The Independent Code of Governance

npocodelogobigA summary of The Independent Code of Governance for Non-Profit Organisations in South Africa

The Independent Code of Governance for Non-Profit Organisations in South Africa consists of a set of principles, values and responsibilities intended to guide and inform the way organisations are managed and conduct their affairs. It is also intended to serve as a standard or measure to assess performance, and guide members of governing boards, and others who carry responsibility for governance.

The code includes 8 fundamental values; 6 leadership principles; and 5 fiscal and legal principles to which signatories will be asked to commit too.

1. Ensuring adherence to values

  • Value One = Fidelity to Purpose
    The fundamental responsibility of the Board of an NPO is to endorse, practise, and require a commitment to the core values that are inherent in the African philosophy described as “Ubuntu”,
  • Value Two = Altruism and Benevolence
    An NPOs resources, energies and activities must be devoted to promoting its public benefit purpose and not to any personal or private objective.
  • Value Three = Integrity
    The underlying motivation must be one of public interest, not self-interest.
  • Value Four = Optimising Resources
    The Board must act responsibly and effectively in ensuring that valuable and limited resources are spent in an appropriate manner.
  • Value Five = Conflicts of Interest and Self-Dealing
    A fundamental principle and value of NPO Governance is the avoidance of conflicts that arise when a person in a position of trust makes a decision or enters into a contract from which they themselves, or friends, relatives or associates, stand to benefit.
  • Value Six = Equality and Non-Discrimination
    It is the responsibility of the Board to take proactive steps to prevent unfair discrimination in the conduct of an organisation, including discrimination that may be based on grounds of race, gender, or disability.
  • Value Seven = Democracy and Empowerment
    In the conduct of its affairs and in its relationships with each of its stakeholders, an NPO must demonstrate a clear commitment to democratic process and decision-making.
  • Value Eight = Independence and Impartiality
    A public benefit purpose implies that all eligible beneficiaries must be treated equally and fairly, without special favour or prejudice.

2. Exercising leadership

  • Leadership principle One = Vision, Purpose and Values
    It is the responsibility of a Board to ensure that the vision, purpose and values of the organisation are clearly defined.
  • Leadership principle Two = Accountability and Transparency
    A critical responsibility of the Board is to ensure commitment to Accountability and Transparency.
  • Leadership principle Three = Fundraising, Sustainability and Risk
    It is the Board’s responsibility not only to monitor expenditures and appropriation of funds, but also to ensure that an organisation continues to be adequately funded
  • Leadership principle Four = Collaboration and Synergy
    NPOs should act collaboratively and cooperate with other similar entities– including official government welfare agencies.
  • Leadership principle Five = The Board and Other Governance Structures
    Board members should be recruited with due regard to a number of relevant factors, including their knowledge, skills, diversity, and availability.
  • Leadership principle Six = Procedural Formalities
    Procedural formalities prescribed in founding documents must be thoroughly observed.

3. Ensuring Fiscal and legal compliance

  • Legal/Fiscal Principle One = Establishment and Incorporation
    The form of legal structure in terms of which an NPO is established may determine how and when the responsibilities of governance arise.
  • Legal/Fiscal Principle Two = Administrative and Procedural Requirements
    Each form of alternative legal structure, with the exception of the common law structure of a Voluntary Association, has its own specific reporting obligations to comply with applicable laws and regulations.
  • Legal/Fiscal Principle Three = NPO Act – Consequences and Benefits of Registration
    Provision is made under the Nonprofit Organisations Act for the voluntary registration of NPOs, irrespective of the particular form by which they are constituted.
  • Legal/Fiscal Principle Four = PBO Status – Fiscal Benefits and Conditions
    It is a fundamental responsibility of the Board to ensure that such privileges are not squandered or abused.
  • Legal/Fiscal Principle Five = Other Legislative and Regulatory Compliance
    The Board’s responsibility for governance includes a responsibility to ensure that the organisation remains compliant with all its statutory duties and obligations.