It is acknowledged that the various types of nonprofits globally have grown in number and operations at an unparalleled rate. This also depicts the Kenyan nation whose expansion has been termed a “global associational revolution”.
Due to the country’s decreasing ability to undertake critical development, some of these organizations were established to supplement governmental services. Likewise, others were founded to offer alternatives to the government in a variety of areas. Some of such areas include health, education, the environment, local water systems, and general human welfare.
In this article, we will consider the various types of nonprofits in Kenya and their contributions to the nation’s development.
- Since the late 1980s, Kenya has witnessed a dramatic growth in the number and types of nonprofits
- There has been a rise in the number of nonprofit activities at an unparalleled rate
- Due to the state’s decreasing ability to undertake critical development, some of these organizations were created to supplement governmental services.
What are the types of nonprofits in Kenya?
There are five classes of nonprofits recognized by Kenyan legislation. We will buttress each of the types and their functions.
1. Public Benefit Organizations (PBOs):
These types of nonprofits are independent, non-partisan, non-profit groups of people or organizations governed by the PBO Act. In general, PBOs engage in public benefit activities and function locally, nationally, or even worldwide.
The PBO Act defines a “Public Benefit Activity” as an activity that enhances or promotes lawful economic, environmental, social, or cultural development; protects the environment; or advocates for matters of general public interest or the welfare of a group of people or organizations.
2. NGOs:
An “NGO” is defined as a private voluntary group of individuals or associations, not operated for profit or other commercial purposes. These types of nonprofits organize themselves nationally or internationally for the benefit of the public at large. Chiefly, NGOs seek to promote social welfare, development, charity, or research in the areas inclusive of – but not limited to – health, relief, agribusiness, and education.
According to the NGO Act, operating an NGO in Kenya for welfare, research, medical assistance, agriculture, education, industry, the provision of utilities, or any other comparable goals without being properly registered as an NGO is illegal.
3. Companies Limited by Guarantee:
By and large, a lot of NPOs are incorporated as companies limited by guarantees.
According to the Kenyan Companies Act [2015], a company limited by guarantee must adhere to certain guidelines. Firstly, they must be incorporated without a share capital. Also, its articles must limit the liability of its members to a specific sum (typically a nominal amount). Hence, the members must agree to contribute to the company’s assets in the event of a liquidation. Finally, its certificate of incorporation must specify that it is a company limited by guarantee.
4. Societies:
These types of nonprofits are governed by the Societies Act. They comprise “any club, company, partnership, or other association of ten or more persons, established in Kenya or having its headquarters or principal place of business in Kenya.”
Even so, a society may also be a branch of another society. However, companies, trade unions, and their branches, corporations, businesses that operate for a profit, schools, banks, among others are expressly excluded from this term. The Registrar of Societies is responsible for registering and overseeing societal organizations.
5. Trusts:
A trust is a legal structure designed to keep and administer assets on behalf of other people. Under the Trustees Act which went into effect in December 2021, any person or group of people who have lawfully constituted themselves to form a trust may apply to the Principal Registrar for a certificate of incorporation.
Previously, trusts could only be established for religious, educational, literary, scientific, social, athletic, or charitable purposes. However, the Act has created room for more societal activities.
Some criteria must be met for a trust to be considered charitable. Firstly, the charitable purposes of the trust must be pursued in Kenya or in another nation. Secondly, the purposes of the trust must be discretionary. Finally, the trustee must have the authority to postpone the distribution of the trust’s assets.
How many nonprofits are registered in Kenya?
According to the PwC Kenya report, over 11,262 organizations were registered with the NGO Coordination Board on June 30, 2019. Likewise, 3,028 NGOs comprising various types of nonprofits across diverse sectors have received a sum of KES 165.97 billion. This shows an 8% increase from the previous year. In general, the sector employs about 76,000 people comprising full-time employees and volunteers.
Health, HIV/AIDS, food security and nutrition, education, and relief/disaster management accounted for the majority of NGO project expenses. By and large, most NPOs rely on funding from overseas donors.
However, to keep and attract additional donors, NPOs may need to think about other funding sources. Likewise, nonprofits should seek ways to leverage technology to improve efficiency, cut operating expenses, implement value-for-money programs, and scale up accountability.
Conclusion
Since the late 1980s, Kenya has witnessed a dramatic growth in the number and types of nonprofits. Also, the activities of these organizations have increased at an unparalleled rate. This reflects the impact of nonprofit activities on the societal development of the nation.
However, the sector must consider diverse funding options. This is especially with the various opportunities available to charity organizations across the web and social space.
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