On 14th May, 2024, more than 10 years after its passing, the Public Benefits Organisation Act, 2013 has been brought into effect. This will bring much needed change to the non-profit landscape in Kenya.
Generally, the type of non-profit entity that a person chooses depends on what activity or function you want the non-profit to undertake. If you want to develop a particular sport, an association may be the way to go. If you want to set up a micro-finance to cater to the under-privileged, you may want to register charitable foundation, for religious or socio-economic aims it may be best to register a charitable trust.
Below is a snapshot of the entities that can be used as vehicles for charitable or non-profit initiatives in Kenya
| Type | Overview | Laws Regulating Formation | Additional Steps | Timelines |
| Company Limited by Guarantee (These are common for sports clubs and golf clubs as well as volunteer humanitarian aid organizations) | A company whose members’ liability is limited by the memorandum to such amount as each of the members may respectively undertake to contribute to the assets of the company in the event of the company being wound up. This type of company does not have share capital and its members are guarantors rather than shareholders. The liability of members is limited to the amount they agree to contribute to the company’s assets if it is liquidated. It may qualify for tax exemption status | Formed under the Companies Act of Kenya, 2015. It is incorporated in the same manner as any other company by lodging the relevant statutory forms together with the memorandum and articles of association. However instead of filing a statement of share capital, a statement of guarantee is filed instead. Also, in the case of a company limited by guarantee, a provision in the articles of the company, or in a resolution of the company, purporting to give a person a right to participate in the divisible profits of the company otherwise than as a member is void | Normally the Registrar of Companies has to liaise with the Director of National Intelligence Service to investigate the conduct of persons who are proposed to members and/or directors and this vetting procedure can sometimes take several months. | It may take three (3) to six (6) months or more due primarily to the vetting procedure. |
| Public Benefit Organisation (formerly Non-Government Organisation) (common for civil rights organisations, microfinance organisations catering for the needy and international aid organisations) | A private voluntary grouping of individuals or associations, not operated for profit but which have organised to undertake activities that support or promote public benefit by enhancing or promoting the economic, environmental, social or cultural development or protecting the environment or lobbying or advocating on issues of general public interest or the interest or well-being of the general public or a category of individuals or organizations in the areas such as health, relief, education, industry and youth or animal welfare. The Public Benefit Organizations Regulatory Authority exercises oversight over PBOs. Continuing obligations include, but are not limited to, filing annual reports to the Public Benefit Organizations Regulatory Authority and notifying them of the changes in the officers or title of the officers. | Registration is governed by the Public Benefits Organizations Act, 2013. Applications are considered by the Public Benefit Organizations Regulatory Authority within 60 days of filing. The Public Benefit Organization Act (Act No. 18 of 2013) was operationalized on 14th May, 2024 and has effectively repealed the Non-Governmental Organizations Coordination Act, 1990 (NGO Act). Existing NGOs have 1 year to re-register under the PBO Act. | There is a prior name search and reservation process before a formal application can be made. Registration can be refused where false information is given. Where a person is aggrieved by the decisions of the Public Benefit Organizations Regulatory Authority either in refusing registration or taking any administrative action, these can be referred to Public Benefit Organizations Disputes Tribunal for further determination. On registration, it qualifies for tax exemptions such as exemptions from income tax, stamp duty and court fees, preferential treatment on VAT and custom duties | It should take two (2) months but may likely be more depending on how often the PBO Authority sits to consider applications. |
| Society (common for churches, political parties or welfare associations) | A society includes any club, company, partnership or other association of ten or more persons, whatever its nature or object, established in Kenya or having its headquarters or chief place of business in Kenya, and any branch of a society but not, inter alia, a Company under the Companies Act or foreign registered company, a school, a building society, a bank or a trade union. | Created under the Societies Act (Cap 108 Laws of Kenya). Application should be made within twenty eight (28) days of formation to the Registrar of Societies. | A society may be exempt from registration on application. An example is the Catholic church | It may take three (3) months. |
| Trust (common for religious and charitable community initiatives) | A trust is an entity formed to hold and manage assets on behalf of another person. A charitable trust is created when the trustees enter into a declaration of trust. Formation of a trust involves drafting the trust instrument, which sets out, inter alia, the name of the trust, the names of the initial trustees and founder, if any, the objectives of the trust and the governing body of the trust. | In Kenya, trusts are governed by provisions of the Trustees Act (Chapter 167 Laws of Kenya) and Trustees (Perpetual Succession) (Chapter 164, Laws of Kenya) | A trust deed after preparation and execution by the trustees needs to be stamped and registered. But this only grants a trust the status of an unincorporated trust. An unincorporated trust does not have a separate legal existence from its trustees. Trustees of a charity may also apply pursuant to the provisions of the Trustee Perpetual Succession Act for a certificate of incorporation of the trustees as a corporate body but issuance of an incorporation certificate may take up to four (4) months. | It may take three (3) weeks. As of 24th April, 2024, trust registration will be undertaken at the Companies Registry (BRS) as opposed to the Land Registry. |
If you are considering setting up a charitable entity, please reach out to Divinah Ongaki (dso@smc-legal.com