Introduction

The transition from the Non-Governmental Organizations Coordination Act of 1990 to the Public Benefit Organizations Act of 2024 marks a significant shift in NGOs’ regulatory framework. The Kenyan government aims to modernize and streamline operations, enhance accountability, and improve NGOs’ efficacy in addressing societal issues. This may include.

  • Enhancing or promoting the economic, environmental, social or cultural development
  • Protecting the environment
  • Lobbying or advocating on issues of the public the interest or the interest or well-being of the public or a category of individuals or organizations

What the PBO Act Means for Existing NGOs

  1. Regulatory Framework

NGO Coordination Act (1990): Focused primarily on the registration and coordination of NGOs, with limited oversight of their activities and funding.

PBO Act, 2024: Introduces a comprehensive framework for registration, regulation, and monitoring of Public Benefit Organizations (PBOs), emphasizing transparency, accountability, and governance.

  1. Registration Process

As of the commencement date, all registered NGOs are deemed registered under the PBO Act but will be required to ‘re-register’ under the PBO Act (one year from the Commencement Date). There will cease to exist if they do not apply for registration under the PBO Act within (thirty days) after a specific notice has been issued to them by the PBO Authority

  1. Governance and Accountability

NGO Coordination Act (1990): Provided minimal guidelines on governance structures, leading to varied practices among NGOs.

PBO Act, 2024: This act sets out explicit governance standards, including board composition, fiduciary responsibilities, and mandatory audits to ensure accountability.

  1. Funding and Financial Management

NGO Coordination Act, 1990: Limited financial oversight provisions led to potential misuse of funds.

PBO Act 2024: Mandates detailed financial reporting, audits, and adherence to financial management standards to enhance transparency and prevent fraud.

  1. Monitoring and Evaluation

NGO Coordination Act (1990): Lacked robust mechanisms for monitoring and evaluating NGO activities.

PBO Act (2024): Implements regular monitoring and evaluation protocols to assess the impact and effectiveness of PBO activities.

  1. Public Participation and Advocacy

NGO Coordination Act (1990): Did not explicitly encourage public participation or advocacy.

PBO Act (2024): Encourages PBOs to engage with communities, advocate for public interests, and ensure their activities align with national development goals

Benefits of the PBO Act for NGOs

  1. Enhanced Accountability and Transparency
  • Regulatory Oversight: The Act likely establishes stricter reporting and auditing requirements, ensuring PBOs operate transparently and are held accountable for their financial and operational activities.
  • Public Trust: With enhanced oversight, public trust in these organizations may increase, as donors and stakeholders can be more confident that their contributions are being used effectively and ethically.

 

  1. Increased Funding Opportunities
  • Government Grants and Subsidies: PBOs might become eligible for additional government grants and subsidies previously inaccessible to traditional NGOs.
  • Tax Benefits: Donors to PBOs may receive tax deductions or other incentives, encouraging more substantial and consistent contributions from individuals and corporations.

 

  1. Improved Governance and Efficiency
  • Standardized Best Practices: The Act likely encourages or mandates the adoption of best practices in governance, financial management, and program implementation, which can lead to more efficient and effective operations.
  • Professional Development: PBOs might receive support and resources for staff training and development, enhancing the sector’s overall capacity and expertise.

 

  1. Broader Scope and Impact
  • Legal Recognition: PBO status may provide a more formal and recognized legal standing, allowing these organizations to engage in a wider range of activities and collaborations, both domestically and internationally.
  • Collaboration and Partnerships: With a more standardized and credible status, PBOs may find it easier to form partnerships with other organizations, including government bodies, private sector companies, and international agencies.

 

  1. Focus on Public Benefit
  • Mission Alignment: The change emphasizes that organizations must primarily serve the public good, potentially leading to a more mission-driven approach in their activities and initiatives.
  • Beneficiary Focus: There may be an increased focus on the impact and outcomes of programs, ensuring that they effectively address the needs of the communities and individuals they aim to serve

 

PBO Act Implementation Challenges

  1. Adaptation challenges: NGOs need time and resources to adjust to the new regulatory requirements.
  2. 2. Capacity Building: Training and capacity building for NGO staff and board members to comply with the new governance and financial management standards.
  3. Resource Allocation: Ensuring adequate resources for the newly established regulatory bodies to oversee PBO activities effectively.
  4. Stakeholder Engagement: Continuous engagement with stakeholders, including donors, government agencies, and the public, to ensure a smooth transition and buy-in.

 

 

How can Reel Informatics support your NGO through this Transition?

  1. Conducting Initial Assessments
  • Readiness Assessment: We assess your current state of operations, governance, and financial management against the requirements of the PBO Act.
  • Gap Analysis: Our assessment identifies gaps in the NGO’s current practices and provides recommendations and a roadmap for adopting the new regulatory requirements, including the mandatory compliance elements.

 

  1. Governance Enhancement
  • Governance Policies: Assist in developing and implementing robust governance policies and procedures, including conflict of interest policies, code of conduct, and risk management strategies.
  • Board Evaluations: Facilitate regular evaluations of the board’s performance and effectiveness in governance.

 

  1. Assisting with Regulatory Compliance
  • Documentation Preparation: Help the NGO prepare and compile the required documentation for registration as a PBO, including financial statements, governance documents, and other necessary filings.
  • Compliance Framework: Develop a compliance framework to ensure adherence to the PBO Act’s requirements, including periodic reporting and audit requirements.

 

  1. Risk Management
  • Risk Assessment: Conducting risk assessments to identify potential risks and develop mitigation strategies.
  • Crisis Management Plans: Support the creation of crisis management and response plans to address potential issues that may arise during the transition.

 

  1. Audits and Assurance Services
  • Financial Audits: Conduct thorough financial audits, expenditure verifications, and spot checks to ensure the financial statements are accurate and comply with the new regulations.
  • Internal Controls: Evaluate and strengthen internal controls to ensure robust financial management and prevent fraud and misuse of funds.

 

  1. Advisory Services
  • Strategic Planning: Offer strategic planning services to help organizations align their mission and activities with the public benefit objectives required by the PBO Act.
  • Financial Planning: Provide advice on budgeting, financial planning, and sustainability strategies to ensure long-term financial health.

 

  1. Monitoring and Evaluation.
  • Impact Assessment: Develop frameworks for monitoring and evaluating the impact of the organization’s programs and activities to ensure they meet public benefit criteria.
  • Reporting Systems: Set up reporting systems to track progress and outcomes, facilitating transparency and accountability.
  1. Ongoing Support and Consultation
  • Continuous Improvement: Provide ongoing support and consultation to address issues and ensure continuous improvement in governance and operations.
  • Regulatory Updates: Keep the organization informed about any changes or updates to the PBO Act and related regulations.

Contact Reel Informatics today to discuss how we can help your NGO navigate the PBO Act transition smoothly and successfully.