Uganda is a uniquely diverse nation with over 11 ethnic groups and more than 40 different languages. Also, the various types of nonprofits in the country are largely influenced by culture and religious practices.
The nation since its independence in 1962 has greatly suffered from guerrilla warfare, corruption, human rights violations, and inflation. Hence, nonprofits in Uganda aim to address some of these issues in alliance with international organizations and donors.
In this article, we will outline the types of nonprofits in Uganda and the laws governing their operations.
- Charitable acts in Uganda often occur informally
- A large number of NGOs in the country primarily depend upon external financial resources for their projects
- Most organizations are largely constrained by access to credit, inability to raise capital or engage in profit-making activities
What are the types of nonprofits in Uganda?
The Ugandan NGO Act specifies three types of nonprofits functional in the country. These non-government entities are also known to interact with foreign grant makers. They are:
1. Nongovernmental Organizations (NGOs):
These types of nonprofits are largely regulated by the NonGovernmental Organizations Act. NGOs are legally constituted organizations created to deliver voluntary services to the community. These entities could either be a private voluntary group of individuals or associations.
2. Trusts:
Trust NPOs are governed by the Trustees Incorporation Act. These types of nonprofits can be created by an organization or association to address social, religious, educational, charitable, or scientific matters in the community. Trusts are also known to provide grants and oftentimes loans at affordable rates to CEOs, NGOs, and private organizations.
3. Foundations:
These types of nonprofits can be registered as companies limited by guarantee under the Companies Act or the Trustees Incorporation Act. Like Trusts, foundations also provide grants and loans to CBOs, NGOs, and private organizations at an affordable rate.
What are the nonprofit segments in Uganda?
The above-listed nonprofits are also segmented into foreign organizations, indigenous organizations, and international organizations. We will provide a brief explanation of these three classes.
a. Foreign Organizations:
These nongovernmental organizations do not possess original incorporation in any country. They are partly or totally controlled by citizens of other countries and operate under the authority of a permit within the country. This permit is given by the National Bureau of Non-Governmental Organizations.
b. Indigenous Organizations:
These nonprofit entities are entirely handled by Ugandan citizens.
c. International Organizations:
Nongovernmental organizations such as this possess original incorporation in a country. International organizations are partly or totally controlled by citizens of one or more countries asides from those of the Partner States of the East African Community. It nonetheless operates in Uganda under the issued authority permit by the Bureau.
Other legal forms of nonprofits functioning within the country but have limited interaction with U.S grantmakers are community-based organizations, trade unions, cooperative societies, political parties, societies, religious entities, and communal land associations.
What are the laws guiding the various types of nonprofits?
The common law practice governing Uganda nonprofits demands that all income or assets of a nonprofit organization must not be distributed to founders, directors, employees, or any other person except to serve the aims and objectives of the organization. It however allows for reasonable compensation for duties rendered that enable the performance of the organization’s activities.
Also, the law restricts all organizations, members, or employees from engaging in profitable activities for personal gain. This common law practice applies to the three nonprofit entities.
In the case where an NPO is liquidated, the law does not make room for the distribution of assets. The organizations are instead required by the law to create procedures for the disposal of the company’s assets upon dissolution.
Lastly, NGOs that are exempted from paying income tax must be included among the “exempt organizations” of the Income Tax Act. These entities must also be issued a formal ruling from the Tax Commissioner to qualify them as exempt organizations.
Some of the nonprofits exempted from tax include religious, charitable, educational institutions or amateur sporting associations.
Note- nonprofit organizations established under the Companies Act are not granted tax exemption benefits.
Conclusion
The diverse range of projects undertaken by different types of nonprofits in Uganda has contributed to the growth of the developing nation. However, charitable acts in the country often occur informally. As a result, the sector’s activities remain largely undocumented.
Also, a large number of NGOs in Uganda primarily depend upon external financial resources for their projects. Most organizations are largely constrained by access to credit, and the inability to raise capital or engage in profit-making activities. This high level of financial vulnerability is one great impediment to the pursuit of long-term goals. The country now more than ever needs to create an internal system of sustainability.
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