Government deregisters thousands of non-profit organisations without warning

Mary-Anne Gontsana
News
The NPO Directorate, which is part of the Department of Social Development, has deregistered about 50 000 non-profit organsations (NPOs) who it has deemed as non-compliant. This is according to Inyathelo, a Cape Town based organisation that assists NPOs.

THIS ARTICLE HAS BEEN UPDATED WITH A RESPONSE FROM GOVERNMENT. SEE THE BOTTOM OF THE ARTICLE.

Shelagh Gastrow, executive director of Inyathelo, said, “We are trying to collect a possible pool of organisations for a class action against the NPO Directorate for administrative inefficiency and bad faith." But she stressed that this would be the last possible action.

Gastrow said they had submitted their annual report and financials this year but were nevertheless deemed non-compliant and have to resend them. “At the same time, despite frequent communications about changes in our board, they still have our board members from 2002. In some ways this is a real attack on civil society. They are going to claim that they were simply getting rid of deadwood. Sure there would be lots of organisations that have closed down or haven’t sent their documents. But some of those that we know have been deregistered did send their documentation.”

One of the organisations that has been de-registered is the mass-member social movement, the Social Justice Coalition (SJC), based in Khayelitsha. The organisation's operations manager Leslie Liddell said no notification was given that the organisation would be deregistered and they heard the news through one of their donors. “I understand that various organisations are facing the same thing and some are not, so there is no consistency. What we will do now is apply for re-registration and work together with Inyathelo as they know how to deal with such matters.”

While not deregistered, the education rights organisation, Equal Education (EE), has been listed as non-compliant. Head of fundraising and development, Yoni Bass, said they were not exactly sure when they were listed as non-compliant. The assumption was that it was over the festive season. "In our case, we were listed as non-compliant as we did not submit our annual report in the requested period. We received no warning that we would be listed as non compliant. Simply put we will be submitting our reports as directed by the NPO directorate. We will also follow with interest the work Inyathelo is doing on this issue. We support the steps they are taking in ensuring that a fair process is followed when dealing with the registration and status of NPOs by the NPO directorate,” said Bass.

Organisations having to submit an annual report and annual financial statements as well as information about changes to their board and address to remain compliant.

Gastrow said it was important that organisations send their documents through immediately to avoid de-registration. “In terms of the NPO Act, when a non-profit organisation’s registration has been cancelled, all rights, benefits and allowances it enjoyed as a result of being registered, end immediately." For example, de-registered NPOs would no longer be eligible for tax-deductible donations.

While our queries to NPOs were for the most part responded to quickly, the same cannot be said for the Department of Social Development. Our questions to the NPO Directorate still remain unanswered. The Department of Social Development's spokesperson Lumka Oliphant said she too was waiting on a response from directorate.

Sasha Stevenson is an attorney with SECTION27, a public interest law centre. She said what appeared to be the mass-deregistration of NPOs, in some cases without the required procedures being followed, and after years without proper enforcement of the reporting and other requirements of the NPO Act, was concerning. “Further concern has arisen because these reported deregistrations have taken place in the context of the publication of a Policy Framework on NPO Law of which most NPOs were unaware until very recently. The content of this Policy Framework is not, bar a few problematic provisions, cause for alarm. However, it would be naïve to assume that the mass-deregistrations and the change in thinking on the regulation of NPOs are unconnected,” said Stevenson.

She said it was uncontroversial that NPOs need to be regulated, but the manner of such regulation was important and NPOs and civil society needed to watch developments touching their sector closely.

Any organisations that wish to go on record about being de-registered and the manner in which it occurred should contact GroundUp so that we can run a follow-up to this story.

UPDATE

At 15:22 on 23 January Mary-Anne Gontsana received an email response on behalf of Lumka Oliphant to her questions.

GroundUp: We received information that about 50 000 organisations were deregistered as NPOs by the NPO Directorate during the festive season and some deemed non-complaint. Could you please advise on this issue and what exactly is happening?

Oliphant: Organisations that have been deregistered amount to 23 035 and not 50 000 as you have been informed. Secondly; the non-compliant organisations are not de-registered; what it means is that they have not submitted annual reports as expected.

GroundUp: Were these organisations given notice prior to them being deregistered or listed as non-compliant?**

Oliphant: Standard procedure is that when an NPO's annual report is overdue; the Department sends them a notice to inform them to submit the annual report. In addition, the Department gives them time (30 days, plus another 30 days for posting) to submit.

GroundUp: What are the main issues that were found in these organisations for them to be deregistered or listed as non-compliant?

Oliphant: a) Deregistered - means organisation's registration status has been cancelled because they have failed to comply with the provisions of the NPO Act which state that they must submit reports that constitute:

  • Narrative report of their activities.

  • Financial statements together with a registered accounting officer's report

b) Non-compliant - means organisations are still registered; but a notice of non-compliance has been sent to them, therefore they have to submit reports as stated above.

GroundUp: What are the consequences if an organisation is deregistered or listed as non-compliant?

Oliphant: What it means is that;

  • a deregistered NPO must seize to use the NPO number as issued by the Department.

  • A non-compliant NPO must submit annual reports within stipulated times in their notice or they could ask for an extension of time in order for them to submit.

GroundUp: Please list the requirements or procedure of compliance.

Oliphant: A complying NPO is the organisation that annually does the following:

a) Submit a narrative report of its activities.

b) Submit its financial statements and the accounting officer's report.

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