For nonprofits to be registered with the Corporate Affairs Commission; it is required that they go through the process of application as specified by the commission. The commission requires that the prescribed application form be manually or electronically (online) filled by organisations intending to register, stating in the form, the name of the proposed corporate body which must contain the words: “Incorporated Trustees of (organisation’s name), aims/objectives of the organisation and names/addresses/occupations of the organisation’s secretary.

To be attached to the completed application form are the following; evidence of approval of name, two passport sized photographs, two printed copies of the organisation’s constitution, duly-signed copies of minutes of the meeting appointing the trustees and authorizing the application, showing the people present and the votes scored, the impression of the proposed common seal if the organisation has one and a payment fee of #37,000 (Incorporation of Trustees – 30,000, Certified True Copy of Constitution- 5,000 and Certified True Copy of Incorporated Form -2,000). This application form must then be signed and submitted to the commission.

The commission may at any time require a declaration in the dailies or any other evidence to verify if the statements and particulars provided by the organisation making the application are true and valid.

Failure to provide true and accurate information for the purpose of incorporating trustees with the Corporate Affairs Commission makes the organisation submitting the application liable to a penalty of one year imprisonment or a fine as specified by the court.

This newsletter is supported by the Commonwealth Foundation. However, the ideas and opinions presented in this document do not necessarily represent those of Commonwealth Foundation, NNNGO or any other organisations mentioned. 

November, 2019

Nonprofit organisations can continue to enjoy their nonprofit status only if they can keep to their charitable object which requires that they do not pay or transfer income, profit or properties of the organisation to any of their board members. It is expedient that the Board has the ultimate responsibility for the income and properties/assets of the nonprofit organisation including its reputation since they are also responsible for the decisions and actions of the organisation.

The Board is also has the mandate to delegate authority by ensuring suitable internal mechanism controls are put in place which allows efficient monitoring of delegated matters. The tone set by the Board through its leadership, behaviour, culture and overall performance is an important foundation for the success and sustainability of the nonprofit organisation.

It is advised that the Board of a nonprofit is informed enough about the organisation in order to defend the its integrity and strength in terms of decision-making, reporting, internal controls and asset management, for enhanced transparency and accountability processes. This helps ensure that the income and properties/assets of a nonprofit are solely used towards the promotion of the aims and objectives of the organisation as stated in its constitution and no portion of its income and property are paid or transferred directly or indirectly, by way of dividend, bonus or otherwise by way of profit to any of the members of the association.

As an internal control mechanism strategy, it is advised that the board regularly monitors the performance of its nonprofit organisation using a consistent framework, operational performance checks against delivery of the organisation’s objectives, strategic goals, budget and risks.

The Board should agree to reasonable remuneration for staff, taking into account prevailing economic indices and enforce a no-pay policy for members of the board with a clear policy on Board reimbursements for travels and meeting attendance costs.

Also, the Board should agree and oversee an effective process for appointing and reviewing independent external auditors, have a board audit committee that is headed by a chairman who has recent and relevant financial expertise and  would also meet with auditors without the staff of the organisation at least once a year.

This Board audit committee must have the capacity and expertise to consider concerns raised by staff and volunteer about improper conduct that may arise within the organisation including arrangement for proportionate and independent investigation/follow-up. Nonprofit organisations who knowingly violate this part of the Companies and Allied Matters Act shall be liable to refund such income or property as it applies to the organisation.

October, 2019 

Nonprofit organisations willing to make alterations to some or all of their particulars after registering with the Corporate Affairs Commission (CAC), must notify the commission via an application process within a reasonable period of time- a duration of 28-60 days is recommended (for medium, small and large organisation) for this to take place.

In the life-cycle of nonprofits, it is not uncommon for organisations to require a change of name, object(s), constitution or some of their board of Trustees at some point and while this is within their constitutional rights as Nigerian nonprofits, there are certain processes that must be undergone by these organisations and approved by the CAC.

Before considering a change in the constitution of an organisation or parts of it, it must be noted that the change can only occur through a resolution passed by a simple majority of the members of the organisation’s board and this has to be approved by the CAC before it becomes valid.

At the expiration of the term of an organisation’s board member and to replace such an individual within the board, the CAC must be notified through an “application process” along with an advert in two daily newspapers publicly displayed for 28 days based on the provisions of the Part C of the Companies and Allied Matters Act (CAMA).

The application process to make alterations to an organisation’s particulars in these situations implies that a letter be drafted on the organisation’s letterhead stating the reasons for the change in particulars; depending on what needs to be changed (name, objects,constitution or board members of the organisation) and sent to the CAC. Very importantly, it is expected that the minutes of the meeting of the board where such decision/resolution took place is attached with this application letter.This is then followed by certain instructions from the CAC which includes an advert in two national dailies as stated earlier, among other things.

Nonprofit organisations must ensure that prescribed processes for any change they wish to effect within their organisation are followed to avoid invalid or void alterations,based on the provisions of the Part C of CAMA.

Constitutions help set the rules guiding the operation of nonprofits. They are important because they establish procedures that everyone can rely on and give a level of certainty about how the organisation should be run; the rules and processes provided in the constitution binds the board, the organisation and its members. Legally, a nonprofit’s constitution is what the Corporate Affairs Commission (CAC) uses to determine its object and decide if it is indeed, a nonprofit.

The first thing nonprofits need to understand when setting up their organisation or applying formally to the Corporate Affairs Commission is to ensure that their board meets either physically or online to discuss the constitution and agree to its adoption; the minutes of this meeting must be documented for future purposes.

When drafting a constitution, nonprofits should ensure that their constitution states the name or title of the organisation, clearly articulates the aims/objects(charitable purpose) of the organisation, clearly sets out the role/powers of the board indicating their job descriptions, appointment/tenure of office and replacement of trustees, how meetings of the board are called and held and what would happen if the organisation must wind up.

At this point, it is important for the prospective board(trustees) to read the constitution and accept responsibility through a signed document for leading the governance of the organisation and ensuring its effectiveness.

It is highly recommended that nonprofits do not copy and paste their organisational constitution to ensure that the constitution and governance documents accurately reflects their organisations’ peculiarities, situations that are unique to how their organisation operates or will operate; this constitution should contain rules that the particular nonprofit understand and will be able to follow.

Ultimately, nonprofits are required to have in place a constitution that governs its operations and safeguards it for efficient and effective running of day to day activities.

This newsletter is supported by the Commonwealth Foundation. However, the ideas and opinions presented in this document do not necessarily represent those of Commonwealth Foundation, NNNGO or any other organisations mentioned

Nonprofit mergers are becoming a common trend in many countries and are now a topic of discussion among nonprofit leaders, board and funders. Mergers provide an avenue to preserve and strengthen needed service provided by nonprofits to diverse communities.

The Part F of the Companies and Allied Matters Act recognizes mergers; paving the way for nonprofits with similar objects and aims to merge under terms and conditions prescribed by the Corporate Affairs Commission. Lessons from studies and research have shown that mergers; improve image, reputation and public support for nonprofits, increase financial stability and efficiency of operations.

Merging might also help address issues of duplication of efforts and avoiding solvency especially with the difficult economic climate and the fact that the funding terrain for nonprofits is adversely affected.

With the passing of the amended Part F of CAMA, we anticipate an increase in the consideration for mergers by nonprofits to develop greater organizational efficiencies relating to programming, administrative capacity and financial sustainability.

Nonprofit considering mergers should ensure that they fuse with organisations that have similar mission and vision as them, make use of experts in the merger process and seek specialized knowledge on what the structure or emerging organisation, function and legal aspect of the merger would look like.

Nonprofits should also ensure that funders involved in the merger are given the opportunity to give input into the planning; the merging process should be seen as a collaborative one by identifying potential mutual gains that could be realized in the merger.

This newsletter is supported by the Commonwealth Foundation. However, the ideas and opinions presented in this document do not necessarily represent those of Commonwealth Foundation, NNNGO or any other organisations mentioned. 

An important step towards financial growth and the promotion of transparency and accountability within a nonprofit organization is strong financial management. Nonprofit organisations are expected to keep a tight record of their financial and accounting operations as this improves their documentation processes and helps to take stock of their spending.

Under the Companies and Allied Matters Act, CAMA, nonprofits have an obligation to the Corporate Affairs Commission, CAC, to correctly keep records that explain how the organization spends and receives its money or other assets (day to day transactions). When nonprofits show records of how it runs; it helps the organisation demonstrate to regulators that it is actively operating and working towards its objectives and remains eligible as a registered nonprofit. This practice also helps to show whether or not the organisation is in good financial health and is being run efficiently.

Nonprofits are to ensure that they keep operational records which will ideally be stated in the statement of accounts prepared by the bank; doing this shows that the organisation is operating as a nonprofit and meeting its obligations under the part F of CAMA and with relevant authorities, stakeholders and donors. Though this process might be delegated, it is the responsibility of the Board to ensure that the organisation’s accounting records are kept and prepared according to relevant accounting principles adopted by the organisation.

The law requires that nonprofits have preserved accounting financial records for a period of six years from the date of the organisation’s inception for effective transparency and accountability processes.

To adhere to this requirement, nonprofits are required to ensure that financial reports, receipts of transactions and all evidences of payments are correctly recorded, allow for true and fair statements prepared  and audited by an audit firm for large organisations while smaller nonprofits can prepare a statement of affairs (a profit and loss account). This document is vital to the process of filing annual returns with the CAC.

This newsletter is supported by the Commonwealth Foundation. However, the ideas and opinions presented in this document do not necessarily represent those of Commonwealth Foundation, NNNGO or any other organisations mentioned. 

In a nonprofit organisation, managing a bank account can be simple or complex depending on the size of the organisation, the net worth and assets possessed by the organisation.

By law, a nonprofit organisation is mandated to have a bank account from which all financial transactions relating to the organisation would be made. This bank account is strictly for the organisation and separate from the personal account of the founder or staff of the organisation. This is particularly important as it is part of transparency and accountability processes towards the financial growth of the organisation.

An incorporated trustee runs the risk of being dissolved if it is observed by a bank that the organisation operates a dormant account as defined under the relevant banking regulation. The length of time before a bank account goes inactive in Nigeria is 12 months and is classified dormant if it remains inactive for another 12 months; the bank then notifies the Corporate Affairs Commission (CAC) to take further actions requesting that the said nonprofit organisation provide evidence of its activities with an ultimatum of 15 days.

Failure to respond satisfactorily within 15 days of request may lead to the dissolving of the organisation by the commission. Before accounts are reclassified, the banking institution will notify said organisation, 3 months before an account is reclassified as dormant.

Dormant accounts are evidence of no activity for a long period of time. A dormant bank account signals to regulators and the public that the organisation is no longer in existence. Nonprofits not operating their bank account for up to 5 years at a stretch may send a signal to CAC processes for revocation of registration.

To safeguard funds in the account where an organisation has not responded in 15 days, the law provides for the money to be declared/or brought to the attention of the CAC who then sets up processes of transferring the money to other nonprofits with similar purpose upon the approval of the minister.

It is advisable that a nonprofit organisation with a dormant account sends a notification stating the reason(s) for having a dormant account to the CAC to avoid the assumption that the nonprofit organisation is no longer in operation which could further lead to “de-listing” of the organisation from the list of registered organisations with the commission.

This newsletter is supported by the Commonwealth Foundation. However, the ideas and opinions presented in this document do not necessarily represent those of Commonwealth Foundation, NNNGO or any other organisations mentioned. 

The new amendment to the Part F of the Companies and Allied Matters Act (CAMA) supports the suspension of an organisation’s board of trustees, in cases where there is perpetration of misconduct and fraudulent management of organisational affairs.

The suspension of trustees can only be made legal after a petition has been made to a court of law and evidences presented to the court by one-fifth of the organisation’s members. The Corporate Affairs Commission (CAC) then enforces the court’s judgment of suspension after the individuals have been found guilty.

The law states that in such cases, an interim manager could be appointed to manage the affairs of the organisation, pending when all matters are resolved. It becomes necessary to appoint an interim manager to ensure the protection of the organisation’s interest and physical properties of a nonprofit organisation. In these cases, the powers and duties of the board of trustees shall be transferred and performed by the interim manager to the exclusion of the trustees under the supervision of the CAC.

It is important to note that the law does not tolerate deliberate and unsubstantiated accusations and petitions of misconduct or fraudulent dealings by Nonprofits. Nonprofits are advised to avoid disputes and issues that can bring discord within their organisation and the wider nonprofit community at large.

To achieve the avoidance of organisational discord, it is advised that nonprofit organisations ensure that their operations and financial management activities are guided by the values of ethics and culture of transparency and accountability.

This newsletter is supported by the Commonwealth Foundation. However, the ideas and opinions presented in this document do not necessarily represent those of Commonwealth Foundation, NNNGO or any other organisations mentioned.

An annual return refers to profit made on investment, over a period of time. In Nigeria, corporate entities registered with the Corporate Affairs Commission under the Companies and Allied Matters Act (CAMA) are mandated to file annual returns with the Commission (CAC) on a yearly basis.

Even though nonprofit organisations do not make profit on investments, Section 55 of CITA specifically makes it clear that ALL companies, registered with the CAC are to file returns irrespective of tax exemptions conferred on their income,in order to encourage transparency.

Generally,organisations must file annual returns not earlier than 30th June or later than 31st December every year (except the year the organisation was incorporated). However, newly registered organisations begin filing their first annual returns, not later than 18 months after incorporation while older organisations file their annual returns not later than 42 days after their Annual General Meeting.

To file annual returns with the Corporate Affairs Commission, an organisation is expected to visit the CAC website, download and fill out an Incorporated Trustees Annual Returns form (CAC/ IT 4), attach an audited financial statement signed by a chartered accountant and two trustees of the organisation or a statement of affairs, in cases where the organisation is yet to commence operation along with a fee of #5,000.

Complying with this law will aid the maintenance of good organisational structures as it encourages a culture of record keeping and puts compliant organisations on good standing with the commission- accurate and updated records of said organisations will be accessible to the commission which gives room for transparency and accountability.

Failure to file annual returns within the stipulated period will incur an additional cost of #5,000 for every year of noncompliance as penalty. Persistent noncompliance to this law could result in eventual de-registration of errant nonprofits as the commission is left to assume that this organisation is non-operational.

Filing annual returns with the Corporate Affairs Commission as and when due helps to keep the company’s name on the commission’s register, saves time in situations where a nonprofit needs a post incorporation service or documents from the commission and also prevent nonprofits from payment of penalties that apply for late filing of annual returns.

This newsletter is supported by the Commonwealth Foundation. However, the ideas and opinions presented in this document do not necessarily represent those of Commonwealth Foundation, NNNGO or any other organisations mentioned. 

Boards of trustees are pivotal to the growth and success of nonprofits. Their role is to serve as governing bodies, safeguard the core values of an organization and ensure the fulfillment of its vision and supervise its the overall operation.

A Board of Trustees is made up of a number of different representatives, often an odd number; between five and thirteen persons or as stipulated in the organisation’s founding document and is often elected or appointed at an Annual General Meeting, for a specific period of time.

Board members can be drawn from all sectors of the community and a founder could form a recruitment panel amongst existing staff or some members of their current board in order to get different views on prospective candidates for a new board so that a more informed decision is taken.

As the governing body of a nonprofit, the board oversees policy approval and is legally accountable to public as well as beneficiaries of the organisation it serves. By law, it is required that the Board meets on a regular schedule to make decisions regarding the organisation, however, the frequency of meetings can be guided by the decisions that the Board needs to make or events, within a timeline, that facilitate management’s ability to effectively implement those decisions.

The Director of a nonprofit sets the agenda to shape the work of the board, therefore he or she is expected to attend Board meeting, however, since every decision the board makes relating to budget and compensation will impact the him or her (in cases where the Director is a paid employee), there may be conflicts of interest.

To handle this, the Director could be excluded from discussions involving budget and compensation, but be allowed to have a vote and remain a part of the board for other business. Alternatively, he or she could be invited to board meetings as a guest rather than a voting member.

This newsletter is supported by the Commonwealth Foundation. However, the ideas and opinions presented in this document do not necessarily represent those of Commonwealth Foundation, NNNGO or any other organisations mentioned.