting, held in November 2021, the DSD explained that the amendments to the Bill dated back
to the Summit for Civil Society, held in 2012, when changes to the Act had been proposed by the NPO sector. The DSD representative said changes in the Bill were administrative and the first phase in a review of the NPO Act. He affirmed that a second phase would include broad consultation with the sector.
The working group pointed out that the changes proposed were in fact substantive policy changes that would
impact NPOs, it felt there had not been proper consultation and procedural issues related to the Bill had been problematic. For example, the Bill was not on the DSD website at the time it was announced, and the lack of an explanatory memorandum of objectives made it difficult to comment on the proposals.
What other steps has the working group taken?
The working group requested a deferral of the deadline for comments, which was extended to June 2022. It then
sent a letter to the DSD minister, Lindiwe Zulu, on 28 April 2022 outlining reservations about the Bill and asking
for its recall. The DSD requested that recommendations be submitted as comments on the Bill. On 25 May 2022, a
petition asking the DSD to withdraw the Bill began circulating. It was addressed to the minister, the DSD parliamentary portfolio committee and the Nonprofit Organisations Directorate.
What happens now? How can NPOs and the DSD reach a positive resolution?
Both sides need to work together and engage for an optimal outcome, to ensure there is cooperation for social
benefit. There is currently an opportunity to engage and address key issues, but the sector needs to be unified so all can move forward and find common ground. We need to promote accountability and transparency, and improve the working relationship between the NPO sector and government.
Acting executive director
Inyathelo: The South African Institute for Advancement