The government has set stiff guidelines for non-profit organisations which hope to seek tax breaks
Barry Streek
Registered non-profit organisations (NPOs) are to be compelled to provide extensive information to the government on their activities if they want to retain their registration and qualify for tax incentives when these are extended to the non-profit sector.
They will have to supply information annually on their details, their history and aims, their achievements, their meetings and constitution, their accounting and fundraising details, a written report from their accounting officer and their financial statements.
“Together, these reports tell the story of the activities, income and spending of your organisation,” states a draft Model Narrative Report for Non-Profit Organisations, which has been published in the Government Gazette.
The draft, for which comment must be made by the end of this week, said reports from NPOs must be submitted to the department of welfare’s non-profit directorate within nine months after the end of their financial year.
It warns: “The directorate can cancel your registration if you do not send these reports in each year.”
Most of the questions in the draft form are straightforward – such as the name of the organisation, its registration number, its contact details, its sector, the provinces and areas it works in and lists of its office-bearers and staff members.
Strangely, the draft asks for details of the race of staff members but not the race of office-bearers.
The questions about the organisation’s history and aims should be readily available in most NPOs but the questions on the organisation’s achievements – including a report by the chair, a list of projects and programmes, its objectives for the year and which were met, what activities were done to achieve the objectives, and who or what benefited from the projects and programmes – will take time to fill in and will test less-resourced NPOs.
The draft also contains questions about meetings – annual general, special general, staff and management – held during the report period, whether they had quorums, when the last annual general meeting was held, and whether the organisation’s constitution was changed during the year.
In the section of the financial report, the organisation’s accounting officer has to be named and details of its accounting policies have to be provided.
Its financial statement and written report will only be accepted if its office- bearers have approved them.
The draft has questions about the percentage the organisation spent on administrative costs, its major fundraising from the general public and business, details of its fundraising and who did the fundraising.
The accounting officer will have to write a short financial report explaining increases or decreases in the organisation’s finances, any spending that was not part of its planned spending as spelt out in its budget and any big changes that affected its income and spending. He or she will also have to produce a detailed financial statement.
The draft narrative has been drawn up in terms of the 1997 Non-profit Organisations Act which was passed to create an enabling environment for the work of non-profit organisations and encourage a vibrant and accountable civil society.
It provided for the voluntary registration of NPOs, established the non- profit directorate in the Department of Welfare and Population Development and a public register of all registered non- profit organisations, and gave the minister of welfare the power to issue regulations.
The law says the state’s responsibility to NPOs is to promote, support and enhance their capacity to fulfil their functions.
The decision in this year’s budget to widen the list of organisations to which tax-deductible donations may be made, as a first step to extending this provision to other NPOs, is a reward for those organisations who have registered and work in certain defined fields.
But the price of registration is increased bureaucracy in filling out the forms which will be required from NPOs to maintain their registration.