Help needed for NPO managers

Non-profit organisations, be they educational, recreational, religious or charitable, are part of our daily lives. Yet when it comes to administration and compliance with legislation, many are lacking.

It looks good on your pedigree to serve as a director or trustee of an NPO, thus doing your bit for society. Why not endure a boring meeting now and again, network a bit, and enjoy tea and a sticky bun afterwards?

But are NPOs complying with all the new legislation?

The Income Tax Act has a wide range of provisions relating to NPOs. Yet many assume they are totally tax-exempt and can trade and issue tax-deduction certificates to donors willy-nilly. It”s not that simple.

A recreational club can be partially taxable. Trade income of exempt NPOs can be taxable. Not all NPOs can issue tax-deduction certificates. And not all donations made to qualifying NPOs qualify for deduction.

The SA Revenue Service has the right to remove the tax-exempt status of a non-compliant NPO. But, quite rightly, SARS is reluctant online casino to clobber them. So it leaves the system open to abuse.

Almost daily we see examples of blatant trading in NPOs. And even the old scam of paying school fees by way of tax-deductible donations and “advertising” golf days still continues. SARS has extensive publications for NPOs available on One wonders if they are ever read.

Then there”s VAT, employees” tax, the new Companies Act, registration as a fundraising institution, possibly King III and international financial reporting standards, or even the Consumer Protection Act. All apply to NPOs.

But NPOs cannot afford the top bean-counters, lawyers and consultants. How can administrators of NPOs be expected to keep abreast of all this when their principal aim is to raise sufficient finance to keep the NPO”s head above water?

Some say that the easy solution would be to exempt all NPOs from today”s super-regulatory environment. Let them get on with it! That just won”t work. Every crook will just register a church or sport club.

Some NPOs will land in big trouble in time to come. And where will they get the funding to sort out the mess? We need training programmes and certificate courses in NPO management.

Originally published in the Sunday Times Tax Talk column.

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