The Public Benefits Organization Act was assented to on 14th January 2013, but it only recently entered into force, on 14th May 2024. This Act was put into effect to, amongst other functions, create new legal, institutional, and regulatory frameworks for organizations set up to undertake activities for general public benefit. It repeals the Non-Governmental Organizations Coordination Act (1990).
A Public Benefit Organization is a body whose sole purpose is to serve the public good by promoting economic, social, environmental, or cultural development and lobbying to protect the interests of the general public or a category of individuals or organizations.
It is a voluntary membership or non-membership grouping of individuals, which is autonomous, non-partisan, and non-profit making. Operations of this organization may be local, national, or international, and it must be registered per the Public Benefit Organization Act. Former NGOs must be re-registered as PBOs under the new Act.
Structure of the governance framework under the PBO Act
The repealed NGO Coordination Act established the NGO Council and the NGO Coordination Board. The Council was a collective forum of all registered NGOs, which would issue codes of conduct to be followed by NGOs. The Board served the function of facilitating and coordinating the work of NGOs operating in Kenya. NGOs, then, were mostly self-regulating.
The PBO Act was enacted after the realization of the increasingly important role Public Benefit Organizations play in achieving national economic and development objectives. It was intended to improve the cohesiveness of the relationship between the government and these bodies.
The PBO Act establishes a tripartite governance structure for PBOs: the “National Federation of Public Benefits Organizations”, the Public Benefits Organizations Authority, and the Cabinet Secretary responsible for matters of planning and national development. PBOs are still self-regulating. However, the new structure requires PBOs to align their aims and objectives to the national economic and development policy.
Individual PBOs are to be self-regulating and may also form and join self-regulating forums that develop codes of conduct, much like the former NGO Council—these self-regulating forums are to be encouraged by the Federation, an umbrella organization of all registered PBOs. However, these individual self-regulation forums must be formally recognized by the PBO Authority and are subject to the monitoring and coordination of the Federation.
The Federation, in turn, serves the Authority in an advisory capacity, offering suggestions on the development of the PBO sector and on ensuring compliance by PBOs with the provisions of the PBO Act, the Regulations, and the codes of conduct of self-regulating forums. For its part, the Act lists more requisites that PBOs must meet in their self-regulation, including a list of “ethical principles and aspirations”, and new provisions intended to assure financial transparency.
The Authority acts as an intermediary body between the government and the Federation, in addition to the administrative functions previously held by the NGO Coordination Board. The Authority interprets the national policy on PBOs to assist in its implementation by government bodies, advises the government on the activities of PBOs and their role in national development, and may institute inquiries to determine whether the activities of PBOs comply with the Act.
The Act further mandates that the Federation, the Cabinet Secretary responsible for planning and national development, and the PBO Authority (replacing the NGO Coordination Board) regularly meet to harmonize their policies, thus focusing the discretion of PBOs to “self-regulate”.
In this legal alert, we shall expound on a few changes that the PBO Act has brought and how they will affect the functioning of these Organizations.
- Cohesion between self-regulating PBOs and national economic policy
The repealed Non-Governmental Organizations Coordination Act called for NGOs to be self-regulating. NGOs were to subject themselves to a code of conduct promulgated by the Non-Governmental Organizations Council—a collective forum of all NGOs registered under the repealed Act.
Like the repealed act, the PBO Act establishes a “National Federation of Public Benefits Organizations”, an umbrella organization of all PBOs registered under the Act. However, the PBO Act specifies some of the rules of the Federation in a departure from the wide latitude accorded to the NGO Council under the repealed Act. Indeed, the Cabinet Secretary responsible for planning and national development now has the authority to ensure that the Federation complies with its rules and procedures during its elections.
Moreover, under the previous regime, NGOs were much more loosely connected with government economic policy. Unlike the NGO Coordination Board, which had a wider discretion to autonomously develop policy guidelines for NGOs to be harmonized with the national development plan, the PBO Authority shall now stand guided in its operation by the national policy on public benefits organizations and the provisions of the PBO Act.
Finally, the PBO Act provides a list of “ethical principles and aspirations” by which every PBO is to be guided in its aims and activities, including “the promotion of gender equality and social inclusion at all levels”, and “a commitment to the sanctity of life”.
- The Public Benefits Organization Dispute Tribunal
Another novelty of the PBO Act is its establishment of the Public Benefits Organization Dispute Tribunal which is mandated to determine disputes that arise between the Federation and its members, the Federation and the Authority, amongst members of the Federation, or between the Federation, the Authority and the Cabinet Secretary. Decisions of the Tribunal may be subject to judicial review within 14 days of their issuance. The Tribunal, then, more closely relates PBOs, the Federation, and the Authority to the direct influence of arms of the government.
The Tribunal will comprise of a chairperson who should be an Advocate of the High Court of Kenya of more than 7 years standing, 3 Advocates with more than 5 years standing being Advocates of the High Court of Kenya, and 2 members who are conversant with the functioning of Public Benefits Organizations.
- The use of resources by PBOs
Consistent with the recognition of the important role played by PBOs in national development, the Act also makes steps towards ensuring that PBOs utilize their finances for the public benefit. For instance, it provides that every person who serves on the governing body of a PBO shall serve on a voluntary basis, that the assets and resources of a PBO shall be directed to the attainment of its aims, and that every PBO is to submit an annual audited financial statement to the Authority.
In this regard, the Act also provides for how PBOs should relate to the political environment of the country. While a PBO may take part in research, education, publication, and advocacy of issues affecting the overall public interest (including the criticism of the State or its officers or policies), no PBO should engage in fundraising or campaigning in support of a political party or candidate, or propose someone for office in such a capacity, nor may it propose or register candidates for elective public office. This helps to clarify that PBOs, both national and international, registered as PBOs in Kenya may not use their finances to support political candidacies.
We at Nyiha, Mukoma & Company Advocates are dedicated to providing exceptional client service through our commitment to understanding the business and legal needs of our clients. Contact us for further information regarding the Public Benefits Organizations Act.
