Nigeria is a Federal Republic. The English legal tradition serves as the foundation for the nation’s legal system and nonprofit laws. Also, the English common law established the legislation governing voluntary not-for-profit organisations.

Nonprofits in Nigeria are shaped by the legal, regulatory, and policy framework in which they function. Likewise, these factors affect NPOs’ capacity to acquire legal status, obtain resources, provide services, and take part in advocacy. This includes all activities that are critical to the development of civil society. 

• Nigerian nonprofit laws are based on common law, although in some cases they also incorporate indigenous customary law, Shari’a law, and Islamic law.
• Only civil cases were covered by customary and Shari’a law.

What are the various Nonprofit Laws in Nigeria?

In this section, we will outline the various nonprofit laws in Nigeria that govern the sector’s activities and operations.

1. Governing bodies 

The Companies and Allied Matters Act (CAMA) is the primary piece of legislation in Nigeria that governs NPOs. Also, other additional laws that regulate nonprofit organisations include the Companies Income Tax Act (CITA), the Value-Added Tax Act and Value-Added Tax Amendment Act, the Federal Inland Revenue Service (FIRS) Act, the National Planning Commission Act, the Money Laundering Prohibition Act, and the Taxes and Levies Act.

2. Governing Constitution

The 1999 Constitution, as revised in 2010, serves as the foundation for these laws. In addition, the Constitution protects fundamental rights like the freedom of assembly, association, and expression. 

3. Stipulated Laws

Nigerian nonprofit laws are based on common law, although in some cases they also incorporate indigenous customary law, Shari’a law, and Islamic law. Previously, only civil cases were covered by customary and Shari’a law, assuming all parties involved agreed. However, since 1999, Shari’a has been expanded by a few states in northern Nigeria, and it is now required for some criminal cases as well as social interactions. Shari’a seems to not affect NPOs other than to promote charitable giving. 

4. Registration

Organisations that want to be incorporated under CAMA or receive donor funding, tax exemptions, and other benefits must register. However, it’s not mandatory. 

The CAMA’s Part C deals expressly with NPO registration as associations with incorporated trustees. The Corporate Affairs Commission (CAC) is the governing entity mandated by CAMA to register and oversee NPOs. Guidelines for the current implementation of CAMA are contained in the CAC Companies Regulation, 2012. 

Classes of Nonprofits

Individuals can choose from a variety of legal structures when they lawfully come together to pursue a common goal. Essentially, these include unincorporated associations, corporations limited by guarantee, associations with incorporated trustees, town unions, and other mutual-benefit organisations. 

By and large, traditional organisations are akin to friendship societies. However, every group is not required to register. 

a. Nonprofit Laws for Company Limited by Guarantee

A company limited by guarantee must be established to advance trade, the arts, sciences, religion, sports, culture, education, research, charitable endeavours, or a related field. Also, assets and income must be used exclusively to further the goals of the organisation. 

b. Nonprofit Laws for Incorporated Trustees

An association with incorporated trustees is an organisation of people who designate one or more trustees. Most importantly, an association’s assets and income must be used to further its express objectives.

Trustees come in two forms. Firstly, those who are connected through kinship, nationality, custom, or religion. Secondly, trustees can be chosen by an organisation or group of people seeking to establish any kind of charitable, educational, scientific, literary, social, cultural, athletic, or religious objective. 

The first category is usually adopted by the majority of town associations, churches, and mosques. The second category on the other hand welcomes traditional non-profit organisations, professional associations, and foundations. 

c. Nonprofit Laws for the Registration of Foreign NPOs

Foreign nonprofits must adhere to the same regulations and registration processes as their domestic counterparts and are incorporated in the same way. Likewise, this entails, among other things, that they have to perform name searches. They cannot register a name that might be perceived as affiliated with a Nigerian government agency, although legal in their home countries.

d. Incorporation of international nonprofits

Even if a foreign nonprofit doesn’t fit the criteria to be incorporated under CAMA, it can still function in Nigeria. However, the organisation will need to sign a bilateral agreement with the relevant line ministry, register with the National Planning Commission, and pay all necessary fees. 

Also, a foreign NPO acquires legal personality in Nigeria upon the signature of the bilateral agreement. This status does, however, come with a fair amount of control over foreign nonprofit activities. 

e. Donor funding and tax breaks

To receive donor funding or to take advantage of tax breaks and benefits, organisations must register or incorporate under CAMA. An association with incorporated trustees or a company limited by guarantee is the most common choice made by NPOs looking to obtain legal status through registration. However, what determines the choice of legal form is the objective of the NPO.

Conclusion 

In summary, giving is a vital pillar of Nigerian society, although Nigeria lacks a formal philanthropic sector and can only claim a small number of well-known philanthropists. According to the World Giving Index 2016, Nigeria ranks sixth globally for the class of people who help strangers and fifty-sixth globally for giving behaviour overall. This is despite the lack of official data on the extent of giving.

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