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The Department of Social Department (DSD) is cracking down on non-compliance by non-profit organisations (NPOs).
DSD has been tasked with ensuring stricter scrutiny over the funds received and distributed by NPOs across the country.
The sector has been identified by an international money laundering and terror financing watchdog as being a prominent conduit for the flow of illegal funds.
A DSD report on the state of NPOs stated that the department had 273 337 registered organisations as of March 2023.
In that year, only 59 624 had submitted their annual reports, and the department has now identified 203 279 NPOs who risk being deregistered for not doing so.
“To date, the department has issued 41 787 notices of non-compliance to NPOs. Of this number, a total of 6 221 NPOs have been deregistered for failure to honour their obligations,” the department stated on Thursday.
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DSD began issuing these notices in August 2023, and NPOs were given the opportunity to participate in programmes that would help them meet compliance standards.
“We must once again emphasise that compliance is a regulatory requirement not only to ensure transparency and accountability but also to ensure the protection of beneficiary communities,” DSD added.
Gauteng has the highest number of registered NPOs, accounting for just over 30% of the national total. The province also leads with the highest number of non-compliant NPOs, with 64 221.
KwaZulu-Natal and Western Cape follow with 36 605 and 20 371 non-compliant NPOs, while Limpopo and Eastern Cape have just over 19 000 each.
“These organisations provide a wide range of services to children, youth, persons with disabilities, older persons and humanitarian relief,” stated DSD.
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Between 2017 and 2023, the number of registered NPOs increased by roughly 66 000 — an over 30% jump in five years.
Development, housing and social services account for well over half of the sector-specific registrations, with education, research, health, culture and recreation making up the next largest portion.
The push to tighten the compliance of NPOs is driven by a need to meet Financial Action Task Force (FATF) technical requirements.
The FATF is a G7 body focused on illicit financing, and in 2021, it singled out South Africa’s NPOs as a sector being exploited.
“While authorities carry out some successful money laundering investigations, the proactive identification and investigation of laundering networks and professional enablers is not really occurring,” FAFT stated in 2021.
As of South Africa’s 2021 evaluation, the country was non-compliant in five of the 40 areas graded by the FATF, and fully compliant in just three areas.
November 2024’s report showed an improvement, with South Africa fully compliant in five areas and at least partially compliant in all 40 areas.
The department is still welcoming NPOs who wish to ensure compliance, and they are able to contact DSD via email, telephone or via walk-in service.
“The department would like to implore all registered NPOs to ensure their operations meet the legal prescripts for compliance without further delay,” DSD concluded.
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