Difference between revisions of "South Africa NGO Sector"
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In addition to government funding, the private sector contributed R3 million in 1998, while international nongovernmental aid was about R.5 million, the bulk of which went towards health, education, and development and housing. | In addition to government funding, the private sector contributed R3 million in 1998, while international nongovernmental aid was about R.5 million, the bulk of which went towards health, education, and development and housing. | ||
| − | ==Definitions and | + | ==Definitions and Legal Classifications== |
The 1997 Nonprofit Organisations Act defines an NPO as | The 1997 Nonprofit Organisations Act defines an NPO as | ||
| − | + | a trust, company or other association of persons— | |
*(a) established for a public purpose; and | *(a) established for a public purpose; and | ||
*(b) the income and property of which are not distributable to its members or office-bearers except as reasonable compensation for services rendered. | *(b) the income and property of which are not distributable to its members or office-bearers except as reasonable compensation for services rendered. | ||
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This definition encompasses a variety of organizations, including NGOs, CBOs, faith-based organizations (FBOs), Section 21 companies, trusts, and “any other Voluntary Association that is not-for-profit.” | This definition encompasses a variety of organizations, including NGOs, CBOs, faith-based organizations (FBOs), Section 21 companies, trusts, and “any other Voluntary Association that is not-for-profit.” | ||
| − | The term “nonprofit organizations” has come into common usage relatively recently. In the 1980s and 1990s, “service organizations” was the common term, which gave way to “NGOs” and “CBOs.” NPOs then gained currency as a broad term distinguishing these organizations from the for-profit sector (Swilling and Russell 6). Prior to 1997, NPOs were variously defined as apolitical organizations serving the interests of their members, and organizations working for a “public purpose,” a phrase which was then enshrined in the 1997 law. A debate about the definition of “public purpose” followed the passage of that law, and led in 2000 to the creation of another term, “public benefit organization” (PBO), discussed below (Swilling and Russell 9). The main legal distinctions between all of these organizations are trusts, Section 21 companies, and voluntary associations. Trusts, which are governed under the Trust Property Control Act of 1988, may be established for private benefit or for a charitable purpose. A trust is created when property is transferred by a trust deed; trustees then administer the property and funds of the trust in the interest of beneficiaries (which may be broadly defined in public interest terms). | + | The term “nonprofit organizations” has come into common usage relatively recently. In the 1980s and 1990s, “service organizations” was the common term, which gave way to “NGOs” and “CBOs.” NPOs then gained currency as a broad term distinguishing these organizations from the for-profit sector (Swilling and Russell 6). Prior to 1997, NPOs were variously defined as apolitical organizations serving the interests of their members, and organizations working for a “public purpose,” a phrase which was then enshrined in the 1997 law. A debate about the definition of “public purpose” followed the passage of that law, and led in 2000 to the creation of another term, “public benefit organization” (PBO), discussed below (Swilling and Russell 9). |
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| + | The main legal distinctions between all of these organizations are trusts, Section 21 companies, and voluntary associations. Trusts, which are governed under the Trust Property Control Act of 1988, may be established for private benefit or for a charitable purpose. A trust is created when property is transferred by a trust deed; trustees then administer the property and funds of the trust in the interest of beneficiaries (which may be broadly defined in public interest terms). | ||
Section 21 companies, as defined by the Companies Act of 1973, are nonprofit associations “having the main object of promoting religion, arts, sciences, education, charity, recreation, or any other cultural or social activity or communal or group interests.” NPOs that have registered with the government and are not trusts, religious institutions, trade unions, or cooperatives fall into this category. All Section 21 companies must register with the Registrar of Companies (Companies Act Chapter IV, 63). Foreign nonprofits can register branches in South Africa under Section 21A of the Companies Act. | Section 21 companies, as defined by the Companies Act of 1973, are nonprofit associations “having the main object of promoting religion, arts, sciences, education, charity, recreation, or any other cultural or social activity or communal or group interests.” NPOs that have registered with the government and are not trusts, religious institutions, trade unions, or cooperatives fall into this category. All Section 21 companies must register with the Registrar of Companies (Companies Act Chapter IV, 63). Foreign nonprofits can register branches in South Africa under Section 21A of the Companies Act. | ||
| − | Most nonprofit organizations in South Africa are voluntary associations (USIG 3), many of which work only at the community level (Swilling and Russell 20). There is no official registration process for such organizations. Rather, an agreement, which is usually written but may be oral, is formed among three or more people with a common goal other than making profits. Voluntary associations are governed by common law, and may be classified in legal terms as either corporate bodies (“universitas”) or “non-corporate associations” (USIG 3). In order to qualify as a universitas, and organization must be structured to continue as an entity regardless of changes in membership; it must be able to hold property distinct from its members; and no member can have any rights to the property of the association based on membership (USIG 3). The Johns Hopkins study notes that while little statistical information exists regarding such organizations, they are believed to have a significant effect in alleviating poverty by responding to local problems more quickly than more formal organizations or government bodies (Swilling and Russell 21). | + | Most nonprofit organizations in South Africa are voluntary associations (USIG 3), many of which work only at the community level (Swilling and Russell 20). There is no official registration process for such organizations. Rather, an agreement, which is usually written but may be oral, is formed among three or more people with a common goal other than making profits. Voluntary associations are governed by common law, and may be classified in legal terms as either corporate bodies (“universitas”) or “non-corporate associations” (USIG 3). In order to qualify as a universitas, and organization must be structured to continue as an entity regardless of changes in membership; it must be able to hold property distinct from its members; and no member can have any rights to the property of the association based on membership (USIG 3). The Johns Hopkins study notes that while little statistical information exists regarding such organizations, they are believed to have a significant effect in alleviating poverty by responding to local problems more quickly than more formal organizations or government bodies (Swilling and Russell 21). |
==Legal Issues and Regulations on the Formation and Operation of Nonprofits== | ==Legal Issues and Regulations on the Formation and Operation of Nonprofits== | ||
The Department of Social Development (before 2000, known as the Department of Welfare) oversees NGO registration and NGO affairs. Its goal is to “ensure the provision of comprehensive social protection services against vulnerability and poverty within the Constitutional and legislative framework, and to create an enabling environment for sustainable development” (DSD 10). Within the department, the National Development Agency (NDA) provides funding and capacity building to civil society organizations (CBOs, NGOs, FBOs, etc.) (DSD 15). | The Department of Social Development (before 2000, known as the Department of Welfare) oversees NGO registration and NGO affairs. Its goal is to “ensure the provision of comprehensive social protection services against vulnerability and poverty within the Constitutional and legislative framework, and to create an enabling environment for sustainable development” (DSD 10). Within the department, the National Development Agency (NDA) provides funding and capacity building to civil society organizations (CBOs, NGOs, FBOs, etc.) (DSD 15). | ||
| − | NGOs may register through the Directorate of Nonprofit Organisations, which was created in 1997. Registration is not required, but until recently only registered organizations were eligible for tax benefits. Once registered, organizations must send annual reports of their activities along with financial statements to the Directorate (NPO Act 18,1). | + | NGOs may register through the Directorate of Nonprofit Organisations, which was created in 1997. Registration is not required, but until recently only registered organizations were eligible for [[How to obtain tax-exempt status|tax]] benefits. Once registered, organizations must send annual reports of their activities along with financial statements to the Directorate (NPO Act 18,1). |
| − | Several important changes have taken place recently with respect to the legal framework and tax benefits for NPOs in South Africa. After | + | Several important changes have taken place recently with respect to the legal framework and tax benefits for NPOs in South Africa. After Apartheid ended in 1994, the nonprofit sector was hit hard when foreign donors redirected their funding away from civil society and towards the state. It was in this context that the NPO Tax Lobbying Campaign arose, in an effort to bring about a more financially enabling environment for the nonprofit sector (Nelson 2.2). In 1999, the Commission of Inquiry into Certain Aspects of the Tax Structure of South Africa (known as the Katz Commission) released a report focusing on taxation of NPOs in South Africa. The report called attention to flaws in the existing tax legislation and made suggestions to improve the fiscal environment for NPOs. The Non-Profit Partnership, an NGO working on behalf of the nonprofit sector, seized the opportunity to lobby for legislative changes that would expand tax benefits to encompass a broader range of organizations. |
These developments led to the passage of the Taxation Laws Amendment Act in 2000, which introduced a new term, “Public Benefit Organization” (PBO). To register as a PBO, an organization must be a charitable trust, Section 21 company, or voluntary association, and qualify as a nonprofit organization under the Nonprofit Organisations Act; this includes a broad range of organizations. However, whereas NPOs must be established for an as-yet-undefined “public purpose,” PBOs go one step further in carrying out “public benefit activities” (PBAs), which are defined as activities “…of a philanthropic and benevolent nature, having regard to the needs, interests and well-being of the general public.” (Income Tax Act 30,2). At least 85 percent of these activities, measured in cost or in time spent, must benefit persons in South Africa. Finally, at least one of the following must be true: | These developments led to the passage of the Taxation Laws Amendment Act in 2000, which introduced a new term, “Public Benefit Organization” (PBO). To register as a PBO, an organization must be a charitable trust, Section 21 company, or voluntary association, and qualify as a nonprofit organization under the Nonprofit Organisations Act; this includes a broad range of organizations. However, whereas NPOs must be established for an as-yet-undefined “public purpose,” PBOs go one step further in carrying out “public benefit activities” (PBAs), which are defined as activities “…of a philanthropic and benevolent nature, having regard to the needs, interests and well-being of the general public.” (Income Tax Act 30,2). At least 85 percent of these activities, measured in cost or in time spent, must benefit persons in South Africa. Finally, at least one of the following must be true: | ||
| − | #the organization’s activities must benefit, or be accessible to, the public at large, “including any sector thereof (other than small and exclusive groups)” | + | #the organization’s activities must benefit, or be accessible to, the public at large, “including any sector thereof (other than small and exclusive groups)” |
| − | #the organization’s activities must benefit, or be easily accessible to, the poor and disadvantaged | + | #the organization’s activities must benefit, or be easily accessible to, the poor and disadvantaged |
#the organization must receive at least 85 percent of its funding from donations, grants from state bodies, or foreign grants (Income Tax Act 30,1). | #the organization must receive at least 85 percent of its funding from donations, grants from state bodies, or foreign grants (Income Tax Act 30,1). | ||
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Civil society’s exclusion from the policy making arena both exacerbates and has resulted from these tensions. In May-June 2006, more than 180 delegates met in New York for the United Nations General Assembly Special Session on HIV/AIDS (UNGASS), where South Africa submitted a progress report to be used by the UN to determine the effectiveness of the country’s programs to combat and treat the disease. Although the UN had instructed governments to include civil society groups in preparing the report, the South African Joint Civil Society Monitoring Forum (JCSMF) complained that they had not been part of the process, and were generally excluded from national policy making. Yet the South African government gave itself eight points out of a possible ten for involving NGOs in the planning and budgeting of HIV/AIDS programs. | Civil society’s exclusion from the policy making arena both exacerbates and has resulted from these tensions. In May-June 2006, more than 180 delegates met in New York for the United Nations General Assembly Special Session on HIV/AIDS (UNGASS), where South Africa submitted a progress report to be used by the UN to determine the effectiveness of the country’s programs to combat and treat the disease. Although the UN had instructed governments to include civil society groups in preparing the report, the South African Joint Civil Society Monitoring Forum (JCSMF) complained that they had not been part of the process, and were generally excluded from national policy making. Yet the South African government gave itself eight points out of a possible ten for involving NGOs in the planning and budgeting of HIV/AIDS programs. | ||
| − | Clearly, many challenges exist with respect to state-NGO relations. Yet it is a testament to the robustness of South African civil society that these challenges are confronted openly by the NGO community. It is truly remarkable that less than fifteen years after the end of | + | Clearly, many challenges exist with respect to state-NGO relations. Yet it is a testament to the robustness of South African civil society that these challenges are confronted openly by the NGO community. It is truly remarkable that less than fifteen years after the end of Apartheid, nearly 100,000 NGOs exist in South Africa today, working to reduce poverty and ensure equality for all citizens. |
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==External Links== | ==External Links== | ||
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U.S. International Grantmaking: information on legal terminology and tax laws | U.S. International Grantmaking: information on legal terminology and tax laws | ||
http://www.usig.org/countryinfo/southafrica.asp | http://www.usig.org/countryinfo/southafrica.asp | ||
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==References== | ==References== | ||
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“All You need to Know About the Registration of an Non-Profit Organisation (NPO).” Department of Social Development, Republic of South Africa. http://www.socdev.gov.za/npo/npo.htm (accessed January 19, 2007). | “All You need to Know About the Registration of an Non-Profit Organisation (NPO).” Department of Social Development, Republic of South Africa. http://www.socdev.gov.za/npo/npo.htm (accessed January 19, 2007). | ||
Latest revision as of 11:56, 13 August 2008
Contents
- 1 History of the Nonprofit Sector in South Africa
- 2 Size and Scope of the Nonprofit Sector
- 3 Definitions and Legal Classifications
- 4 Legal Issues and Regulations on the Formation and Operation of Nonprofits
- 5 State-NGO Relations and the Future of Civil Society in South Africa
- 6 External Links
- 7 References
History of the Nonprofit Sector in South Africa
The nonprofit sector in South Africa has a long history. The beginnings of civil society arose during the colonial period with various religious, cultural, and welfarist community-based groups. In addition, the European colonial powers brought their own organizations with them from the seventeenth through the nineteenth centuries (Swilling and Russell 67). During the twentieth century, the nonprofit sector developed further through a corporatist pact between the British elite and Afrikaner middle class (Swilling and Russell 68). Large, formalized non-governmental organizations (NGOs) dealing with health and social services emerged for the exclusive care of the white community. At the same time, grassroots community-based organizations arose in the black community in order to provide basic services. These groups were often survivalist and stood in opposition to segregation and later Apartheid. For the most part, the white-run government tolerated these organizations, except during periods of active political repression like the 1960s.
In the early 1980s, anti-Apartheid civil society organizations grew as a result of President P.W. Botha’s liberalization of the political system. Nonetheless, his reform movement retained repressive elements, and the state-civil society relationship throughout the 1980s remained adversarial, with a hostile legal and financial environment for NGOs (Habib 675-77). Oppositional social movements spawned by community-based organizations were integral in bringing about the end of Apartheid in 1994.
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