The third and last ngoLAW Brief of 2025

Following hot on the heels of our second ngoLAW Brief, issued on 3 November, is this, the third and last ngoLAW Brief of 2025, packed with all sorts of views, information, updates and links to useful resources.

In this Brief:

What are the most important qualities of great Board members? (spoiler alert, its not being able to read AFS);
18A changes- what is (or was) the 18A ‘audit’ certificate, and who needs one?
VAT for schools- a major shift coming in the amended VAT Act
FAQ of the Brief: who signs the AFS?
Resource: a free toolkit keeping activists safe online
Resource: the 2025 NPO salaries and board fees survey is out.

But first, how is it going with the new online-only NPO system? Its not going. Although our (oft made) attempts at new applications and reports sometimes make us hopeful, when we can get to the next page or the only useful block is no longer greyed-out, this hope is, so far, always dashed in the next moment, when a new tech barrier is encountered.

Deep breathing is required. And remembering that no-one can hold you responsible for not filing, as all of the old pathways are closed, and the new way so far impassable.

Fangirling: Nicole (red dress) and Bandile (black and white) so excited to take a selfie with the inestimable, irrepressible force of nature that is Gcina Mhlope! Joined by Zama Nxumalo (far left) and Nomcebo Msenti (far right) at the Robin Hood Foundation event to celebrate Cindy Norcott (stepping down as leader) and her new book, The Weight of Hope, written about what she learned as a founder of a nonprofit (and including a chapter by Nicole)- find the book at https://cindynorcott.co.za/

QUALITIES OF GREAT BOARD MEMBERS

Building a great board is fundamental to getting governance working for an organisation. Yet recruiting useful, committed board members is something that many organisations report struggling with. And which they often give up on, putting up with mediocre board performance and engagement, either because ‘better the devil you know’ or because the organisation is doing okay, raising funds, and (for the moment, anyhow) management perceives the board as superfluous to requirement!

However, the arrival of a crisis will prove the worth of a working-order board. If the board is disconnected, flabby or work-shy, the organisation will find it lacks the bed-rock required to weather the storm.

The lesson, of course, is not to wait for a drama before you realise how vital it is to have the right people bracing the organisation against shocks. Also, one of the main jobs of boards is to lift their eyes further than management has the time to do, and to plan for possible emergencies and hard times.

So, whatever the life stage of the organisation you serve, building a great board is important and deserves proper attention.

But who should you approach? What sort of people will be useful? The first answer to this is, of course, people who are passionate about the work. Then I am asked- but don’t we need a lawyer, an accountant, other people with skills? It seems, however, that the most important factors are not the ‘hard’ skills brought to the boardroom table, but specific ‘qualities’ identified through an informal survey of over 200 executives conducted by Jocelyn Mangan of illumyn Impact and reported on in full here: 10 must-have qualities every board member should cultivate.

Follow the link to read all about it, but they really resonate, and the headline (with my comments in brackets) is that you want people who:

Ask thoughtful questions
See around corners (the long view)
Inspire bigger thinking
Are connected to the work (told you so)
Oversee without taking over (very important that roles are understood)
Network and recruit for the organisation
Spend time with the organisation (you can make this happen, allowing the board to encounter the work)
Invest in the leadership
Challenge thinking
Think before they talk

According to Mangan the ‘so-called soft skills are what separate the great from the good’. She added that, when CEOs told her what they valued in particular board members, none said “Well, they really understand the audit process.”

CHANGE COMING TO S18A: THE ‘AUDIT’ CERTIFICATE

The Taxation Laws Amendment Bill, which has been through the public comment and Finance Standing Committee processes, and was put before the National Assembly for consideration on 12 November, contains some useful tweaks to section 18A(2B) which deals with what it currently called an ‘audit certificate’ required to show that certain sorts of 18A organisations comply with the provisions of section 18A.

Although this required document has been called an ‘audit certificate’, the main change in the Act is dropping this confusing name, which led organisations to believe that their auditors had to issue it, or that the certification was part of a mini-audit process.

In terms of the proposed amendments, it is now just called a ‘certificate’ and the amended 18A(2B) will look like this:

(2B) A public benefit organisation, institution, board or body contemplated in subsection (2A), must obtain and retain ~~an audit~~ a certificate containing such information as the Commissioner may prescribe by public notice and confirming the reasonable satisfaction of a registered tax practitioner that all donations received or accrued in that year of assessment in respect of which receipts were issued in terms of subsection (2), were utilised in the manner contemplated in subsection (2A).

Although the Commissioner has yet to issue the notice mentioned, this amended clause introduces a whole lot of clarity already, in that it is clear:

Who is required to issue the certificate: a registered tax practitioner. There is no requirement for them to be external to the NPC, or independent, they must just be registered as a tax practitioner.
The standard to be applied by the tax practitioner when issuing the certificate, which is ‘reasonable satisfaction’. This ‘reasonable satisfaction’ standard is not defined in statute, but is widely used legal term, and case law shows it means that:
- It requires a rational examination of relevant facts and credible information/documents; and
- It is not a subjective test, but the standard of the ‘objective bystander’ should be applied, i.e. would a reasonable person (reasonable tax practitioner), faced with this same evidence, be satisfied?

If this is the first time you are hearing about this (not audit) certificate, and wondering whether the organisation you serve should be getting one, here are the basics:

The certification required is around the use of funds:

For an organisation which carries on both 18A and non-18A activities, funds for which an 18A receipt was issued may only be used for the 18A activities;
For an organisation which has 18A(1)(b) -donor/’conduit’ status, in respect of the funds for which an 18A receipt was issued, at least 50% of these must be donated (or contracted to be donated) within 12 months after the end of the tax year in which they were received; and
For an organisation which donates to both 18A and non-18A organisations, funds for which an 18A receipt have been issued must only be donated to 18A(1)(a) -doer 18A- organisations.

You will note that, for all of these, it is only applicable to

organisations which have 18A(1)(b) donor/conduit status OR which have ring-fenced 18A status;
if these organisations have issued 18A receipts.

In practical terms, if an organisation is one or more of the three types described AND has SA taxpaying donors to whom 18A receipts are issued, a registered tax practitioner must examine the financial records to establish, to their reasonable satisfaction that the organisation has complied with whichever of the requirements in 1-3 is applicable.

Overseas grant funding, interest and income on investment, sales and sponsorship income do not require 18A receipts and if an organisation only receives these kinds of funds, no 18A receipts are issued, and 18A(2B) is not applicable.

If an organisation issues 18A receipts for only some of its income, it is only this income which needs to be considered in the examination and certification.

To allow this to occur seamlessly each year, the financial systems and reports should:

Distinguish between donations for which 18A receipts were issued and those for which they were not issued, and be able to give you a total for each for the year;
If there are both 18A and non-18A projects being carried on, separate out the project expenditure and then classify by 18A or non-18A project expenditure; and
For donor organisations, separate out the grant recipients who have 18A(1)(a) status from those who do not, and provide totals for the amounts granted to each category.

When you do these sums there will, of course, be general expenses which are not project spend or grants made. So, you will need to establish the proportion of ‘18A money’ (funds for which 18A receipts are issued) to non-18A money (all other receipts), and apply that proportion to your overhead/general/admin/general staff expenses.

In each of 1-3, the tax practitioner would have to be objectively satisfied that:

The total value of funds received for which 18A receipts were issued is less than or equal to the total expenditure on 18A qualifying activities;
50% of the total amount for which 18A receipts were issued in the previous tax year, have been spent/committed in the current tax year; and
For donor organisations, the total amount of funds for which 18A receipts were issued is less than or equal to the total funds donated to 18A(1)(a) organisations.

In other words that ‘18A money’:

Is only spent on 18A projects OR only donated to 18A(1)(a) organisations AND
50% of it is given or promised in the year after it was received.

The certificate itself can be fairly simple, but the detail will be required for the tax practitioner to be able to sign off on it.

I ….. with registered tax practitioner number ….. hereby certify that I have established, to my reasonable satisfaction, that funds for which 18A receipts were issued to donors to … during the tax year …, were ……

The certificate does not have to be filed with or submitted to SARS, but just ‘obtained’ and ‘retained’. Keep it in case SARS calls for it, is the idea. And it is not required to be an original, so can be scanned and put in a folder. (And remember what folder you put it in!)

MORE COMING SOON: ALL SCHOOL SERVICES AND SALES TO BE VAT EXEMPT

As those familiar with VAT matters as they affect schools will know, section 43 of the Taxation Laws Amendment Bill also contains a major shift for schools and VAT.

The current VAT Act exempts from VAT ‘the supply of educational services provided by … a school’. Also exempt, under the current s12(h)(1) are charges by a school for board and lodging.

Now, the consequence of something being an exempt supply is twofold:

The school cannot charge VAT on its school fees or other fees for supplies of educational services or board and lodging; and
The school cannot claim back any VAT that it spends in making those educational or board and lodging supplies.

However, as it was only educational supplies and board and lodging which were exempt, where schools ran tuckshops, coffee shops, uniform shops or other school-related income spinners, they could choose to register as VAT vendors once these other sources of income went over R50k in 12 months (or looked like they would), OR were forced to register as VAT vendors if they exceeded (or looked likely to exceed) R1mil of this revenue in a 12-month period.

For some schools, the ability to claim back the VAT on these school enterprises and also a proportion of related ‘head office’ VAT costs, has been useful where input costs were high. However, many schools found the separate accounting required for the VATable and exempt supplies (and relevant input costs) to be burdensome, time consuming and expensive, and an appeal was made to Treasury to simplify matters for schools.

The result is the proposed new 12(h)(iv) of the VAT Act, which simply exempts from VAT:

“(iv) the supply of any goods or services by a school”

This means that school fees, board and lodging, uniform shops, tuck shops, bus services and all other goods or services supplied by school are now exempt from VAT. No VAT may be charged on them, no VAT can be claimed back and schools which registered as VAT vendors (by choice or not) must de-register.

(In the public submissions process, issues with negative consequences of sudden deregistration were raised, and timing concessions have been made by SARS, similarly concessions have been made regarding schools conducting welfare activities (zero rated) as defined. For these details see page 51 of the Treasury document: https://www.treasury.gov.za/Draft%20Response%20Document%20on%202025%20Tax%20Bills%2004%20Nov%202025.pdf

FAQ: WHO SIGNS THE AFS?

The first things we need to find out, is who approves the annual financial statements (AFS):

In terms of section 30(3) of the Companies Act, for a non-profit company (NPC) it is the Board which approves the AFS (not the members of the NPC, if there are any).
For a voluntary association, it is not impossible that the constitution may require member approval of the AFS, but this would be unusual, probably because it would be impractical, in terms of timing.
And, of course, for a trust, there is only a Board, so the trustees must be those who approve the AFS.

It is important to note that the AFS are approved by the Board as a whole, and not by each individual serving on the Board. The Board at the time that the AFS are ready for approval, needs to consider the AFS, see if they think they are an accurate reflection of the transactions and flows of money, ask the auditors questions, suggest edits, and then resolve, as a whole that the AFS are approved.

So, the Board votes, the Board approves.

Once this has occurred one (or sometimes two) of those who serve on the Board will sign the AFS on behalf of the Board, reflecting the approval of the Board.

There is no need for all who serve on the Board to sign, as the Board has made a resolution, and those who sign do so to certify that the Board has resolved to adopt the AFS.

FAQ: WHO SIGNS THE AFS?

Many of our clients are working in spaces and ways that expose them to personal risk. These are risks that they take, knowing the importance of the work to be done, but they do need to be wise in doing what they can to protect their personal safety and also their reputations, and this digital security toolkit for activists and human rights defenders https://powerlaw.africa/wp-content/uploads/2025/10/251022-MMA-Safeguarding-the-Frontlines-Toolkit-2025-FINAL.pdf has been created by Media Monitoring Africa and Power Law Africa, to offer ‘concrete tools and knowledge …(to) empower you to reclaim safer, more resilient digital spaces and continue vital human rights work with greater security and confidence’.

It is eye-opening, educational, practical, and really accessible, ‘a guide for sustaining human rights work in a digital age’. Check it out and use it.

FAQ: WHO SIGNS THE AFS?

Just out, the AGRS 2025 Non-Profit specific salary surveys reports from Averile Ryder, including Board and committee fee guideline: https://www.rewardspecialist.co.za/salary-surveys/2025-npo-salary-surveys-reports/

For all those who are hurtling like a flaming comet toward the end of 2025, happy landing. The best thing about the year-end rush is that it ends! Happy holidays, wishing your real rests and Aluta continua into 2026.

Nicole, Bandile, Janice, Chelsea, Lisa, Alison, Asanda, Ayanda and Dorothy