SOCIAL DEVELOPMENT ISSUES NOTICES OF NON-COMPLIANCE AND DEREGISTERS OVER 6 000 NON-COMPLIANT NPOs

• The Department of Social Development is urging all non-profit organisations (NPOs) who have not complied with the requirements set out in the Non-Profit Organisations Act to do so as a matter of urgency.
• Currently, a total of 203 279 NPOs, voluntary associations and trusts across South Africa face the risk of deregistration for failing to submit annual reports.
• The department has issued more than 40 000 notices of non-compliance to organisations that provide a wide range of services to children, youth, people with disabilities, older persons and humanitarian relief.

A total of 203 279 non-profit organisations, voluntary associations and trusts across South Africa face the risk of deregistration for failing to submit annual reports.

The organisations are required to comply with the requirements to submit annual reports in terms of Section 18 (1) of the Non-Profit Organisations (NPO) Act (Act 71 of 1997, as amended by the General Laws Amendment Act 22 of 2022).

The Department of Social Development has issued 41 787 notices of non-compliance to NPOs. Of this number, 6 221 NPOs have been deregistered for failure to honour their obligations in terms of the NPO Act.

These organisations provide a wide range of services to children, youth, persons with disabilities, older persons, and humanitarian relief.

The consequences for non-compliant NPOs are severe as they will no longer be able to access certain privileges such as tax exemption, letters of support and funding from government, donors and private institutions.

The majority of these non-compliant organisations are based in Gauteng (64 221), followed by KwaZulu-Natal (36 605), Western Cape (20 371), Limpopo (19 982), Eastern Cape (19 202), Mpumalanga (15 102), North West (12 363), Free State (10 661) and Northern Cape (4 770).

While the department acknowledges the significant contribution of NPOs in providing much-needed services to the vulnerable, the deregistration of non-compliant NPOs is a regulatory requirement aimed at fostering accountability and transparency within the NPO sector.

The department remains committed to working in partnership with the sector to ensure the integrity and protect the legitimate activities of NPOs that comply with South Africa’s regulatory framework.

The commencement of the deregistration process follows a formal notice issued by the department in August 2023.

The notice was followed by a series of workshops and outreach programmes conducted across South Africa to engage NPOs and provide them with the necessary opportunity and support, including capacity building and corrective steps to be taken to address the compliance issues.

In addition to the NPO Act, the deregistration of non-compliant organisations is consistent with the Financial Action Task Force’s Recommendation 8 on non-profit organisations and the risk-based approach, which highlights the vulnerability of South Africa’s NPO sector to money laundering and terrorist financing.

In November 2023, the Financial Action Task Force Plenary noted the considerable progress South Africa has made to address the technical compliance deficiencies identified in the mutual evaluation report.

With South Africa due to report back to the task force on the remaining deficiencies in its fifth-round mutual evaluation this year, the department implores all registered NPOs to ensure their operations meet the legal prescripts for compliance without further delay.

In line with its developmental mandate, the department stands ready to assist registered NPOs who are struggling with the process of complying with the requirements of the NPO Act.

To date, the department has processed over 18 000 requests through email correspondence, 3 000 telephone enquiries and assisted 4 000 clients through walk-in services.

A total of 3 450 NPOs have updated their details on the NPO register.

As the registrar and custodian of the NPO Act, the Department of Social Development has a legislative mandate to maintain a reliable database of all Non-Profit Organisations registered in terms of the Act.

We must once again emphasise that compliance is a regulatory requirement not only to ensure transparency and accountability in the NPO sector but also to ensure the protection of beneficiary communities in which the registered NPOs operate and render their services.