The legal regime for registration of public benefit organizations (previously referred to as non-governmental organizations) was governed by the Non-governmental Organizations Act,1990(the “NGO Act”. The President, on 14th May,2024, assented to the Public Benefit Organizations Act,2013 (the “PBO Act”) repealing the NGO Act. This article will focus on the salient differences between the two Acts, registration of Public Benefit organizations under the Act and the advantages of registration of a Public Benefit Organization.
Salient differences between the two Acts.
The regulatory body under the NGO Act was Non-governmental Organizations Coordination Board which has now been replaced with Public Benefit Organizations Regulatory authority. under the PBO Act. Under the NGO Act applications for registration were made to the executive director of the Bureau who has now been replaced with Public Benefit Organizations Regulatory authority under the PBO Act. Under the NGO Act there was the non-governmental organizations Council which was responsible for advising the Non-governmental Organizations board on regulation of non-governmental organizations. The Council has now been replaced with the Governing Board of the federation under the PBO Act which shall advise the Authority on regulation of Public Benefit Organizations. Under the PBO Act there is established the Public Benefit Organizations Disputes Tribunal which has the jurisdiction to hear and determine complaint arising out of breach of the Act while under the NGO Act disputes were under the jurisdiction of the Board.
Registration of Public Interest organizations
A Public Benefit Organization is a voluntary membership non-profit making organization that engages in public benefit activities. These do not include; trade unions, political parties, religious organizations, co-corporative societies, Sacco societies, micro-finance institutions or public bodies established under any written law. Registration of Public Benefit Organizations is governed by the Public Benefit Organizations Act, 2013. The application for registration is made to the Public Benefit Organizations Regulatory Authority established under Section 34 of the Act. When making the application the applicant will present the following documents; application form under the Act, name and address of the organization, the Constitution of the organization, names, addresses and contact information of the authorized agents of the organization. The Authority may accept or reject the application within sixty (60) days after receiving the application. Upon registration the Authority shall issue a certificate of registration.
Advantages of Incorporation
Corporate Personality; The Incorporation of a Public Interest organization under the Act accords the trust a separate legal personality with perpetual succession and powers to sue and be sued in its own name, to hold, acquire, convey, transfer, assign, and/or charge any interest in movable or immovable property held in trust.
Tax incentives; Section 6 as read together with the Second Schedule of the Act have exempted Public Benefit organizations registered under the Act from paying;
• income tax on income received from membership subscriptions and any donations or grants;
• income tax on income acquired from the active conduct of income producing activities if the income is wholly used to support the public benefit purposes for which the organization was established;
• tax on interest and dividends on investments and gains earned on assets or the sale of assets;
• stamp duty; and
• court fees;
and for preferential treatment under value added tax (VAT), and customs duties in relation to imported goods or services that are used to further their public benefit purposes as well as incentives for donations by legal and natural persons;
Government funding; Schedule 2 of the Act provides that incorporated Public Benefit organizations shall receive direct funding from government where they partner with the government via budget subsidies, grants for specific purposes and contracts.
Procurement opportunities; the schedule provides that incorporated organizations shall receive preferential treatment in public procurement procedures and bidding for contracts.
Should you decide you need a Trust, you should seek legal advice to ascertain the most suitable trust for you. This alert is for informational purposes only and should not be construed as a legal opinion. If you have any queries or need clarifications, please do not hesitate to contact Gregory Makambo, Partner, (gmakambo@makambolaw.com), Diana M. Kimiti, (dkimiti@makambolaw.com) or your usual contact at our firm, for legal advice.