Tax, accounting bodies step in after Zuma NPO exposé
21 July 2015
Posted by: Author: Fin24
South Africa’s tax and accounting professionals joined forces on Monday to help stay the NPO sector after a News24 exclusive revealed that five of the six non-profit organisations (NPOs) associated with President Zuma was non-compliant with the NPO Act.
However, the non-compliance by the Zuma charities is the tip of the iceberg. The Department of Social Development revealed to News24 that more than half of the nearly 140 000 registered non-profits were not compliant with the law. The Ministry of Social Development has 140 513 NPOs on its database.
READ: How Zuma-linked charities flout the rules
In reaction to the expose the SA Institute of Tax Professionals (SAIT) and the SA Institute for Business Accountants (SAIBA) committed R10m to help NPOs become compliant because the sector "is critical in democratic South Africa”.
Stiaan Klue, Chief Executive of the SAIT told Fin24 on Monday should the NPO sector fail, it could derail the already frail economy. "NPOs are critical stakeholders and are contributing significantly to uplifting the poor and destitute from poverty," said Klue.
News24 reported on Monday that non-profit organisations run by President Jacob Zuma's immediate family - including his four wives - have not filed financial reports in years, a breach of the law which effectively keeps any income and expenditure by the trusts from public scrutiny.
Most donor and funding agencies require registration as a non-profit organisation (NPO) as a prerequisite for an entity to receive money. Under the NPO Act, administered by the Department of Social Development, registered entities must file annual reports which are publicly available.
Klue said in addition to the NPO Act, NPOs - although tax exempt - are also required to file tax returns with the South African Revenue Service.
SAIT and SAIBA said in a joint statement on Monday various pieces of legislation impose hefty regulatory requirements on the NPO sector, but a compliant and well-managed NPO could receive millions from donors and government.
Nicolaas van Wyk, CE of SAIBA decried the non-compliance, saying "it will be a sad day in our democracy if NPOs do not receive quality professional support to remain operational".
"The end result will be that donor funds may not reach the intended recipients."
Van Wyk said a valid concern is that disorganised NPOs may not deliver on their legal obligation and this will lead to the sector being accused of a lack of accountability and transparency. If these allegations go unchecked it may seriously affect the ability of the whole sector to draw in new donor funds.
"The NPO sector therefore needs to commit to improved performance and compliance", he warned.
"However as professional bodies we realise that volunteers manage most NPOs, with a passion for helping the poor", said Klue. "Under dire and difficult circumstances these volunteers allocate all of their time to helping people in need. It is therefore perhaps understandable that compliance may fall by the way side."
With a combined membership of close to 20 000 tax practitioners and accountants, SAIBA, SAIT and their members stand ready to heed the call of Minister Dlamini and commit R10m professional services to the sector
The monetary assistance is to help NPOs attain compliance with regulatory filing requirements with SARS and the Department of Social Development.
NPOs in distress should contact firstname.lastname@example.org as soon as possible.
This article first appeared on fin24.com.