The Public Benefits Organizations Act 2013 (the PBO Act) was passed by Parliament in 2012 and subsequently assented to in 2013. However, the PBO Act became law a decade later when the Cabinet Secretary for Interior, through Legal Notice Number 78 of 9 May 2024, appointed 14 May 2024 as the date of commencement of the PBO Act. The coming into force of the PBO Act heralds a new regulatory regime for Non-Governmental Organizations (NGOs) which were previously governed by the Non-Governmental Organizations Coordination Act 1990 (the NGO Act).
The key highlights of the PBO Act are discussed below:
Purpose of the PBO Act: the objects and purposes of the PBO Act include, among others, to provide meaningful protection to the freedoms of expression, association and peaceful assembly, to promote self-regulation among PBOs and to promote compliance by PBOs with their legal obligations to exercise effective control and management over the administration of their activities and funding.
Definition of PBOs: under Section 4, the PBO Act provides that a PBO is an autonomous, non-partisan, non-profit making voluntary membership or non-membership grouping of individuals or organizations organized and operated either nationally or internationally, registered as a PBO by the Authority and engaging in public benefit activities (PBA) in any of the areas specified under the Sixth Schedule to the PBO Act. Section 2 of the PBO Act provides further guidance on PBAs, providing that a PBA is any activity supporting and promoting public benefit by “enhancing or promoting the economic, environmental, social or cultural development or protecting the environment or lobbying or advocating on issues of general public interest or the interest or well-being of the general public or a category of individuals or organizations”.
Establishment of regulatory institutions: The PBO Act establishes various institutions intended to participate in the regulation of PBOs as follows:
The Public Benefit Organizations Regulatory Authority (the Authority): The Authority replaces the NGO Coordination Board. Its functions include registering and de-registering PBOs, maintaining a register of registered PBOs, receiving and reviewing annual reports from PBOs, advising the Government on PBOs' activities, and issuing forms, instructions, and model documents for use by PBOs.
The National Federation of Public Benefit Organizations (the Federation): the Federation was established as an umbrella organization of all PBOs registered in Kenya. It is meant to be a mechanism for self-regulation of the various PBOs with all registered PBOs being eligible for membership to the Federation. Its functions include providing leadership on matters of interest to the sector, coordinating self-regulation of PBOs, advising the Authority on the development of PBOs and rendering advice to donors and the Authority on any issue relating to the Sector.
The Public Benefit Organizations Disputes Tribunal (the Tribunal): the PBO Act establishes the Tribunal and confers it with jurisdiction to hear and determine complaints arising from a breach of the provisions of the PBO Act, to hear and determine any matter or appeal made to it pursuant to the PBO Act.
Registration of PBOs: the PBO Act provides that a PBO shall only enjoy the benefits under the PBO Act upon registration by the Authority and further provides that no organization registered under any other law shall be registered as a PBO while its registration under that other law subsists. Under Section 7, organizations are prohibited from operating as PBOs unless registered as such under the PBO Act or bestowed with the status of a PBO by the Authority.
Benefits accruing to PBOs: the Second Schedule to the PBO Act is dedicated to the various benefits accruing to PBOs. These benefits include exemptions from income tax received from membership subscriptions, donations or grants, exemption from stamp duty, exemption from paying tax on interest and dividends on investments and gains earned on assets or the sale of assets, direct government financing for public benefit organizations that partner with the government and preferential treatment in public procurement procedures and bidding for contracts.
Transitional provisions: the Fifth Schedule to the PBO Act contains transitional provisions with Paragraph 5 providing that any organization registered as an NGO under the repealed NGO Act on the appointed date shall be deemed to be registered as a PBO under the PBO Act and shall have up to one year from the appointed day to seek registration as a PBO under the PBO Act.
Any NGO that fails to procure registration under the PBO Act within the specified period shall be issued with a notice to do so by the Authority and shall cease to have public benefit organization or any similar or equivalent status thirty days after the expiration of the specific notice period if the organization remains non-compliant. Further, under Paragraph 7, any organization that was exempt from registration under the repealed NGO Act will be required to apply for registration as a PBO within three months of the PBO Act coming into force. In light of the recent developments, NGOs registered as such by the 14th day of May 2024 shall have up to one year to obtain registration under the PBO Act. Exempt organizations shall, on the other hand, have only three months to apply for registration under the PBO Act.
Conclusion
In conclusion, the PBO Act provides a comprehensive regime for the regulation of PBOs. However, there is a need for the Cabinet Secretary to enact regulations to give effect to some provisions and requirements under the PBO Act. These provisions include matters such as the prescribed registration fees and application forms referred to under Section 8 of the PBO Act.
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