Maverick Citizen

NONPROFIT LEGISLATION

General Laws Amendment Act represents a ‘battle won’ for NPO sector, but key concerns remain

General Laws Amendment Act represents a ‘battle won’ for NPO sector, but key concerns remain
A South African mother brings her child to receive a breakfast nutrition pack from the 9 Miles Project feeding scheme in the 7de Laan informal settlement in Cape Town, South Africa, 21 May 2020. (Photo: EPA-EFE/NIC BOTHMA)

The nonprofit sector’s submissions on the General Laws Amendment Act saw its compulsory registration requirement for nonprofit organisations in South Africa refined — an important win for civil society. However, there are still concerns about the road ahead for the enforcement of the new legislation.

The public consultation process behind the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act brought together representatives of civil society committed to challenging the more problematic aspects of the proposed legislation, as it related to the nonprofit sector.

The final act, which was signed into law on 22 December 2022, saw certain concerns of civil society organisations addressed, while others went unresolved. It has enacted amendments across five South African acts, including the Nonprofit Organisations Act of 1997, with the intention of addressing deficiencies identified in the Financial Action Task Force’s  Mutual Evaluation Report of South Africa from October 2021.

When the bill was originally opened for public comments on 27 September 2022, a key concern among civil society organisations was the proposed universal mandatory registration of all nonprofits operating in South Africa with the Department of Social Development’s NPO Directorate. The requirement was seen by many as impractical and unconstitutional.

Read more in Daily Maverick: “Period for public comments on greylisting bill extended after NPO sector raises red flags

“[This] has been addressed in that the mandatory registration is now confined to organisations based in South Africa… which are carrying out projects in or transmitting funds to other countries,” said Nicole Copley, founder of ngoLAW, which provides legal advice and assistance to nonprofits.

“There are still many who are not happy with the reduced mandatory registration ambit… but, on the whole, civil society feels that a major battle has been won here.”

Read in Daily Maverick: Greylisting bill’s registration requirements for nonprofits to be refined

William Bird, director of Media Monitoring Africa, questioned the act’s compulsory registration requirement for NPOs that provide humanitarian, charitable, religious, educational or cultural services outside South Africa, without providing charitable donations.

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“It means any [South African] nonprofit entity that works, for example, in the [African] region is then going to be forced to register,” he said. “You’re back at the same point that we were, which is this compulsory registration of these entities with no reasonable justification for that limitation.”

Bird further highlighted the possibility of registration being unjustly withheld or called into question for civil society organisations that clash with the government.

“[The act] is just simply not clear enough,” said Dale McKinley, a research education officer with the International Labour Research and Information Group, on the conditions around compulsory registration.

“When things are not clear in legislation, they cause problems, because then the interpretations and enforceability are left up to selective and subjective interpretations of legislation.”

Copley considered it unlikely that the compulsory registration requirement would be abused, as the act only allows registration to be refused for noncompliance with the minimum governance requirements for NPOs or a failure to provide organisational details as required.

Maverick Citizen reached out to the Treasury about civil society concerns related to the General Laws Amendment Act, but had not received a response at the time of publishing.

NPO Directorate

During the public consultation process for the General Laws Amendment Act, civil society organisations put forward the concern that the NPO Directorate in its current form — underfunded, unempowered and within the Department of Social Development — was not suited to handling compulsory registration.

However, “given the time constraints and how late in the day the wider nonprofit sector was consulted, there did seem to be no other place or body to accommodate the compulsory registration”, according to Copley. 

“We were asked to make very specific recommendations about human capacity, skills, training and systems [for the NPO Directorate], and we did so,” she said.

“The most important issue to be addressed is the status of the directorate. At the moment, the head of the directorate has no power to hire or fire its own staff, and it cannot manage its own budget… it functions as an internal sub-department of a ministry [DSD] which is focused on social welfare and which is dysfunctional.”

McKinley said that building capacity in the NPO Directorate to manage the registration and compliance of thousands of NPOs could take many years.

“To say that you can simply fix [registration problems] by providing [the directorate] with more resources, I don’t think is going to solve even half the problems, because it isn’t just a resource problem — it’s an understanding of how civil society and NPOs have changed over the last ‘x’ number of years,” said Bird.

NPO Amendment Bill

The stop-start public consultation process behind another piece of legislation affecting the nonprofit sector, the NPO Amendment Bill, has been ongoing since 2021. The bill was first opened for public comments between 5 and 30 October 2021. An extension on the period for comments was later provided, ending on 10 June 2022.

However, it is not yet clear how the NPO Amendment Bill will change to align with the General Laws Amendment Act.

“We have been advised that the reissued NPO Amendment Bill, which was the same as the one sent out in October 2021, had to be issued for comment in its current state because of a technical matter,” said Copley.

“All submissions made on the NPO Bill in the 2021 and 2022 [public comments] rounds have been taken into consideration and an updated NPO Amendment Bill which responds to those past submissions will be developed and sent through the state law advisers and then for its [Socioeconomic Impact Assessment System] certificate. 

“It is hoped that the updated amended bill will be released for a fresh round of comments by the end of March 2023.”

Maverick Citizen asked the Department of Social Development about the concerns of civil society and the road ahead for the NPO Amendment Bill, but had not received a response at the time of publishing. DM/MC

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