On March 26, 2020, new regulations created numerous obligations for private actors: radio services were required to stream public announcements on COVID-19; internet providers were obliged to remove “fake news” from their platforms immediately after identifying it; and national address systems and databases were required to be made available to assist government in tracking and tracing infected or exposed individuals. On March 18, other new regulations criminalized making statements intended to deceive another person about any measure taken by the government to address COVID-19. The regulations also prohibited gatherings of more than 100 people.
In addition, on April 29, new regulations repealed a number of prior orders and regulations issued under the Disaster Management Act, but retained a ban on all public gatherings except at funerals (which are limited to 50 people), workplaces, and gatherings for the purchase of commodities. The regulations also provided for a system of contact tracing, and established a national COVID-19 Tracing Database. For more details, see the ECNL-ICNL COVID-19 Civic Freedom Tracker’s entry for South Africa.
The South African legal system reflects a combination of legal traditions. The civil legal tradition is rooted in the Dutch colonial period whilst the common law tradition emanates from the English colonial period. In addition, indigenous law remains a central part of the South African legal system. The South African constitutional dispensation has, since 1994, further resulted in the development of common law in line with the Constitution and the invalidation of statutory laws which are found to be inconsistent with the Constitution.
The legal framework does not present significant obstacles for civil society organizations (CSOs) operating in South Africa. Indeed, South Africa’s legislation is generally enabling and supportive of CSO activities. In 1997 the Nonprofit Organizations Act (NPO Act) was promulgated. The NPO Act repealed the Fundraising Act of 1978 which was used by the apartheid government to suppress the fundraising activities of some organizations.
The NPO Act describes the State’s responsibility to not-for-profit organizations as follows: “Within the limits prescribed by law, every organ of state must determine and coordinate the implementation of its policies and measures in a manner designed to promote, support and enhance the capacity of NPOs to perform their functions.” Despite this noble commitment, the challenge comes with the effective implementation of laws. The institutions responsible for the implementation of the relevant legislation are generally under-resourced. For some institutions it would be beneficial to review their effectiveness since coming into operation – or since South Africa became a democratic country.
On November 19, 2018, the South African Constitutional Court handed down a judgment in which it declared that section 12(1)(a) of the Regulation of Gatherings Act 205 of 1993 was unconstitutional because it made the failure to give notice or the giving of inadequate notice by any person who convened a gathering a criminal offence. This sub-section requires that the convener of a public gathering must give written notice to the local municipality and makes it a criminal offence to convene a gathering consisting of more than 15 people without giving the requisite notice. A convener may invoke a defence that the gathering concerned took place spontaneously. The Constitutional Court had to consider whether section 12(1)(a) of the Gatherings Act limits the right entrenched in section 17 of the Constitution, which guarantees that “[e]veryone has the right, peacefully and unarmed, to assemble, to demonstrate, to picket and to present petitions” and, if so, whether that limitation was reasonable and justifiable as required in terms of the Constitution.
The Court commented that: “This breadth and, by all accounts, legislative overreach, point to how section 12(1)(a) results in criminalisation without regard to the effect of the protest on public order. This exacerbates the severity of the limitation.” Multiple international legal bodies have condemned the categorical criminalisation of the failure to comply with notice requirements. Instead, the apparent standard required under international law is that every infringement of the right to freedom of assembly must be linked on the facts to a legitimate purpose.” The Court concluded that: “In balancing the above factors, it becomes clear that section 12(1)(a) is not ‘appropriately tailored’ to facilitate peaceful protests and prevent disruptive assemblies.”
|Organizational Forms ||Voluntary Associations||Non-Profit Trusts||Non-Profit Companies|
|Registration Body||Not applicable||Master of the High Court||Companies Commission|
|Approximate Number||144,467 ||2,512||6,688|
|Barriers to Entry||No legal barriers||No legal barriers||No legal barriers|
|Barriers to Activities||No legal barriers||No legal barriers||No legal barriers|
|Barriers to Speech and/or Advocacy||No legal barriers||No legal barriers||No legal barriers|
|Barriers to International Contact||No legal barriers||No legal barriers||No legal barriers|
|Barriers to Resources||No legal barriers||No legal barriers||No legal barriers|
|Barriers to Assembly||Seven days advanced notification requirement; restrictions on assemblies near government buildings; excessive use of police force.||Seven days advanced notification requirement; restrictions on assemblies near government buildings; excessive use of police force.||Seven days advanced notification requirement; restrictions on assemblies near government buildings; excessive use of police force.|
 This chart is according to the “2015/16 The State of NPO Registration in South Africa: A Report from the National NPO Database.” The number of voluntary associations represent 93% of the total number of organizations registered under the Nonprofit Organisations Act (trusts are 1%, and non-profit companies are 6%).
The 2018-19 Annual Report of the Department of Social Development states that, “During the reporting period, a total of 33,196 applications for NPO registration were received and processed. This brought the total number of registered NPOs since the promulgation of the NPO Act to 224,069.”
 More than 55,000 organizations were either de-registered or marked as non-compliant between December 2012 and January 2013, presumably for reasons of non-compliance. The Department of Social Development reinstated all organizations that were de-registered in February 2013 and granted a six-month grace period for NPOs to submit outstanding narrative and financial reports, as required by the NPO Act. This came to an end on July 31, 2013, but the Department has, to date, not commenced the de-registration process. Media reports indicated that the date for de-registration to commence was extended to the end of March 2014.
In addition, the National Department of Social Development issued a media statement on February 24, 2014, in which registered NPOs were called upon to submit their annual financial and narrative reports, as required under the NPO Act, to the NPO Directorate by March 31, 2014 to avoid being de-registered. The Department has, according to the media statement, “undertaken a road show around the country to assist NPOs with issues of compliance, educate NPOs on good governance, transparency and accountability matters, as well as to register new NPOs. This campaign has resulted in 3,149 NPOs submitting their annual reports.” In May 2020, it was reported in Parliament that, “There were 228,822 NPOs registered in South Africa, of which 58.44% were non-compliant with the relevant legislation.”
In July 2014, the Minister of Social Development published a short list of candidates for appointment to the Arbitration Panel, as required by the NPO Act. The Arbitration Panel is responsible for, among other things, presiding over disputes in the event that a de-registered organization contests the grounds for its de-registration. This appointment process was reportedly finalized towards the end of 2015, but no formal announcement has been reflected on the website of the Department. In October 2020 there was no Arbitration Panel in place.
|Population||55,910,000 (Statistics South Africa 2016 est.)|
|Capital||Pretoria (executive), Cape Town (legislative)|
|Type of Government||Republic|
|Life Expectancy at Birth||Male: 48.7|
Female: 51.3 (Census 2011)
|Literacy Rate||Male: 87%|
|Religious Groups||Zion Christian: 11.1%; Pentecostal/Charismatic: 8.2%; Catholic: 7.1%; Methodist: 6.8%; Dutch Reformed: 6.7%; Anglican: 3.8%; Muslim: 1.5%; other Christian: 36%; other: 2.3%; unspecified: 1.4%; none: 15.1% (2001 census)|
|Ethnic Groups||Black African: 79%; white: 9.6%; mixed race ancestry: 8.9%; Indian/Asian: 2.5% (2001 census)|
|GDP per capita|
Source: The World Factbook. Washington, DC: Central Intelligence Agency.
|Ranking Body||Rank||Ranking Scale|
(best – worst possible)
|UN Human Development Index||113 (2018)||1 – 188|
|World Bank Rule of Law Index||52 (2018)||100 – 0|
|World Bank Voice & Accountability Index||69 (2018)||100 – 0|
|Transparency International||70 (2019)||1 – 180|
|Freedom House: Freedom in the World||Status: Free|
Political Rights Score: 33
Civil Liberties Score: 46 (2020)
|Free/Partly Free/Not Free|
40 – 1
60 – 1
|Foreign Policy: Fragile States Index||85 (2020)||178 – 1|
International and Regional Human Rights Agreements
|Key International Agreements||Ratification*||Year|
|International Covenant on Civil and Political Rights (ICCPR)||Yes||1998|
|Optional Protocol to ICCPR (ICCPR-OP1)||Yes||2002|
|International Covenant on Economic, Social, and Cultural Rights (ICESCR)||Yes||2015|
|Optional Protocol to ICESCR (Op-ICESCR)||No||—|
|International Convention on the Elimination of All Forms of Racial Discrimination (ICERD)||Yes||1998|
|Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW)||Yes||1995|
|Optional Protocol to the Convention on the Elimination of Discrimination Against Women||Yes||2005|
|Convention on the Rights of the Child (CRC)||Yes||1995|
|International Convention on the Protection of the Rights of All Migrant Workers and Members of their Families (ICRMW)||No||—|
|Convention on the Rights of Persons with Disabilities (CRPD)||Yes||2007|
|African Charter on Human and Peoples’ Rights||Yes||1996|
|African Charter on the Rights and Welfare of the Child||Yes||2000|
|Treaty Establishing the African Economic Community||Yes||2001|
|Protocol to the African Charter on Human and Peoples’ Rights on the Rights of Women in Africa||Yes||2004|
|Protocol to the African Charter on Human and Peoples’ Rights on the Establishment of an African Court on Human and Peoples’ Rights||Yes||2002|
* Category includes ratification, accession, or succession to the treaty.
The Constitution of the Republic of South Africa, Act 108 of 1996 (as amended), is the supreme law of South Africa. The current Constitution was adopted by the Constitutional Assembly on 11 October 1996 and came into effect on 4 February 1997.
Relevant constitutional provisions include:
Clause 16 – Freedom of Expression:
(1) Everyone has the right to freedom of expression, which includes:
- freedom of the press and other media;
- freedom to receive or impart information or ideas;
- freedom of artistic creativity; and
- academic freedom and freedom of scientific research.
(2) The right in subsection (1) does not extend to
- propaganda for war;
- incitement of imminent violence; or
- advocacy of hatred that is based on race, ethnicity, gender or religion, and that constitutes incitement to cause harm.
Clause 18 – Freedom of Association: Everyone has the right to freedom of association.
Clause 36 – Limitations Clause:
(1) The rights in the Bill of Rights may be limited only in terms of law of general application to the extent that the limitation is reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom, taking into account all relevant factors, including-
- the nature of the right;
- the importance of the purpose of the limitation;
- the nature and extent of the limitation;
- the relation between the limitation and its purpose; and
- less restrictive means to achieve the purpose.
(2) Except as provided in subsection (1) or in any other provision of the Constitution, no law may limit any right entrenched in the Bill of Rights.
National Laws and Regulations Affecting Sector
Relevant national-level laws and regulations affecting civil society include:
- Constitution of the Republic of South Africa, Act 108 of 1996 (as amended)
- Companies Act 71 of 2008
- Companies Amendment Act of 2011
- Non-Profit Organisations Act 71 of 1997 (as amended) (“NPO Act”)
- Trust Property Control Act 57 of 1988 (“TPCA”)
- Income Tax Act 58 of 1962 (as amended) (“ITA”)
- Value Added Tax Act 89 of 1991 (“VATA”)
Pending NGO Legislative / Regulatory Initiatives
1. The Davis Tax Committee Report on Public Benefit Organisations and the Tax System
In April 2018, the Davis Tax Committee (DTC) published its Report on Public Benefit Organisations and the Tax System. The report contains a number of recommendations pertaining to public benefit organisations for consideration by the Minister of Finance. This could potentially lead to amendments to the Income Tax Act because. If so, any amendments will follow standard route of legislative amendments.
Potential amendments that may result from the DTC report would expand the ambit of tax benefits in the form of deductible contributions being offered to public benefit organisations and also remedy a number of anomalies. For example, youth leadership and development activities are not currently eligible for donor deductible donations and the DTC report recommends that this activity and others be considered for such benefit. The DTC comments that: “In the circumstances, the DTC recommends that a process be initiated in which there is an opportunity for public participation including an invitation to concerned non-profit organisations to raise issues and problems with respect to the Ninth Schedule to the Act [which contains the list of public benefit activities].” The DTC report further recommends that tax benefits offered in terms of the Income Tax Act should be made more accessible to smaller community-based entities.
2. Gauteng Social Development Guidelines for the Selection of Board Members for NPOs
The Gauteng Department of Social Development (Gauteng is one of 9 provinces in South Africa) has issued Guidelines on the selection of Board Members for NPOs. With reference to the recruitment and appointment of board members (for organisations presumably getting funding from the Department), the Guidelines provide amongst others: The Head of the Department of Social Development or his/her delegate shall establish a Screening Committee on an ad- hoc basis for a specific task; The Screening Committee shall consist of representatives of the Department of Social Development, local municipality officials, and representatives from other organisations or relevant stakeholders; Call for nominations of board members should be made through local newspapers, pamphlets, stakeholders’ meetings, community imbizos, etc.; Announcements should be made through local churches, and/or any other means of communication in a specific community; The strategic plan of the Department should be shared with potential board members by Department of Social Development officials; The Screening Committee should establish whether the potential board member is suited or skilled for board membership and should also establish whether there is any conflict of interest with the activities of the NPO. The names of nominees who accept and who qualify shall be put on ballot papers by the Screening Committee.
3. The South African Nonprofit Organisations Summit
The National Department of Social Development hosted the South African Nonprofit Organisation Summit (the Summit) during August 15-17, 2012 in Johannesburg, South Africa. The Summit was, according to the Department, aimed at creating a platform for effective partnerships between the government and nonprofit sector as mandated by the Nonprofit Organisations Act 1997, Act 71 of 1997, as amended. The Summit was also attended by the provincial ministers for social development, the national Minister of Social Development and, on the second day, the President of South Africa.
The Summit endeavored to identify opportunities for supporting the nonprofit sector to ensure sustainability; identify and explore mechanisms to improve an enabling environment for nonprofit organisations; and to provide clear directives on the review of the legal framework on the nonprofit sector. One of the parallel commissions at the Summit focused on exploring options for the review of the legal framework on the nonprofit sector. Some of the issues emanating from the discussions at the commission, included:
- Decentralizing the registration processes in terms of the Nonprofit Organisations Act (NPO Act) which is currently taking place at one central location,
- Making application and reporting forms prescribed in terms of the NPO Act less complex,
- Making the application for registration in terms of the NPO Act available in other official languages,
- Improving document management at the Department to avoid missing documentation,
- Increasing communication amongst key institutions dealing with NPOs,
- Shortening the registration process, and
- Establishing a self-regulatory NPO Council.
The proposed establishment of a self-regulatory NPO Council in South Africa sparked some controversy during discussions at the commission as some delegates felt that a self-regulatory council, similar to the Charities Commission in the United Kingdom, may not be a suitable option for South Africa.
The Department also circulated a document at the Summit entitled: Policy Framework on Nonprofit Organisations Law (the Policy Document). The Policy Document captures the foundational principles of government’s intended review of the legislative framework affecting the non-profit sector. The Policy Document further states that: “The objective of the review is to ensure that the new regulatory framework is appropriate to the legal and socio-economy contexts of South Africa as a constitutional democracy and an open society.”
The Policy Document proposes the establishment of a new entity to be called The South African Nonprofit Organisations Regulatory Authority that will deal with the registration of nonprofit organisations, investigate complaints and enforce compliance, raise awareness and education and provide public access to information.
The Policy Document further states that: “It will be therefore be imperative for voluntary associations, nonprofit companies and nonprofit trusts to be subjected to the same rules regarding formation, governance and reporting requirements in order to circumvent any legal loopholes that will undermine the principles of public beneficiation and disclosure. This will further create greater equality within the nonprofit sector and will also promote public confidence in the sector.” (page 6)
The above statement is seemingly in contradiction with a later statement in the Policy Document which provides that: “There will be therefore a need for the regulatory framework to differentiate between the different categories of NPOs and to align standards and the regulation regiment accordingly.”(page 12)
With reference to international organisations operating in South Africa, the Policy Document provides that: “The regulation of foreign organisations that have established a presence in South Africa requires special consideration. A simple process that allows foreign organisations to be registered and maintained in South Africa must be developed, while providing for recourse in cases of misconduct and winding up, particularly with respect to liabilities for debts, the duties and responsibilities of the foreign office bearers and inter group transactions. Foreign nonprofit organisations must equally be subjected to the same requirements and obligations as that of any registered nonprofit organisation. However, registration for foreign organisations must be compulsory considering the risk of money laundering and financing of terrorist activities.” (page 18) In March 2014, the Department of Social Development published an amended version of the Draft Policy Framework. This amended document has removed some of the draconian proposals relating to enforcement and investigation of NPOs by a proposed National Directorate for NPOs. Towards the end of 2014 the Department of Social Development published a request for proposals to amend the Nonprofit Organisations Act and to draft an amendment Bill. No further developments have taken place since then. The Department of Social Development confirmed in June 2015 that a service provider has been appointed to do an evaluation of the NPO regulatory framework in South Africa, but the process was still in the early stages of development at the time of the confirmation.
Several articles have recently been written in the media on imminent legislation that will negatively impact South African NPOs. However, no draft legislation was published as of the end of August 2016.The public and NPOs will have an opportunity to comment on any proposed amendments to such legislation once it is published.
In its report to the Parliament’s Portfolio Committee on Social Development dated May 4, 2018, the Department of Social Development stated that it, “has set a target to facilitate the implementation of the Department of Social Development Sector Funding Policy and the Department of Social Development-NPO Partnership Model as well as submitting the NPO [Amendment] Bill to Cabinet. These are in line with the department’s achievement of the NDP targets (See pages 16 and 29).”
4. The Protection of State Information Bill
The Protection of State Information Bill [B6-2010], which is aimed at the protection of certain information from destruction, loss or unlawful disclosure, was, amidst significant public controversy, passed by the National Council of Provinces on November 29, 2012 and South Africa’s highest parliamentary body, the National Assembly, in April 2013. It was referred to President Zuma for his assent. The President in September 2013 referred the Bill back to the National Assembly to review two specific sections of the Bill. The National Assembly has reportedly referred the Bill to an ad hoc committee which was established during 2012 to attend to a revised version of the Bill. The Bill, in essence, defines the kind of state information that requires protection against alteration, destruction, loss or disclosure. It further provides for a procedure of classifying and declassifying such information and punishment in the event of non-compliance. The ‘B’ version of the Bill, which has been called The Protection of State Information Bill [B 6B-2010], was, in the wake of ongoing opposition and controversy, on November 22, 2011 adopted by members of Parliament. The Bill was referred to the National Council of Provinces (the Council) which has established an ad hoc committee to report to the Council during 2012.
The constitutionality of the Bill has been subject to significant public scrutiny in South Africa. One of the key concerns relates to ‘what’ information can be considered to be in the national interest and consequently classified as confidential or secret. Another key concern relates to ‘who’ can determine what information is in the national interest and consequently classify such information as confidential or secret. In terms of the Bill, any head of an organ of state, as defined, may classify or reclassify information using the classification levels set out in the Bill. The power to declare information as confidential or secret is accordingly given to broad range of state officials.
The Bill, in its current format, can be interpreted to allow for a veil of secrecy to be cast over certain information and may consequently limit public accountability and scrutiny of matters in the public interest. A number of eminent institutions and academics have criticized the initial version of the Bill. The General Council of the Bar (GCB) during August 2010 reported to Parliament that the initial version of the Bill does not pass constitutional muster. The GCB was of the view that some provisions were contrary to the foundational values of the South African Constitution. The GCB also pointed out that the current Promotion of Access to Information Act of 2000, which also applies to state, has been enacted in terms of the Constitution and allows for state information to be legitimately withheld from the public domain. The ruling party has made some concessions which are reflected in the latest version of the Bill, but even this version of the Bill has remained controversial. The concessions revolved around who would be authorized to classify information, provision for an independent appeal process and the removal of minimum sentencing provisions. The latest version of the further Bill states that interpretation measures taken must have regard to the freedom of expression, the right of access to information and the other rights and freedoms enshrined in the Bill of Rights, and be consistent with Article 19 of the International Covenant on Civil and Political Rights and respect South Africa’s international obligations. In June 2020, the President of South Africa reportedly sent the ‘Secrecy Bill’ back to Parliament for consideration due to concerns about its constitutionality.
5. Cybercrimes and Cybersecurity Bill, 2016
The government published The Cybercrimes and Cybersecurity Bill (“Cybercrimes Bill”) for public comment during 2015. The Cybercrimes Bill is aimed at creating offences and imposing penalties which have a bearing on cybercrime and regulating the power to investigate cybercrimes. The Bill has generally been welcomed as it is geared towards comprehensively combating cybercrimes and promoting cybersecurity.
Nonetheless, several submissions were made on the Cybercrimes Bill and some concerns have been expressed on aspects of the Cybercrimes Bill. The Freedom of Expression Institute has raised concerns regarding the Cybercrimes Bill’s potential to infringe on freedom of expression, access to information and the right to privacy. The Institute has commented that: “If effected the Bill would affect groups such as Whistleblowers, investigative Journalists and other human rights activists, who are in constant interaction or possession of information. It is our belief that this Bill would have a chilling effect on access to information and freedom of expression.”
The Law Society of South Africa has commented that: “A disturbing element of the Bill is the apparent absence of the appreciation, which is a feature of all credible cybersecurity frameworks, of establishing a balance between civil liberties and the powers of national security and law enforcement agencies. There is no apparent acknowledgement of the constitutional right of privacy, which has been globally recognised as critically important in legislative frameworks that are being developed to address 21st century issues.” The Department of Justice and Constitutional Development has embarked upon a process of public consultation and is expected to introduce an amended version of the Cybercrimes Bill.
In 2019, the Department of Justice published an amended version called the Cybercrimes Bill for public comment. The aim of the Bill was “To create offences which have a bearing on cybercrime; to criminalise the distribution of data messages which are harmful and to provide for interim protection orders; to further regulate jurisdiction in respect of cybercrimes; to further regulate the powers to investigate cybercrimes; to further regulate aspects relating to mutual assistance in respect of the investigation of cybercrime; to provide for the establishment of a designated Point of Contact; to further provide for the proof of certain facts by affidavit; to impose obligations to report cybercrimes; to provide for capacity building; to provide that the Executive may enter into agreements with foreign States to promote measures aimed at the detection, prevention, mitigation and investigation of cybercrimes; to delete and amend provisions of certain laws; and to provide for matters connected therewith.”
6. Prevention and Combating of Hate Crimes and Hate Speech Bill, 2016
The Department of Justice and Constitutional Development published the Prevention and Combating of Hate Crimes and Hate Speech Bill (“the Hate Crimes Bill”) in November 2016. Although the Hate Crimes Bill has reportedly been in the making for about ten years, a spate of racist remarks on social media has resulted in its swift revival. The Hate Crimes Bill aims to “provide for the offence of hate crimes and the offence of hate speech and the prosecution of persons who commit those crimes; provide for appropriate sentences that may be imposed on persons who commit hate crime and hate speech offences; and provide for the prevention of hate crimes and hate speech.” The Hate Crimes Bill was open for public comment until January 31, 2017. Several concerns have been expressed on the scope and ambit of the Hate Crimes Bill, particularly by comedians and religious groups. The Department has prepared a response to such concerns. On May 10, 2018, the Minister of Justice and Correctional Services reported to the Parliament’s Portfolio Committee on Justice that the Bill was introduced into Parliament in April 2018.
7. Investigative Study of the Commercialization of Religion in South Africa
The Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities published an interim report for public comment after having conducted a Pilot Study in one of the provinces in South Africa. The study focused on the concept of ‘commercialization of religion’ in South Africa, but failed to offer a concrete definition for this phrase. It concludes that the problem is ‘widespread and on the increase’. The interim report recommended, among others, that: “It should be mandatory for all religious institutions to register with the (the Commission) and sign the document at registration.” The 2017 final report was published during August 2017.
Please help keep us informed; if you are aware of pending initiatives, write to ICNL at firstname.lastname@example.org.
There are three kinds of civil society organisations in South Africa, namely:
- Voluntary associations that are established in terms of common law.
- Non-profit trusts that are established in terms of the Trust Property Control Act, and
- Non-profit companies that are established in terms of the Companies Act.
Any of these CSOs can register in terms of the Nonprofit Organisations Act of 1997, provided that those CSOs comply with a number of requirements listed in that Act. In essence, the founding document of such CSOs must contain prescribed information (including the name, objectives, non-profit distribution constraint, governance structures, etc) and narrative and financial reports must be submitted to the Directorate for Nonprofit Organisations on an annual basis.
Public Benefit Status
South Africa uses a tiered regulatory approach toward public benefit status.
As a first step, the Nonprofit Organisations Act defines a nonprofit organisation as a trust, company or other association of persons established for a public purpose and the income and property of which are not distributable to its members or office-bearers except as reasonable compensation for services rendered. Applicants must submit documentation to the Directorate of Nonprofit Organisations for registration.
Second, a nonprofit organization may apply for the status of “public benefit organization.” Among other requirements, the organization’s sole purpose must be to undertake one or more public benefit activities, carried out in a non-profit manner and with an altruistic or philanthropic intent. Public benefit organizations are restricted from using their resources to directly or indirectly support, advance, or oppose any political party, but they are not restricted from lobbying. They are entitled to a broad range of fiscal benefits, including a partial income tax exemption and, subject to certain conditions, an exemption on transfer duty on immovable property.
Third, Public benefit organizations may apply for the right to receive tax-deductible donations.
Barriers to Entry
The legal framework for each of the available organizational forms is generally enabling, and does not include barriers to formation, establishment or registration. Problems worth noting here are in regard to the establishment and registration of nonprofit organizations. Incorporating a non-profit company in South Africa is subject to delays, despite the new Companies Act of 2008. Furthermore, the Nonprofit Organisations Act sets a fixed time period of two months within which registration applications must be decided upon. The NPO Directorate in 2013 introduced an online registration facility which has significantly reduced the long processing times experienced prior to the introduction of such facility. However, organizations still have to wait weeks for the actual registration certificate to arrive via mail after the organisation has been registered online.
Barriers to Operational Activity
There are no serious legal barriers affecting the operational activity of CSOs in South Africa.
It is worth noting, however, that non-profit trusts, as accountable institutions under the Financial Intelligence Centre Act of 2001 (FICA), are subject to registration with FICA. FICA has the object of combating money-laundering activities in South Africa. Trusts, including not-for-profit trusts, are regarded as accountable institutions in terms of FICA and must accordingly comply with its provisions.
The Financial Intelligence Centre Amendment (FICA) Act, 2008, which came into operation on December 1, 2010 introduced some amendments to FICA which are of critical importance to non-profit trusts. These amendments were not specifically directed at not-for-profit trusts, but include them under the definition of ‘accountable institution’. The amended provisions require accountable institutions to register with the Financial Intelligence Centre (Centre) and notify the Centre of any changes to their registration details. The Centre is empowered to issue directives to ensure monitoring and compliance with FICA. Inspectors, appointed in terms of the Act, are allowed to enter and inspect any premises of an accountable institution and may, in certain instances, be able to direct persons to appear for questioning, produce documents and furnish information. Inspectors will also be able to open any strong-room or safe and use any computers system on the premises to access data. Accountable institutions failing to register with or provide information to the Centre are guilty of an offence and may, upon conviction, be liable to a fine of up to R100m ($13.3m) or imprisonment for a maximum of 15 years. Non-profit trusts, as accountable institutions, were required to register with the Centre at the end of February 2011. On March 1, 2011 the Centre issued a statement recommending “that institutions that have not as yet registered do so as soon as possible. Late registrations closer to March 1, 2011 would be viewed more favorably, as sanctions could be issued for late registration in due course. The [Centre] reserves the right to issue sanctions or penalties for late registration under the Financial Intelligence Centre Act No 38 of 2001 (the FIC Act).”
It is also worth noting that opening a bank account has become a challenge for some not-for-profit organisations operating in South Africa. Community-based organisations that are established as voluntary associations will have to wait for registration in terms of the Nonprofit Organisations Act (up to six months) to open a bank account. Organisations having board members that are based outside of South Africa may also find it a challenge to open bank account in South Africa.
In 2019, the Financial Intelligence Centre published a Public Compliance Communication dealing with Guidance on combating the financing of terrorism and anti-money laundering measures relating to not-for-profit organisations.
Barriers to Speech / Advocacy
CSOs in South Africa are not prohibited from criticizing the government or advocating for politically unpopular causes. There are no legal restrictions or governmental harassment of such activities. CSOs that are involved with causes that are unpopular from a government’s perspective may ordinarily not attract significant funding support from government. But CSOs have been involved with the processes of drafting of laws and lobbying for legislation and government policies. CSOs that have tax exemption cannot use their resources to support, oppose or advance the activities of any political party.
Barriers to International Contact
There are no legal barriers impeding international contact or communication.
Barriers to Resources
Generally, the law does not impose any constraints on the ability of CSOs to seek and secure funding. There are no special rules for CSOs to receive foreign funding. CSOs are permitted to carry out commercial activities, either directly or through a for-profit subsidiary. CSOs can compete for government funds based on objective criteria. Government departments and development funding agencies have, however, been criticized by CSOs for having negatively impacted on the ability of CSOs to secure funding.
It is worth noting, however, the Consumer Protection Act of 2008 came into operation on April 1, 2011 and regulates, amongst other, direct marketing. In terms of this Act direct marketing includes approaching a person, either in person or by mail or electronic communication, for the direct or indirect purpose of, amongst other, requesting a person to make a donation of any kind for any reason. The National Consumer Commission (the Commission) has the discretion, in terms of this Act, to establish a registry in which any person can register a pre-emptive block (either generally or for specific purposes) against direct marketing communication. Regulations have been published by the Minister of Trade and Industry which also prescribe mechanisms to block direct marketing communication.
There are a few important implications for non-profits soliciting donations in South Africa once the relevant provisions of the Act and the regulations are implemented. Firstly, the Act will effectively allow individuals and legal persons to block non-profit organisations from soliciting donations by registering pre-emptive blocks. The regulations allow for the establishment of a registration facility. Secondly, all direct marketers, including non-profits soliciting donations from the public, will have to assume that a comprehensive pre-emptive block has been registered unless confirmed otherwise by the Commission. Thirdly, all direct marketers must register with the Commission (and annually confirm their details) and apply in writing to the Commission to find out if a pre-emptive block has been registered. Fourthly, non-profits applying to find out about pre-emptive blocks, will in all probability have to wait some time as the Commission will be required to put in place a screening and validation process in respect those registering as direct marketers. Pending registration, the direct marketer will not be able to obtain information on pre-emptive blocks.
The final provisions of the Financial Intelligence Centre Amendment (FICA) Act entered into force on October 2, 2017. Under this Act not-for-profit organisations will essentially have to ensure that their board members are verified with, among others, banking institutions to maintain their bank accounts. Some banking institutions have already commenced the process of requiring additional information in relation to board members. Organisations that do not comply with the new requirements may not be able to access their bank accounts. The FICA Act initially introduced a rules-based approach to ensure verification, i.e. compliance with prescriptive rules by accountable institutions aimed at combating money laundering. The introduction of a risk-based approach means that the accountable institutions must now adopt risk management programmes aimed at ensuring suitable mechanisms are in place to combat money laundering risk. This will have to be contextualised within the business environment of the accountable institutions. According to the Financial Intelligence Centre money laundering and terrorist risk refers to “the risk that the products and services of an accountable institution may be abused by