The International Journal
of Not-for-Profit Law

Volume 1, Issue 3, March 1999

A quarterly publication of the International Center for Not-for-Profit Law

Table of Contents

Letter from the Editor


Creative Uses of Program Related Investments
Milt Cerney

Redes y Redes de Redes
Miguel Angel Itriago Machado and Antonio L. Itriago Machado

The Katz Report - Finally a Reality

Recent Experiences with Re-Registering Foundations in the Czech Republic
Lenka Deverová and Petr Pajas

Canadian Developments
Arthur Drache

Creating an Enabling Environment for Private Philanthropy: the Role of Charity Law in Northern Ireland
Kerry O'Halloran

Establishing New Interactive Forms of Collaboration Between Non-Profit Organizations and Enterprises.- Competitive vs. Collaborative Relationships
Maria Beatriz Parodi Luna

Reflexionando sobre Consolidación de Organizaciones Cúpula de la Sociedad Civil en Venezuela
Charo Méndez


Studies of – and prospects for the revision of the tax laws governing non profit organizations 
By Fondazione Italiano per il Voluntario

Protecting Human Rights Defenders - Analysis of the newly adopted Declaration on Human Rights Defenders
By the Lawyers Committee for Human Rights

Las Asociaciones Civiles en el Derecho Venezolano (Qué son y cómo funcionan)
By Miguel Angel Itriago and Antonio L. Itriago
Reviewed by Caroline L. Newman

Philanthropy and Law in Asia
Edited by Thomas Silk

Case Notes

CIT v Sri Gujarathi Mandal | CIT v Nagi Reddi Charity

Association Eglise de Scientologie
| Albert & others v Association club du chien-guide d'aveugles d'Ile de France

United Kingdom:
Varsani v Jesan | Singh v Bhasin | The Zoological Society of London v Customs & Excise / Dean & Canons of Windsor v Customs & Excise | National Trust v Hoare

United States:
United Cancer Council v Commissioner | In Re Bishop Estate

Country Reports

Asia Pacific:
Regional | Australia | China | New Zealand | Papua New Guinea | the Philippines | Singapore | Vietnam

Central and Eastern Europe:
Albania | Bulgaria | Croatia | Czech Republic | Hungary | Latvia | Lithuania | Macedonia | Romania | Slovakia

Latin America and the Caribbean:
Brazil | Columbia | Falkland Islands/ Malvinas | Peru | Venezuela

Middle East and North Africa:
Regional | Egypt | Kuwait | Morocco

Newly Independent States:
Armenia | Azerbaijan | Belarus | Georgia | Kazakhstan | Kyrgyzstan | Moldova | Russia | Tajikistan | Turkmenistan | Ukraine | Uzbekistan

North America:
Canada | the United States

Sub-Saharan Africa:
Cameroon | Ethiopia | Ghana | South Africa

Western Europe:
Regional | Belgium | France | Germany | Republic of Ireland | Italy | Malta | Sweden | Switzerland | the United Kingdom

Self-Regulation Initiatives

Code of Conduct for NGOs In Ethiopia- A Review Article
Eddie Adiin Yaansah

International Grantmaking

What’s Behind the Foreign Public Charity Equivalence Affidavit?
Betsy Buchalter Adler and Ingrid Mittermaier

International Developments

International Fiscal Association Congress 1999

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Editorial Board

Subscription Information

Previous Issues

ICNL Homepage

The Katz Report - Finally a Reality

The South African National NGO Coalition (Sangoco)

While Sangoco has welcomed the Katz Commission's recent recommendations (501 KB) on changes to the tax structure, the Coalition has cautioned that they do not go far enough to meet the sector's needs.

Under the current legislation only a very narrow band of organisations qualify for any form of exemptions or deductions. Similarly, donors are only eligible to claim deductions when funding those with Sections 18A status, namely tertiary educational institutions. Research has shown that there is a high correlation's between tax reform and increased levels of corporate and private donations given to the NGO Sector.

The long-awaited Katz Commission Report is taking the first major steps to correct this imbalance. By far the Report's most far-reaching recommendation is to widen the criteria of eligible public benefit organisations. Below is a list of types of NPOs which, provided they fulfil certain criteria, will be eligible for a range of tax exemptions. The list is fully comprehensive.

One criterion will be registration under the NPO Act and many of the other clauses call for standards of accountability and transparency supporting the mandate of the Act itself. There are, however, restrictions which Sangoco still considers too severe or inappropriate for many organisations.

Trading Income

Sangoco's submission called for full tax exemption on both 'related' and 'unrelated' trading income. Related income refers to activities that fall directly within the mandate of the organisation i.e. fees for services or membership or interest made on income. Tax-free income could make a considerable contribution towards an organisation's attempt to become self-sustainable both in terms of fundraising and charging for services. The report proposes that only 'one-half of gross receipts (including donations) will be free of tax. The balance will be charged at the normal rate. Sangoco will continue to call for complete exemption.

One of the most important aspects for this campaign is to encourage increased donations from donors and the local corporate sector. In a recent survey on philanthropic giving, undertaken by Georgina Jaffee, donors revealed that 'tax deductions are a major incentive, lowering the price of giving and therefore encouraging a higher level of donations.' Despite this, and the obvious need to provide further incentives to companies currently not contributing to development, the report has stuck to a 5% deduction on taxable income across the board. This figure remains very low especially when compared to many other countries. For example, in the US it is as high as 50 per cent. Sangoco will continue to urge that both company and individual giving levels be increased to 10%.

Much of the nervousness to raise the levels stems from deep-rooted concerns as to the loss of money to the fiscus. Although many international examples have shown that any loss becomes insignificant when compared to the gains made as increased funds flow towards social development, the Commission remains unconvinced. The report calls for an 'efficient computer system to be introduced to calculate the cost of such deductions.’ Sangoco supports this strongly, anticipating that evidence of the limited loss of revenue to the State will encourage the Department of Finance to re-assess its position.

The far-reaching effects that these changes, if approved, could have on the state of NGOs in this country cannot be stressed enough. It will impact upon every single organisation and their ability to remain financially sustainable. Sangoco urges all organisations to support the call for tax reform and to work with us to ensure that by the next budget speech the tax environment will more favourable and supportive of the important work that NPOs do.

In the next issue of NGO matters there will be full details of how you can join the campaign for Tax reform. Sangoco is currently working on a full response to the report.

If you would like to obtain a copy of the report please contact Laura Maxwell-Stuart at the Sangoco offices, E-mail or visit

The South African National NGO Coalition (SANGOCO) is a rapidly growing umbrella body of South African NGOs. The Coalition was formed in August 1995 to co-ordinate NGO input into the Reconstruction and Development Programme. It consists of provincial and sectoral affiliates, working in a wide range of development fields including land, health, urban and rural development.


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ISSN: 1556-5157