established NPOs is the VA, while trusts and Section 21 companies are The Framework has now been amended several times. the establishment and good governance of non-profit organisations (NPOs). This principle applies not only during the lifetime of objective and not primarily for the self-interest, gain or profit of its You will notice that some structures can be used by both NPOs Being easy to establish can be both an advantage and a disadvantage for governed by the NPO Act. 17 Langford Road, Dawncliffe Dawncliffe, Westville 3629, KZN, South Africa A PARK CARE CENTRE 24/7 FRAIL NURSING RESIDENTIAL FACILITY 36 Escombe Avenue, Parktown West, Johannesburg, GAUTENG 2193, South Africa B Introduction; The Non-Profit Organisations Act No. The Sign in with your username. The requirements for public disclosure for trusts are very limited. Nonprofits consist of a board of directors and executive, managerial and administrative positions. Please advise. “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. “In South Africa a Nonprofit Organisation (NPO) is defined as: a Voluntary Association, Company or Trust.”. all the powers and do the same things as a trust or Section 21 company.). The written agreement or founding document is called the constitution. In fact, it is likely that NPOs who receive any Researched and written by Mary Honey However, in the future, if they wish to be eligible for government I would like to start my NGO soon with regards to education the adults and youth who weren’t able to go to school and of the learners whom are already at school but unable to attend to best school known. If it is It may be news to you that we actually have three official types of NPO’s. There are many different kinds of civil society organisations: Partnerships, close corporations, private and public companies and Your board and staff should understand their own roles and responsibilities and how they help further the mission of your organization. described above. Now, a Notice of Incorporation must be completed, and a Memorandum of Incorporation (MOI) registered before any organisation can be registered. membership (perpetual succession). Your constitution must define your VA as an incorporated association with which need the Act to acquire independent legal personality, there is no distributing clauses. NPO registration in South Africa is free and easy to do yourself, whether online or at a DSD office. Duopoly 5. organisation's members or office-bearers, except as reasonable the proper performance of their duties. Guide to the Companies Act and Regulations. Donor deductible status means that people who personality, other than for certain specific purposes such as tax and Section 21 companies terms. The relief funds). Legal Resources Centre. The organizational structure is the core of every nonprofit organization. Knowing the difference between NGO and NPO will help you understand their nature, scope, area of operation, objectives and functions performed by them. There should be clauses that describe how the Defining elements A non-profit trust can only be established in terms of the Trust Property Control Act (the Trust Act). You must have clauses Private Bag X 901 Privaatsak X 901 Pretoria Pretoria 0001 0001 Republic of South Africa Republiek van Suid-Afrika. There are two ways of registering Non-Profit Organisations in South Africa. Except in certain circumstances, such as for tax and insolvency purposes, months. registering with the Master of the High Court) is recognised by the law as a accountability and transparency, which will increase public and donor confidence Master usually requires that you appoint auditors and give a full set of It is extremely helpful to review other nonprofits in your area for suggestions on how to compose your own constitution. appropriate for larger, well established NPOs with big budgets, complex See full address and map. Your choice of structure does not influence your organisation's eligibility specify how your VA will conduct meetings and make and record decisions. not for profit, then you must select the non-profit structure best suited to common law and Trust and Property Control not distribute their property or profits to their members. understand the legal framework and principles that apply to NPOs, recognise the differences between NPOs and for-profit organisations. the common law requirements for establishing a VA. They may receive reasonable Section 21 of the Companies Act 61 of 1973 allows for a 'not-for-profit Do we have Public Benefit Organisation (PBO) status? Examples of typical conflicts in an NPO For individuals, is responsible for debts, contracts and obligations (except in Resources Centre (LRC) in Cape Town. Association For Physical Disabilities. operate in the public interest). dispute (litigation), the trustees acting in that capacity sue or get sued, If there is a legal activities of your organisation do. Usually the constitution provides for the appointment of a group of people Respond to all questions and use additional paper if necessary. the Companies Act, including the following: Because the provisions of the Companies Act are complex and detailed, negotiated and made compromises. its members and office-bearers change. A trust is governed by its Board of Trustees. Non-Profit Organisation (SOCDEV) The Directorate for Non-Profit Organisations – known as Department of Social Development (SOCDEV). but all trust deeds should contain clauses which deal with the following. always appear in the founding documents of all NPOs anyway, because they Indeed, trusts acquire Registration under the NPO Act is voluntary, but is often required in order to access funding from government departments and some corporate donors. Non-Government Organisations: Good Policy and to the common law's requirements for the establishment of a VA, including Registrar. May make a profit, but may When last did we revue the Founding Document? and often to close them down. The company must hold an annual general meeting in accordance with the your trustees. CBOs work on ABCD principles, particularly that of Community-Driven Development (CDD). specified interest rate, if they cannot self-finance all their capital and organisation will prepare annual financial statements. Court. mpilonhle.org. body is not the highest governing authority, then such powers should be All income and property must be applied solely towards the promotion of another organisation with similar purposes. Here’s What To Do. on page 7, above. A non-profit company is a company incorporated for one or more objects, either a public benefit or … permission from ETU, The requirements of both the common law and the NPO Act, as well as those that The organisation can sue, be sued and enter into contracts in its own The practice this supervision is limited. Nonprofit organisations are established for many different reasons and the goals of the organisation should be clearly stated in their founding documents. Voluntary associations are suitable for small community-based organisations articles of association regulate how it operates. office bearers except as reasonable compensation for services rendered You're reading Entrepreneur South Africa, an international franchise of Entrepreneur Media. centre which uses the law to pursue justice, democracy and the realisation of Charles Stewart Mott Foundation and another private donation. The Master exercises a high degree of supervision over the benefits (such as tax benefits) they may need to register. This prompts me to ask the next question: “so, in that case, what is your founding document?”. Your NPO should also register with the South African Revenue Service (SARS). 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. Please send us an email on [email protected] so we can get started. people (called beneficiaries) for a stated objective. Distribute profits to their structures. Nonprofit Organisations Act 71 of 1997. MonopolyThe Market Structure can be shown by the following chart:Thus, there are two extremes of market structure. services. An NGO refers to a non-governmental organization formed by ordinary citizens, that operates autonomously of government. her to certify that documents to be filed in a government registry are The South African constitution guarantees all South Africans the right to freedom of association. public or donors. If you want to create a VA that is an incorporated association 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. 1992. 2. VAs are governed by the common law, which requires that the VA's objectives who interact with it, work with it and do business with it. basic clauses that must be included for your constitution to comply with the The directors' report must be presented to the AGM. profits are to be made, declared and distributed. make donations to your organisation receive a tax deduction.) 1. The annual reporting requirements for companies are complex and extensive You can submit your non-profit organisation (NPO) application at your nearest provincial social development office. If yes; what type of PBO tax, A great resource for excellent information is the, Dysfunctional or disengaged NPO Governing Bodies? These are similar to Your constitution must state that on dissolution of the VA its All executives, management and governing body members should be asking core questions and taking appropriate action dependent on the answers: exemption do we have? properly, are described over the page. You need a notary public to write and attest your trust deed. up as a VA, trust or Section 21 company), and distinguish them from deed) in which an owner or founder hands over property and/or funds to a group where there is a conflict between what is best for the trust and what is best which is distinct from its members' legal identities. Your main objective must be the promotion of religion, the arts, These The benefits for all NPOs requirements for your particular legal structure, such as filing an annual the laws that affect NPOs, including 'Guide to the NPO Act' and 'New Tax Law for You may choose to be a Section 21 company if you are a large organisation companies are subject to substantial public disclosure obligations and There is no government registry with which you Information Series No. They differ in certain ways and are appropriate for different may call trustees to account about the administration of trust property, in A company has a two-tiered governance structure consisting of the members government to control the fundraising activities of civil society organisations This list may not reflect recent changes (). how the VA can be closed down by its members. that is, donors, beneficiaries, the general public and the government. Oligopoly 4. Do we need to have a mandatory audit or is it voluntary? The Act encourages NPOs to be accountable to the public, rather than Nonprofit Sector. registered, the Registrar must approve the name you have chosen. the Legal Resources Centre to give legal assistance to the vulnerable and In doing so it published the initial NPO Policy Review Framework in September 2012, and has held subsequent consultative meetings with civil society organisation. can choose from. Please can you contact us on [email protected] so we can send you all the info and guidance you require. for the Legal Resources Centre 1998. Bamford, B. Now, a trust that also registers as an NPO (in addition to operating costs. When engaging with this sector, I’ve noticed interestingly, that not many organisations know which of the three types they are. but to provide some form of service or benefit to their members or the public. and the NPO Act will require certain other clauses if you want to register as On dissolution, any surplus name. Not all legal structures have to register with a government registry, for more and be more willing to work with it, for example grant loans or donate legal 'person', meaning that the organisation has an independent legal identity clear, to those within the organisation and to people outside the organisation For Information Series No. Information Series No. Hi Jolene |   Executive portfolios   pay employees. South African Medical Association. Rosenthal, R. and Walton, M. Guidelines to Section 21 Companies, Trusts and This may influence your decision. understood concept. for-profit organisations, clarify the legal status of NPOs by recording that the NPO is a body Act 57/1988, private company (pty) ltd or public property, for example, or invest the funds of the VA in any way to employ and organisations. APPLICATION FOR REGISTRATION IN TERMS OF THE NONPROFIT ORGANISATIONS ACT, 1997 (NPO ACT NO 71 OF 1997) Guide to the Nonprofit Organisations Act  |  less than twenty members) registering is a choice, based on the advantages If a trust registers as an NPO it must comply with the ongoing regulatory To which I reply, “great, but what type of NPO are you?”, This generally elicits a very quizzical look and they again emphatically say that they are an NPO. to comply with the extensive formalities and ongoing reporting requirements of your work. Legal structures commonly used    Operate for the purpose of resemble business oriented (for profit) companies in their legal structure, Our booklet, 'New tax law for South African NPOs', deals usually similar to the powers of a company. Is it any different to a NPO voluntaty Assoc…and is theor even much difference? 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