On Tuesday morning the parliamentary committee on finance considered submissions from ChristianView Network and other organisations on an over-stringent anti-money laundering bill that threatens to financially and administratively strangle most of South Africa’s non-profits, who are unlikely to be able to comply.
The good news is that this morning the parliamentary agreed to extend the comment period — but if we don’t use our second chance and speak up, South Africa’s vulnerable NPO sector and our democracy will be hurt badly.
Section 10 of the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill amends Section 12 of the Non-Profit Organisations Act, 1997, to require all non-profit organisations (NPOs) to register in terms of the Act. Registration in terms of the NPO Act is currently voluntary.
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The administrative requirements of the act are however onerous, and most, particularly smaller non-profits, including community-based organisations, choose not to register because this would otherwise add financial and time costs and detract from their core function and financial viability. It is more viable for a larger NPO to register.
Parliament is under a lot of pressure to push the bill through fast, as South Africa faces the threat of international “grey listing” as an investment destination which will likely harm our economy. But we need to fix clause 10. It is ironically mainly foreign-funded NGOs that have the financial resources to comply with the NPO Act, meaning that the voice and participation of grassroots South African funded NPOs would be hardest hit.
Harmful effects of the bill on NPOs
The government is shooting itself in the foot by destroying a major part of the welfare and putting more load on the Department of Social Services. It would also weaken democracy by ensuring that only well-funded organisations would be allowed to operate.
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Nevertheless, over time it would slowly kill most of the sector because: firstly, most large non-profits start small and grow bigger, thus the small but future large non-profits would be killed at birth. Secondly, mon-profits within each sector tend to have a lifecycle, with new organisations starting up and older ones dying off.
If the bill passes as is, the older ones would continue to die off, but there would be few new ones growing to replace it. The bill would discriminate against smaller community-based NPOs that lack the administrative skill and resources, thus prejudicing the poor.
Existing protection of FICA Act
The FICA Act already has stringent protections against money laundering, many of which are already making the work of some NGOs difficult. The proposed Act would not just make their work difficult but shut a lot of them down. This is not the first time the government has attempted to force NPO’s to register and previous attempts have been strongly opposed.
This attempt, however has slipped through. The price of freedom is eternal vigilance. We asked parliament to: 1. Delete or amend Section 10 of the Bill so that registration of NPOs remains voluntary. 2. Extend the time for public comment. Yesterday, the parliamentary committee agreed to extend the time for public comment to October 25 2022. Please especially warn those you know who are part of small non-profits and churches to speak up.
We must use this opportunity or thousands of small churches and NPOs can suddenly become illegal. Comment can be sent via: awicomb@parliament.gov.za
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I believe the threat of “Grey Listing” is more serious, having a wider impact on South Africa’s economy and the well being of society than the adverse effect on smaller NGO’s. Surely the answer is to streamline the registration and compliance process, which is far more proactive than assuming “a short staffed or inefficient” social services department.