13 things your Board must know about your NPO

Gabrielle Ritchie | Director, The Change Room | 21st June 2017

Good governance is the foundation of a successful NPO. Governance can make or break your organisation – if it is great you can fly, if it is poor you can fail.  In NPOs, therefore, we should know as much as possible about the key features of our organisational governance.

But what are they key governance-related facts your Board should have at its fingertips:

Here are the 13 top things your Board must know about your NPO:

  1. What kind of entity is our NPO?

In terms of the law: in South Africa, your NPO could be one of three kinds of entity – a voluntary association, a trust, or a non-profit company (ex-Section 21 company, an entity type which no longer exists)

  1. What kind of founding document do we have?

If you are a voluntary association, you will have a constitution.  If you are a trust, you will have a trust deed. And if you are a non-profit company, you will have a Memorandum of Incorporation.  There are no other options.  Those three are it.  Your Board should know which kind of founding document your organisation has – and should refer to it in those terms.

  1. Is our NPO registered as such with the Department for Social Development’s NPO Directorate?

For NPOs to be able to access all the legal and tax benefits of being a non-profit in South Africa, and in most cases to be able to access donor funding, they need to be registered with the NPO Directorate.  Successful application will result in you being issues with an NPO registration number clearly indicated on an NPO registration certificate issued by the NPO Directorate.  NPO – which stands for non-profit organisation – is a generic term for a non-profit or non-governmental entity in South Africa.  As such, your organisation is an NPO regardless of whether you are constituted as a voluntary association, a trust or a non-profit company. It is critical that your Board knows that should you not comply with the Directorate’s requirements – such as submission of annual audited financials – you can be deregistered as an NPO, which can have a number of negative knock-on effects (such as donors keeping a long barge pole between themselves and your organisation!)

  1. What is our NPO registration number?

All of your Board members should have a copy of the NPO registration certificate somewhere in their Board manual, and should be able easily to access the NPO registration number.

  1. Are we registered as a public benefit organisation (PBO) with SARS?

Being awarded PBO status as a non-profit means that SARS considers you a tax-exempt organisation. Which means you don’t have to pay tax on your income (there are limits to this untaxed income depending on how it is generated, and how it links to your overall NPO mission – but you’d need a tax or NPO finance specialist for that.  Ideally, you’d have one of those on your Board, but there are not a huge number of accountants around who are deeply familiar with NPO finance, law and tax matters!).  Being tax-exempt – and SARS will issue you with a PBO number in addition to your income tax number – does not exempt you from submitting tax returns, however.  Go to the SARS site to find out more about income tax returns for tax-exempt organisations.

  1. Are we registered with any other entities or professional bodies?

Many NPOs register with professional associations in their sector, or may be part of broader sector networks.  Your Board should know about these memberships, whether there is a fee, and what benefit they bring to the organisation besides (as may be the case) a legal requirement and/or professional status.

  1. What are the main laws governing our NPO?

All NPOs are subject to a few basic Acts in South Africa.  These include the Nonprofit Organisations Act, the Income Tax Act and a range of other Acts including the Basic Conditions of Employment Act.  Your Board must establish which other laws are pertinent to its work (eg. Acts relating to health, child welfare, criminal justice, education, rights and social justice, information).

  1. How many board members does our founding document specify we must have?

An NPO founding document will somewhere specify the number of board members.  If the Board does not have this number, it should be recruiting for new members based on identified skills gaps on the board. Most South African NPO boards have between five and eight board members.  It should not be more than eight, including the organisational Director (whether ex-officio or, in the case of non-profit companies, as a full Board Director).

  1. To whom does our NPO need to submit annual and/or other reports?

All NPOs need to submit annual audited financials to the NPO Directorate, to maintain their registration.  In addition, those NPOs who also have PBO status need to submit their annual audited financials to SARS.  Further, non-profit companies – all of which are registered through CIPC (Commercial and Intellectual Property Commission) – must submit annual audited financials to CIPC.  NPOs who receive funding from Department of Health, Education or Social Development are usually also required to submit monthly and annual reports. Your Board needs to know who must be reported to, how often these reports must be submitted, and whether these reports are being submitted timeously.

  1. When is our financial year-end?

Board members must have a good grip on the NPOs financial management, including when the NPOs financial year-end is.  In most cases it will either be end-Feb or end-March in any given year.  Your Board needs to know this, as it impacts on planning and timing around the preparation of annual audited financials, the Board signing off on the statements, and the submission of these financials to the relevant bodies indicated in (9) above.

  1. Are we able to issue Section 18A tax deduction certificates to our donors, where applicable?

Section 18A status, which allows an organisation to offer a tax benefit to its donors, must be specifically applied for, and is only granted to organisations working in areas of the public benefit activities (PBA) specified by SARS.

  1. When is our NPO AGM?

While it might be a matter of good governance practice to hold annual general meetings every year, it is not a requirement – unless this is specified in your founding document.  Voluntary associations hold annual general meetings, and non-profit companies with members (aka shareholders in the for-profit sector), but trusts do not have members and generally don’t hold AGMs.  Some organisations, regardless of entity and/or requirements per founding document, like to hold annual meetings as a way to engage their communities, friends, supporters, donors and – where relevant – government departments with a vested interest in the success of the organisation.  Your board members must know what is required of your NPO in terms of an AGM.

  1. Have we signed on to the Independent Code of Good Governance for Nonprofit Organisations in South Africa?

This Code of Good Governance outlines the key principles, values and practices of good governance in nonprofits – and shines a spotlight on the key responsibilities of any NPO board member.  This Code provides a “sign-on sheet” which facilitates the Board of an NPO to declare that it has adopted the Code to guide its governance practices.  This Code has no legal standing and is an in-principle commitment which is self-regulated, providing an excellent guide for monitoring one’s organisational governance.  More information can be found at www.governance.org.za.  PS  – if you Board signs on, you also get to display the Independent Code logo on your organisational platforms and marketing materials. It looks good to donors – and it’s a great logo.

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For insights into whether your Board is fundraising-fit, and why it needs to be, see my blog on this at https://philanthropediasa.wordpress.com/2016/06/03/507/

To support your Board, alert them to the great governance-focused resources at:

  1. Ricardo Wyngaard’s site nonprofitlawyer.co.za
  2. The Inyathelo resources site askinyathelo.org.za

 

 

 

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Ten things you might not know about South African Philanthropy: South African PhilanthroFacts 3

Gabrielle Ritchie | Director, The Change Room | 23rd May 2017

Many multiple months have passed since I wrote South African Philanthrofacts 1 and 2 (no need to check back!) – but better late than never is one of my life mottos, and it applies here too.  So this is South African Philanthrofacts 3!

PF 1 was about the common knowledge that “little is known about South African philanthropy” – so I provided ten possible sources that could be consulted and pursued so that we could find out more about this terrain.

PF 2 was about the politics of philanthropy and who benefits from the ever-changing and whimsical sympathies of the benefactors.  That piece looked specifically at summer fire-fighting in the Cape Peninsula area, and the politics of an incredibly successful radio appeal for funding support for fire-fighting.

The focus for South African Philanthrofacts 3 is TEN things you might not know about South African Philanthropy:

  1. The first-ever Chair in African Philanthropy has been established at the Wits Business School. Acknowledgement loudly goes to Dr Bheki Moyo and Southern Africa Trust, and Wits Business School, for pulling this initiative together.
  2. I am the first PhD student (actually, I might be the first student!) under the new Chair (Professor Alan Fowler). It is also the first Chair in Philanthropy on the continent.  Big FIRSTS.
  3. The Social Justice Initiative has been established to provide a smooth mechanism for South Africans (and others) to support social justice work with their philanthropic giving – including work around gender-based violence; women’s economic empowerment and other issues central to South Africa’s social development.
  4. There are a number of different estimates around the ZAR scale of private philanthropy in our country. The Independent Philanthropy Association of South Africa (IPASA), when it was still the Private Philanthropy Circle based at Inyathelo: The South African Institute for Advancement, estimated that it represented around R1.5billion (in 2014) in annual grant spend.  It is not possible to extrapolate this out because, although IPASA represents somewhere between 25 and 35 philanthropic entities, the number of formal donor foundations in South Africa is completely unknown.  I have been told verbally in passing (and am not able to reference this), that recent research has revealed that private philanthropy in SA is worth over R40billion annually – but I am reserving my right to see this as a bit of a stretch and I really look forward to being able to unpack that number.
  5. South Africans with disposable income don’t give enough. We don’t give enough. I often wonder what we are holding on to.  If we are not investing in our own social development, then who on earth is going to?
  6. There are ENDLESS incredible projects to support. If you have disposable funds or are thinking of investing some money in social development, let me know.  I would be delighted to point you in some right directions.  There is superb work happening in job creation and support for micro-entrepreneurs – such as The Big Issue (declaration: I am the Chair of the Board!); in education – for example, Partners for Possibility; in health – health-e news is one such project; working to expose and end corruption – such as Corruption Watch; to develop community-based health care projects – like NACOSA is doing nationally; standing for our rights as citizens to be able to access information – such as Right to Know and Amabhungane.  Really endless, people.  It is not hard to find a project or a cause.  But if you are struggling to decide where to invest, I would be more than happy to provide information and find you some good, reliable, dependable, hardworking, effective projects to support!
  7. While many speak of things changing rapidly in the philanthropy space, this is not really the case. There is mention, for example, of the potential for incredibly exciting shifts and wild innovation such as consulting directly with communities and activists on the ground.  Yes, apparently this is new and wildly innovative.  It is also something that has been discussed for years, and for which calls have been made by the very people living in communities and working on the ground.  So perhaps it is “new” because the philanthropists are finally hearing it?  Come, people – there needs to be a far smaller gap between what how we do philanthropy and how we KNOW we should do philanthropy.
  8. There are very few people talking much at all locally about philanthropy, funding, grantmaking, social justice and social development. To listen to those who are sharing their pearls, follow these folk on Twitter:  @RAITHFoundation | @SocialJusticeSA | @BerthaFN | @OtherFoundation | @Tshikululu | @bheki_moyo | @shelaghgastrow | and me on @philanthropiSA | If you know of others, please share!
  9. Personal philanthropy is still not much of a discussion topic, not amongst traditional white wealth in South Africa anyway. I think we might be stuck a bit in the British tradition of “we don’t discuss money… it’s impolite”.  But how grand would it be if we all spoke about what we invest socially, why we chose those causes and/or organisations, whether others know of good projects needing support, how we decide as individuals whether projects are support-worthy, what we think we can achieve with our particular investment choices.  Wouldn’t it be great? Wouldn’t it?!
  10. South African philanthropy is part of a much broader philanthropy space across the whole continent. As such, it is part of a growing conversation about practice, process, people, and pathways in giving money in support of a bigger social project.  It is exciting stuff – and these times will become ever-more interesting as our understanding of the breadth of practices of different kinds of philanthropies becomes more and more evident on the continent.

The South African NPO Funding Crisis – again?

quote from www.resourcingphilanthropy.org.za

Gabrielle Ritchie, Director, Change Room

4th May 2017

If you think that the South African NPO sector is in a particularly tight and horrible funding crisis right now, battered from all sides by events impacting negatively on funding sources, that’s understandable.  You will have been bombarded with a range of tweets, blog posts, articles and chat around which latest local, national, regional or global event is going to make it harder for us to raise funds – and how or why it might make it harder.

I kind of have news for you, though.  Raising funding in support of your non-profit work has never been an easy task. It takes incredibly hard work, and consistent excellence in the practice of a few fundraising basics.  While it isn’t rocket science, it does take commitment, and it requires investment – in whatever way your organisation is able to invest.  This might be budget, for a staff post, a marketing campaign, the implementation of a donor CRM database, or the development of a 5-year strategy and operation plan for attracting funding.  It might be staff time, to conduct 1 hour of prospect research every day, or to staff fundraising events, or to contribute to your organisation’s public profiling efforts.  It might be your volunteers, your board members, or a series of video stories.  However your organisation is able to define “resource”, your organisation will not attract funding without some well-planned resource investment.

So is there a crisis?  Is it getting worse?  Do we need to be on constant watch for what Zuma said at #WEF2017, or Trump’s bulldozing efforts to cease foreign funding (or at least significantly contract existing funding programmes). How impactful was Zuma’s Cabinet Reshuffle, and how will those impacts play out? Does non-profit funding at a local level require economic confidence at a global level?

For every action, there is a reaction.  Basic physics, really. And funding streams have not been predictable for South African non-profits for quite some time, if ever. Since 1994, and no doubt prior to that, non-profits have been hit with one or other “latest funding crisis”.  In 1994, foreign donors decided to channel their funding through the new government’s RDP initiative, rather than fund non-profits directly. These crises have continued emerging, and will definitely continue to do so.  Change is the only constant!

This means that non-profits cannot EVER take funding for granted.  This is a serious and difficult challenge, because all organisations are focused on doing the work they were set up to do – and if funding seems to be taking care of itself, then little attention is paid to building new relationships and identifying new prospective funding sources.  For example, many social justice organisations in South Africa are funded in most part by a well-known group of social justice-focused funders.  My advice?  Do not take your eye off the ball.  We know there are no guarantees that funding will continue to come in from those same sources, but we often ignore this basic funding rule in the interests of being able to get on with the work.  Unsurprising.  But, just like in most for-profits where the next contract/ customer/ client is being sought or pitched to or chased, so too in non-profits we need to identify potential partners and pursue with vigour and commitment to bringing in that next funder, to support us in driving our work forward.

If only the funding crisis would just settle already. It isn’t going to. So is it indeed a crisis?  It feels like it for organisations struggling to find support for their work, but it has levelled out into the “existing state of affairs”. The funding terrain has its peaks and troughs, it’s easier times and rougher times – but if you had to ask any non-profit who has successfully attracted sufficient funding and support to cover overheads, “programme” costs, and growth, you will find an organisation with a strong focus on profiling their work, identifying funders, networking, building relationships – by any means necessary.  And even then, it ain’t easy.

In short, then, it is almost guaranteed that any morning news headline could be argued to have a potential impact on South African non-profit funding.  So keep your eye on what is happening out there, but definitely keep focused on building your organisational profile, ensuring excellence in organisational governance, and don’t stop looking for opportunities in their multiplicity of forms.

 

 

Digital space, civil society and nonprofits in South Africa

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Gabrielle Ritchie, Director, The Change Room

25th November 2016

So what is the state of play in South African digital civil society?  My last post looked at the importance of defending digital spaces in South Africa – but now I go back a bit, to the nitty-gritty of digital civil society. This broad phrase refers to a broad mix of concerns, approaches, practices and activities ranging from building the public profile of a cause, to defending current levels of freedom, openness and accessibility of digital space.

Enset has been running a global workshop series focused on supporting civil society organisations around the world to navigate what Enset refers to as “the complex digital landscape” to achieve online effectiveness.  Enset’s mission with these workshops and panel discussions is to identify and, likely, help create the best paths for the use of digital space by non-profits globally.

The Enset/ Resource Alliance panel discussion, of which I was a part – held at Bandwidth Barn in Cape Town on 4th October 2016 – was titled, “NGOdigitalspaces & Civil Society”.  The discussion addressed a range of issues and practice areas in the digital space, such as:

  • What is the role of Social Media in building civil society?
  • How is digital fundraising changing the donor relationship and giving overall?
  • What are some of the risks and challenges of digital spaces, and what can non-profits to address these?
  • What is the political / regulatory environment and implications of a new NPO Act in South Africa?
  • What is the future of digital spaces for civil society – opportunities, challenges and potential threats?
  • What is the importance of credibility and validation within the sector?

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A number of organisations and individuals spoke to their particular concerns, the work they do, and how their work serves to address their concerns.  The panel and issues included:

  1. Jeri Curry, president and CEO, Enset: introduction to the non-profit and civil society digital space, and to the work of Enset – and also navigated the panellists inputs, facilitating the discussion with great knowledge and expertise.
  2. Baratang Miya, founder and CEO, GirlHype: now here is somebody to watch and keep up with. Baratang spoke about her initiative to encourage girls into the digital and tech space, not as users but as innovators.  Great stuff.
  3. Michelle Jones, head of content for digital agency RogerWilco: Michelle shared lessons from a successful client project, showing how paying careful attention to messaging, content, design and site architecture can completely change levels, frequency and type of user interactions with your online presence
  4. Gabrielle Ritchie, Director, The Change Room: This is me – I spoke about the need to defend digital spaces, as these levels of freedom increasingly come under the state spotlight and as non-profit organisations are under pressure from government. I also shared insights about the legislative framework that currently governs this space in South Africa.
  5. Colin Habberton, IFC Ambassador, South Africa: Colin shared insights into the use of digital platforms for fundraising and for profile-building for organisations and causes, and stressed the importance – across a range of factors – of building an online profile
  6. Michelle Matthews, Head of ED and Innovation, CiTi: Michelle’s focused on trends in ICT and the digital economy, and she shared details of a fantastic digital project supporting start-up and established social enterprises and businesses, including the development of an innovative toolkit (which we all wanted a copy of!)

Are you starting to get the picture?  Around the breadth and depth of any discussions about “digital space”?

We can talk about developments in digital technology; the use of digital technologies for the promotion of civil society campaigns; the role of an online presence in promoting your non-profit organisation and in stakeholder/ supporter/ donor communications; the importance of content in building a profile and positive footprint in the online space; the role of civil society organisations in promoting and encouraging the involvement of girl learners in the digital tech space; the importance of an online presence for fundraising (both on- and off-line); the pressure (globally) on civil society and the closure of operating spaces, both physical and digital; and the legislative framework governing the use of digital technology (eg. drones for journalism) and online spaces.  That’s just the start.

In addition, there is a boatload of information that non-profits need to keep up with – such as the 2014 transition of the org.za domain (used by most South African non-profits for their web presence) to a new regulatory authority, and the implications for non-profits using org.za.  Again, just the start.

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Enset’s work has had the effect not just of providing spaces to have discussions about digital spaces and civil society, but also of connecting activists and digital specialists locally and globally.  It is critical that we are talking to each other, in light of my particular concern – as per my previous post – about the defence of digital spaces as we see an increase in governments clamping down on activities that challenge their actions (or lack of action).

This space is absolutely critical for civil society organising, as a still-democratic space providing for the proliferation and platforming of a range of voices critical to debate, discussion, defining the languaging around particular issues, and moving away from the dominance of traditional media and their ownership of public discourse.  This has changed irreversibly, and this space must be defended.

Philanthropy in South Africa: Support for defending digital civil society

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Image from Heinrich Boll Foundation. Creator: Niklas Hughes

Gabrielle Ritchie: Director, The Change Room

16th November 2016

Philanthropic funding is critical for a host of democracy-defending and –strengthening initiatives that would otherwise have little or no financial support at all to implement the tough work that needs to be done to defend our democratic space.  In South Africa, we must remain vigilant about our freedoms and must continue to push to ensure that rights – as per our constitution – are realised for all.

So where does digital fit into discussions on democracy, development and donors?

I have been thinking a lot about digital civil society – which, in my view, is the same thing (at least currently they remain the same) as civil society using digital technology.  A few weeks back, I had the energising experience of being part of an Enset/ Resource Alliance panel discussion in Cape Town about South African civil society and the digital space, which I will be writing about in the next week or so (so watch this space!).  It’s a huge topic, with so many sub-topics, not all of which link up neatly together.  The digital space and its implications for civil society has been a hot topic for precisely this reason – there is SO much to discuss!

One of my most favourite, self-proclaimed philanthropy wonks is Lucy Bernholz. Her latest blog post is about digital civil society and the looming threats to freedom of expression and freedom of assembly, all the more threatened with the election of Donald Trump to the US presidency.   Her urgent call is that we all need to stand up, make our voices heard, and resist attempts to close down civil society space.

This is not a challenge limited to the US.  Far from it.  Increasingly across the African continent, there are noises and threats regarding the closure (or further constriction) of digital space, in addition to pressure on the physical civil society space – where it does exist – to organise and express challenges to governments.

As Bernholz says:

All our civic action – from philanthropy to protest, from petitions to polling – now takes place on a digital infrastructure. Every organization that is dedicated to helping the vulnerable, to free expression, or that understands it is simply an institutionalized form of our right to peaceable assembly and private action for public benefit should realize now that their existence depends on the rights now threatened. As civil society has closed elsewhere, so has it now been directly, overtly, and rather unabashedly threatened from the people elected to lead our government. 

The most important point that Bernholz makes, though, is that we all need to get ourselves trained up around digital space, the ways (both actual and potential) in which this space is threatened, and what we need to start doing about it. Right now.

Bernholz mentions a number of angles, including “capacity building, consulting, governance training, and technology support need to address digital governance and practices”.  And she goes on to stress that “It is not optional, it’s integral to running a safe and effective organization”.

In other words, this isn’t something we need to watch out for coming down the line.  Rather this is something that we need not only to be monitoring now, but we need to be managing the risks already, and putting place policies and practices that will ensure we are able to continue to work effectively and safely.

Ute Scheffer’s September 2016 article, No right for digital participation in many regions of the world, offers insights into the current state of play with regard to journalism and clampdowns on expression and organising.   According to Scheffer, South Africa ranked 39th of 180 countries in the World Press Freedom Index.  This is above the US, and only one place behind the UK. There are two thoughts on this – one is that this is very revealing about the squeeze on press freedom in these apparent bastions of democracy and freedom; the second is that having a reasonable ranking means we must maintain and increase (not loosen) our vigilance.

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It is critical to bear in mind that, with regard to digital civil society – and the digital space in which we operate – it is not just about access to news and information, but is also fundamentally about forms of communicating, organising, advocating, mobilising, and attracting resources in support of organisational and campaign work.

Organisations in South Africa working on these issues (and supported with philanthropic funding) suddenly become central to South African civil society then, right?  So who are they, what are they working on, and how do we find them?  Below are a few of the best known organisations working to defend our freedoms with regard to information, and the sharing of information in print and in the digital space.

Start engaging around our digital space, people – global trends (and Lucy Bernholz) indicate that the time is now.

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