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All about NPOs in South Africa

We have touched on Public Benefits Organizations not so long ago on one of our #FunFactsWednedays video, let us to continue this chat. 

What is an NPO?

We cannot assume you know, let’s get to understand what an NPO is. An NPO is a Nonprofit Organisation that plays a significant role in society, they take responsibility of the social and development needs of the country.

How to get started: 

Just like any other business/organisation, there must be intent or purpose of starting. Start here: 

1️⃣ Define your goal – before you could even register, you just at least know what your NPO will stand for. Knowing your WHY is important, it will help you navigate things more especially in cases where you need to go back to the drawing board. What exactly do you hope to achieve once you start the organization? Read more: What exactly do you hope to achieve once you start the organization?

2️⃣ Choose your board of Directors – selecting management of the NPO is probably the most fundamental step. Bring in like-minded people on board, it’s even better to get people from different industries who could come in with different perspectives during different situations. 

3️⃣ Draft your memorandum – this is important as it proves your intention to register the organization as a “not-for-profit” company – followed by information about how the organization would be governed, owned, and other important things to note therein.

Lastly, register. 

About registering your NPO

You can submit your non-profit organisation (NPO) application at your nearest provincial  social development office or a local South African Revenue Service (SARS) branch office. 

Benefits of registering is that its certificate:

  • improves your credibility and increases funding opportunities
  • it allows your organisation to open a bank account
  • helps your organisation with tax incentives.

The prerequisites of registering is that you must be one of the following:

  • non-governmental organisation (NGO)
  • community-based organisation (CBO)
  • faith-based organisation (FBO).

Do NPOs pay tax? 

However these organisations are “nonprofit”, they do not automatically qualify for tax exemption, the organisations that meet the requirements set out in the Income Tax Act, 1962 must apply for this exemption. Only IF the exemption application has been approved by SARS, the organisation will then be registered as a Public Benefit Organisation (PBO) and allocated a unique PBO reference number. 

These organisations can issue section 18A certificates – which allow for tax deduction to parties who make donations to such organisations. This becomes an attraction to donors because they get to enjoy these tax benefits therein by making donations to your organisation. 

As a member of a Public Benefit Company/Organisation, familiarise yourself with the conditions of the section 18A or contact Accase Solutions and we will gladly assist: 

✉️: info@accasesolutions.co.za

☎: 0615238833