The Bill proposes fines of up to R1-million and prison terms of up to five years
- New legislation proposes giving the Nonprofit Organisations Directorate powers to investigate, prosecute and sanction organisations without independent oversight.
- The directorate will be given new enforcement powers to impose administrative sanctions, fines of up to R1-million and prison terms of up to five years.
- The bill's appeal mechanism relies on an Arbitration Tribunal whose members are appointed by the Minister of Social Development, the same executive authority responsible for the directorate.
- South Africa's many non-profit organisations deliver essential services and hold public institutions accountable, and the new bill risks not only unfair decisions against individual organisations, but the erosion of civil society's ability to operate freely in a constitutional democracy.
South Africa's nonprofit sector was born from a deliberate democratic choice. When Parliament adopted the Nonprofit Organisations Act in 1997, it rejected the coercive regulatory model of the apartheid era and embraced something far more aligned with constitutional values: a largely voluntary system grounded in transparency, not control. Accountability would come from openness, not from punitive enforcement.
Nearly three decades later, that foundational choice has been challenged by a world in which the international crackdown on financing of terrorist organisations is creating pressure on the South African government to regulate nonprofit organisations (NPOs) more tightly.
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Our framework has already shifted significantly. In response to recommendations from the Financial Action Task Force (FATF), Parliament adopted amendments in 2022 requiring certain NPOs - particularly those operating across borders - to register. These changes, which came into force between December 2022 and April 2023, introduced important safeguards against financial abuse.
New bill
A new draft amendment Bill, published by National Treasury for comment until 13 February, proposes changes to the regulatory framework governing NPOs. The bill further alters the balance between the state and civil society. More troublingly, it does so in a manner that raises serious concerns.
At stake is not whether NPOs should be accountable - they must be. The question is whether the state can assume expansive enforcement powers without creating genuinely independent safeguards against abuse.
The original 1997 Act reflected a clear philosophy: non-profit organisations would generally choose whether to register, and accountability would be achieved through disclosure rather than punishment. This approach recognised the essential democratic role of civil society, particularly in a country emerging from decades of repression.
The new bill goes further. It transforms the Nonprofit Organisations Directorate from a largely facilitative body into an enforcement authority with punitive powers.
Section 5 of the act, which currently emphasises cooperation, coordination, and support, would be amended to give the Directorate an explicit mandate to "monitor and enforce compliance". This marks a shift in regulatory philosophy - from assisting compliance to policing it.
The implications become clearer when read together with the proposed amendments to sections 20 and 30.
Section 20, which currently allows the director only to issue compliance notices or refer suspected criminal conduct to the police, would be amended to empower the director to impose administrative sanctions directly. These sanctions would become part of the directorate's routine enforcement workflow.
Section 30 would, for the first time, introduce explicit penalties -- including fines of up to R1-million and prison terms of up to five years.
Taken together, these amendments establish a powerful new enforcement regime within the directorate itself.
Constitutional problems
The Constitution does not prohibit strong regulation. But it does prohibit unfair regulation.
Under the proposed framework, the director would effectively perform three roles simultaneously: investigator, prosecutor, and adjudicator. The directorate would monitor compliance, determine whether violations occurred, and impose sanctions.
This fusion of functions raises serious concerns under section 33 of the Constitution, which guarantees everyone the right to administrative action that is lawful, reasonable, and procedurally fair.
The Constitutional Court has repeatedly emphasised the importance of separating investigative and adjudicative functions when public power is exercised. In competition law, for example, the Competition Commission investigates and prosecutes cases, but the Competition Tribunal - an independent body - decides them. This institutional separation protects against bias and ensures fairness.
The NPO amendment framework contains no such internal separation. Instead, it relies almost entirely on an appeal mechanism in section 14 as the safeguard against abuse.
The bill proposes expanding section 14 to allow appeals against administrative sanctions to an "Arbitration Tribunal." This tribunal would have the power to confirm, modify, or overturn sanctions imposed by the director.
On paper, this appears to provide oversight. In reality, it does not meet the constitutional standard of independence.
Members of the tribunal are appointed by the Minister of Social Development - the same executive authority responsible for the directorate. Their terms and conditions are determined by the minister. The directorate serves as the administrative conduit for appeals.
This creates a direct institutional chain between the enforcement authority and the body tasked with reviewing its decisions.
Section 34 of the Constitution guarantees the right to have disputes resolved by a court or by an independent and impartial tribunal. Independence is not symbolic; it must be structural.
Can an appeal body appointed, regulated, and supported by the same executive authority whose decisions it reviews satisfy this standard?
This debate is not about administrative design alone. It is about the relationship between the state and civil society.
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Critical role at stake
Nonprofit organisations play a critical role in South Africa's constitutional democracy. They deliver essential services, advocate for vulnerable communities, and hold public institutions accountable.
If enforcement powers are exercised without independent oversight, the risk is not only unfair decisions. It is the erosion of confidence in the regulatory system itself.
One solution is straightforward: ensure that appeals against sanctions are heard by a body that is demonstrably independent of the directorate and insulated from executive control.
This could include reforms to the appointment process, statutory guarantees of tenure and operational independence, or the establishment of an independent non-profit ombud.
Without such safeguards, the enforcement framework risks constitutional challenge - and rightly so.
Recognising that many organisations were unaware of the proposed changes and the tight deadline, the NPO Working Group has requested a short extension to ensure the NPO sector has a fair and meaningful opportunity to respond and participate fully. Treasury has yet to respond.
Alison Tilley is the head at Judges Matter, a civil society organisation forming part of the Democratic Governance and Rights Unit at UCT Law Faculty that monitors the South African judiciary. Follow @WhyJudgesMatter and visit www.judgesmatter.co.za.
Opinions expressed are not necessarily those of GroundUp.
