Registration of Not-for-Profit Organizations in Kenya

Registration of Not-for-Profit Organizations in Kenya is not mandatory to be done under the Public Benefits Organizations (PBO) Act.

A not-for-profit organization is a broad term for all independent organizations whose purpose is something else other than to make a private profit for directors, members, or shareholders.

There are various types of not-for-profit organizations, these include but not limited to Non-Governmental Organizations “NGOs” (soon to be known as Public Benefit Organizations “PBOs”), Companies Limited by Guarantee, Societies, and trusts, and even branch of a foreign organization.

There are various types of not-for-profit organizations (“NPOs”)

1. Non-Governmental Organizations (NGOs) (soon to be Public Benefit Organizations (PBOs)).
2. Companies Limited by Guarantee;
3. Branch of a foreign organisation; and
4. Trusts.

The Public Benefit Organisations Act 2013 created a new legal, regulatory, and institutional framework for non-profit organizations doing public benefit work in Kenya, under a single law it repealed The Non-Governmental Organisations Co-ordination Act, 1990. An organization may be registered as a PBO by the Public Benefits Organizations Regulatory Authority if it has as its objective the promotion of public benefit in any of the following areas:

Membership PBOs are those that recruit members while non-membership PBOs only have a Board and a Secretariat.

The Act defines a “public benefit activity” as one that supports or promotes the public benefit by enhancing or promoting legitimate economic, environmental, social, or cultural development; protecting the environment; or lobbying or advocating on issues of general public interest or the well-being of a group of individuals or organizations (PBO Act Sections 5(1) and 2(1)). 

However, NPOs in Kenya do not have to be registered under the PBO Act. There are in fact a number of other organizational forms to choose from which are not restricted to public benefit purposes, including companies limited by guarantee and branches of foreign companies under the Companies Act, 2015, trusts under the Trustees (Perpetual Succession) Act, (Cap. 164) Laws of Kenya, societies under the Societies Act, (Cap. 108) Laws of Kenya, co-operative societies under the Co-operative Societies Act, (Cap. 490) Laws of Kenya and grassroots organizations such as Harambee (self-help groups) and community-based organizations.

Kenya exempts from corporate income tax, the income of certain NPOs that carry out specific types of activities. Unrelated business income is subject to tax under certain circumstances. Kenya also subjects certain sales of goods and services to VAT, with a fairly broad range of exempt activities. The tax laws confer only limited tax benefits on corporate donors and on individual donors.

Applicable Laws

The regulatory scheme for NPOs in Kenya is complex, combining substantive and procedural statutes, common law rules embodied in case law, and administrative practices. [10] In addition, Kenyan legislation provides for organizations to be substantially regulated through enforcement of their founding documents.

1. The Constitution of Kenya [2010]
2. Constitution of Kenya (Supervisory Jurisdiction and Protection of Fundamental Rights and Freedoms of the Individual) High Court Practice and Procedure Rules [2006] 
3. The Constitution of Kenya (Protection of Rights and Fundamental Freedoms) Practice and Procedure Rules [2013]
4. The Public Benefit Organizations Act [2013]
5. The Companies Act [2015]
6. The Insolvency Act [2015]
7. The Societies Act, Chapter 108 of the Laws of Kenya [1998]
8. The Trustees (Perpetual Succession) Act, Chapter 164 of the Laws of Kenya [1981]
9. The Trustee Act, Chapter 167 of the Laws of Kenya [1929]
10. The Value Added Tax Act (Act No. 35 of 2013)
11. The Income Tax Act, Chapter 470 of the Laws of Kenya [1989]
12. East African Customs Management Act [2004]
13. Excise Duty Act (Act No. 23 of 2015)
14. The Employment Act, Chapter 226 of the Laws of Kenya [2007]
15. The Education Act, Chapter 211 of the Laws of Kenya [1980]
16. The HIV and AIDS Prevention and Control Act, Chapter 246A of the Laws of Kenya [2006]
17. The Political Parties Act, Chapter 7B of the Laws of Kenya [2011]
18. The Universities Act, Act No. 42 [2012]