With a week left of lockdown and restrictions after the 30th seeming inevitable, we bring you in this ngoLAW Brief:
- an update on the C19-TERS scheme (some good news and some clarity);
- a warning about a scam doing the rounds in the non-profit sector; and
- some guidance on ways to deal with the risk of scams.
TERS UPDATE: IT'S COMPULSORY! (ALSO: ANNUAL LEAVE, PAYE AND THE SUMS)
Please note that the TERS Directive has been amended (and expanded) again. It has been clarified in signed amendments of Thursday 16 April (which have not yet been published in the Government Gazette) that:
- Employers who, as a result of the Covid-19 pandemic, close all or part of their operations for a three month (or lesser) period must apply for Covid-19 benefits for and on behalf of affected employees. This is a dramatic change, as there was previously no wording making the TERS application compulsory;
- Applications for TERS funding may be made even in cases where the relevant employees have already been asked or agreed to take annual leave during the period of closure of the business or organisation.
Also, employers who have requested their employees to go on leave:
“may set off any amount received from the UIF in respect of that employee’s COVID-19 benefit against the amount paid to the employee in respect of annual leave provided that the employee is credited with the proportionate entitlement to paid annual leave in the future”
- Employers who may not receive the applied-for COVID-19 benefits in time to pay employees are encouraged to make the payments and then wait to be reimbursed by the UIF:
“To speed payment of COVID 19 benefits to employees, employers are urged to pay employees based on clause 3.4 of the Directive and reimburse or set off such with COVID-19 benefits claim payments for UIF.”
Please note that the tax treatment of TERS payments should be like UIF: they are not taxable (i.e. PAYE should not be deducted from them), and should be recorded as “TERS/UIF benefits” on the payroll.
There are some practical difficulties for those administering these payments to employees. Among them:
- if the payments arrive as a lump sum, how do you know how to divide it out?
- If the payments do not arrive before payday, how can employers be sure how much they should pay out in the interim;
- and, where employers are topping the payments up, how will they know what proportion of the payment they should not deduct tax from?
If a breakdown does not arrive from UIF, our suggestion is that you ask your accountant for guidance and, if that is not possible or useful, you use an online UIF calculator, with adjustments being made as follows:
- Insert the maximum period (48 months) as the period of employment is not relevant;
- Adjust any result amounts under R3500 up to R3500; and
- As the UIF calculator works with a lower maximum base salary than TERS (it seems to max out at R12500) apply the lowest percentage (38%) to the salary amount between R12500 and R17712.
Please also note that some of those who have been paid out under TERS are being required to submit additional documents to comply with the follow-up audit requirements. These include proof of payment of UIF, Compensation Fund documents, payroll reports, attendance registers, UI-19 declarations and sample copies of employment contracts and salary slips.
For assistance from ngoLAW with these applications please email firstname.lastname@example.org. We are offering slashed rates on fees for the lockdown period and are able to assist with, advise on and/or make these applications on your behalf.
THE “NGO CERTIFICATE” SCAM
At ngoLAW we have been inundated with queries and requests to ‘convert’ the registrations of non-profits from an “NPO” to an “NGO”. This request originates in a scam operation, in which a fraudster has induced panic in the non-profit sector by claiming that this “NGO” certificate is required in order to access a huge pot of overseas relief funding. There are costs involved, of course:
- the immediate fee paid to the defrauder of R1999; and
- the (potentially bigger and riskier) cost of providing them details and documents that would enable hijacking of the organisation.
DSD has issued a formal statement on this renouncing this scheme as a fraud (Read statement here) and correct legal position is the following:
An NGO is not a type of legal entity, it is just a general word used for all types of non-profit organisations, at whatever stages of registration. There are three types of legal entities in South African law which non-profits can be established as - a voluntary association, a charitable trust or as a non-profit company (“NPC”) (previously known as a Section 21 Company).
- A voluntary association is established and comes into being by agreement between its members and its founding document is a constitution which contains the governing rules of the association. Legally this agreement and the adoption of a constitution with the required clauses is the only requirement necessary for a voluntary association to be formed;
- A charitable trust has a trust deed as its founding document which is registered at the Master of the High Court; and
- An NPC (section 21 company) has either a Memorandum of Incorporation (MOI) or Memorandum and Articles of Association and is registered with the Companies and Intellectual Properties Commission (“CIPC”).
When you have a properly established legal entity you may apply for further registration with the NPO Directorate at the Department of Social Development and they will issue you with an NPO number and certificate and this is will be your proof of registration with the Department. You may also make an application to SARS for income tax exemption (also known as public benefit organisation “PBO” or “section 30”) status.
If anyone is telling you that another registration is required for your organisation in order to acquire funding please note that it is fake news and a scam being perpetuated on you and you should not forward to anybody any notices which say so as more panic will be created.
SCAM-PROOFING: HOW TO PROTECT YOURSELF AND YOUR ORGANISATION AGAINST THE RISK
I begin this advice with a personal story, tracing my own journey with social media and those who lurk in its shadows, searching for unwary prey. (Bear with me or scan to the end for the pointers in how to avoid being snaffled in the net of a scam or needlessly diverted by the not-quite true.)
At 10.30 pm on 1 April (!), I received a Whats App from a trusted colleague: “Have you seen this major funding opportunity, deadline midnight, 1 April?” I clicked on the link and looked at the website and my first reaction was panic: This website (which looked legitimate) contained a call from a major government player which had apparently set up a non-profit funding entity and every NGO which wanted to benefit should complete the application before midnight (!!) or be out of the loop! How could I have missed this? I had spent days buried in regulations and commentary, writing and deciphering and advising, but surely I had not been buried that deep?
My second reaction was fear: “I have failed my clients, subscribers and colleagues. I am going to be exposed and seen as a fake/fraud.”
Fortunately, this 1 April incident came on the back of two other social-media panic attacks (one of which turned out to be fake and the other true, but not my issue to take up). From my previous experiences I had learned that my first panic-fear response was not a reliable measure or guide, and that I had (even while the clock ticked towards midnight!) to breathe, step back, and do a proper investigation before taking any action or spreading the news.
My first step was to send it to a few colleagues and CEOs of reputable NGOs with an explanation I had just received this, I was not sure if it was true, had they seen it and what did they think? Of the five, three had not seen it, one had and had applied and the other had investigated and decided it was fake. Tick-tock towards midnight (!) but I held my nerve and did a check, not following the link sent, but on the website of the government agency mentioned. Hmmm. No sign of any call for applications on their own website. Then Henre Benson, CEO of CASME, texted me back: The website set-up looked legitimate, but the background of it was redacted, which could be suspicious.
My long-suffering IT-engineer husband added his counsel (perhaps in the interest of getting some rest): anything which comes at you with a very tight deadline is likely to be a scam. I was already leaning towards calling it fake (and calling it a night!) when it struck me that I had the cellphone number of the head of the NPO Directorate – would she respond at 11.00 pm? Yes, she did and it took her two minutes to check with the government agency named on the website and to let me know that it was a scam and that a statement would be issued the following day. So I could go to bed with an easy conscience (and my reputation intact).
Not only was there no missed-mayday application but I had also saved myself the embarrassment of forwarding something fake AND I had saved everyone in my database from panic, anxiety, unnecessary worry, and exposure to whatever the scammer had in mind.
As already mentioned in this brief, there is currently a new scam doing the rounds – a fake call for NPO certificates to be ‘converted’ to NGO certificates (for a fee). Many non-profits have been taken in by this smooth scammer, and are sending me panicked-queries and, no doubt, this will not be the last of the scams eating up our mental energy, diverting our time and attention from the real work that needs to be done, duping and dragging us down, if we let them.
Responsible citizens, board members and NGO leaders need to adopt a strategy which decreases this risk of being caught up in these scams and their negative consequences.
The following suggested approach is based on my personal experience, the wise counsel of Ida Jooste (Global Health Media Advisor at INTERNEWS), and the very useful article by H Colleen Sinclair posted by The Conversation Africa, Inc.
When you receive one of these messages:
- Hit pause and breathe – do not allow the (natural) panic and fear to drive your actions. In fact, be wary of taking at face value or of sharing any post or message which makes you feel strong emotions (even good ones) or which plays to your vanity or need to feel included. Fake/scam posts are, as Sinclair says designed “to short-circuit your critical thinking by playing on your emotions. Don’t fall for it”;
- Watch out for short deadlines and/or requirements to upload or register details to benefit or participate. The short deadlines are intended to make you respond from panic (by-passing rational thought) and details are being foraged for fraudulent purposes.
- Treat all Whats App or SMS notes which claim to come from major players as suspicious: Government agencies and reputable organisations and funders will never send Whats App/Instagram/SMS summaries of offers/policies around, they will instead provide a link to a notice on their official website.
- Check on the source. If an email, does the email address look like an official one? (Government departments and donors are unlikely to send from gmail addresses). Or is it spelt very slightly differently from the name of the organisation it is pretending to come from? Is the source clearly identified? If it is a voice note/video clip, check that the person identifies themselves clearly and accurately and gives their official/professional qualification and status (and, when you independently google them, check that these match up). Ida Jooste’s policy: #NoSourceNoForward, should be widely adopted.
- Be wary of messages or posts which have grammar or spelling errors, or a mix of fonts or ODD words in CAPS. Sometimes these indicate unreliability (if the person sending it to you could not bother to spell check, perhaps they also did not bother to check the facts?) OR they could be intentionally introduced to catch your attention OR (very sneaky, this) to weed out responses from the grammar police, i.e. to ensure they hit only their target market of those not applying critical thinking to the message.
- Conduct an independent search, a “fresh google” of all the actors/agencies mentioned. Do not follow the links given on the posts or message but go to their actual websites. Without spreading the panic, do some cross-checking with trusted colleagues. Prepare your communication with calm words which indicate that you think an investigation is first required. If you can, contact the organisations, departments or agencies mentioned directly to check for accuracy. To check out facts, try the websites set up for this purpose: Snopes or Fact check are good places to start.
There are scams, there is fake news and then there is panicked or mindless/often well-meant forwarding or spreading of these. Caring, responsible citizens and leaders need to build a personal fortress against the waves of these which come at us. Often we can be most useful by not passing something on. What about adding #ThisStopsWithMe ?
Keep the questions coming!
At ngoLAW we will be continuing our work and will research and draw together information and advice to assist you with thinking through and making some tough decisions over the next while. Watch this space for our correspondence and conversations and please forward this email to anyone who may benefit.
To submit your questions, visit our website, hit the ‘contact’ tab, and enter your question into the ‘Contact Form’ space provided.
Stay safe, keep calm and carry on- A Luta Continua!
Nicole, Lize, Bandile, Janice, Lisa and Dorothy