A GUIDE TO ESTABLISH AND SUSTAIN AFRICAN NGOS
LEGAL FRAMEWORK AND
PROCESS FOR CREATING AN NGO

Introduction
The legal framework within which NGOs operate throughout the cont inent of Africa is
most important to them. It describes their ri ghts and responsibilities, it gives them certain
privileges and immunities, and it defines the ways in which they relate to the state as
regulator and to the people they serve. The legal framework may also define the ways in
which NGOs can gain access to state funds, i ndirectly, through the tax system by virtue
of tax exemptions and tax deductions for contributions, and directly, through state
contracts and grants. However, it is very difficult to generalize about legal frameworks
for a continent as diverse as Africa. Thus, this paper contains broad,general outlines of
legal issues and the contexts in which th ey arise. All NGO leaders reading it should
consult with their own legal advi sers for assistance with respect to the law that applies in
their own country.

General Background Information
The legal systems that apply in Africa south of the Sahara can generally be divided into
three different types, with a fourth important influence, Islamic Law, having an impact in
certain countries. The three different system s reflect the colonial powers that formerly
occupied much of Africa. All the colonizers essentially imported the legal system with
which they were familiar and caused it to be enacted in each colony. Thus, Anglophone
Africa has a legal system that is quite similar to the legal system in England, while
Francophone Africa reflects the French system. Other parts of Africa colonized by other
powers (e.g., Belgium, Italy, the Netherlands,a nd Portugal) tend to reflect a European
legal tradition that differs in important aspe cts from the French system with respect to
how it affects NGOs. In addition to these four main influences and systems, the legal
rules affecting NGOs in a particular country may reflect tribal traditions or customary
law.
The principal differences between the legal systems derived from the one in England, on
the one hand, and the ones in Western Europe, on the other, is that the English system is a
common law system, which developed principally in the British Isles (and Great Britain’s
far-flung colonial empire), while the Europ ean systems have their roots in Roman law

and the Napoleonic Code. The terms used in the common law systems differ markedly
from those used in European systems. In Anglophone Africa, for example,an NGO is
“incorporated,” while in countries whose legal systems have their principal roots in
Western Europe, an NGO attains legal existence by being “registered.”
But the differences are more fundamental than that. NGOs in civil law countries are
generally organized as two different types of legal entities,associations and foundations.
According to Roman law, associations are organizations of people, which are governed
by their members, who elect th e governing bodies of the association. Foundations, on the
other hand,are organized around sum of money or an endowment, which they ordinarily
invest, spending earnings on the endowmen t to do their good works. The principal
difference between the French legal system and those derived from it, and the other
European systems is that the French syst em does not generally permit foundations to
have legal status. Foundations exist in France and in Francophone Africa, but they must
be specially licensed by the state. In other civil law countries in Africa, foundations are
permitted to achieve legal status by registration, but the form may not be in widespread
use because of the requirement for an endowment.
NGOs in common law countries are not organize d using the same forms as are used in
civil law countries. They tend to be referre d to as companies(or corporations) and
societies, on the one hand, and trusts on the other.Trusts are not incorporated entities, but
they do have a recognized legal existence for some purposes. The choice of form of
organization in the common law system does not affect whether an NGO has members or
an endowment,as it does in a civil law system.

Key Elements of the Legal Framework
1. How do NGOs achieve legal status?
Although many NGOs exist outside the legal framew ork in that they are not registered or
incorporated, many want to have legal status. They may want to acquire legal status by
registering or incorporating for a variety of reasons:
• * having legal status will clarify what the organization may and may not do;
* legal status may carry with it certain priv ileges, such as limited liability for the
organization;
* NGOs may not be able to open bank acc ounts without having legal status; and
* NGOs may not be entitled to tax exempt status and they may not have access to
state grants and contracts unl ess they have legal status.

Once the decision is made that legal status is desirable, the NGO will need to go through
certain formal procedures to become inco rporated or registered. These will vary
depending on the country, but, in gene ral,certain steps are required:
• * the NGO must draw up a set of bylaws (sometimes known as statutes, or a
charter, or articles of incorporation);
* the bylaws must contain certain things required by the law such as the names
and addresses of the founders, the purpos es of the NGO, the address where the
NGO will operate, the kinds of govern ing bodies the NGO will have, how the
NGO’s assets will be disposed of in the event that it ceases to serve its purposes,
the fact that members or founders may not receive distributions of profits, etc.;
* if the organization is a membership organization, the rights and duties of
members must be stated;
* if the organization is a foundation, any minimum endowment requirement must
be met and proven in the manner required by law;
* the bylaws must be delivered to the proper registry body, where they will be
reviewed;
* all required registration fees must be paid;
* if there are no objections to the regist ration, the new NGO will be entered in the
appropriate register and ther eby become a juridical person.
In some countries NGOs that are operating in the public interest may also be required to
obtain a “certificate of public interest”from the appropriate regulatory body. Tax exempt
status and the ability to compete for certain grants and contracts may be tied to whether
or not the NGO has qualified for a ce rtificate of public interest.
2. How are NGOs held accountable to the state?
After an NGO has registered, it is permitted to conduct its business,to open a bank
account in its own name, to invest its property, etc. However,any NGO will be required
to file certain forms with appropriate govern ment agencies in order that they may know
what it is doing. These forms maybe very el aborate or they may be very simple.
In addition to the tax authorities, which are discussed in the next segment, typical
government bodies that may requi re reports from NGOs include:
• * local courts;
* local (county, provincial) o ffices of the Ministry of Justice or the Ministry of
Interior;

* the Registrar of Companies;
* a ministry that serves in the field of fields in which the NGO is working (e.g.
the Ministry of Educatio n for a private school).
It is very important for NGOs to learn just what forms are required to be filed and when,
so that any fines and penalties for late filing or failure to file will be avoided.
3. How do NGOs acquire tax exempt status?
Many countries in Africa permit NGOs to apply for tax exempt status,and they also
permit NGOs operating in the public interest to receive contributions that are deductible
for tax purposes by the donor. It is important to understand what it means to qualify for
these special privileges, and understanding what it means requires NGO leaders to
understand tax terminology. Before talking brie fly about how tax exempt status can be
obtained, this section explains the tax terms that will apply.
“Tax exempt status” at the national level generally means exemption from the income
tax. However, in most countries NGOs will be required to pay tax on their unrelated
business income, but not their investment income (e.g., interest on accounts or bonds
and dividends on shares). Exemption from the national income tax may carry with it
exemption from other national taxes and fees, such as value-added tax (VAT) and
customs duties. Exemptions from local taxes and fees (e.g., property taxes, stamp
duties, etc.) may also be available.
The deduction from the income tax for contributions to public benefit NGOs may be
called the “charitable contribution deduction.” It will generally apply to donations
made by individuals and businesses,but some countries may restrict who is entitled to
take the deduction.Although there may be limitations on the amount of the donation that
is deductible (e.g., the deduction may be limited to 10% of the donor’s income), this is
still a valuable status to ha ve when it is available becau se it means that the donor will
receive a tax benefit and may therefore be wi lling to make a greater contribution to the
NGO.
Filing for tax exemption is not easy. It will require the NGO to fill out proper forms and
furnish additional information to the tax authorities.The additional information will
include financial information as well as in formation about the NGO’s programs. An NGO
is usually required to file an application for exemption from each of the taxes or other
fees described above, which means that the process may become quite complicated. But
it may be worth it, because it will reduce th e NGO’s operating costs. NGOs that qualify
for tax exempt status are generally required to file annual returns showing their receipts
and expenditures, but if the r eceipts are below a certain minimum, they may be exempted
from the annual filing requirement.
4. How do NGOs apply for state contracts and grants?

The laws of each country will prescribe the ways in which NGOs, like businesses and
individuals, may apply for cont racts and grants. This is an increasingly important issues
for NGOs in many countries because nationa l and local governments are seeking to
privatize certain social servic es by contracting them out to the NGO sector. This form of
state support has become increasingly importa nt for NGOs in many countries in Africa.
Generally the procurement law of a country will pr escribe the procedures that must be
followed for a “public tender,”specifying how notices of the tender must be made, what
qualifications must be met, when the work mu st be completed, etc. The laws that deal
with procurement generally require fair and open competitions so that all bidders will
have equal access to the funds the government wants to spend.
If an NGO wins a government cont ract or grant, it will be required to file additional
forms that account for the state funds. It may also be subject to special audits by the state.
5. What other laws are relevant to NGOs?
NGOs will need to comply with certain laws regardless of the substantive work they do.
There are also special requirements for NGOs op erating in certain social spheres. This
section describes some of the generally appli cable laws as well as those that may apply
specially to certain types of NGOs.
• * NGOs will have to comply with all labor and other employment laws and they
will ordinarily be required to pay social taxes for their employees.
* NGOs will have to comply with all laws that apply to their dealings with
others, such as landlords, contractors, suppliers, etc.
* A country or a province may have very specific fund raising legislation that
will require an NGO to register, use certa in forms for receipts, make special
reports, etc.
* Where NGOs are permitted to use lotteries for fund raising, special rules will
apply.
NGOs that operate in certain social sphere s (e.g., education, eldercare, etc.) may be
required to have special licenses.
NGOs that have rallies and large public m eetings may be required to obtain special
permits for those gatherings.
Summary and Conclusions
The legal framework within which NGOs in Africa operate is quite complicated and
demands that NGOs pay close attention to thei r legal obligations. This guide can assist
NGOs in understanding aspects of the law a nd how it will affect them in carrying out

their mission. It is important to stress that the guide is very broad and general. It cannot
serve as a substitute for legal advice obtained from a qualified local lawyer who is
familiar with the intricacies of the law of a particular country.

About the Author: This paper was written by Karla W. Simon, President of the
International Center for Not-for-profit Law (ICNL). Professor Simon is a Professor of
Law at the Catholic University of America a nd holds a J.D. degree from Duke University
and an LL.M. degree from New York Univer sity. ICNL is the only international
organization providing a full range of legal services to help support the legal environment
for the not-for-profit sector in countries around the world. ICNL provides technical
assistance, education, and trai ning to assist the development of sound legal and fiscal
environments in which the not-for-profit sector can grow and thrive.

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