Draft Regulations under Nonprofit Organisations Act: discussion

WELFARE PORTFOLIO COMMITTEE
8 June 1998
DRAFT REGULATIONS UNDER NONPROFIT ORGANISATIONS ACT: DISCUSSION

Documents handed out:
Department of Welfare: Regulations under the Non-profit Organisations Act, 1997 (see appendix)

SUMMARY
The Department of Welfare and Population Development went through the draft regulations under the Nonprofit Organisations Act, 1997, and the committee made suggestions to this draft. The Department is working towards securing a culture of accountability for NGOs though these regulations. The Chairperson as well as the members emphasised that the parliamentary portfolio committee had to be properly consulted before the regulations are promulgated. The committee refused to be hurried into finalising discussions on the draft regulations.

DETAILED MINUTES
The Director of Nonprofit Organisations, Ms Saguma Gordhan, went through the application form entitled Application For Registration By A Nonprofit Organisation.

The committee proposed that the application form required more details about "Particulars of Office-bearers" as organisations often disappear or are amalgamated.

The reason for the section labelled "Additional information required" was that the Department of Welfare and Population Development hoped the register would provide more information about the Nonprofit sector.

The section labelled "Duties of Nonprofit Organisations" was intended as an important reminder to the organisation to keep financial records as well as inform the Director of any changes which occur in the organisation.

The committee suggested that there should be an explanation of terms, for example, under "Requirements for Registration", the term 'corporate body' should be explained as well as (i) and (k) under the same heading. Besides an explanation of terminology, examples should be given as organisations may not understand all the questions.

The committee proposed that "Optional Provisions for Registration" should be a compulsory section to fill in. The Director said that this section could create controversy if it was a compulsory section as some organisations would object to the questions.

Ms Cupido (NP) wanted to know whether it could be stipulated that the finance officer be a qualified person. The Director replied that some organisations may not have access to qualified persons. She felt that only guidelines could be given, for example, keep complete financial records, pay by cheque, have auditors and accountants play an important advisory role in the organisation as their advice was usually free. Ms Cupido suggested that the Department give a motivating directive that organisations approach retired qualified people to act as finance officers, e.g. teachers in their area.

The Chairperson, Mr Saloojee, raised the question whether it was widely recognised that every NGO is supposed to register. He was concerned that it had not been made known to all NGOs. He said that there was a need to move away from old regime practices and encourage NGOs to register and be accountable. He hoped that the Department had not just relied on publishing the regulations in the Government Gazette as the old regime used to do. The Director responded that the information had been sent to more than 300 organisations and forum meetings were used to notify organisations. She could not say whether the central forums had passed on the information.

The Chairperson reiterated that the Department must not proceed quietly as in the "old days" and must move away from publishing in the Government Gazette. He suggested that they use newspapers, radio and television, which would target a broad range of organisations. The Chairperson said that he had not seen evidence of these methods of communication and a revision of the situation was needed. Ms Gandhi (ANC) drew attention to the provision made in the Act [B88-1997], stipulating the necessity for "broad publication".

Ms Turok (ANC) asked if people who were registered under the Fund-Raising Act had been informed about the registration form. The Director replied in the affirmative.

The discussion moved from the application form to the draft regulations. In chapter two (Appeals against decision not to register or to cancel registration), the panel of arbitrators would hear the appeals, provided that they were not full-time employees, but remunerated for their work as panellists.

Ms Turok questioned why there could not be a standard procedure for every case. The Director replied that a case may need special expertise. She said that arbitrators would be chosen according to the needs of individual cases.

The Director informed the committee that the Department was planning on enforcing the Regulations under the Nonprofit Organisation Act, 1997 from 1 August 1998. The Chairperson strongly objected to that date of promulgation. He said correct procedures had to be followed. This meeting was the first opportunity the committee had had to consider the regulations and hopefully the next meeting would finalise it. He said the regulations needed very careful consideration. The Director explained that the regulations had been planned to come out at the beginning of February, but had only been ready in June.

The committee decided that the regulations would not be finalised that day. They would continue in the first week of the next parliamentary quarter.

With regard to costs of appeal (Chapter 2(5)), the Director told the committee that the Department wanted it to be simple and an inexpensive mechanism to appeal. Alternative dispute mechanisms were available to take cases further, to court and finally to the Constitutional Court.

The committee then discussed the provisions for the narrative report (Chapter 5, 9(a)). The regulations must be modified to clarify that the narrative report must be an annual one, but could begin and end at any time of the year, depending on the organisation's financial year.

Regarding Chapter 5, 9(b), requiring the narrative report to give full details of the organisation's major projects, the Chairperson said that the specific instructions were unrealistic. He said organisations would not carry them out. The Director responded that the purpose of that section was to keep control so that organisations did not indulge in activities other than what they had claimed, in order to get their registration and benefits. The Chairperson felt that this section needed to be considered very carefully.

Concerning Chapter 5, 9(c), administrative matters, Ms Gandhi felt that the requirements were "tough" and the Department should be careful of limiting a small organisation. The Director replied that they were trying to promote good governance and a culture of accountability.

Ms Malan (NP) asked why the Department needed the information relating to staff (Chapter 5, 9(f)). The Director answered that the Department needed to know what kind of skills the Nonprofit organisations sector had, so as to utilise the skills of those NGOs. Also a high turn-over in staff could indicate trouble in an organisation. Ms Turok warned against trying to get too much information from busy organisations and suggested that 9(f)(i) should ask for "staffing skills", not "profile". The committee may ask that 9 (f)(ii) and (iii) be dropped.

The committee did not have any difficulties with chapter seven.

As the committee came to chapter eight, they decided to resume their discussion early in the next quarter.

Appendix 1

Draft regulations

GOVERNMENT NOTICE

DEPARTMENT OF WELFARE

REGULATIONS UNDER THE NONPROFIT ORGANISATIONS ACT, 1997

DRAFT PURSUANT TO COMMENTS RECEIVED

SCHEDULE

CONTENTS

Chapter 1: Application for registration

Chapter 2: Appeal against decision not to register and to cancel registration

Chapter 3: Certificate of Registration

Chapter 4: Register of Nonprofit Organisations

Chapter 5: Keeping constitutions and compiling, submitting and keeping accounting and other records, reports and documents

Chapter 6: Compliance notices

Chapter 7: Public access to constitutions, reports and documents

Chapter 8: Terms and conditions of employment of panel of arbitrators

Form 1: Application for Registration

Form 2: Certificate of Registration

Form 3: Compliance Notice

Form 4: Register of Nonprofit Organisations

CHAPTER 1

APPLICATION FOR REGISTRATION

1. Whenever an application is contemplated in terms of section 13(1) of the Act, the application must be made -

(a) in the format set out in Form 1; and

(b) subject to any conditions listed on that form.

CHAPTER 2

APPEALS AGAINST DECISION NOT TO REGISTER OR TO CANCEL REGISTRATION

DEFINITIONS

2. In this chapter, unless the context indicates otherwise -"consider the appeal" means considering all documents and representations received, making the decision, and submitting a written notice to the parties to the appeal, stating the decision and the reasons for the decision.

OBJECTIVE OF THIS CHAPTER

3. The objective of this chapter is to specify the procedure in terms of which appeals may be submitted and considered.

PROCEDURE FOR NOTING AND CONSIDERING AN APPEAL

4. (1) When submitting the notice of appeal as contemplated in sections 14(1) and 22(1) of the Act, the nonprofit organisation -

(a) must state the grounds on which the appeal is based; and

(b) may request that the appeal be considered by a person from the panel of arbitrators with particular expertise or by more than one person from the panel, in which case the reasons for such request must be specified.

(2) Within two weeks after receipt of all the documents relevant to noting the appeal, the Directorate for Non-Profit Organisations-

(a) must submit the document to the chairperson of the panel of arbitrators; and

(b) may -

(i) request that the appeal be considered by a person from the panel of arbitrators with particular expertise or by more than one person from the panel, in which case the reasons for such request must be specified; or

(ii) comment on the request made in terms of subregulation (1)(b).

(3) Upon receipt of the documents referred to in subregulation (2), the chairperson must appoint a presiding officer(s) to constitute the Arbitration Tribunal from among those members of the panel of arbitrators who are available and able to consider the appeal. In the event that more than one person is appointed to constitute the Arbitration Tribunal, the chairperson must designate one of them as the convening presiding officer.

(4) Upon being appointed, the presiding officer or convening presiding officer, as the case may be, must send a written notice to the nonprofit organisation and the Directorate for Non-Profit Organisations. The written notice must specify -

(a) the date by which written submissions may be made and on which oral representations may be made by the parties to the appeal. This date must be

(i) no later than two weeks before the expiry of the time period contemplated in sections 14(2) and 22(2) of the Act; and

(ii) at least one month after sending the written notice;

(b) the time and venue at which oral representations will be heard; and

(c) the person to whom or place at which written representations must be submitted.

(5) Subject to subregulation (6), the parties to the appeal are not obliged to make oral representations or submit written representations.

(6) If the nonprofit organisation fails to appear in person or through a representative to make oral representations, or fails to submit written representations on the date contemplated in sub-regulation (4)(a), the presiding officer or convening presiding officer, as the case may be, may dismiss the appeal for non-prosecution or may make any other appropriate order.

(7) The Arbitration Tribunal, on good cause shown, may excuse any party from compliance with any procedure specified in this regulation and may give any direction in matters of good practise and procedure that it considers just and expedient.

(8) Subject to the Act and this regulation, the chairperson of the panel of arbitrators may determine supplementary rules for the proper noting and considering of appeals.

COSTS

5. The Arbitration Tribunal may make an order for costs if a party to the appeal, or person who represented that party in the appeal, -

(a) acted in a frivolous, vexatious or unreasonable manner -

(i) by proceeding with or opposing the appeal; or

(ii) in conducting the appeal; or

(b) without good cause, fails to attend or remain in attendance during the receipt of oral representations.

CHAPTER 3

CERTIFICATE OF REGISTRATION

6. Whenever the issuing of a certificate is contemplated in terms of section 15(1)(a) of the Act, the certificate must be issued in the format set out in Form 2.

CHAPTER 4

REGISTER OF NONPROFIT ORGANISATIONS

7. The register of nonprofit organisations contemplated in section 24(1) of the Act must be kept in the manner set out in Form 4.

CHAPTER 5

KEEPING CONSTITUTIONS, COMPILING, SUBMITTING AND KEEPING ACCOUNTING AND OTHER RECORDS, REPORTS AND DOCUMENTS

8. For purposes of section 25(1)(a) and (b) of the Act, the constitutions of all nonprofit organisations that have voluntarily de-registered, have been wound up or dissolved, and all accounting records and reports submitted to the Director of Nonprofit Organisations as contemplated in section 17(3) of the Act, must be kept by the Director for a period of five years in their original or reproduced form.

9. For purposes of section 18(1)(a) of the Act, the narrative report must-

(a) specify the period under review;

(b) describe the organisation's major projects, and more particularly -

(i) name the projects;

(ii) indicate which objectives of the organisation's constitution were met by the projects;

(iii) indicate which activities were embarked upon to achieve these objectives;

(iv) describe the benefits of the projects;

(v) describe the beneficiaries of the projects;

(c) in respect of administrative matters, set out -

(i) how many meetings of the office-bearers were held;

(ii) indicate whether all these meetings were quorate;

(iii) whether the annual general meeting held and whether it was held timeously, and if not, why not;

(iv) whether special general meetings were held, and if so, in respect of what issues; and

(v) whether the organisation's constitution, address or composition of office-bearers has changed, and if so, whether the organisation has complied with the provisions of the Act in this regard;

(d) in respect of financial matters -

(i) state the name of the accounting officer appointed as contemplated in section 17(2);

(ii) provide details of the organisation's accounting policies; and

(iii) specify whether the financial statements submitted in terms of section 18(1)(a) having been approved by the office-bearers;

(iv) specify what percentage of the organisations budget was spent on administrative costs (salaries, rentals, etc) and on the organisations projects;

(e) in respect of fundraising, specify -

(i) the types of funding the organisation received;

(ii) whether the organisation engaged in any major fund-raising from the general public and businesses;

(iii) whether the organisation was assisted in its fundraising by a staff member, a member of the organisation or a person outside the organisation, and whether this was done on a voluntary basis or for a fee;

(f) in respect of staff-related matters, briefly describe -

(i) the staffing profile of the organisation;

(ii) any changes in staffing compliment during the period under review; and

(iii) any new skills, knowledge and expertise developed by the organisation during the period under review.

CHAPTER 6

COMPLIANCE NOTICE

10. Whenever the sending of a compliance notice is contemplated in terms of section 20(1)(a) of the Act, the notice must be issued in the form as set out in Form 3.

CHAPTER 7

PUBLIC ACCESS TO CONSTITUTIONS, REPORTS AND DOCUMENTS

11. Any person may inspect any constitution, report or document submitted to the Directorate of Nonprofit Organisations in terms of the Act, at the office of the Director of Nonprofit Organisations between the hours of 08:30 and 12:00, and 1:30 and 15:30, from Monday to Friday.

12. The Director of Nonprofit Organisations must charge the fees shown in the table below for the services listed.

TABLE OF INSPECTION AND COPYING FEES

Column 1 Column 2

Service: Fee

• Inspecting a constitution, report or document: R5

• Providing a certified copy or certified extract from

a document, constitution or report: R1 per page

• Providing a certified copy of a certificate of

registration: R10

13. All fees referred to in regulation 12 must be paid in advance in revenue stamps.

CHAPTER 8

TERMS AND CONDITIONS OF APPOINTMENT OF PANEL OF ARBITRATORS

DEFINITIONS

14. In this chapter, unless the context indicates otherwise -"day" means a day calculated from midnight to midnight; "panellist" means a member of the panel of arbitration established in terms of Section 9 of the Act.

FUNCTION AND RESPONSIBILITIES

15. In addition to any other function or responsibility conferred in terms of the Act

(a) the chairperson is responsible for

(i) administering the affairs of the panel of arbitrators

(ii) ensuring that the burden of considering appeals and arbitrations is distributed equitably among the panellists; and

(iii) setting adequate standards of performance for panellists and the maintenance thereof;

(b) all panellists must perform their functions with due regard to -

(i) maintaining and raising the standard of integrity of the panel of arbitrators;

(ii) respecting the confidentiality of all parties to an appeal or arbitration;

(iii) generally accepted standards of professionalism;

(c) the national department must provide the chairperson and panel of arbitrators with the administrative and human resources reasonably required to enable them to adequately discharge their responsibilities.

VACANCIES AND REMOVAL OF OFFICE OF PANELLIST

16. (1) A vacancy will arise in the Panel of Arbitrators if -

(a) pursuant to an inquiry, the Minister decides to remove a panellist from office on the grounds that the panellist -

(i) has committed misconduct;

(ii) has brought the panel of arbitrators into disrepute;

(iii) is incapable or has not capably discharged his or her responsibilities;

(iv) is no longer of sound mind;

(v) is no longer able to discharge his or her responsibilities; or

(vi) has not been able or been available to discharge his or her responsibilities for a continuous period of six months;

(b) a panellist resigns; or

(c) a panellist dies

(2) A vacancy will be considered to have occurred

(a) upon the minister making the decision to remove a panellist;

(b) upon receipt of a written notice of resignation from the panellist; or

(c) on the date of the panellist's death.

REMUNERATION

17. Panellists will be remunerated by the national department at a rate determined by the Minister with the concurrence of the Member of Cabinet responsible for finance, for the following functions -

(a) every appeal or arbitration considered in terms of the Act;

(b) all awards made in respect of an appeal or arbitration; and

(d) all administrative work and meetings associated with conducting the affairs of the panel of arbitration, except that panellists will not be remunerated for administrative or preparatory work associated with an appeal or arbitration that they have been appointed to consider.

TRAVEL AND ACCOMMODATION

18. (1) In circumstances where panelists are required to conduct an appeal or arbitration hearing in a municipal area other than their usual place of business, employment or residence, panellists must obtain prior approval of their itineraries from the chairperson. For journeys to any foreign country, prior approval must be obtained from the Minister.

(2) The travel and accommodation policy and tariffs of the national department apply to panellists with the changes required by the context.

(3) The requirements of Treasury Instruction K3.2.1 to K3.1 2.5 apply to subsistence and relevant expenses incurred by the panel and the panellists with the changes required by the context.

ENTERTAINMENT AND OTHER ASSOCIATED EXPENSES INCURRED BY THE PANEL OF ARBITRATORS

19. (1) Expenditure on entertainment and other associated expenses incurred by the panel of arbitrators will be paid for by the national department in terms of Treasury instructions K14.1

(2) Entertainment and other associated expenses will be paid only -

(a) in respect of expenses reasonably incurred; and

(b) upon submitting to the national department the relevant supporting vouchers.

RESPONSIBILITY FOR PAYMENT OF EXPENDITURE

20. (1) All expenditure incurred in respect of the business of the panel of arbitrators as set out in the Act and regulations must be met by the vote of the controlling department.

(2) Subject to the provisions of Treasury Instruction K3.13.1, the salary and personal allowances of any state official providing services to the panel of arbitrators must be met from the vote of the department/provincial administration in which he or she is normally employed.

(3) The controlling department must maintain separate subsidiary records of all expenditure on the panel of arbitrators so as to ensure that particulars thereof are readily available if required by Parliament or the Auditor-General.