INFORMATION PAGE REGARDING REGISTRATION FOR NPO BENEFITS AND TAX EXEMPTION FOR ROTARY CLUBS IN SOUTH AFRICA

In the light of South African legislation relating to organisations using public moneys and the requirement for all such organisations to apply for exemptions from tax on income from subscriptions or donations received, all non-profit organisations receiving income should register in terms of the Nonprofit Organisations Act 1997.   This registration together with registration with the SARS in terms of the Income Tax Act as a Public Benefit Organisation can open many new doors for clubs to receive donations.   Due to the fact that Donors fund clubs that have registered as an NPO and PBO means that they also can receive certain tax benefits.   This makes it WIN / WIN / WIN for all.

There are two aspects to be considered by each club.

REGISTRATION AS A NON PROFIT ORGANISATION:

Step one is that of registration in terms of the Nonprofit Organisations Act 1997.  This registration legitimizes your club to receive certain benefits.  Your club can enjoy certain benefits such as exemption from various bank charges and in some cases, when seeking funding for Rotary programmes can mean donations from Donors who would not normally give funding to a Rotary club.

After discussion with the Directorate for Nonprofit Organisations it became clear that our organisation – Rotary International  : District 9300 – could not register as an Non Profit Organisation under the Nonprofit Organisations Act 1997 due to the fact that Rotary District documentation clearly states that if a District ceases to exist,  its assets (including its funds) become the property of Rotary International in United States of America.   The Nonprofit Organisations Act 1997 does not permit assets to be distributed outside the borders of South Africa.    If this registration could have taken place it would have meant that all Clubs would have been able to  benefit from District’s registration.   However, the constitution of a Rotary Club meets the necessary criteria.

Registration is a very simple matter.   Registration is a ONCE-OFF event.    A simple four page application form together with a copy of the Club’s constitution, Bylaws and Resolution marked Annexure “B”, in duplicate, submitted to the Directorate for Nonprofit Organisations, Private Bag X901, PRETORIA, 0001 initiates the process.   Page 2 of the application consists of the club officers holding office at the time of application – the Club President signs the application.    Should you wish to make direct contact with the registering office the telephone number is 012 312 7500.

One additional responsibility a club would have is that its books should be examined by an Accounting Officer and annual financial statements are to be submitted to the Directorate for Nonprofit Organisations.   It could well be that a club has such a qualified person as a member – remember it is not necessary for a Chartered Accountant from an Auditing firm to audit the club’s books.    This of course would mean that every club would conduct  its financial affairs  at a more professional level.

SO ... THE PROCESS IS SIMPLE:

1. Get your club’s constitution – haven’t got one??   Well you can download RI Club constitution and bylaws from the website.  Make 3 copies, call a SPECIAL MEETING OF MEMBERS for its adoption and then pass a resolution to formalize the process together with the approval of the Resolution marked Annexure “B”(see note 2 below).   Complete and sign the certificates required.     The Secretary of the club should keep one copy for safe keeping with the club records – the other two copies are needed for NPO registration.
2. At the same meeting you need to pass the attached Resolution marked Annexure “B” regarding Bank procedures and Dissolution of the Club.   One copy to be kept by club and two copies for NPO registration purposes.  Complete club name, place of meeting and date at top of page and at clause 2 insert the name of the club.   The Secretary and President should sign this document at the bottom of the page in the space provided.
3. Complete the application form provided on the website of Department of Social Welfare with your present Club Executive Committee members.   Please remember that a husband and wife cannot be listed on the same executive committee for NPO purposes.
4. Read the instructions carefully and make sure you complete every section.   To help you please use the following answers on pages 3 and 4.  (3)  REQUIREMENTS FOR REGISTRATION OF THE ORGANISATIONS’ CONSTITUTION (See Manual of Procedure 2007 – pages 250-270)
   (a) Article 2
   (b) Articles 4 and 5
   (c) Resolution Annexure B Clause 3
   (d) Resolution Annexure B Clause 4
   (e) Resolution Annexure B Clause 4 (b)
   (f) Resolution Annexure B Clause 3 and 4 ©
   (g) Article 13 of Constitution;  Annexure B Clause 5 and see Bylaws
   (h) Article 4,9,10,12 and 13 of Bylaws
   (i) Article 5 of Bylaws
   (j) Article 5 and 7 of Bylaws
   (k) Resolution Annexure Clause 2
   (l) Article 12 of Bylaws – finances – Section 6 - 30th June
   (m) Article 19 of Constitution; Article 16 of Bylaws
   (n) Resolution Annexure B Clause 1
   (o) Resolution Annexure B Clause 1 (d)                                                                               OPTIONAL PROVISIONS IN TERMS OF SECTION 12 (3) – as above in 3.
   (a) Article 7 of Constitution
   (b) Article 12 Section 4
   (c) Article 12 Section 5
   (d) Article 12 Section 6
   (e) Article 6 of Bylaws
   (f) Resolution Annexure B Clause 6
   (g) Articles 3 and 4 of Bylaws
   (h) Article 3 Sections 3 and 4 of Bylaws
   (i) Article 3 Section 1 of Bylaws
   (j) Resolution Annexure B Clause 6
   (k) Resolution Annexure B Clause 2©
   (l) Article 12 Section 1 of Bylaws
   (m) Resolution Annexure B Clause 4©
5. Make sure you send all requirements when mailing off.    I understand that at certain times it is possible to deliver personally and you wait and actually get registration that day.
6. After you have received your Certificate of registration, remember your bank account, FICA requirements, and get your accounting officer.

REGISTRATION AS PUBLIC BENEFIT ORGANISATIONS – This registration is with SARS and provides exception from paying taxes on donations and subscriptions.

• The next step to open wide the door for receipt of funding from all Donors in South Africa is registration with the SARS as a Public Benefits Organisation.   This registration usually follows registration as a Non Profit Organisation in terms of the abovementioned Act however many of our clubs have this registration and have not been registered as a NPO yet.
• It may not be necessary for your club to proceed with this registration if it is its intention not to seek funding from other sources other than members dues.   However, if your club’s income exceeds a certain limit per annum then  it would be best to seek the advantages of being registered as a Public Benefit Organisation with SARS to obtain exemption from payment of taxes in terms of Sections 10 (1) of the Income Tax Act.   From December 2003 any non profit organisation, whether registered under the Nonprofit Organsations Act of 1997 or not, can be liable to pay taxes should their income exceed the limit set by SARS from time to time.  
• You will need to download the EI1 form as provided by the Tax Exemption Unit (TEU) and complete all details for Section 10(1) – this registration ensures that the club is exempt from paying taxes on donations and subscriptions (its income derived from donations and subscriptions only)   If a club is occupied with Income Generating projects for organisations please check with SARS in this regard.

REGISTRATION IN TERMS OF SECTION 18A of the Income Tax Act

This is an additional separate registration and a number of Donors and some funders require this certificate in order for their organization or company to claim additional Tax benefits.    At present NO ROTARY CLUBS have this status (except Rotary Club of Durban).   Visit SARS website, click on publications – half way down the page on the left-hand column you will see reference to organisations registered with Section 18A – should you have been told your club has this status, click on this section and scroll down the names of organisations having it – if your club’s name is not there then you do not have it.    This was withdrawn a few years ago because it had been misused

Should you have a donor who wants to give you a large amount and wants this specific certificate in terms of Section 18A please contact the writer.   In discussions with SARS we have been advised that for certain special projects permission can be obtained for that specific donation.    Contact the writer for these conditions and details.    All documentation required for registration as a Public Benefit Organisation can be obtained via internet

Projects which would attract the issue of a Section 18A certificate are as follows:

1. Welfare and Humanitarian:
1. The care or counseling of, or the provision of education programmes relating to, abandoned, abused, neglected, orphaned or homeless children;
2. The care or counseling of poor and needy persons where more than 90 per cent of those persons to whom the care of counseling are provided are over the age of 60.
2. Health Care:
1. The provision of health care services to poor and needy persons
2. The care or counseling of terminally ill persons or persons with a sever physical or mental disability, and the counseling of their families in this regard
3. The prevention of HIV infection, the provision of preventative and education programmes relating to HIV and AIDS
4. The care, counseling or treatment of persons afflicted with HIV and AIDS, including the care or counseling of their families and dependants in this regard.
3. Education and Development:
1. The provision of education by a “school” as defined in the South African Schools Act 1996 (Act No 84 of 1996)
2. The provision of “higher education” by a “higher education institution” as defined in terms of the Higher Education Act 1997(Act No 101 of 1997)
3. “Adult Basic Education and Training” as defined in the Adult Basic Education and Training Act 2000 (Act No 52 of 2000) including literacy and numeracy education
4. “Further Education and Training” provided by a “public  further education and training institution” as defined in the Further Education and Training Act, 1998 (Act No 98 of 1998)
5. Training for unemployed persons with the purpose of enabling them to obtain
   employment
6. The training or education of persons with a severe physical or mental disability
7. The provision of bridging courses to enable educationally disadvantaged persons to enter a higher education institution as envisaged in subparagraph (b)
8. The provision of educare or early childhood development services for pre-school children
9. The provision of school buildings or equipment for public schools and educational institutions engaged in public benefit activities contemplated in subparagraphs (a) to (h)
10. Programmes addressing needs in education provision, learning, teaching, training, curriculum support, governance, whole school development, safety and security at schools, pre-schools or educational institutions as envisaged in subparagraphs (a) to (h)
11. Educational enrichment, academic support, supplementary tuition or outreach programmes for the poor and needy.
4. Conservation, Environment and Animal Welfare: The establishment and management of a transfrontier area, involving two or more countries which
1. is or will fall under a unified or co-ordinated system of management without compromising national sovereignty, and
2. has been established with the explicit purpose of supporting the conservation of biological diversity, job creation, free movement of animals and tourists across the international boundaries within the peace park and the building of peace and understanding between the nations concerned. (we need to check if water projects and sanitation are included)
5. Providing of funds, assets or other resources
1. The provision of  funds, assets, services or other resources by way of donation
2. The provision of assets or other resources by way of sale for a consideration not exceeding the direct cost to the organization providing the assets or resources;
3. The provision of funds or assets solely to a public benefit organization approved in terms of Section 30 or an institution, board or body contemplated in terms of Section 10(1)(cA)(i) carrying on any public benefit activity approved for Section 18A purposes.

There are no financial costs involved in any of these registrations.

There will be many benefits to clubs  – club’s will perform more professionally in their administrative tasks and we would be able to obtain additional funding that we did not have access to before.   We as an organisation need to be involved in the development of communities and the various focus programmes as set out in Future Vision for the advancement of our country and in our clubs we can receive great advantage financially if we market the Rotary programmes.   Membership can even grow as we let others know of our involvement and commitment to development.

For the benefit of all I have written this in simple language avoiding legal jargon.  I trust that these comments will assist you in determining the future of your club and our district.

Should you have any further questions please do not hesitate to contact me at 016 423 7425 or 072 437 5636  or on email at betco@pixie.co.za

Beth Thomas
2009.11.01
DG 9300

Click here to download Annexure B 

Click here to download the DSD's application form

Click here to go to the Department of Social Development - Non Profit Organisations