•The PBO Act introduces comprehensive regulatory measures governing public benefit entities. It outlines an administrative and regulatory framework for PBOs to conduct their affairs in Kenya.
•One of the fundamental implications of the new law is that with the coming into effect of the PBO Act, the Non-Governmental Organizations Coordination Act, 1990 (NGO Act) now stands repealed.
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Non-Governmental Organisations operating in the country will now be required to register afresh in the next 12 months or cease operations, as the state moves to streamline the sector.
This is after the A 11-year wait for the Public Benefit Organizations Act, 2013 to be operationalised finally ended and the state gave the go ahead for its implementation.
The PBO Act introduces comprehensive regulatory measures governing public benefit entities.
It outlines an administrative and regulatory framework for PBOs to conduct their affairs in Kenya.
In 2013, the then President of the Republic of Kenya Uhuru Kenyatta, assented to the Public Benefit Organizations Act, 2013, although signed into law, the act was held in suspense and could not become operational until the gazettement of its commencement date.
Price Waterhouse Coopers (PwC) points out that despite the 11-year wait for the operationalisation of the law some areas are still not clearly defined.
PwC senior manager for legal business solutions Caroline Wanja says that the new law is for instance silent on compulsory registration.
“It simply provides that an organisation will only be recognized as a PBO upon registration with the Authority. It further provides that a PBO must be registered to access the benefits provided by the PBO Act. The PBO Act therefore appears to incentivize registration, rather than requiring it,” said Wanja.
The benefits, outlined in the Second Schedule of the PBO Act, include tax incentives, eligibility for government funding, preferential treatment in public procurement, and access to training and information, enabling PBOs to contribute effectively to policy development.
Under the PBO Act, no organization shall purport to be a PBO unless it is registered under the PBO Act or has been bestowed the status of a PBO.
Wanja points out that this provision appears to restrict and regulate the use of the term or status ‘PBO’ to ensure that organizations claiming or presenting themselves to be a PBO have officially been recognized as such by the Authority through registration.
“This will have implications on how non-registered entities engaged in public benefit activities describe or characterise themselves,” she adds.
One of the fundamental implications of the new law is that with the coming into effect of the PBO Act, the Non-Governmental Organizations Coordination Act, 1990 (NGO Act) now stands repealed.
NGOs that under the repealed NGO Act were exempted from registration are required, within three (3) months after the commencement of the PBO Act, to apply for registration.
Previously, the Cabinet Secretary could, by notice in the Gazette, exempt certain NGOs from registration.
NGOs that have enjoyed exemption from registration under the former NGO Act now face a legal obligation to apply for registration which could, in theory, put their funding at risk because being compliant with legal requirements is often a prerequisite for receiving funding.
Under the PBO Act, every NGO registered under the repealed NGO Act will be deemed to be registered under the PBO Act and shall have up to one (1) year from the commencement date of the PBO Act to confirm its’ status through formal registration.
Among the major changes in the new law International PBOs (IPBOs) registered pursuant to an application shall be required to have at least one third of its directors who are Kenyan citizens and who are resident in Kenya and maintain an office in Kenya.
Wanja notes that imposing a requirement to appoint directors, and specifically Kenyan citizens, would necessitate a fundamental restructuring of the IPBOs governance models.
“The provision requiring IPBOs to have at least one-third of their directors as Kenyan citizens is challenging for several reasons. Firstly, many IPBOs operate with governance structures that do not traditionally include a board of directors, instead relying on advisory boards, trustees, or executive committees,”
NGOs that fail to seek registration shall cease to have PBO status thirty (30) days after the expiration of specific notice unless they have by then, filed an application to be registered as a PBO.
This provision suggests that PBOs will first be given notice and a reasonable opportunity to seek registration before losing their PBO status.
It is not clear how this requirement will be practically implemented considering coordinating and delivering notices to potentially numerous PBOs could be logistically challenging for the Authority, particularly if there are issues with contact information.
It is also not clear if the provision on registration of exempt NGOs will affect international specialized humanitarian, advocacy, development