1) THE THREE FORMS OF NGO IN SOUTH AFRICA
NGO is the broad term to describe any organisation that has a social purpose. In South Africa, an NGO can take on one of three different structures. They are: (1) a voluntary association; (2) a charitable trust; or (3) a non profit company. A voluntary association is the most informal, and a non profit company usually requires the most record-keeping and administration.
2) REGISTRATION AS A NON-PROFIT ORGANISATION (NPO)
Any of the three forms of NGO described above may choose to register as a non profit organisation (NPO) with the Department of Social Development (DSD). You cannot register an NPO without your organisation being either a voluntary association, a trust or a non profit company.
The DSD keeps a list of all organisations in South Africa that are registered as NPOs. Benefits of registering your NGO as an NPO include increased accountability and donor trust. All NGOs registered as NPOs must comply with the provisions of the Non-Profit Organisations Act, 1997.
3) REGISTRATION AS A PUBLIC BENEFIT ORGANISATION (PBO)
Any of the three forms of NGO described above may, in addition to registering as an NPO, also register as a public benefit organisation (PBO) with the South African Revenue Service's (SARS) Tax Exemption Unit (TEU). PBO status is regulated by the Income Tax Act, 1962.
Any NGO wishing to apply for PBO status from SARS must meet the following requirements:
the primary purpose of the NGO must be to carry out at least one of the public benefit activities listed in Schedule 9 of the Income Tax Act;
the public benefit activities must not be carried out with the primary purpose of making money - rather, it must be with the purpose of helping people other than the founders of the NGO;
no profits beyond what is deemed to be "reasonable remuneration" may be gained by any NGO director/trustee/member/ employee;
an NGOs activities must benefit and/or be widely accessible to "the general public at large", and not only exist for the purpose of serving small and exclusive groups.
The benefits of PBO status are:
a partial income tax exemption;
an exemption on donations tax; and
in some cases, an exemption on transfer duty on immovable property
4) REGISTRATION OF AN NGO WITH PBO STATUS TO HAVE SECTION 18A STATUS
If your NGO has been granted PBO status, then you may wish to apply for section 18A status, which allows for donors to receive a tax deduction when they donate to your NGO.
Certain PBOs, such as religious organisations, will not qualify for section 18A status.
For more information on applying for section 18A status, go here.