Comparing NPO Types

One of the questions that often come up in our Facebook Group is the difference between various types of NPOs. What is an NGO? What is a CBO? How does an NPO and an NPC differ?

Community Based Organisations (CBOs)

CBOs work on ABCD principles, particularly that of Community-Driven Development (CDD). Instead of “experts” from outside of the community coming into the community and deciding what the community should have to solve their problems, in a CBO, the community sets its own objectives and works toward those objectives with or without outside help.

These organisations are usually informal structures, but in South Africa may decide to take on a legal structure and register as a voluntary association, non-profit company or trust if they want to (or are forced to do so by outside agencies), unless they decide to embark on a Social Enterprise, in which case for-profit legal structures are also available to them.

If the CBO is faith-based, it may also be called a Faith Based Organisation (FBO).

Non-Profit Organisations (NPOs / NPCs)

NPOs are different from CBOs in that their solutions are not necessarily driven by the members of the community in which they work. The organisation’s governing structure sets the objectives for the organisation, usually in response to a perceived need in the community, with or without community consultation. NPOs generally don’t have programmes, or if they do, there are not a wide range of them, with most work performed routinely or through projects.

NPOs in South Africa are registered as either a Non-Profit Organisation (Department of Social Development), Non-Profit Company (Companies and Intellectual Property Commission) or Trust (Master of the High Court).

The main difference between these legal entities is in their compliance requirements.

In South Africa, the vast majority of NPOs are Voluntary Associations.

CriteriaCBONPONPCTrust
Required Members3+3+3+1+
Registration with Master of the High Court RequiredNNNY
Registration with CIPC RequiredNNYN
Registration with DSD RequiredNYNN
Registration with DSD EncouragedYYYY
SARS Income Tax Registration RequiredYYYY
SARS PBO Registration RequiredNNNN
SARS PBO Registration EncouragedYYYY
SARS S18A Exemption Application RequiredNNNN
SARS S18A Exemption Application EncouragedYYYY
Annual Financial Audit RequiredNNNN
Annual Financial Audit EncouragedYYYY
Annual Returns to SARSYYYY
Annual Report to DSD if RegisteredYYYY
Annual Report to CIPCNNYN
Annual Report to Master of the High CourtNNNY
Governance RequirementsLowLowHighLow

Non-Governmental Organisations (NGOs)

NGOs are different from NPOs in that their objectives are aligned to international objectives on a national scale, rather than regional or local requirements, even though they often overlap.

Another large difference is that NGOs are more structured and institutional than NPOs, in that they often have various programmes with projects that span a large geographical area.

NGOs often fund NPOs who implement projects aligned to their programmes, and have easier access to IAOs than NPOs or CBOs due to their capacity.

In South Africa, NPO and NGO are often used interchangeably, with the reasoning that all NPOs are by nature non-governmental (not of or initiated by government).

International Aid Organisations (IAOs)

IAOs differ from NGOs in that they are exclusively driven by international objectives on a global scale. They could be government instituted (e.g. SIDA, GIZ, USAID) or private (e.g. Greenpeace, Michael & Susan Dell Foundation, Rockefeller Foundation, Aga Khan Development Network). Their objectives could be broad-singular (health, in the case of the Bill & Melinda Gates Foundation) or very broad (Aga Khan Development Network).

IAOs work with all entities, but due to their large budgets, often rather work with NGOs than NPOs and CBOs, who may have a capacity shortage to implement high-value programmes and projects efficiently.

So What’s Special About Foundations?

Foundations are usually organisations that are set up by wealthy families with their own funding and own objectives. In South Africa, there is no legal entity for a foundation, so a foundation may register as any of the entitities available, and any entity can call itself a foundation. If an organisation did call itself a foundation and did not actively raise and distribute funds, it would seem hypocritical to call itself a foundation.

Summary

Organisational TypeDescription
International Aid Organisations (IAOs)IAOs are government instituted or private foundations and make funding available to governments and NGOs. Their programmes are usually global in nature. The Bill & Melinda Gates Foundation and Oxfam are examples of IAOs.
Non-Governmental Organisations (NGOs)NGOs are professional-driven organisations that receive funding from IAOs and governments, either using it themselves in their broad spectrum of programmes, or redistributing it to NPOs and CBOs. Their programmes are usually country-specific in nature, with a global view. loveLife Trust and Childline are examples of NGOs. In South Africa, their legal form can take that of a Voluntary Association, Non-Profit Company or Trust.
Non-Profit Organisations (NPOs)NPOs are professional-driven organisations that receive funding from NGOs and governments for specific programmes. Their programmes are usually regional to local in nature. iThemba Trust is an example of an NPO. In South Africa, their legal form can take that of a Voluntary Association, Non-Profit Company or Trust.
Community-Based Organisations (CBOs)CBOs are community-driven organisations that receive funding from any source for specific programmes. Their programmes are usually local in nature. Sophakama Community Partnership is an example of a CBO. In South Africa, their legal form can take that of a Voluntary Association, Non-Profit Company or Trust, if they choose to formalise their relationship.

2 Comments

  1. Teroglynn Pekeur 04/01/2019

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