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New NGO Act balances enablement and regulation

Saturday April 6 2013


A lot has been written about the newly enacted Public Benefit Organizations (PBO) Act, 2013, which will repeal the NGOs Co-ordination Act of 1990.

It is fair to say that some of what has been written has caused apprehension in the NGO sector. It is, therefore, important that clarity be brought to the discussion on this law.

Specifically, the law seeks to improve the regulatory environment for NGOs in Kenya, increase regulator efficiency and transparency, improve sector capacity and accountability and develop dialogue between civil society and the government.

The PBO Act is the product of extensive consultations involving stakeholders from relevant government agencies and NGOs involved in public benefit work. 

The process also benefited from consultations and borrowed good practice from various renowned PBO regulators such the Charity Commission of England and Wales and the Office of the Scottish Charity Regulator.

The new law has ensured that Kenya retains its important role as a pacesetter in the region and indeed Africa.

The law seeks to ensure the delicate balance between enablement and regulation.

In enabling NGOs, it provides space for them to use their comparative strengths: mobilising citizen participation, promoting innovation and flexibility in service provision and advocating against societal ills, without undue interference by the government.

In regulation, it provides the necessary oversight to protect the public interest in the NGOs, promote their increased accountability and protect the PBOs from potential abuse by rogue directors.

The use of the term “Public Benefit Organisations” in place of “Non-Governmental Organisations” as previously used in the NGOs Co-ordination Act, 1990 is deliberate. 

It seeks to create a distinction between NGOs that operate for mutual benefit – those addressing the interest of members – and those serving the public and thereby common good.

By focusing on PBOs, the PBO Act seeks to call attention to these special category of NGOs underscoring their importance and at the same time demanding that PBOs meet certain ethical and legal standards in their operations to continue enjoying that special status.

The special status referred to here is the fact that in most countries, Kenya included, the State does not want to extend benefits or concessions to all NGOs indiscriminately.

By providing benefits like tax exemption, the State seeks to promote certain activities that it considers to be for the common good.  The PBO Act, therefore, provides a legal and administrative framework for identifying and giving legal recognition to those NGOs that should enjoy this special status and ensures that such organisations are held to account and regulated in the public interest.

In giving benefits to PBOs, the State waives its rights to collect income tax for instance, and as such, it is interested to see that this concession results in benefits to the public.

The PBO Act seeks to remedy an anomaly that has seen many NGOs enjoy this special status without being regulated, thereby making it difficult to determine if they deserve it.

NGOs established under any of the existing laws wishing to enjoy public benefit status must apply to be conferred with the status by the Public Benefits Regulatory Authority.

This will in turn make them subject to the regulation of the authority. The implications of this requirement are that such NGOs will then be responsible to multiple registration bodies. 

While the Act seeks to enhance regulation and enablement of PBOs, the law has not necessarily brought drastic changes.  What it is has done is to bring clarity and make unequivocal what was either inadequately provided for or only implied in the NGOs Co-ordination Act.

Some of the provisions viewed by some people as “new” and “drastic” are in fact, international best practices that many NGOs are already voluntarily submitting themselves to.

For example, the PBO Act has elaborated on the area of self-regulation by outlining expected standards and good practice for PBOs based on the understanding that poor or weak governance is at the centre of NGO ineffectiveness and lack of accountability.

The law has specifically made provisions for the separation of powers between the management and boards of NGOs and expressly provided that board members serve on voluntary basis. The new law affirms volunteerism as the cornerstone of the charitable sector.

Mr Ochido is the head of operations, compliance and research at the NGOs Co-ordination Board [email protected]