Advantages of NGOs
9 ADVANTAGES OF NGOs: THE BENEFITS OF SETTING-UP A FOUNDATION
Advantages of NGOs: If you are currently running an organization that is unregistered with the Corporate Affairs Commission or have interest in the advancement of a political, educational, religious, literary, scientific, social/cultural development, sporting or charitable causes, or just looking to establish a Non-Governmental Organization (“NGO”); here are the advantages and benefits you can derive from registering an NGO under Part “C” of the Companies and Allied Matter Act, Cap C20 Laws of the Federation of Nigeria 2010.
1. Right to Acquire Assets. When your organization is formally registered with the Corporate Affairs Commission by way of incorporation, it then becomes entitled to acquire land, own fixed assets and/or incur liabilities under its common seal. It is illegal for an unregistered organization to buy, hold or sell land anywhere in Nigeria.
2. Protection from Personal Liability. You can buy, acquire and register stakes and assets in the name of your NGO. This is a very smart way of protecting yourself from unlimited liability for untoward happening such as bankruptcy, foreclosure, judgment debt, or divorce etc. Assets and property registered in the name of your NGO can never be targeted or attached for the satisfaction of any unsettled debts, nor can it be used for court settlement in a divorce proceeding. You are better off outsmarting an ugly situation in future than be sorry!
3. Corporate Entity. As a corporate body, your organization’s dealings and engagements with the public will improve. The NGO can sue to enforce its legal rights or be sued through its registered trustees.
4. Structured Financial Plan. Having an NGO can afford a tax-free mechanism for activities you are carrying-on under the NGO. NGOs are deemed not-for-profit and tax exempted. You can develop a structured financial plan that allows the organization to do business devoid of tax liabilities. This is called “tax avoidance”. Tax avoidance is a legitimate way of reducing or eliminating your tax obligation. Tax avoidance is not “tax evasion” which is illegal!
5. Stability. The registration of your organization can suggest that there is effective and responsible leadership in place. The public will perceive same as being stable than an unregistered organization. Political parties, government, donor agencies, financial institutions, charity organizations and other NGOs will want to partner with a registered body to further common objectives.
6. Perpetual Succession. This means an NGO got an unlimited lifespan and will continue to exist even if the founder or trustees die or leave the NGO. The organization’s existence will only cease if it is formally wound up by the Order of Court. Amongst other benefits, this may allow perpetual succession.
7. Access to Credit. Registering an NGO can afford access to credit from lenders and financial institutions. You can use a loan facility to promote the organization’s activities, finance a mortgage, acquire land or fixed assets. Banks will want to see proof of registration with the CAC as condition precedent to giving a loan.
8. Name Preservation. Once your organization is registered, no one can use the same name or name similar to it throughout Nigeria. This has the benefit of protecting your corporate image and name from unauthorized use.
9. Banking. Opening a corporate account with a bank for the NGO may signal the fact that you are transparent. Some private persons, government, donor agencies and other NGOs will not be comfortable writing you a cheque for your organization in your personal name. A bank account for the NGO would signal its corporate existence and its readiness to receive donations. You need to provide proof that your organization is registered with the Corporate Affairs Commission to be able to open an account with a bank.
NEXT STEP?
If you want to start an NGO, you are taking the right step in the right direction. Registering an NGO would confer numerous benefits for growth and sustainability of whatever you do. It is recommended that you obtain guidance from an accredited solicitor of the CAC for the pre and post incorporation matters of the NGO, and to pin down key issues relating to the governance structure and the internal affairs of same.
Advantages of NGOs