SUMMARY OF REGULATORY SYSTEM FOR NGOS IN KENYA

1. CREATING NGOS
Estimates on the size and economic value of the NGO sector: NGOs activities are now spread in every corner of Kenya and cover almost every aspect of the economy. There are currently over 4000 registered NGOs (this includes about 400 international NGOs), employing 50,000 people. It was estimated at the end of 2002 that the wider not for profit sector (including NGOs, self-help groups, women and youth groups) encompassed over 220,000 organisations. It is estimated that the annual income of NGOs was $1 billion, approximately 3% GDP. The Government now regards NGOs as true partners in development. Different types of NGOs that exist: The main types of not-for-profit organizations that can be formed under the law are companies, societies, trusts and NGOs.

Legal definition(s) of the different types of NGOs that exist: The NGO Coordination Act (1990) defines an NGO as a private voluntary grouping of individuals or associations, not operated for profit or for other commercial purposes but which have organised themselves nationally or internationally for the benefit of the public at large and for the promotion of social welfare, development, charity or research in the areas inclusive of, but not restricted to, health, relief, agriculture, education, industry and the supply of amenities and services". An NGO can not become a branch or affiliated with or connected with any organisation or group of a political nature established outside of Kenya. An NGO is required to benefit the public at large and promote social welfare, development charity, or research in areas including but not restricted to health, relief, agriculture, education, industry, and the supply of amenities and services. Other non-profit organisations are not restricted to public benefit purposes.

Requirements for creating an NGO: The NGO Co-ordination Act makes it illegal to operate an organisation which falls within the definition of an NGO unless it has been registered with the NGO Co-ordination Board. A few NGOs are exempt from the requirement to register, including those established by a state or group of states for welfare, research, relief, public health or other forms of development assistance. Failure to register carries a fine up to 50,000 KShs or 18 months imprisonment or both. Those non profit organisations which are outside the definition of an NGO (see above) may register as companies limited by guarantee with the Registrar of Companies or societies with the Registrar of Societies. Community Based Organisations are administratively registered with the Provincial Administration or the Department of Culture and Social Services. The majority of women groups and self help groups fall into this category. 2. REGISTERING NGOS NGOs which are required to register and details of the agencies they must register with (including contact details): It is a legal requirement for any organisation which falls within the definition of an NGO to register with the NGO Co-ordination Board: NGO Co-ordination Board Co-op Bank House 15th Floor Haile Selassie Avenue P.O. Box 44617 Nairobi Kenya

Tel: +254 (20) 2144044 Email: ngobureau@wananchi.co.ke NGOs which may register voluntarily and details of the agencies they can register with (including contact details): The registration process: In summary the process for the registration of an NGO currently involves the following: Obtaining authorisation for the name of the NGO Before an application for registration is made, approval must be obtained from the Director of the NGO Co-ordination Board for the name of the NGO to be registered. There is a small fee to reserve the name. Name approval lasts for one month (applications must be made within 30 days of any approval or it must be renewed). Particulars of the founders of the NGO must be submitted to the NGO Co-ordination Board for background checks. Constitution The proposed NGO must have a constitution specifying its objects. This must comply with requirements issued by the NGO Co-ordination Board. The constitution must be subscribed to by three members. Submission of application Once the name of the organisation is approved, applicants must provide the NGO Co-ordination Board with:

       

Five copies of the completed application form includes the following: name of the organisation, the name of the Chief Executive, the date and place of first registration (where appropriate), the nature or functional remit of the proposed NGO, the objects of the NGO, the local and foreign personnel requirements, the sources of funds, other countries of operation, affiliate organisations. Personal particulars of the NGOs 3 officers Five copes of a letter from the sponsor who is the person or body providing primary financial and material support Two copies of the NGOs constitution (NB: the NGO Board can supply a model constitution for a fee) Two current passport-sized photographs of the applicant duly endorsed by the sponsor or referee A certificate of registration outside Kenya or incorporation in Kenya where appropriate (i.e. where an NGO is registered outside Kenya or previously registered in Kenya under a different legal regime, for example under the Societies or Companies Acts) A copy of the minutes of the meeting of the proposed NGO authorising the filing of the application A notification of the location of the office and postal address of the proposed NGO, signed by the Chief Executive of the proposed NGO The prescribed application fee currently 11,000 KShs (22,000 for an international NGO)

Consideration of application and decision Applications are carefully considered by the Programmes and Publications Committee of the NGO Coordination Board. Registration certificates personally signed by the Chair of the NGO Board. 3. GOVERNANCE REQUIREMENTS FOR NGOS Requirements for governing documents: The NGOs constitution must contain:

 

Information regarding the custody, use and investment of the funds and property of the NGO and the designation of the persons responsible therefore The purpose for which the funds may be used (should include prohibition of the distribution of funds and assets among member, the prohibition of clauses in the constitution that may permit or suffer the distribution of funds and assets to member or officials except for legitimate reimbursement of expenses incurred in implementing the objects of the NGO) The rules governing the awarding of contracts to member or officials

Other pertinent provisions of the constitution include:

 

The persons or entities which may become members The structure and management of the NGO (includes the titles of officers, trustees, auditors and their terms of office and methods of election, appointment, suspension and dismissal; also encompasses the composition of committees and their terms in office and the methods of election, appointment, suspension and dismissal).

Additional important provisions which would ensure effective and efficient financial management and social and political governance and accountability include:

     

Quorums for and dates of general meetings Financial year and periodicity of audit of accounts Inspection of books and list of members Whether and how branches may be formed The manner of amending the name, constitution or rules of the NGO. Clause regarding the manner of dissolution of the NGO and the disposal of its property on dissolution.

What responsibilities and/or liabilities are imposed upon governing bodies of NGOs?

Regulations relating to payments and distribution of profits:

3. COLLECTING INFORMATION ON NGOS Collecting information: NGOs are required to declare bank account details in their Annual Reports and to report any changes in address or changes in officers to the NGO Co-ordination Board. NGOs must also submit an Annual Return to the NGOs Board by 31 May each year. Analysis of information: The NGO Co-ordination Board analyses the information it receives from NGOs to assist it to inform government on the work of the sector and identify potential problems within organisations. Making information publicly available: The NGO Co-ordination Board maintains a register of registered national and international NGOs at its main office. The public have access to the register, which is published periodically in accordance with the law. 5. ACCOUNTABILITY AND ACCOUNTING Requirements and standards: NGOs are required to declare bank account details in their Annual Reports and to report any changes in address or changes in officers to the NGO Board. NGOs must also submit an Annual Return to the NGOs Board by 31 May each year. The National Council for NGOs has produced a Code of Conduct for NGOs to promote compliance with minimum ethical and governance standards.

Analysis of information: The NGO Co-ordination Board analyses annual returns submitted by NGOs. 6. PREVENTING AND INVESTIGATING ABUSE Regulatory intervention: Government and sector representatives share responsibility for regulating the sector in Kenya. The NGO Co-ordination Act (1990) provided for the creation of a self-regulatory body for NGOs the National Council of NGOs alongside the government oversight body - the NGOs Co-ordination Board. All NGOs registered by the NGO Co-ordination Board automatically become member of the National Council for NGOs. The Council oversees adherence with a Code of Conduct. Its Regulatory Committee sits periodically and acts as a tribunal. It can hear complaints, dismiss complaints, issue a warning to an organisation, recommend (to the NGO Co-ordination Board) that a certificate is cancelled or suspended, recommend an organisation takes appropriate action against an employee/member/agent, remove or bar a person from holding office in the Council for 5 years. The Council of NGOs can summon NGOs and other parties to appear before the Regulatory Committee. There is a small charge for filing a case with the Committee. Any serious concerns about NGOs (arising from monitoring of Annual Reports or from an external source, including the National Council for NGOs) are investigated by the NGO Co-ordination Boards Programmes Department. A Regulatory Committee assesses cases and recommends a course of action to the NGO Board, which can then dismiss the complaint, admonish the organisation, fine it, or suspend or cancel its registration certificate. The NGO Board can also order the freezing of bank accounts if appropriate. Right of appeal: Applicants can appeal if the NGO Co-ordination Board decides not to register them. They appeal to the Minister responsible for NGOs (currently the Minister of State for National Heritage) and ultimately to the High Court. Directors of an NGO can similarly appeal if the NGO Co-ordination Board decides to deregister them.

7. REGULATIONS RELATING TO INCOME Tax exemptions: Kenya exempts from corporate income taxes the income of certain NGOs carrying out specific types of activities. Unrelated business income is subject to tax under certain circumstances. Kenya also subjects certain sales of goods and services to VAT, with a fairly broad range of exempt activities. The tax laws confer only limited tax benefits on corporate donors and no benefits on individual donors. Trading: What special restrictions/rules are there on trading by NGOs? In what ways can NGOs fun draise?

Fundraising: There are no special rules controlling receipt of funding from overseas. There are no special rules controlling receipt of funding from overseas. Many NGOs rely on overseas donors and base their programmes on availability of donor funds. Local initiatives are encouraging NGOs to be more selfreliant, to look for funding locally and creatively diversify funding streams. Public charitable collections or Harambees are allowed in Kenya. They must be conducted in compliance with the provisions of the Public Collections Act and the regulations made there under. Licensing authority for Harambees is the Provincial Administration. NB: What assistance, advice or guidance is provided to NGOs to assist them in meeting regulations relating to income?