Over 160 000 non-profit organisations at risk of de-registration

With over 160 000 non-profit organisations at risk of de-registration due to compliance issues, concerns have been raised that requirements often pose significant challenges, especially for grassroots organisations with limited resources and lack of support from government.

The Western Cape Department of Social Development (DSD) confirmed there are 30 914 registered NPOs operating across multiple sectors in the province including social services, health, environment, law and advocacy, and education and research.

However, 17 364 are non-compliant. Nationally, as of October 2024, there were 295 052 registered NPOs, of which, 167 103 are non-compliant.

According to DSD, the biggest contributors to non-compliance were failure to submit annual reports and organisations not adhering to the provisions of their own founding documents.

“In anticipation of the phased deregistration process, the WCDSD’s Institutional Capacity Building unit has ramped up its efforts to assist NPOs. In 2023/24, the unit conducted 33 Mobile Help Desk drives across the province, which assisted 422 NPOs with registration, compliance, and related concerns.

A further 1 593 NPOs were assisted by the NPO Helpdesk walk-in service, situated in the Cape Town city centre,” the department said.

Social Development MEC Jaco Londt added: “As DSD management, we have also been working on a model to help better support organisations, beyond the funding we provide as government, to create a ‘double safety net’. More on this will be communicated in the coming months.”

NPOs said the reality on the ground remained challenging.

Hope For the Future founder, Vanessa Nelson said: “For us and so many organisations, there's not really support for after you’ve registered, there's no workshops around how to follow the processes.

“You register and they just leave you hanging. There is so much paper work and most organisations run with no money. They need audited reports, which is costly. Auditing is so expensive, in townships, we don't have the resources.

“Many organisations are women run and many of the women are also elderly, they don’t have money but continue to help their communities with every last cent they have.

“DSD needs to collaborate with organisations and offer more support, walk a mile with organisations to help them thrive so they can continue to do the good work they do.”

Ilitha Labantu expressed concern regarding the high number of non-compliant NPOs in South Africa.

Ilitha Labantu spokesperson, Siyabulela Monakali said: “Regulatory compliance has proven to be a significant burden for many NPOs, particularly for smaller or newly established organisations.

“While compliance frameworks are necessary to ensure accountability and transparency, they often present significant hurdles for organisations with limited resources.

“Many grassroots NPOs, which are at the forefront of delivering vital services, find the requirements complex and time-consuming.

“This diverts time and resources away from service delivery and into administrative processes, creating additional strain on already stretched operations.”

He added that non-compliance carries serious risks for NPOs, including restricted access to funding opportunities, diminished public trust, and in some cases, the complete shutdown of operations.

Ilitha Labantu urged the department and other stakeholders to offer greater support to NPOs.

This includes simplifying compliance requirements to ease the administrative burden, providing regular training and capacity-building opportunities focused on governance and financial management, and creating mechanisms to assist organisations with compliance-related costs, Monakali said.

Cape Times