ESTABLISHING A NOT FOR PROFIT ORGANIZATIONS IN KENYA

ESTABLISHING A NOT FOR PROFIT ORGANIZATIONS IN KENYA

Have you thought of how to start a Not-for-profit organization in Kenya? This article might be helpful to you. First let’s start by understanding what a Not-for –profit organization is: “Not-for-profit organization” is a broad term for all independent organizations whose purpose is something else other than to make private profit for directors, members or shareholders.

There are various types of not-for-profit organizations, these includes but not limited to: Non-Governmental Organizations “NGOs” (soon to be known as Public Benefit Organizations “PBOs”), Companies Limited by Guarantee, Societies and trusts.

An NGO or a PBO is a group of individuals or associations with voluntary membership, non-partisan, and neither for profit nor commercial engagements. It is locally, nationally or internationally organized and engages in public benefit activities. A “public benefit activity” is one that supports or promotes the public benefit by: enhancing or promoting legitimate economic, environmental, social welfare, or cultural development; protecting the environment; or advocating on issues of general public interest. NGOs or PBOs do not include: trade unions, political parties, religious organization which is primarily devoted to religious worship or propagation of religious beliefs, co-operative societies, Sacco societies or community-based organization whose objectives include the direct benefit of its members.


NGOs or PBOs are mostly established for purposes of promoting, developing charity or research in the areas such as health, relief, agriculture, education, and the supply of social amenities and services. They must be registered for them to operate in Kenya.

NGOs or PBOs are mostly established for purposes of promoting, developing charity or research in the areas such as health, relief, agriculture, education, and the supply of social amenities and services. They must be registered for them to operate in Kenya.

In addition, Organizations registered as NGOs or PBOs have access to a number of benefits: These include an income tax exemption on income received from membership subscriptions and any donations or grants; preferential treatment for value-added tax (VAT) and an exemption on customs duties in relation to imported goods or services that are used to further their public benefit purposes.

The second category of Not-for-profit Organization are companies limited by Guarantee: they are well known for carrying out charitable activities. A company limited by guarantee is usually registered without a share capital, the liability of its members are limited by the company’s articles to a specific amount (usually a nominal amount) that the members undertake to contribute to the assets of the company in the event of shutting down and its certificate of incorporation must state that it is a company limited by guarantee.

There is no prescribed organizational structure for a company limited by guarantee. Nor are there any particular restrictions as to who may be appointed a director; there is no requirement that a director be a resident or citizen of Kenya. However, the company must have at least one director who is a natural person or a corporation sole and be registered under the Companies Act (2015).

The third category of a not-for-profit organization is a trust. A trust is a legal entity registered under the Trustees (Perpetual Succession) Act. They are usually established for purposes such as: religious, educational, literary, scientific, social services or charitable purpose.

The process of registration of an incorporated trust involves the trustees entering into a trust deed which is presented to the Cabinet Secretary together with the prescribed forms for registration and can take between twelve to thirty six months. 

Finally the fourth category of a Not-for-profit organizations are societies. A society is “any club, company, partnership or other association of ten or more persons, whatever its nature or object, established in Kenya or having its headquarters or chief place of business in Kenya.” They excludes: companies, trade unions and their branches, firms, associations, or partnerships carrying on business for profit, schools, banks or international organizations of which Kenya is a member. A society’s governing documents are called the constitution or rules of the society and are registered and regulated by the Registrar of Societies. 

BY Andrew Wanga

www.mmsadvocates.co.ke

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  2. STEPHEN ODHIAMBO OGWENO

    DO YOU REGISTER SOCIETIES, IF YES AT WHAT COST?

    Reply

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