The Department of Social Development has issued 41 787 notices of non-compliance to non-profit organisations (NPOs), with a total of 6 221 NPOs deregistered for failure to honour their obligations in terms of the NPO Act.
In a statement, the department said a total of 203 279 organisations comprising non-profit organisations, voluntary associations and trusts across South Africa face the risk of deregistration.
This is due to failure to comply with the requirements to submit annual reports as per the provisions of section 18 (1) of the Non-Profit Organisations Act (Act No. 71 of 1997, as amended through the General Laws Amendment Act 22 of 2022).
“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 that uphold accountability and the rule of law,” the department said.
The majority of these non-compliant organisations are based in Gauteng at 64 221, followed by KwaZulu-Natal at 36 605, Western Cape at 20 371, Limpopo at 19 982, Eastern Cape at 19 202, Mpumalanga at 15 102, North West at 12 363, Free State at 10 661 and Northern Cape at 4 770.
These organisations provide a wide range of services to children, youth, persons with disabilities, older persons and humanitarian relief.
“While the department acknowledges the significant contribution of NPOs in providing the 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 continue 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,” it explained.
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 targeted 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.
FATF recommendation
In addition to the NPO Act, the deregistration of non-compliant organisations is consistent with the Financial Action Task Force (FATF)’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.
The FATF grey listed South Africa at its February 2023 plenary meeting held in Paris.
The FATF is the international standard-setting body that oversees global compliance with anti-money laundering rules.
It developed an Action Plan with 22 Action items linked to the eight strategic deficiencies identified in the country’s anti-money laundering and combating of financial terrorism regime.
In November 2023, the FATF 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 FATF on the remaining deficiencies in its fifth round mutual evaluation this year, the department would like to implore all registered NPOs to ensure their operations meet the legal prescripts for compliance without further delay.
Assistance
“In line with its developmental mandate, the department stands ready to assist registered NPOs that are struggling with the process to comply with the requirements of the NPO Act,” the department said.
To date, the department said it has processed over 18 000 requests through email correspondence, 3 000 telephone enquiries and assisted 4 000 clients through walk-in service.
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,” the department said.
Soweto Sunrise News
