Background:
The Public Benefit Organisations Act, 2013 (the Act) came into force on 14 May 2024 (the Commencement Date) pursuant to Legal Notice No. 78 of 2024 (the Legal Notice).
The commencement of the Act repeals the Non-Governmental Organisations Co-ordination Act, 1990 (the NGO Co-ordination Act) which until the Commencement Date provided for the registration and coordination of Non-Governmental Organizations (NGOs) in Kenya.
A PBO is a voluntary membership or non-membership grouping of individuals or organisations, which is autonomous, non-partisan, non-profit making and which is:
- organised and operated locally, nationally, or internationally;
- engages in public benefit activities in any of the areas set out in the Act; and
- is registered as such by the Public Benefit Organisations Regulatory Authority (the Authority).
The PBO Act introduces a more detailed and structured legal framework specifically tailored for Public Benefit Organizations (PBOs).
Introduction:
The PBO Act recognizes the Non-Governmental Organizations (NGO's) that were registered under the Non-Governmental Organizations Coordination Act. It confers upon them the status of a public benefits organization, but imposes an obligation on the same NGOs to register within one year from the commencement of the PBO Act.
Establishment of the Public Benefit Organizations Regulatory Authority
The Act establishes the Public Benefit Organizations Regulatory Authority (the Authority) whose functions shall include:
- the registration and de-registration of PBOs;
- receiving and reviewing annual reports of PBOs;
- advising the Government on the activities of PBOs and their role in development within Kenya;
- instituting inquiries to determine if the activities of PBOs comply with the PBOs Act or any other law; and
- providing advice and training to public benefit organizations.
Effect of Registration as a PBO
A PBO that intends to enjoy the benefits that accrue under the PBOs Act must register as a PBO with the Authority. The benefits accruing to a registered PBO are set out in the Second Schedule to the Act and include the following:
- indirect government support in the form of exemption from certain taxes such as income tax on income received from membership subscriptions and any donations or grants; income tax on income acquired from the active conduct of income producing activities if the income is wholly used to support the public benefit purposes for which the organization was established; and preferential treatment under value added tax (VAT), and customs duties in relation to imported goods or services that are used to further their public benefit purposes; and; incentives for donations by legal and natural persons;
- provision of direct government financing for public benefit organizations that partner with the government, via budget subsidies, grants for specific purposes, and contracts to perform certain work.
- preferential treatment in public procurement procedures and bidding for contracts; and
- access to training courses that are relevant to public benefit organizations and offered by government institutions.
International Organizations
The PBO Act acknowledges the existence of international organizations involved in public benefit activities within Kenya.
An organization which is registered outside Kenya and which intends to operate in Kenya will be required to apply to the Authority for a certificate to operate in Kenya.
Exemption for Limited Operations:
The Act allows the Public Benefit Organizations Regulatory Authority (PBORA) to exempt international organizations from full registration under certain conditions. These conditions ensure that the international organization:
- Doesn't Directly Implement Programs. They cannot directly carry out activities or programs within Kenya.
- Doesn't Use Kenya as a Base. They cannot use Kenya as a launchpad to implement programs in other countries.
- Doesn't Fundraise in Kenya. They cannot raise funds of any kind within Kenya.
Essentially, this exemption caters to international organizations with a limited, indirect role in Kenya's public benefit landscape.
An organization registered pursuant to an application mentioned above shall be required to have:
- have at least one-third of its directors who are Kenyan citizens and who are resident in Kenya; and
- to maintain an office in Kenya.
Strengths of the PBO Act compared to the NGO Coordination Act
1. Streamlined Registration Process:
- Predictable timelines and clear requirements aim to eliminate the unpredictable application process under the NGO Act.
- This reduces delays and potential legal challenges associated with registration.
2. Harmonized Regulations:
- The PBO Act consolidates regulations from various sources, simplifying compliance for PBOs.
- This reduces confusion and potential conflicts arising from scattered regulations.
3. Alignment with Modern Legal Framework:
- The PBO Act incorporates principles of fair administration, human rights, and the 2010 Kenyan Constitution.
- This ensures the regulatory framework is up-to-date and reflects modern legal standards.
4. Self-Regulation and Advocacy:
- The PBO Act establishes a National Federation of PBOs and self-regulation forums.
- This allows PBOs to have a collective voice and advocate for their interests to the government.
5. Dispute Resolution Mechanism:
- The PBO Act introduces a dedicated PBO Disputes Tribunal.
- This provides a structured mechanism for resolving disputes within the sector.
6. Categorization of PBOs:
- The PBO Act differentiates between international and local PBOs, tailoring registration processes accordingly.
- This recognizes the unique circumstances of different types of organizations.
7. Transparency and Accountability:
- The PBO Act aims to enhance transparency and financial accountability of PBOs.
- This helps prevent money laundering and ensures proper use of donor funds.
Dispute Resolution for PBOs
The PBOs Act establishes the Public Benefits Organizations Disputes Tribunal (the Tribunal) which shall have jurisdiction to hear and determine complaints arising out of any breach of the provisions of the Act. The Tribunal shall also have jurisdiction to hear and determine any matter or appeal made to it pursuant to the provisions of the PBOs Act.
Conclusion:
The Act outlines the regulatory requirements, standards, and oversight mechanisms for PBOs operating in Kenya. This aims to enhance accountability, transparency, and efficiency within the sector. Additionally, this provides greater clarity and guidance for these organizations.
With the deadline for existing NGOs to register under the PBO Act approaching on May 13, 2025, the Public Benefit Organizations Regulatory Authority (PBORA) is required to issue detailed guidelines on the registration process in the coming months.
By:
Kate Odundo
kodundo@alakonyalaw.co.ke
