Laws regulating nonprofit organizations, nonprofit corporations, non-governmental organizations, and voluntary associations vary in different jurisdictions. They all play a critical role in addressing social, economic, and environmental issues. These organizations operate under specific legal frameworks that are regulated by the respective jurisdictions in which they operate. Such law can facilitate the workings of nonprofit organizations, but they can also hamper their functioning.
Algeria In Algeria, nonprofit organizations are regulated by Law No. 12-06 of 12 January 2012 on Associations. This law provides guidelines for the establishment, registration, and operation of nonprofit organizations. It sets out the requirements for formation, membership, governance, financial reporting, and dissolution of associations. Nonprofit organizations are required to register with the local authorities to obtain legal recognition and must comply with reporting obligations as stipulated by the law.
Algeria, during its third and fourth UN Human Rights Council universal periodic reviews, made a commitment to revoke Law No.12-06 of 2012 concerning associations and develop a new legislation. These reviews highlighted the significant limitations imposed by the existing law on the formation of associations, the registration procedures, funding, and the discretionary authority of the administration when it came to dissolving associations.
Australia In Australia, nonprofit organizations include trade unions, charitable entities, co-operatives, universities and hospitals, mutual societies, grass-root and support groups, political parties, religious groups, incorporated associations, not-for-profit companies, trusts and more. Furthermore, they operate across a multitude of domains and industries, from health, employment, disability and other human services to local sporting clubs, credit unions, and research institutes. A nonprofit organization in Australia can choose from a number of legal forms depending on the needs and activities of the organization: co-operative, company limited by guarantee, unincorporated association, incorporated association (by the Associations Incorporation Act 1985) or incorporated association or council (by the Commonwealth Aboriginal Councils and Associations Act 1976). From an academic perspective, social enterprise is, for the most part, considered a sub-set of the nonprofit sector as typically they too are concerned with a purpose relating to a public good. However, these are not bound to adhere to a nonprofit legal structure, and many incorporate and operate as for-profit entities.
In Australia, nonprofit organizations are primarily established in one of three ways: companies limited by guarantee, trusts, and incorporated associations. However, the incorporated association form is typically used by organizations intending to operate only within one Australian state jurisdiction. Nonprofit organizations seeking to establish a presence across Australia typically consider incorporating as a company or as a trust.
Belgium Under Belgian law, there are several kinds of nonprofit organization: Non-profit associations by membership, called (abbreviated VZW) in Dutch, or (abbreviated ASBL) in French, or in German. International non-profit association, called (Dutch, often abbreviated IVZW) or (French, often abbreviated AISBL) for international nonprofit organizations. (Dutch, abbreviated SON) or (French, abbreviated FUP); a private non-membership organization for the common good. (Dutch) or (French), an informal organization, often started for a short-term project, or managed alongside another NPO that does not have any status in law, and thus cannot purchase property, etc.
(Dutch, abbreviated VZW) or (French, abbreviated ASBL) or (German, abbreviated VoG) is the legal term for a basic non-profit organization in Belgium and Luxembourg. It is a formal designation under Belgian and Luxembourg law, and organisations are entered in a register and allocated numeric identifiers.
Prominence It is estimated that 497,400 employees work for associations without lucrative purpose in Belgium. The international associations without lucrative purpose employ an estimated 20,000 to 30,000 people in Belgium. Brussels is the second largest city in terms of housing of international associations after Washington, DC. The category includes among others professional associations, foundations and NGOs.
Legal reforms In 2019, Belgium adopted new legal rules for private companies which also cover associations without lucrative purpose. The new rules allow an association without lucrative purpose to undertake commercial activities, although they are not permitted to distribute their profits.
Associations without lucrative purpose have been in the past criticized for their poor management practices. In response, the new rules also increase the liability for the administrators of an association without lucrative purpose with respect to the association.
Burundi In January 2017, Burundi announced an entry-into-force of a new law governing foreign NGOs. This law introduced ethnic quotas on foreign NGOs, designating that local staff must remain 60 percent Hutu and 40 percent Tutsi. In October 2018, Burundi's National Security Council announced an immediate suspension of a large number of foreign NGOs, with the exemption of hospital and school-based organizations. The suspended NGOs were required to present four documents reinforcing the organizations' commitment to banking regulations and ethnic staffing quotas, among others; or face deregistration.
Canada Canada allows nonprofit organizations to be incorporated or unincorporated. They may incorporate either federally, under Part II of the Canada Business Corporations Act, or under provincial legislation. Many of the governing Acts for Canadian nonprofits date to the early 1900s, meaning that nonprofit legislation has not kept pace with legislation that governs for-profit corporations, particularly with regards to corporate governance. Federal, and in some provinces (including Ontario), incorporation is by way of Letters Patent, and any change to the Letters Patent (even a simple name change) requires formal approval by the appropriate government, as do bylaw changes. Other provinces (including Alberta) permit incorporation as of right, by the filing of Articles of Incorporation or Articles of Association.
During 2009, the federal government enacted new legislation repealing the Canada Corporations Act, Part II – the Canada Not-for-Profit Corporations Act. This Act was last amended on 10 October 2011, and the act was current until 4 March 2013. It allows for incorporation as of right, by Articles of Incorporation; does away with the ultra vires doctrine for nonprofits; establishes them as legal persons; and substantially updates the governance provisions for nonprofits. Ontario also overhauled its legislation, adopting the Ontario Not-for-Profit Corporations Act during 2010; the new Act is expected to be in effect as of 1 July 2013.
Canada also permits a variety of charities (including public and private foundations). Charitable status is granted by the Canada Revenue Agency (CRA) upon application by a nonprofit; charities are allowed to issue income tax receipts to donors, must spend a certain percentage of their assets (including cash, investments, and fixed assets) and file annual reports in order to maintain their charitable status. In determining whether an organization can become a charity, CRA applies a common law test to its stated objects and activities. These must be: The relief of poverty The advancement of education The advancement of religion, or Certain other purposes that benefit the community in a way the courts have said is charitable
Charities are not permitted to engage in partisan political activity; doing so may result in the revocation of charitable status. However, a charity can carry out a small number of political activities that are non-partisan, help further the charities' purposes, and subordinate to the charity's charitable purposes.
Ethiopia On March 12, 2019, the government of Ethiopia enacted a new law on civil society organizations (CSOs), the Organization of Civil Societies Proclamation No. 1113/2019 (CSO Proclamation). The CSO Proclamation replaces the Proclamation of Charities and Societies No. 621/2009 (2009 Proclamation). The 2009 Proclamation was criticized by many NGOs as extremely restrictive, requiring NGOs to report to the Charities and Societies Agency; NGOs were also required to follow a '70/30' rule in which organizations were to allocate 70 percent of their budget to operational costs and 30 percent to administrative costs.
France
In France, nonprofits are called . They are based on a law enacted 1 July 1901. As a consequence, the nonprofits are also called .
A nonprofit can be created by two people to accomplish a common goal. The can have industrial or commercial activities or both, but the members cannot make any profit from the activities. Thereby, worker's unions and political parties can be organized from this law.
In 2008, the National Institute of Statistics and Economic Studies (INSEE) counted more than a million of these in the country, and about 16 million people older than 16 are members of a nonprofit in France (a third of the population over 16 years old). The nonprofits employ 1.6 million people, and 8 million are volunteers for them.
This law is also relevant in many former French colonies, particularly in Africa.
Hong Kong The Hong Kong Company Registry provides a memorandum of procedure for applying to Registrar of Companies for a Licence under Section 21 of the Companies Ordinance (Cap.32) for a limited company for the purpose of promoting commerce, art, science, religion, charity, or any other useful object.
India In India, non-governmental organizations are the most common type of societal institutions that do not have commercial interests. However, they are not the only category of non-commercial organizations that can gain official recognition. For example, memorial trusts, which honor renowned individuals through social work, may not be considered as NGOs.
They can be registered in four ways: Trust Society Section-25 company (Section 8 as per the new Companies Act, 2013) Special licensing
Registration can be with either the Registrar of Companies (RoC) or the Registrar of Societies (RoS).
The following laws or Constitutional Articles of the Republic of India are relevant to the NGOs: Articles 19(1)(c) and 30 of the Constitution of India Income Tax Act, 1961 Public Trusts Acts of various states Societies Registration Act, 1860 Section 25 of the Indian Companies Act, 1956 (Section 8 as per the new Companies Act, 2013) Foreign Contribution (Regulation) Act, 1976.
Israel In Israel nonprofit organizations (NPOs) and non-governmental organizations (NGOs) are usually established as registered nonprofit associations (, ; plural: , ) or public benefit companies (, or , , not to be confused with public benefit corporations). The structure of financial statements of nonprofit organizations is regulated Israel's Accounting Standard No. 5, and must include a balance sheet, a report on activities, the income and expenditure for the particular period, a report on changes in assets, a statement of cash flows, and notes to the financial statements. A report showing the level of restriction imposed on the assets and liabilities can be given, though this is not required.
are regulated by the . An is a body corporate, though not a company. Public benefit companies are governed solely by company law; if their regulations and objectives meet the two conditions specified in Section 345A of the Companies Act, they will in effect be in all but name.