Non-governmental organizations (NGOs) are corporations that are legally constituted by natural or legal ‘people’ (such as an incorporated company). An NGO runs independently from any form of government, even if funded by a government.
When you are registering a not-for-profit organisation, according to the standards of the Department of Social Welfare (DSW), the following are the founding documents that you need to possess.
1. A constitution of your organisation
Based on the requirements stipulated in section 12 of the NPO Act, your constitution must have the following information:
- The main and supporting objectives of the organisation.
- You must also state that the income and property of the organisation cannot be distributed to any of the office bearers or members except for some form of compensation for whatever service(s) that anyone renders.
- Powers of the organisation as well as the organisational structures and how the organisation would be governed.
- How meetings would be convened and conducted as well as the quorums that would be required for meetings to hold.
- How decisions would be made, and how financial transactions of the organisation would be conducted in terms of a banking account.
- The process that must be followed in case the constitution would be changed, the date when the financial year of the organisation would end, and in case the organisation needs to wind up or be dissolved, the process that it would take. State also that once every liability has been met after dissolving it, whatever remaining assets would be transferred to another NPO.
- You also need to declare the need for the continued existence of the organisation even when the membership or office bearers are recomposed.
- Explain that no member or person holding an office has personal rights to the organisation’s assets or property because such is a member or holding an office.
While the points listed above are essential and must be contained in your document, you could also state other information such as what qualifies someone to be a member of the organization and how the membership can be terminated. How to nominate and appoint those who would bear offices, how to invest, and how the funds of the organization would be spent, among other things, can also be contained in the constitution.
2. Deeds of trust
This is expected to carry an authorisation letter from your trustees for a trust.
3. Memorandum and articles of association
These are very important as they serve as proof of your intention to register the organisation as a not-for-profit company. Then, information about how the organisation would be governed, owned and others would be contained therein.
Do NGO pay taxes in South Africa?
The Income Tax Act defines the types of activities that an NPO can undertake before it is granted a tax-exempt status. Obtaining a Tax exemption is not automatic. An application must be made to the South African Revenue Service (SARS) who, on review, will grant the NPO a tax exemption status.