Register a Non Profit Organisation

Starting a Non Proft Organisation

Do you desire to impact the community and make a positive change on the society of South Africa. If you are a group of people that are eager to make a difference, then its a good idea to formalise your efforts and register your organisation.

Registration causes people to take you seriously, and understand that you are serious about making a difference and transforming lives. It enables you to open a bank account in the name of the organisation and causes people to be more happy to donate money to assist you in your pursuits.

Registration Methods of your Non Profit Organisation

In South Africa, people utilise the words NGO to mean a 'Non Governmental Organisation' and it is understood to be a Non Profit venture in the aim of social development. However there are two different types of entities at least on paper. They are effectively the same thing, but registered by different departments. They both can open a bank account, both are responsible for accurate book-keeping and both will pay tax.

NPC - Non Profit Companies - Registered with CIPC (Recommended)
NPO - Non Profit Organisations - Registered with Social Department (Not Recommended)

Although registering an NPC is easy, and is suitable for your organisation, if you are registering in the hope to gain governmental funding for your project you will need to register an NPO.

Difference in registration speed

CIPC is more organised with registration processes and is faster and more efficient. The Social Department, NPO, takes longer and is prone to more complexities.

SwiftReg is a specialist in registering NPC's and in most cases, registration takes less than a week. This is by far the easiest way to start an NGO

Payment of Tax of an Non Profit Organisation

It should be pointed out that every NGO will need to pay tax, based on profits made in the year.

After registration though it is possible to apply for PBO Status. PBO stand for "Public Benefit Organisation" and does come with certain limits on how to raise funds for your organisation. If you are raising funds through donations alone, then PBO status is possible. However if you are competing in the marketplace and selling products at a profit, (to raise funds for your organisation) then the PBO status is not possible.

SARS will watch and observe your NGO to make certain that this is not happening and you can lose your PBO status. However while you obtain this PBO status you are exempt from Tax.

An NGO can remain without PBO Status, and frequently not pay tax, as they generally use their profits for development of the community during the tax year. Subsequently they do not have profit to declare and no tax is due.

However they may want to buy land or buildings, with their profits, and as those are assets and not part of the income statement, they are not viewed as an expense and tax will become due.

The pros and cons of being Tax Exempt (PBO Status)

PROS

Donations given to you are Tax Exempt. This benefits the giver and you the receiver. The receiver gets a certificate enabling them to claim the donation on their Tax form
Your company does not need to worry about paying Tax

CONS

SARS still requires maintenance and submission of Income Statements and watches your organisation closely
You cannot conduct a business through the Organisation

Registering a PBO

To register a PBO, you first need to register an NPC. The NPC needs to contain an alteration from the standard NPC in the MOI (Memorandum of Incorporation). SwiftReg can assist you with the registration. This product is called an "NPC For Tax Exemption" and is one of the first options when you choose to register an NPC

Directors of an NGO

There must be a minimum of 3 Directors for an NGO

The Act allows for two classes of members; voting and nonvoting. Usually, the members have equal voting power, but the MOI does allow for certain members to have greater voting power.

NPC do not have to be audited unless it holds or manages other people’s (third party) assets in excess of R5m, then an audit is required (the same applies to (Pty) Ltd’s)