Non-profit organisations in South Africa can take three legal forms, and the choice determines almost everything that follows. A voluntary association is formed by a constitution. A non-profit trust is registered with the Master of the High Court. A non-profit company (NPC) is registered with the CIPC under the Companies Act.
Separately from the legal form, an organisation may register as an NPO with the Department of Social Development under the Nonprofit Organisations Act 71 of 1997. That registration is voluntary in law, but in practice funders and government departments require it.
Business Requirements at a Glance
What you need depends on the legal form and on whether you register as an NPO.
- A founding document — a constitution for a voluntary association, a trust deed for a trust, or a memorandum of incorporation for an NPC
- At least the minimum number of office bearers the form requires — a voluntary association and an NPC each require a governing body
- A clear non-profit object, with income and property applied to that object and not distributed to members
- A dissolution clause providing that remaining assets pass to another non-profit body with a similar object
- Identity documents and details of all office bearers
- A physical address for the organisation
- For NPO registration: an application to the Department of Social Development on the prescribed form
Registration and Legal Requirements
Choosing the form. A voluntary association is the simplest and cheapest to establish, formed by adopting a constitution, and suits small community organisations. A non-profit trust suits organisations holding and applying assets, and is registered with the Master of the High Court. A non-profit company is registered with the Companies and Intellectual Property Commission, has the most formal governance requirements and is generally preferred by large funders and for organisations that will grow.
The founding document must contain the right clauses. The Nonprofit Organisations Act prescribes what a constitution must include for NPO registration, and the Income Tax Act separately prescribes clauses required for tax exemption. A document that omits them has to be amended later, which is avoidable work.
Draft it once, correctly, with both sets of requirements in mind. This is the single most common thing organisations get wrong at formation.
NPO registration is separate from tax exemption and from B-BBEE recognition. They are three different processes with three different bodies, and holding one does not give you the others.
Documents and Ownership Information Required
For NPO registration with the Department of Social Development, prepare the following.
- Completed NPO registration application form
- Two original signed copies of the founding document — constitution, trust deed or memorandum of incorporation
- Certified copies of the identity documents of all office bearers
- A list of office bearers with their positions and contact details
- The organisation’s physical and postal address
- For a trust: the letters of authority from the Master of the High Court
- For an NPC: the CIPC registration certificate and memorandum of incorporation
- Minutes of the meeting adopting the founding document and electing office bearers
Tax, Licence and Compliance Requirements
Tax exemption is a separate application to SARS. An organisation is not automatically tax exempt because it is a non-profit. Approval as a Public Benefit Organisation (PBO) under section 30 of the Income Tax Act must be applied for from the SARS Tax Exemption Unit, and it requires the founding document to contain specific clauses and the organisation to carry on approved public benefit activities.
Section 18A is a further step again. Approval under section 18A allows an organisation to issue receipts entitling donors to a tax deduction, and it applies only to specified activities. Many donors will not give without an 18A receipt, so if donations are part of the funding model, apply for it.
Ongoing obligations are where NPOs most often fall down. Registered NPOs must submit annual narrative and financial reports to the Department of Social Development within the prescribed period after financial year end. Failure to do so leads to deregistration, and deregistration is discovered at the worst moment — when a funder checks.
NPCs additionally file annual returns with the CIPC. PBOs file annual income tax returns with SARS even though they are exempt. Trusts report to the Master. Each is separate.
Changes of office bearers, address or founding document must be notified to the Department of Social Development, and to the CIPC or the Master where applicable.
Process, Deadlines and Ongoing Obligations
Register in the right order: establish the legal form first, then apply for NPO registration, then apply to SARS for PBO and section 18A approval. Each stage depends on the one before it.
Build the compliance calendar on day one. Annual reports to the Department of Social Development, CIPC annual returns where applicable, SARS returns and audit or independent review arrangements all have deadlines, and an organisation that misses them loses status it took months to obtain.
- Choose the legal form deliberately — it is difficult to change later
- Draft the founding document with both NPO and tax exemption clauses included
- Register the legal form first, then apply for NPO registration
- Apply to SARS separately for PBO approval, and for section 18A if you take donations
- Diarise the annual reporting deadline to the Department of Social Development
- File CIPC annual returns where the organisation is an NPC
- Notify changes of office bearers and address promptly
- Confirm current forms, fees and deadlines with the department and SARS
Frequently Asked Questions
Is NPO registration compulsory?
It is voluntary in law, but funders, government departments and many corporates require it in practice, so most organisations register.
Does NPO registration make me tax exempt?
No. Tax exemption is a separate application to the SARS Tax Exemption Unit for approval as a Public Benefit Organisation, and it has its own requirements.
What is section 18A?
Approval allowing an organisation to issue receipts entitling donors to a tax deduction. It applies only to specified activities and is applied for separately from PBO approval.
What happens if I miss the annual reports?
Registered NPOs that fail to submit annual narrative and financial reports face deregistration, which is usually discovered when a funder checks.
Registration requirements, prescribed clauses, forms, fees and reporting deadlines are set by the Department of Social Development, the CIPC, the Master of the High Court and SARS, and are revised. Confirm current requirements with each.